U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                 ---------------

                                   FORM 10-QSB

                                   (Mark One)
|X| Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
    1934 

For the quarterly period ended May 31, 1998

___ Transition  report under  Section 13 or 15(d) of the Securities Exchange Act

For the transition period from __________ to __________

                         Commission file number 0-27664

                                 UNIDIGITAL INC.
        -----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

           Delaware                                       13-3856672
-------------------------------             ------------------------------------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)


                 229 West 28th Street, New York, New York 10001
                    (Address of Principal Executive Offices)

                                 (212) 244-7820
                           (Issuer's Telephone Number,
                              Including Area Code)

         Check whether the Issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such  shorter  period  that the Issuer was  required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.
                                   Yes: X No:
State the number of shares outstanding of each of the Issuer's classes of common
stock, as of June 30, 1998:

Class                                                      Number of Shares
-----                                                      ----------------
Common Stock,  $.01 par value                                  3,902,634

         Transitional Small Business Disclosure Format (check one):
                                   Yes: No: X


<PAGE>



                        UNIDIGITAL INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS
                                -----------------
                                                                    Page
                                                                    ----
PART I   FINANCIAL INFORMATION

         Item 1.      Financial Statements...........................1

                CONSOLIDATED BALANCE SHEETS
                as at May 31, 1998 (unaudited)
                and August 31, 1997 (audited)........................2

                CONSOLIDATED  INCOME  STATEMENTS  
                For the Three  Months and Nine
                Months Ended May 31, 1998 and May 31, 1997
                (unaudited)..........................................3

                CONSOLIDATED  STATEMENTS OF CASH FLOWS 
                For the Nine Months Ended
                May 31, 1998 and May 31, 1997
                (unaudited)..........................................4

                NOTES TO CONSOLIDATED FINANCIAL
                STATEMENTS (unaudited)...............................5

         Item 2.      Management's Discussion and Analysis or
                      Plan of Operation..............................11

                General..............................................11

                Results of Operations................................11

                Liquidity, Capital Resources and Other Matters.......15

PART II  OTHER INFORMATION

         Item 2.      Changes in Securities and Use of Proceeds......17

         Item 5.      Other Information..............................17

         Item 6.      Exhibits and Reports on Form 8-K...............17

SIGNATURES...........................................................21


                                      -i-
<PAGE>



                          PART I FINANCIAL INFORMATION

                          Item 1. Financial Statements



                                      -1-
<PAGE>

<TABLE>
<CAPTION>

                                                 UNIDIGITAL INC. AND SUBSIDIARIES
                                                 --------------------------------
                                                    CONSOLIDATED BALANCE SHEETS
                                                    ---------------------------

                                                                                                  May 31,              August 31,
                                                                                                   1998                   1997
                                                                                                 --------                ------
                                                                                               (unaudited)
                                        ASSETS
                                        ------
<S>                                                                                           <C>                    <C>         
Current assets:
   Cash and cash equivalents .......................................................          $    162,098           $  3,202,766
   Accounts receivable (less allowance for doubtful
     accounts of $553,499 and $266,000 at
     May 31, 1998 and August 31, 1997, respectively) ...............................            14,546,337              9,752,807
   Deferred financing costs, net ...................................................             1,107,204                463,931
   Prepaid expenses ................................................................             3,201,952              1,529,664
   Other current assets ............................................................             3,645,179                765,760
                                                                                              ------------           ------------
       Total current assets ........................................................            22,662,770             15,714,928
Property and equipment, net ........................................................            13,807,594             11,899,475
Intangible assets, net .............................................................            27,252,774              5,330,923
Other assets .......................................................................               342,123                 87,964
                                                                                              ------------           ------------
       Total assets ................................................................          $ 64,065,261           $ 33,033,290
                                                                                              ============           ============
                                        LIABILITIES
                                        -----------
Current liabilities:
   Accounts payable and accrued expenses ...........................................          $  7,258,029           $  5,181,684
   Current portion of capital lease obligations ....................................             2,230,281              1,998,443
   Current portion of long-term debt ...............................................             2,942,775             10,018,332
   Income taxes payable ............................................................             1,050,412                551,235
   Loans and notes payable to stockholders .........................................               168,906                154,591
                                                                                              ------------           ------------
       Total current liabilities ...................................................            13,650,403             17,904,285
Capital lease obligations, net of current portion ..................................             3,275,900              2,875,577
Long-term debt, net of current portion .............................................            32,393,333              2,127,796
Deferred income taxes ..............................................................               543,970                445,000
Loans and notes payable to stockholders, net of current portion ....................               207,495                207,496
                                                                                              ------------           ------------
       Total liabilities ...........................................................            50,071,101             23,560,154
                                                                                              ------------           ------------

                               STOCKHOLDERS' EQUITY
                               --------------------

Preferred stock -- authorized 5,000,000 shares,
   $.01 par value each; none issued or outstanding .................................                   --                      --
Common stock -- authorized 10,000,000 shares,
   $.01 par value each; 3,902,634 and 3,243,243 shares
   issued and outstanding at May 31, 1998 and
   August 31, 1997, respectively ...................................................                39,206                 32,432
Additional paid-in capital .........................................................             9,814,625              6,291,613
Retained earnings ..................................................................             4,404,005              3,237,984
Cumulative foreign translation adjustment ..........................................              (263,676)               (88,893)
                                                                                              ------------           ------------
       Total stockholders' equity ..................................................            13,994,160              9,473,136
                                                                                              ------------           ------------
       Total liabilities and stockholders' equity ..................................          $ 64,065,261           $ 33,033,290
                                                                                              ============           ============

                        The Notes to Consolidated Financial Statements are made a part hereof.
</TABLE>
                                                               -2-
<PAGE>
<TABLE>
<CAPTION>


                                                 UNIDIGITAL INC. AND SUBSIDIARIES
                                                 --------------------------------
                                                  CONSOLIDATED INCOME STATEMENTS
                                                  ------------------------------
                                                            (unaudited)
                                                            -----------

                                                                         Three Months Ended,               Nine Months Ended,
                                                                         -------------------               ------------------
                                                                      May 31,          May 31,           May 31,          May 31,
                                                                        1998            1997              1998             1997
                                                                        ----            ----              ----             ----

<S>                                                                 <C>             <C>              <C>             <C>         
Revenues
   Net sales ...................................................    $ 13,994,679    $  7,664,033     $ 32,845,094    $ 18,157,668
                                                                    ------------    ------------     ------------    ------------
Expenses
   Cost of sales ...............................................       7,692,922       4,239,289       17,597,651       9,624,915
   Selling, general and
     administrative  expenses ..................................       4,203,955       2,273,727       10,943,509       6,018,091
                                                                    ------------    ------------     ------------    ------------
   Total operating expenses ....................................      11,896,877       6,513,016       28,541,160      15,643,006
                                                                    ------------    ------------     ------------    ------------
   Income from operations ......................................       2,097,802       1,151,017        4,303,934       2,514,662
   Interest expense ............................................         793,208         396,921        1,341,359         695,660
   Interest expense - deferred financing costs .................         219,583              --          695,721              --
   Interest and other expenses (income) ........................          40,670         (67,175)         126,604         (60,792)
   Expenses incurred due to restructuring ......................         246,930              --          246,930              --
                                                                    ------------    ------------     ------------    ------------
   Income before income taxes ..................................         797,411         821,271        1,893,320       1,879,794
   Provision for income taxes ..................................         329,815         281,162          727,299         634,378
                                                                    ------------    ------------     ------------    ------------
Net income .....................................................    $    467,596    $    540,109     $  1,166,021    $  1,245,416
                                                                    ============    ============     ============    ============

