SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           --------------------------

                                   FORM 10-QSB

                   Quarterly Report under Section 13 or 15 (d)
                     of the Securities Exchange Act of 1934

                           --------------------------

For the Quarter Ended:                          Commission File Number
   March 31, 1998                                     0 - 9574

                           --------------------------

                         UNITED SYSTEMS TECHNOLOGY, INC.

       Iowa                                          42-1102759
(State of Incorporation)                         (I.R.S. Employer
                                               Identification Number)

                           1850 Crown Road, Suite 1109
                               Dallas, Texas 75234
                                 (972) 402-8600

          (Address of principal executive offices and telephone number)

                           --------------------------

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the  Securities  Exchange Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                               Yes __X__ No ______



     As of March 31,  1998  there  were  43,178,043  shares of the  registrant's
Common Stock, par value $0.10 per share, outstanding.

<PAGE>

                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY

                              INDEX TO FORM 10-QSB



PART I - FINANCIAL INFORMATION (UNAUDITED)                             PAGE
------------------------------------------                           

Item 1.           Consolidated Financial Statements

                  Balance Sheets                                        3

                  Statements of Operations                              4

                  Statements of Cash Flows                              5

                  Notes to Consolidated Financial Statements            6


Item 2.           Management's Discussion and Analysis or
                  Plan of Operation                                     8


PART II - OTHER INFORMATION                                            11
---------------------------


            ---------------------------------------------------------



     The consolidated financial information reflects all adjustments, which are,
in the opinion of  management,  necessary  to a fair  presentation  of financial
position  and of the  statements  of  operations  and cash flows for the periods
presented.


     These consolidated  financial statements should be read in conjunction with
the notes to the  consolidated  financial  statements  which are included in the
annual report on Form 10-KSB for the fiscal year ended December 31, 1997.

<PAGE>

                 United Systems Technology, Inc. and Subsidiary
                           Consolidated Balance Sheets
<TABLE>
<S>                                              <C>              <C>

                                                 March 31,
                                                   1998           December 31,
                                               (Unaudited)           1997
                                               -----------        -----------
    Current Assets
 Cash and cash equivalents                     $  237,748        $  204,807
 Trade accounts receivable, 
  less allowance for doubtful accounts of
  $30,000 at March 31, 1997 and $40,000 at
  December 31, 1997                               113,774           216,693 
 Prepaid expenses and other                         9,634             6,165 
                                               ----------        ----------
     Total current assets                         361,156           427,665
                                               ----------        ----------

Property and equipment, net                        76,754            85,940
Goodwill, net                                     464,607           481,605
Purchased software, net                            48,596            53,056
Deposits and other                                  5,293             4,999
                                               ----------        ----------
                                                  595,250           625,600
                                               ----------        ----------
       Total assets                            $  956,406        $1,053,265
                                               ==========        ==========


    Liabilities and Stockholders' Equity
Current Liabilities
 Notes payable - related party                 $   50,000        $   50,000
 Current portion of capital lease obligations       2,854             4,484
 Trade accounts payable                           185,457           177,316
 Accrued payroll                                   16,935            24,485
 Accrued interest - related party                  77,116            76,111
 Other accrued expenses                            84,762            98,868
 Deferred revenue                                 711,044           779,485
                                               ----------        ----------
     Total current liabilities                  1,128,168         1,210,749

Capital lease obligations, 
 net of current portion                             1,652             2,247
                                               ----------        ----------
       Total liabilities                        1,129,820         1,212,996
                                               ----------        ----------

Commitments and contingencies                        -                 -

    Stockholders' Equity
Preferred stock, convertible, cumulative,
 par value $.10 per share; authorized
 5,000,000 shares; issued and outstanding,
 500,000 shares of Series B, 500,000 shares
 of Series D,and 300,000 shares of Series E,
 aggregate liquidating preference of 
 $1,300,000 ($1.00 per share)                     130,000           130,000
Common stock, par value $.10 per share;
 authorized 100,000,000 shares; issued
 and outstanding 43,278,043 at March 31,
 1998 and  December 31, 1997.                   4,317,803         4,317,803
Additional paid-in capital                      3,768,562         3,768,562
Accumulated deficit                            (8,389,779)       (8,376,096)
                                               ----------        ----------
       Total stockholders' equity                (173,414)         (159,731)
                                               ----------        ----------
 Total liabilities and stockholders' equity    $  956,406        $1,053,265
                                               ==========        ==========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

<PAGE>

                 United Systems Technology, Inc. and Subsidiary
                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<S>                                                   <C>            <C>

                                                     Three Months Ended
                                                          March 31,
                                                    1998              1997
                                                    ----              ----
Revenue
 Software packages                             $   47,584        $   78,503
 Installation, training and customer support       19,342            35,031
 Maintenance                                      256,235           279,519
 Equipment and supplies sales                      42,575            64,122
 Other                                              1,843             1,304
                                               ----------        ----------
                                                  367,579           458,479
                                               ----------        ----------
Costs and expenses
 Salaries                                         207,597           253,180
 Other general, administrative and
  selling expense                                 115,355           128,854
 Depreciation and amortization                     36,771            39,782
 Commissions                                        4,001             9,109
 Cost of equipment and supplies sold               18,810            33,072
                                               ----------        ----------
                                                  382,534           463,997
                                               ----------        ----------
Loss from operations                              (14,955)           (5,518)
                                               ----------        ----------
Nonoperating income (expense)
 Interest expense                                  (1,170)           (1,393)
 Interest income                                    1,778               493
                                               ----------        ----------
                                                      608              (900)
                                               ----------        ----------

    Net loss                                   $  (14,347)       $   (6,418)
                                               ----------        ----------
Preferred stock dividend requirements             (22,440)          (22,440)
                                               ----------        ----------
Loss available for common stockholders         $  (36,787)       $  (28,858)
                                               ----------        ----------

Earning (loss) per common share                $    NIL          $    NIL
                                               ----------        ----------
Weighted average number of common
 shares outstanding                            43,178,043        43,178,043
                                               ----------        ----------
</TABLE>

    The accompanying notes are an integral part of the financial statements.