Net income per share available to common stockholders:
   Basic .......................................................    $       0.13    $       0.17     $       0.34    $       0.39
                                                                    ============    ============     ============    ============
   Diluted .....................................................    $       0.12    $       0.17     $       0.32    $       0.39
                                                                    ============    ============     ============    ============

Shares used to compute net income per share:
   Basic .......................................................       3,724,459       3,228,083        3,403,721       3,203,121
                                                                    ============    ============     ============    ============
   Diluted .....................................................       4,036,427       3,253,163        3,640,752       3,217,789
                                                                    ============    ============     ============    ============

                        The Notes to Consolidated Financial Statements are made a part hereof.
</TABLE>



                                                               -3-
<PAGE>

<TABLE>
<CAPTION>

                                                 UNIDIGITAL INC. AND SUBSIDIARIES
                                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                            (unaudited)

                                                                                                        Nine Months Ended,
                                                                                                   --------------------------
                                                                                                   May 31,            May 31,
                                                                                                     1998                1997
                                                                                                     ----                ----
Operating Activities
<S>                                                                                              <C>                 <C>         
Net income ...............................................................................       $  1,166,021        $  1,245,416
Adjustments to reconcile  net income to net cash provided by (used in) operating
     activities:
       Depreciation and amortization .....................................................          2,684,088           1,346,217
       Provision for deferred income taxes ...............................................             91,069             (73,530)
       Provision for bad debts ...........................................................             31,600              77,182
Net changes in assets and liabilities net of effects of businesses acquired:
       Accounts receivable ...............................................................         (3,272,035)         (1,376,573)
       Prepaid expenses and other current assets .........................................         (3,493,771)         (1,841,527)
       Other assets ......................................................................            (91,550)             (6,184)
       Accounts payable and accrued expenses .............................................            449,256           2,004,481
       Income taxes payable ..............................................................            476,976             181,743
                                                                                                 ------------        ------------
Net cash (used in) provided by operating activities ......................................         (1,958,346)          1,557,225
                                                                                                 ------------        ------------
Investing activities
Additions to property and equipment ......................................................           (836,694)           (959,996)
Business acquisitions ....................................................................        (21,245,349)         (5,320,902)
                                                                                                 ------------        ------------
Net cash used in investing activities ....................................................        (22,082,043)         (6,280,898)
                                                                                                 ------------        ------------
Financing activities
Net proceeds from bank borrowings ........................................................         22,386,042           5,721,404
Payments of capital lease obligations ....................................................         (1,421,939)         (1,493,261)
Payments of notes for cancellation of options
   and acquisition of business ...........................................................                 --            (177,893)
IPO issuance costs .......................................................................                 --              (4,214)
Stockholder loans ........................................................................                 --                 687
Common stock issued ......................................................................             20,134                 460
                                                                                                 ------------        ------------
Net cash provided by financing activities ................................................         20,984,237           4,047,183
                                                                                                 ------------        ------------
Effect of foreign exchange rates on cash .................................................             15,484               6,152
                                                                                                 ------------        ------------
Net decrease in cash and cash equivalents ................................................         (3,040,668)           (670,338)
Cash and cash equivalents at beginning of period .........................................          3,202,766           4,145,514
                                                                                                 ------------        ------------
Cash and cash equivalents at end of period ...............................................       $    162,098        $  3,475,176
                                                                                                 ============        ============
Supplemental disclosures
Interest paid ............................................................................       $    406,943        $    685,467
                                                                                                 ============        ============
Income taxes paid ........................................................................       $    159,443        $    706,879
                                                                                                 ============        ============
Noncash transactions:
Equipment acquired under capital lease obligations .......................................       $  1,310,243        $  2,025,673
                                                                                                 ============        ============

                        The Notes to Consolidated Financial Statements are made a part hereof.

</TABLE>

                                                               -4-
<PAGE>



                        UNIDIGITAL INC. AND SUBSIDIARIES
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (unaudited)
                                   -----------

Note A - Basis of Presentation:
-------------------------------

         The information presented for May 31, 1998, and for the three-month and
the nine-month  periods ended May 31, 1998 and May 31, 1997, is unaudited,  but,
in  the  opinion  of  the  management  of  Unidigital   Inc.,  its  wholly-owned
subsidiaries  and  its  and  their   subsidiaries,   affiliated   companies  and
predecessors   (collectively,   the  "Company"),   the  accompanying   unaudited
consolidated  financial  statements contain all adjustments  (consisting only of
normal recurring  accruals) which the Company  considers  necessary for the fair
presentation of the Company's financial position as of May 31, 1998, the results
of their operations for the three-month and the nine-month periods ended May 31,
1998 and May 31, 1997 and their cash flows for the nine-month  periods ended May
31, 1998 and May 31, 1997.

         The  consolidated   financial  statements  included  herein  have  been
prepared  by the  Company  in  accordance  with  generally  accepted  accounting
principles for interim financial information and the instructions to Form 10-QSB
and Item 310 of Regulation S-B.  Accordingly,  certain  information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles have been condensed or omitted.
These consolidated  financial  statements should be read in conjunction with the
Company's audited financial statements for the year ended August 31, 1997, which
were included as part of the Company's Annual Report on Form 10-KSB.

         The  consolidated   financial   statements   include  the  accounts  of
Unidigital  Inc.  and its  direct and  indirect  subsidiaries.  All  significant
intercompany balances have been eliminated.

         Interim results are not  necessarily  indicative of results that may be
expected for the full fiscal year.


Note B - Summary of Significant Accounting Policies:
----------------------------------------------------

         Organization and Business:

         Unidigital Inc., a Delaware corporation,  is the parent holding company
of five wholly-owned  operating  subsidiaries,  Unidigital  Elements (NY), Inc.,
formerly known as  LinoGraphics  Corporation  ("Elements  (NY)"),  Elements (UK)
Limited ("Elements  (UK)"),  Unidigital  Elements (SF), Inc.,  formerly known as
LinoGraphics  (Delaware)  Corporation  ("Elements  (SF)"),  Unison  (NY),  Inc.,
formerly known as  Unidigital/Cardinal  Corporation  ("Unison  (NY)") and Unison
(MA),  Inc.,  formerly known as  Unidigital/Boris  Corporation  ("Unison (MA)").
Elements (NY) engages in the on-demand  print and digital  prepress  business in
New York City. Elements (UK) engages in the on-demand print and digital prepress
business  in  London.  In  addition,  Elements  (UK)  through  its  wholly-owned
subsidiary, Regent Group Limited, operates a financial digital print business in
London.  Elements  (SF) owns and operates the San Francisco  on-demand  prepress
business and retouching studio.  Unison (NY) engages in the digital prepress and
digital printing business,  and provides general printing,  color separation and
large format printing  


                                      -5-
<PAGE>

                        UNIDIGITAL INC. AND SUBSIDIARIES
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (unaudited)
                                   -----------

services to advertising agencies and corporations primarily in the New York City
area.  Unison (MA) engages in the business of digital  imaging and  photographic
processing in the Boston area.


         Foreign Currency Translation:

         The  portion of the  Company's  financial  statements  relating  to the
Company's  United Kingdom  operations are translated  into United States Dollars
using  period-end  exchange  rates  ((pound)1.00  = $1.62 at August 31, 1997 and
$1.67 at May 31, 1998,  respectively,  for balance  sheet  accounts) and average
exchange  rates  ((pound)1.00  = $1.64 for the year ended August 31,  1997;  and
$1.68 and $1.64 for the three month periods ended May 31, 1998 and May 31, 1997,
respectively;  and $1.68 and $1.64 for the nine month periods ended May 31, 1998
and May 31, 1997, respectively,  for income statement accounts). The translation
difference is reflected as a separate component of stockholders' equity.


         Earnings Per Share:

         In February  1997,  the  Financial  Accounting  Standards  Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share," which
is required to be adopted for years ending after December 15, 1997. Accordingly,
the Company has adopted the provisions of the new statement.

         The following  table sets forth the  computation  of basic and dilutive
earnings per share:

<TABLE>
<CAPTION>
                                                               Three Months Ended,                  Nine Months Ended,
                                                         ------------------------------     -------------------------------
                                                                     May 31,                             May 31,
                                                              1998             1997               1998             1997
                                                              ----             ----               ----             ----

<S>                                                      <C>             <C>                <C>               <C>
Numerator  for  basic  and  diluted  earnings  per
     share-net   income   available   for   common
     stockholders...............................         $     467,596   $     540,109      $   1,166,021     $   1,245,416
                                                          ============    ============       ============      ============
Denominator:
   Denominator for basic earnings per share-
     weighted average shares....................             3,724,459       3,228,083          3,403,721         3,203,121
   Effect of dilutive securities:
     Stock options..............................               109,555          17,128             64,896            11,978
     Warrants...................................               202,413           7,953            172,135             2,690
                                                           -----------     -----------        -----------       -----------
   Denominator    for   diluted    earnings    per
     share-adjusted  weighted-average  shares  and
     assumed conversions........................             4,036,427       3,253,163          3,640,752         3,217,789
                                                           ===========     ===========        ===========       ===========

</TABLE>


                                      -6-
<PAGE>

                        UNIDIGITAL INC. AND SUBSIDIARIES
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (unaudited)
                                   -----------

         The following securities have been excluded from the dilutive per share
computation as they are antidilutive:

                              Three Months Ended,           Nine Months Ended,
                            ----------------------------------------------------
                                    May 31,                        May 31,
                            1998               1997         1998          1997
                            ----------------------------------------------------
Stock options..............11,000            153,500        11,000       153,500
Warrants...................25,000             92,000       117,000        92,000


Note C - Stockholders' Equity:
------------------------------


         Common Stock:

         As at June 30, 1998,  3,902,634 shares of common stock, $0.01 par value
(the "Common Stock"), were issued and outstanding.


         Preferred Stock:

         As at June 30, 1998,  there were no shares of  preferred  stock,  $0.01
par value, issued or approved for issuance.


Note D - Stock Option Plans:
----------------------------

         Pursuant to the 1997 Equity  Incentive  Plan,  as amended (the "Plan"),
the Company  granted  options to purchase an aggregate of 222,599  shares of its
Common Stock during the nine months ended May 31, 1998. All options were granted
at their fair market value.

         Subsequent  to the end of the quarter,  on July 13,  1998,  the Company
granted  options to purchase  40,000  shares of its Common  Stock to Nicholas P.
Gill in connection  with his employment as the Company's Vice  President,  Chief
Financial Officer and Secretary.  Such options were granted at their fair market
value under the Plan.




                                                               -7-
<PAGE>
                        UNIDIGITAL INC. AND SUBSIDIARIES
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (unaudited)
                                   -----------

Note E - Long Term Debt and Notes Payable:
-----------------------------------------

         At May 31, 1998, the Company's debt consisted of the following:

<TABLE>
<CAPTION>
                                                                      Facility              Amount Outstanding
                                                                       Amount       ------------------------------------
                                                                     August 31,         May 31,          August 31,
                                                                        1997              1998              1997
                                                                   ---------------- ----------------- ------------------
<S>                                                                  <C>             <C>                <C>
Credit facilities  in the United Kingdom;  interest at the bank's
   overdraft rate plus 3%; facility amount is approximately
   (pound)1,145,000 ($1,969,400)                                     $  1,969,400    $       --         $  1,784,150
Credit  facilities in the United Kingdom;  interest at the bank's
   overdraft  rate  plus 2%;  facility  amount  is  approximately
   (pound)2,300,000 ($3,841,000)                                            --         2,557,358               --
Revolving  line of credit;  matures  April 30, 2000,  interest at
   Alternate  Base Rate or Adjusted LIBO Rate,  as defined,  plus
   1/4% in the United States and 2.25% in the United Kingdom            4,500,000            --            1,725,000
Lines of credit;  interest  at  Alternate  Base Rate or  Adjusted
   LIBO Rate,  as  defined,  plus 1/4% in the  United  States and
   2.25% in the United Kingdom                                          5,250,000            --            4,110,110
Term  loan;  matures  March  31,  2003,  payable  in sixteen (16)
   quarterly  installments  ranging  from $750,000 to $1,500,000,
   commencing June 30, 1999, together  with a balloon  payment of
   $7,000,000  at March 31, 2003,  plus interest at the Base Rate
   or  at  the  Eurodollar  Rate,  as defined, plus an Applicable
   Margin,  as  defined,  ranging  from  0.75% to 3.0%;  facility
   amount is $25,000,000                                                     --        25,000,000              --
Revolving line of credit; matures March 24, 2003, interest at the
   Base  Rate  or  at  the  Eurodollar Rate, as defined,  plus an
   Applicable   Margin,  as  defined, ranging from 0.75% to 3.0%;
   facility amount is $10,000,000                                            --         6,935,000              --
Acquisition  line of credit;  matures March 31, 2003,  payable in
   eleven (11) quarterly installments of 5.0% of the  outstanding
   balance at March 24, 2000 commencing June 30, 2000 and one (1)
   installment  of 45.0% of the outstanding  balance at March 24,
   2000,  plus  interest  at  the  Base Rate or at the Eurodollar
   Rate,  as  defined, plus  an  Applicable  Margin,  as defined,
   ranging from 0.75% to 3.0%; facility amount is $5,000,000                 --              --                --
SBA loan;  matures December 1, 2014,  monthly payments of $3,665,
   interest at prime rate plus 2.74%                                      350,000            --              334,368
Installment  note due seller of Elements  (SF);  payable in eight
   (8) quarterly installments of $11,600 including interest at 6%          85,000          21,250             42,500
Loans  from  private  investors,  beginning  May  1997,  maturing
   between  May  2002 and  August 2002; interest at 10% for first
   six months, 11% for second six months and 12% thereafter             4,000,000            --            4,000,000
Installment  note due seller of Unison (MA);  matures January 15,
   1999,  payable  in  two  (2)  annual  installments  of $75,000
   including interest at 8.0%                                             150,000         114,167            150,000
Installment note due Kwik International;  matures April 15, 2001,
   payable in thirty-five (35) monthly installments of $20,833.33
   and one  (1)  installment  of $20,833.45 including interest at
   5.7%                                                                      --           708,333               --
                                                                                      ----------------------------------
                                                                                       35,336,108         12,146,128
Less current portion                                                                    2,942,775         10,018,332
                                                                                      ----------------------------------
                                                                                     $ 32,393,333       $  2,127,796
                                                                                      ==================================
</TABLE>


                                                               -8-
<PAGE>

                        UNIDIGITAL INC. AND SUBSIDIARIES
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (unaudited)
                                   -----------


         The Company has borrowing  arrangements  with commercial  banks in both
New York and London.  On March 24, 1998,  the Company  terminated  its financing
facilities with its former New York bank and entered into borrowing arrangements
with its  current  New  York  bank  (the  "Bank")  in the  aggregate  amount  of
$40,000,000,  which consist of a: (i) $25,000,000  term loan;  (ii)  $10,000,000
revolving  line of  credit  facility  which is  available  for  working  capital
purposes;  and (iii) $5,000,000 credit facility which is available for corporate
acquisition  purposes.  Such  borrowings are guaranteed by the Company's  United
States  subsidiaries.  In  addition,  the  Company  pledged  all of  its  equity
interests  in its  United  States  subsidiaries  and  two-thirds  of its  equity
interests in its wholly-owned  United Kingdom  subsidiary as collateral for such
credit  facilities.  Interest under such credit  facilities is, at the Company's
option,  at the  Base  Rate  or at the  Eurodollar  Rate,  as  defined,  plus an
Applicable  Margin,  as defined,  ranging  from 0.75% to 3.0%  depending  on the
Company's  consolidated  debt to earnings  ratio and the type of loan. As of May
31, 1998, the Company had an outstanding  balance of $25,000,000  under the term
loan and  $6,935,000  under the  revolving  credit  facility.  A portion  of the
proceeds  of such loans was used to repay in full  promissory  notes  previously
issued by the  Company in 1997 to certain  private  investors  in the  aggregate
principal amount of $4,000,000.

         The credit  facilities  contain  covenants which require the Company to
maintain certain earnings and debt to earnings ratio  requirements  based on the
combined  operations of the Company and its subsidiaries.  The credit facilities
are secured by a first priority lien on all of the assets of the Company and its
subsidiaries,  a mortgage on the Company's  facilities  located at 545 West 45th
Street, New York, New York and a leasehold mortgage on the Company's  facilities
acquired as part of the Kwik  Acquisition (as defined below) located at 229 West
28th Street,  New York,  New York.  The Company,  the Bank and Richard J. Sirota
("Sirota"),  the sole  shareholder of Kwik (as defined  below),  entered into an
intercreditor  subordination  agreement  with respect to the Bank's and Sirota's
relative interests in the Company.

         The Company's  agreement with the Bank restricts the Company's  ability
to pay certain dividends without the Bank's prior written consent.

         The  Company's  credit  facility  with its  London  bank  provides  for
combined  lines of credit of  (pound)2,300,000  (approximately  $3,841,000)  for
working  capital for its United  Kingdom  operations.  Such credit  facility was
increased  from  (pound)1,400,000  (approximately  $2,338,000)  on May 13, 1998.
These lines of credit renew  annually and bear  interest at 2.0% over the Bank's
Base Rate,  as defined.  In  addition,  the Company is required to pay a service
charge equal to 0.2% of invoice value.  These lines of credit contain  covenants
which require the Company's  United Kingdom  subsidiaries  to maintain a minimum
net  worth of  (pound)500,000,  limit  borrowings  up to  specified  amounts  of
accounts  receivable aged 120 days or less and are guaranteed by the Company for
the  principal  amount  of  up  to  (pound)500,000.   Amounts   outstanding  are
collateralized  by substantially  all of the Company's United Kingdom assets. As
of May 31, 1998, the Company had an outstanding  balance of $2,557,358 under its
United Kingdom credit facility.



                                      -9-
<PAGE>

                        UNIDIGITAL INC. AND SUBSIDIARIES
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                                   (unaudited)
                                   -----------

Note F - Acquisition:
---------------------

         On March 25, 1998, the Company,  through its  wholly-owned  subsidiary,
Unison (NY),  consummated the acquisition of substantially  all of the assets of
Kwik  International  Color,  Ltd.  ("Kwik")  located in New York City (the "Kwik
Acquisition"). Kwik provided general printing, color separation and large format
printing  services.  The Company intends to continue such line of business.  The
assets  purchased  included Kwik's entire customer list,  inventory,  equipment,
cash,  accounts  receivable  and trade name.  The purchase  price  included cash
payments of $20,590,349,  issuance of a 5.7% subordinated promissory note in the
principal  amount of  $750,000  (payable in 36 monthly  installments  commencing
April 15, 1998),  issuance of 649,841  shares of restricted  Common Stock of the
Company and the assumption of certain trade obligations of Kwik. Of the purchase
price,  $1,000,000  in cash and  $1,000,000  of  restricted  Common Stock of the
Company  (190,589  shares)  is being held in escrow for a period of two years to
satisfy any indemnification claims.

         The Company funded the cash portion of the purchase price from proceeds
of a  $25,000,000  term loan and a  $10,000,000  revolving  credit loan from the
Bank. See "Note E - Bank Credit Facilities."

         The following supplemental pro forma information is presented as if the
Company had  completed  the Kwik  Acquisition  as of September 1, 1997 and 1996,
respectively:

                            Nine Months Ended May 31,
                            -------------------------
                                            ------------------------------------
                                                    1998                  1997
                                            ------------------------------------
Net sales..........................          41,675,406              36,257,283
Income from operations.............           4,883,428               3,216,370
Net income.........................             761,383               1,778,271
Net income per share - basic.......                0.20                    0.46
Net income per share - diluted.....                0.18                    0.46




                                      -10-
<PAGE>



Item 2.           Management's Discussion and Analysis or Plan of Operation.
-------           ----------------------------------------------------------

General
-------

         The  Company  provides  a full range of  digital  prepress,  four color
digital  offset  printing,  wide  format and  financial  printing  products  and
services to the New York City, San Francisco,  London and Boston markets.  Using
advanced computer technology,  the Company provides the imaging and reproduction
services  required by graphic artists and marketing  professionals in connection
with the creation of printed and photographic  materials for their clients.  The
Company's  clients  include  advertising  agencies,  publishers,   corporations,
government  agencies,  retailers,  marketing  communications firms and financial
institutions.  The Company's services are designed to afford graphic artists and
marketing professionals the ability to make numerous changes and enhancements in
the design and content of printed  materials  throughout the design and approval
process,  with  shorter  turnaround  times and at reduced  costs as  compared to
traditional industry methods.

         The statements  contained in this Quarterly  Report on Form 10-QSB that
are not historical facts are forward-looking statements (as such term is defined
in the Private Securities  Litigation Reform Act of 1995) that involve risks and
uncertainties. Such forward-looking statements may be identified by, among other
things,  the use of forward-looking  terminology such as "believes,"  "expects,"
"may,"  "will,"  "should"  or  "anticipates"  or the  negative  thereof or other
variations thereon or comparable terminology, or by discussions of strategy that
involve  risks  and  uncertainties.  From  time  to  time,  the  Company  or its
representatives have made or may make forward-looking  statements,  orally or in
writing. Such forward-looking statements may be included in various filings made
by the Company with the Securities and Exchange Commission, or press releases or
oral statements made by or with the approval of an authorized  executive officer
of the Company. These forward-looking  statements,  such as statements regarding
anticipated  future  revenues,   capital  expenditures,   and  other  statements
regarding  matters  that are not  historical  facts,  involve  predictions.  The
Company's actual results,  performance or achievements  could differ  materially
from the results expressed in, or implied by, these forward-looking  statements.
Potential  risks and  uncertainties  that  could  affect  the  Company's  future
operating  results  include,  but are not limited to: (i)  economic  conditions,
including economic  conditions  related to the digital print industry;  (ii) the
availability  of  equipment  from the  Company's  vendors at current  prices and
levels;  (iii) the intense competition in the markets for the Company's products
and services;  (iv) the Company's  ability to integrate  acquired  companies and
businesses in a cost-effective  manner; (v) the Company's ability to effectively
implement  its branding  strategy;  and (vi) the  Company's  ability to develop,
market,  provide,  and achieve market acceptance of new service offerings to new
and existing clients.

Results of Operations
---------------------

         The  consolidated  financial  information  includes  both the Company's
United States  operations and its United Kingdom  operations.  On April 4, 1997,
the Company  consummated the acquisition of Boris Image Group,  Inc. (the "Boris
Acquisition")  and, on May 22, 1997, the Company  consummated the acquisition of
Libra City Corporate Printing Limited (the "Libra 


                                      -11-
<PAGE>

Acquisition").  In addition, on March 25, 1998, the Company consummated the Kwik
Acquisition.

         Three Months Ended May 31, 1998 and May 31, 1997
         ------------------------------------------------

         Net Sales.  Net sales for the three  months  ended May 31, 1998 ("Third
Quarter of Fiscal 1998")  increased by 83%, or $6,330,646,  to $13,994,679  from
$7,664,033  for the three months  ended May 31, 1997  ("Third  Quarter of Fiscal
1997").  Net sales for the Company's United States operations  increased by 98%,
or $4,767,168, from $4,844,565 in the Third Quarter of Fiscal 1997 to $9,611,733
in the Third Quarter of Fiscal 1998. This increase was attributable primarily to
an  increase  in net sales  resulting  from the Kwik  Acquisition,  a full three
months  of net  sales  resulting  from the Boris  Acquisition  and,  to a lesser
extent,  an  increase  in net sales in each of the  Company's  two other  United
States  subsidiaries.  Net sales for the  Company's  United  Kingdom  operations
increased by 55%, or $1,563,478,  from $2,819,468 in the Third Quarter of Fiscal
1997 to  $4,382,946  in the Third  Quarter of Fiscal  1998.  This  increase  was
attributable  primarily to a full three months of net sales  resulting  from the
Libra Acquisition and, to a lesser extent,  increases in the Company's  prepress
operations.

         Cost of  Sales.  Cost of sales  for the Third  Quarter  of Fiscal  1998
increased by 81%, or  $3,453,633,  to $7,692,922  from  $4,239,289 for the Third
Quarter of Fiscal 1997.  As a percentage  of net sales,  cost of sales  remained
constant at 55% for the Third  Quarter of Fiscal  1997 and the Third  Quarter of
Fiscal 1998. Cost of sales for the Company's United States operations  decreased
as a  percentage  of net sales from 55% for the Third  Quarter of Fiscal 1997 to
51% for the Third  Quarter  of  Fiscal  1998.  Such  decrease  was  attributable
primarily to the change in product mix in the Company's United States operations
to include more digital prepress  services as a result of the Kwik  Acquisition.
Cost of  sales  for the  Company's  United  Kingdom  operations  increased  as a
percentage of net sales from 56% for the Third Quarter of Fiscal 1997 to 63% for
the Third Quarter of Fiscal 1998.  Such increase was  attributable  primarily to
the change in product mix in the Company's United Kingdom  operations to include
more digital print and  financial  print  services.  Digital print and financial
print services have higher costs compared to digital prepress services.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative   expenses  ("SG&A")  increased  by  85%,  or  $1,930,228,   from
$2,273,727  for the Third  Quarter of Fiscal  1997 to  $4,203,955  for the Third
Quarter  of  Fiscal  1998.  Such  increase  was  attributable  primarily  to the
increased  level of operations  which resulted from the Kwik  Acquisition  and a
full  three  months  of  operations  which  resulted  from  each  of  the  Boris
Acquisition  and the Libra  Acquisition.  As a  percentage  of net  sales,  SG&A
remained  constant  at 30% for the Third  Quarter  of Fiscal  1997 and the Third
Quarter of Fiscal 1998.

         Income from Operations. Income from operations for the Third Quarter of
Fiscal 1998 increased by 82%, or $946,785, to $2,097,802 from $1,151,017 for the
Third Quarter of Fiscal 1997. Of this amount,  $1,549,418 was contributed by the
Company's United States  operations and $548,384 by the Company's United Kingdom
operations.  This increase  resulted from higher net sales in both the Company's
United States and United Kingdom operations.


                                      -12-
<PAGE>

         Net Interest  Expense.  Net interest  expense for the Third  Quarter of
Fiscal 1998 increased by 219%, or $723,715,  to $1,053,461 from $329,746 for the
Third Quarter of Fiscal 1997. This increase  resulted from increased  borrowings
under the Company's credit  facilities and capital leases assumed by the Company
as  part  of  the  Kwik  Acquisition,   the  Boris  Acquisition  and  the  Libra
Acquisition.  In addition,  the Company  incurred  deferred  financing  costs of
$219,583,   and  of  such  deferred  financing  costs,  $138,000  are  non-cash,
non-recurring expenses.

         Restructuring Expenses.  In connection  with  the Kwik Acquisition, the
Company  has  consolidated  its  New  York  operations.  As  a  result  of  such
consolidation, the Company incurred restructing expenses of $246,930.

         Income  Taxes.  Income   taxes  for  the Third  Quarter of Fiscal  1998
increased by 17%, or $48,653, to $329,815 from $281,162 for the Third Quarter of
Fiscal 1997.

         Net Income.  As a result of the factors described above, net income for
the Third  Quarter of Fiscal 1998  decreased by 13%, or $72,513,  to $467,596 as
compared to a net income of $540,109 for the Third Quarter of Fiscal 1997.

         Nine Months Ended May 31, 1998 and May 31, 1997
         -----------------------------------------------

         Net Sales.  Net sales for the nine months ended May 31, 1998  increased
by 81%, or  $14,687,426,  to $32,845,094  from  $18,157,668  for the nine months
ended May 31,  1997.  Net  sales  for the  Company's  United  States  operations
increased by 78%, or $8,621,664,  from  $11,089,871 in the nine months ended May
31, 1997 to $19,711,535 in the nine months ended May 31, 1998. This increase was
attributable  primarily  to an  increase in net sales  resulting  from the Boris
Acquisition,  the Kwik Acquisition  and, to a lesser extent,  an increase in net
sales in each of the Company's two other United States  subsidiaries.  Net sales
for the Company's  United  Kingdom  operations  increased by 86%, or $6,065,762,
from $7,067,797 in the nine months ended May 31, 1997 to $13,133,559 in the nine
months  ended May 31, 1998.  This  increase  was  attributable  primarily to the
inclusion  of net sales  from the Libra  Acquisition  and,  to a lesser  extent,
increases in the Company's prepress operations.

         Cost of Sales.  Cost of sales for the nine  months  ended May 31,  1998
increased by 83%, or  $7,972,736,  to 17,597,651  from  $9,624,915  for the nine
months ended May 31, 1997. As a percentage of net sales, cost of sales increased
slightly  from 53% for the nine  months  ended May 31,  1997 to 54% for the nine
months  ended  May 31,  1998.  Cost of sales  for the  Company's  United  States
operations  decreased as a percentage  of net sales from 51% for the nine months
ended May 31, 1997 to 49% for the nine months ended May 31, 1998.  Such decrease
was attributable  primarily to the change in product mix in the Company's United
States  operations to include more digital prepress  services as a result of the
Kwik Acquisition and, to a lesser extent, to the Company's  renegotiation of its
vendor contracts resulting in reduced supply costs to the 


                                      -13-
<PAGE>

Company.  Cost of sales for the Company's United Kingdom operations increased as
a percentage of net sales from 57% for the nine months ended May 31, 1997 to 61%
for the nine months ended May 31, 1998. Such increase was attributable primarily
to the change in product  mix in the  Company's  United  Kingdom  operations  to
include more digital  print and  financial  print  services.  Digital  print and
financial  print  services  have  higher  costs  compared  to  digital  prepress
services.

         Selling, General and Administrative Expenses. SG&A increased by 82%, or
$4,925,418,  from  $6,018,091  for  the  nine  months  ended  May  31,  1997  to
$10,943,509  for  the  nine  months  ended  May  31,  1998.  Such  increase  was
attributable  primarily to the increased level of operations which resulted from
the Kwik Acquisition, the Boris Acquisition and the Libra Acquisition, and, to a
lesser extent, the hiring of additional management and administrative  personnel
and costs  associated  with the Company's  acquisitions.  As a percentage of net
sales,  SG&A remained constant at 33% for the nine months ended May 31, 1997 and
for the nine months ended May 31, 1998.

         Income  from  Operations.  Income from  operations  for the nine months
ended  May 31,  1998  increased  by  71%,  or  $1,789,272,  to  $4,303,934  from
$2,514,662  for the nine months ended May 31, 1997.  Of this amount,  $2,554,649
was contributed by the Company's United States  operations and $1,749,285 by the
Company's  United  Kingdom  operations.  This increase  resulted from higher net
sales  and  reduced  supply  costs  offset in part by  higher  production  costs
associated with the changing product mix of the Company's  operations to include
more digital print and financial print services.

         Net Interest  Expense.  Net interest  expense for the nine months ended
May 31, 1998 increased by 241%, or $1,528,816,  to $2,163,684  from $634,868 for
the nine months  ended May 31,  1997.  This  increase  resulted  from  increased
borrowings under the Company's  credit  facilities and capital leases assumed by
the Company as part of the Kwik Acquisition, the Boris Acquisition and the Libra
Acquisition.  In addition,  the Company  incurred  deferred  financing  costs of
$695,721  and  of  such  deferred   financing  costs,   $414,000  are  non-cash,
non-recurring expenses.

         Restructuring Expenses.  In connection  with  the Kwik Acquisition, the
Company  has  consolidated  its  New  York  operations.  As  a  result  of  such
consolidation, the Company incurred restructing expenses of $246,930.

         Income  Taxes.  Income  taxes  for the nine months  ended May 31,  1998
increased  by 15%, or $92,921,  to $727,299  from  $634,378  for the nine months
ended May 31, 1997.

         Net Income.  As a result of the factors described above, net income for
the nine months ended May 31, 1998 decreased by 6%, or $79,395, to $1,166,021 as
compared to a net income of $1,245,416 for the nine months ended May 31, 1997.



                                      -14-
<PAGE>

Liquidity, Capital Resources and Other Matters
----------------------------------------------

         Cash Flow.  Net cash used in operations  was  $1,958,346  for the first
nine months of fiscal 1998.  Net cash provided by operations  was $1,557,225 for
the first nine months of fiscal 1997. Net cash used in investing  activities for
the acquisition of property and equipment was $836,694 for the first nine months
of fiscal 1998 and $959,996  for the first nine months of fiscal  1997.  For the
first nine months of fiscal 1998 and fiscal 1997, the Company acquired equipment
under  capital  leases of  $1,310,243  and  $2,025,673,  respectively,  and made
payments under capital leases of $1,421,939 and  $1,493,261,  respectively.  Net
bank borrowings  provided funds of $22,386,042 and $5,721,404 for the first nine
months of fiscal 1998 and fiscal 1997, respectively.

         Bank Credit  Facilities.  The Company has borrowing  arrangements  with
commercial  banks in both New York and London.  On March 24,  1998,  the Company
terminated  its financing  facilities  with its former New York bank and entered
into  borrowing   arrangements   with  the  Bank  in  the  aggregate  amount  of
$40,000,000,  which consist of a: (i) $25,000,000  term loan;  (ii)  $10,000,000
revolving  line of  credit  facility  which is  available  for  working  capital
purposes;  and (iii) $5,000,000 credit facility which is available for corporate
acquisition  purposes.  Such  borrowings are guaranteed by the Company's  United
States  subsidiaries.  In  addition,  the  Company  pledged  all of  its  equity
interests  in its  United  States  subsidiaries  and  two-thirds  of its  equity
interests in its wholly-owned  United Kingdom  subsidiary as collateral for such
credit  facilities.  Interest under such credit  facilities is, at the Company's
option,  at the  Base  Rate  or at the  Eurodollar  Rate,  as  defined,  plus an
Applicable  Margin,  as defined,  ranging  from 0.75% to 3.0%  depending  on the
Company's  consolidated  debt to earnings  ratio and the type of loan. As of May
31, 1998, the Company had an outstanding  balance of $25,000,000  under the term
loan and  $6,935,000  under the  revolving  credit  facility.  A portion  of the
proceeds  of such loans was used to repay in full  promissory  notes  previously
issued by the  Company in 1997 to certain  private  investors  in the  aggregate
principal amount of $4,000,000.

         The credit  facilities  contain  covenants which require the Company to
maintain certain earnings and debt to earnings ratio  requirements  based on the
combined  operations of the Company and its subsidiaries.  The credit facilities
are secured by a first priority lien on all of the assets of the Company and its
subsidiaries,  a mortgage on the Company's  facilities  located at 545 West 45th
Street, New York, New York and a leasehold mortgage on the Company's  facilities
acquired as part of the Kwik  Acquisition  located at 229 West 28th Street,  New
York, New York. The Company,  the Bank and Sirota entered into an  intercreditor
subordination  agreement  with  respect  to the  Bank's  and  Sirota's  relative
interests in the Company.

         The Company's  agreement with the Bank restricts the Company's  ability
to pay certain dividends without the Bank's prior written consent.

         The  Company's  credit  facility  with its  London  bank  provides  for
combined  lines of credit of  (pound)2,300,000  (approximately  $3,841,000)  for
working  capital for its United  Kingdom  operations.  Such credit  facility was
increased  from  (pound)1,400,000  (approximately  $2,338,000)  on May 13, 1998.
These lines of credit renew  annually and bear  interest at 2.0% over the Bank's



                                      -15-
<PAGE>

Base Rate,  as defined.  In  addition,  the Company is required to pay a service
charge equal to 0.2% of invoice value.  These lines of credit contain  covenants
which require the Company's  United Kingdom  subsidiaries  to maintain a minimum
net  worth of  (pound)500,000,  limit  borrowings  up to  specified  amounts  of
accounts  receivable  aged 120 days or less and are guaranteed by Unidigital for
the  principal  amount  of  up  to  (pound)500,000.   Amounts   outstanding  are
collateralized  by substantially  all of the Company's United Kingdom assets. As
of May 31, 1998, the Company had an outstanding  balance of $2,557,358 under its
United Kingdom credit facility.

         The Company  expects that  anticipated  cash flow from  operations  and
available  borrowings will be sufficient to fund its capital lease  obligations,
debt service payments,  potential earn-outs, capital expenditures and operations
for at  least 12  months.  The  Company  may  require  additional  financing  to
consummate future acquisitions.  There can be no assurance that the Company will
be able to secure such additional financing on terms favorable to the Company.

         Working  Capital.  The  Company's  working  capital at May 31, 1998 was
$9,012,367  compared to a working  capital  deficit of  2,189,357  at August 31,
1997.

         Acquisition.  On March 25, 1998, the Company,  through its wholly-owned
subsidiary,  Unison (NY),  consummated the Kwik Acquisition.  The purchase price
included  cash  payments  of  $20,590,349,   issuance  of  a  5.7%  subordinated
promissory  note in the  principal  amount of  $750,000  (payable  in 36 monthly
installments   commencing  April  15,  1998),  issuance  of  649,841  shares  of
restricted  Common  Stock of the Company  and the  assumption  of certain  trade
obligations of Kwik. Of the purchase price, $1,000,000 in cash and $1,000,000 of
restricted  Common Stock of the Company (190,589 shares) is being held in escrow
for a period of two years to satisfy any indemnification claims.

         The Company funded the cash portion of the purchase price from proceeds
of a  $25,000,000  term loan and a  $10,000,000  revolving  credit loan from the
Bank.

         Inflation,  Foreign  Currency  Fluctuations  and Interest Rate Changes.
Although the Company cannot  accurately  determine the precise effect thereof on
its operations, it does not believe inflation, currency fluctuations or interest
rate  changes have  historically  had a material  effect on  revenues,  sales or
results of operations.  Inflation, currency fluctuations and changes in interest
rates have,  however, at various times, had significant effects on the economies
of the United  States  and the United  Kingdom  and could  adversely  impact the
Company's revenues, sales and results of operations in the future. If there is a
material adverse change in the  relationship  between the Pound Sterling and the
United  States  Dollar,  such change would  adversely  affect the results of the
Company's  United  Kingdom  operations as reflected in the  Company's  financial
statements.  The  Company  has not  hedged  its  exposure  with  respect to this
currency  risk,  and does not expect to do so in the  future,  since it does not
believe that it is practicable for it to do so at a reasonable cost.




                                      -16-
<PAGE>


                                     PART II
                                     -------

                                OTHER INFORMATION
                                -----------------



Item 2.           Changes in Securities and Use of Proceeds.
-------           ------------------------------------------

                  On March  25,  1998,  the  Company  issued  649,841  shares of
restricted  Common Stock of the Company (with an aggregate  value of $3,409,651)
to Sirota as partial consideration for the Kwik Acquisition.

                  No underwriter  was employed by the Company in connection with
the issuance and sale of the securities  described  above.  The Company believes
that  the  issuance  and  sale of the  foregoing  securities  were  exempt  from
registration under Section 4(2) of the Securities Act of 1933, as amended,  as a
transaction not involving a public offering. No public offering was involved and
the securities were acquired for investment and not with a view to distribution.
Appropriate  legends  have  been  affixed  to the stock  certificates  issued to
Sirota. Sirota had adequate access to information about the Company.

Item 5.           Other Information
-------           -----------------

                  Subsequent  to the  end of the  quarter,  on  July  13,  1998,
Nicholas P. Gill was elected to the offices of Vice  President,  Chief Financial
Officer and Secretary of the Company.

                  Subsequent  to the end of the  quarter,  on July 1, 1998,  the
Company moved its principal executive offices to 229 West 28th Street, New York,
New York 10001.

Item 6.           Exhibits and Reports on Form 8-K.
-------           ---------------------------------

                  (a)      Exhibits.

                             4.1    Stockholders'  Agreement  dated  as of March
                                    25,  1998  by  and  among  Unidigital  Inc.,
                                    William  E.  Dye  and   Richard  J.   Sirota
                                    (included  as  an  exhibit  to  the  Current
                                    Report  on  Form  8-K of the  Company  dated
                                    April 8, 1998 and  incorporated by reference
                                    herein).

                           10.1     Asset Purchase  Agreement  dated as of March
                                    25,  1998  by  and  among  Unidigital  Inc.,
                                    Unison (NY), Inc., Kwik International Color,
                                    Ltd.  and Richard J. Sirota  (included as an
                                    exhibit to the Current Report on Form 8-K of
                                    the   Company   dated   April  8,  1998  and
                                    incorporated by reference herein).

                           10.2     Subordinated Promissory Note dated March 25,
                                    1998  of  Unidigital  Inc.  payable  to Kwik
                                    International Color, Ltd. in  the  principal
                                    amount  of  $750,000 (included as an exhibit
                                    to the Current  Report  on  Form  8-K of the
                                    Company dated April 8, 1998 and incorporated
                                    by reference herein).



                                      -17-
<PAGE>

                           10.3     Employment  Agreement  dated as of March 25,
                                    1998  by and  between  Unidigital  Inc.  and
                                    Richard J. Sirota (included as an exhibit to
                                    the  Current  Report  on  Form  8-K  of  the
                                    Company dated April 8, 1998 and incorporated
                                    by reference herein).

                           10.4     Loft  Lease  dated  March  1,  1997  between
                                    S.N.Y.,  Inc. and Kwik International  Color,
                                    Ltd. for the property located at 229 W. 28th
                                    Street,  New York,  New York,  on the fourth
                                    floor, known as Room 401-405 (included as an
                                    exhibit to the Current Report on Form 8-K of
                                    the   Company   dated   April  8,  1998  and
                                    incorporated by reference herein).

                           10.5     Loft  Lease  dated  March  1,  1997  between
                                    S.N.Y.,  Inc. and Kwik International  Color,
                                    Ltd. for the property located at 229 W. 28th
                                    Street,  New York,  New York, on the seventh
                                    floor,  known as Room  706-714  and  707-713
                                    (included  as  an  exhibit  to  the  Current
                                    Report  on  Form  8-K of the  Company  dated
                                    April 8, 1998 and  incorporated by reference
                                    herein).

                           10.6     Loft  Lease  dated  March  1,  1997  between
                                    S.N.Y.,  Inc. and Kwik International  Color,
                                    Ltd. for the property located at 229 W. 28th
                                    Street,  New York,  New York,  on the eighth
                                    floor (included as an exhibit to the Current
                                    Report  on  Form  8-K of the  Company  dated
                                    April 8, 1998 and  incorporated by reference
                                    herein).

                           10.7     Loft  Lease  dated  March  1,  1997  between
                                    S.N.Y.,  Inc. and Kwik International  Color,
                                    Ltd. for the property located at 229 W. 28th
                                    Street,  New York,  New  York,  on the ninth
                                    floor (included as an exhibit to the Current
                                    Report  on  Form  8-K of the  Company  dated
                                    April 8, 1998 and  incorporated by reference
                                    herein).

                           10.8     Credit  Agreement dated as of March 24, 1998
                                    by and among  Unidigital  Inc.,  the lenders
                                    from  time  to  time  parties   thereto  and
                                    Canadian Imperial Bank of Commerce (included
                                    as an exhibit to the Current  Report on Form
                                    8-K of the  Company  dated April 8, 1998 and
                                    incorporated by reference herein).

                           10.9     Term Note dated March 24, 1998 of Unidigital
                                    Inc.  payable to Canadian  Imperial  Bank of
                                    Commerce   in  the   principal   amount   of
                                    $25,000,000  (included  as an exhibit to the
                                    Current  Report  on Form 8-K of the  Company
                                    dated  April  8,  1998 and  incorporated  by
                                    reference herein).

                           10.10    Acquisition  Note  dated  March 24,  1998 of
                                    Unidigital Inc. payable to Canadian Imperial
                                    Bank of Commerce in the principal  amount of
                                    $5,000,000  (included  as an  exhibit to the
                                    Current  Report  on Form 8-K of the  Company
                                    dated  April  8,  1998 and  incorporated  by
                                    reference herein).



                                      -18-
<PAGE>

                           10.11    Revolving  Credit  Note dated March 24, 1998
                                    of  Unidigital  Inc.   payable  to  Canadian
                                    Imperial  Bank of Commerce in the  principal
                                    amount  of   $10,000,000   (included  as  an
                                    exhibit to the Current Report on Form 8-K of
                                    the   Company   dated   April  8,  1998  and
                                    incorporated by reference herein).

                           10.12    Stock  Pledge  Agreement  (U.S.) dated as of
                                    March 24,  1998 made by  Unidigital  Inc. in
                                    favor of Canadian  Imperial Bank of Commerce
                                    (included  as  an  exhibit  to  the  Current
                                    Report  on  Form  8-K of the  Company  dated
                                    April 8, 1998 and  incorporated by reference
                                    herein).

                           10.13    Mortgage  dated as of March 24, 1998 made by
                                    Unidigital   Inc.   in  favor  of   Canadian
                                    Imperial  Bank of Commerce  (included  as an
                                    exhibit to the Current Report on Form 8-K of
                                    the   Company   dated   April  8,  1998  and
                                    incorporated by reference herein).

                           10.14    Security  Agreement  dated as of  March  24,
                                    1998  made by  Unidigital  Inc.  in favor of
                                    Canadian Imperial Bank of Commerce (included
                                    as an exhibit to the Current  Report on Form
                                    8-K of the  Company  dated April 8, 1998 and
                                    incorporated by reference herein).

                           10.15    Subsidiaries Guarantee dated as of March 24,
                                    1998  made by each  of  Unidigital  Elements
                                    (NY), Inc.,  Unidigital Elements (SF), Inc.,
                                    Unison (NY), Inc. and Unison (MA),  Inc., in
                                    favor of Canadian  Imperial Bank of Commerce
                                    (included  as  an  exhibit  to  the  Current
                                    Report  on  Form  8-K of the  Company  dated
                                    April 8, 1998 and  incorporated by reference
                                    herein).

                           10.16    Intercreditor  and  Subordination  Agreement
                                    dated as of March 25, 1998 by and among Kwik
                                    International  Color, Ltd.,  Unidigital Inc.
                                    and  Canadian   Imperial  Bank  of  Commerce
                                    (included  as  an  exhibit  to  the  Current
                                    Report  on  Form  8-K of the  Company  dated
                                    April 8, 1998 and  incorporated by reference
                                    herein).

                           10.17    Mortgage, Assignment of Leases and Rents and
                                    Security  Agreement  dated as of  March  24,
                                    1998  between  Unidigital  Inc. and Canadian
                                    Imperial  Bank of Commerce  (included  as an
                                    exhibit to the Current Report on Form 8-K of
                                    the   Company   dated   April  8,  1998  and
                                    incorporated by reference herein).

                           27.1     Financial Data Schedule for the period ended
                                    May 31, 1998.



                                      -19-
<PAGE>

                           27.2     Financial Data Schedule for the period ended
                                    November 30, 1997.

                           27.3     Financial Data  Schedule  for the year ended
                                    August 31, 1997.

                           27.4     Financial Data Schedule for the period ended
                                    May 31, 1997.

                           27.5     Financial Data Schedule for the period ended
                                    February 28, 1997.

                           27.6     Financial Data Schedule for the period ended
                                    November 30, 1996.

                           27.7     Financial Data  Schedule  for the year ended
                                    August 31, 1996.

                  (b)      Reports on Form 8-K.

                           On April 8, 1998,  the Company filed a Current Report
                  on Form  8-K  with  the  Securities  and  Exchange  Commission
                  relating to the Kwik Acquisition. Such Form 8-K also disclosed
                  the terms of certain  loans made to the Company,  the proceeds
                  of which the Company  used to fund the  purchase  price of the
                  Kwik Acquisition.

                           Subsequent  to the  end of the  quarter,  on  June 8,
                  1998,  the  Company  filed a  Current  Report  on  Form  8-K/A
                  containing   required  financial   statements  and  pro  forma
                  information relating to the Kwik Acquisition  disclosed in its
                  Current Report on Form 8-K filed on April 8, 1998.





                                      -20-
<PAGE>



                                   SIGNATURES



         In accordance with the  requirements of the Securities  Exchange Act of
1934,  the  Issuer  caused  this  report  to be  signed  on  its  behalf  by the
undersigned, thereunto duly authorized.

                                              UNIDIGITAL INC.



DATE:  July 15, 1998                          By:/s/William E. Dye
                                                 -------------------------
                                                 William E. Dye,
                                                 Chief Executive Officer
                                                 (Principal Executive, Financial
                                                 and Accounting Officer)