<PAGE>

                 United Systems Technology, Inc. and Subsidiary
                      Consolidated Statements of Cash Flows
            For the Three Month Period Ended March 31, 1998 and 1997
                                   (Unaudited)
<TABLE>
<S>                                                 <C>               <C>

                                                    1998              1997
                                                    ----              ----
Cash flows in operating activities:
  Net Loss                                     $  (14,347)       $   (6,418)

Adjustments to reconcile net loss
 to net cash provided by operating activities:
  Depreciation and amortization                    36,771            39,782
 Change in operating assets and liabilities:
  Accounts receivable                             102,919           (12,991)
  Prepaid expenses                                 (3,469)             (295)
  Deposits and other                                 (294)            7,073 
  Accounts payable                                  8,141           (22,721)
  Accrued expenses                                (20,651)           18,780 
  Deferred revenue                                (68,441)           17,112
                                               ----------        ----------
                                                   54,976            46,740
                                               ----------        ----------
Net cash provided (used) in
 operating activities                          $   40,629        $   40,322
                                               ----------        ----------
Cash flows from investing activities: 
 Property and equipment additions              $   (5,437)       $   (4,186)
 Additions to purchased software                     (690)           (1,086)
                                               ----------        ----------
Net cash used in investing activities          $   (6,127)       $   (5,272)
                                               ----------        ----------

Cash flows from financing activities:
 Payments on capital lease obligations         $   (1,561)       $   (1,979)
                                               ----------        ----------

Increase in cash and cash equivalents          $   32,941        $   33,071
Cash and cash equivalents, beginning of year      204,807            67,252
                                               ----------        ----------
Cash and cash equivalents, end of period       $  237,748        $  100,323
                                               ==========        ==========

Supplemental disclosures of cash flow
 information:

Cash paid during the period for:
 Interest                                      $      115        $      580
                                               ==========        ==========
</TABLE>

    The accompanying notes are an integral part of the financial statements.


<PAGE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   Notes To Consolidated Financial Statements
                                   (Unaudited)

Note 1.  Basis of Presentation:

     In the  opinion of  management,  the  accompanying  unaudited  consolidated
statements  contain  all  adjustments   (consisting  of  only  normal  recurring
accruals)  necessary to present fairly the  consolidated  financial  position of
United Systems  Technology,  Inc. ("USTI") as of March 31, 1998 and December 31,
1997 and the results of  operations  and cash flows of USTI for the three months
ended March 31, 1998 and 1997.  The  consolidated  results of operations for the
three months ended March 31, 1998 are not necessarily  indicative of the results
to be expected for the full year.

Note 2.  Property and Equipment:

     Property and equipment at March 31, 1998 and December 31, 1997 consisted of
the following:
<TABLE>
<S>                                         <C>              <C>

                                            March 31,        December 31,
                                              1998               1997
                                              ----               ----

Leasehold improvements                   $   64,772        $   63,772
Furniture and fixtures                       39,248            39,248
Equipment                                   908,760           904,323
                                         ----------        ----------
                                          1,011,780         1,007,343
Less Accumulated depreciation
  and amortization                         (936,026)         (921,403)
                                         ----------        ----------
                                         $   76,754        $   85,940
                                         ----------        ----------
</TABLE>

Note 3.  Other Assets:

     Other  assets at March 31,  1997 and  December  31, 1996  consisted  of the
following:
<TABLE>
<S>                               <C>           <C>                 <C>

                                                Accumulated
March 31, 1998                    Cost          Amortization        Net
--------------                    ----          ------------        ---

Goodwill                      $ 1,692,128       $(1,227,521)   $  464,607
Purchased Software                593,390          (544,794)       48,596

December 31, 1997
-----------------
Goodwill                      $ 1,692,128       $(1,210,523)   $  481,605
Purchased Software                592,700          (539,644)       53,056
</TABLE>

<PAGE>
                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY
                   Notes To Consolidated Financial Statements
                                   (Unaudited)

Note 4.  Preferred Stock:

     The  company is in arrears in the  payment of  dividends  to holders of its
Series B, D and E  Preferred  Stock.  Holders  of Series B  Preferred  Stock are
entitled to annual  dividends of $.07 per share,  payable  quarterly  and, as of
March 31,  1998,  are  entitled  to the  payment of  approximately  $332,430  in
dividends  which are currently in arrears.  Holders of Series D Preferred  Stock
are entitled to annual dividends of $.07 per share, payable quarterly and, as of
March 31,  1998,  are  entitled  to the  payment of  approximately  $284,315  in
dividends  which are currently in arrears.  Holders of Series E Preferred  Stock
are entitled to annual dividends of $.07 per share, payable quarterly and, as of
March 31,  1998,  are  entitled  to the  payment of  approximately  $142,915  in
dividends which are currently in arrears.

<PAGE>

                 UNITED SYSTEMS TECHNOLOGY, INC. AND SUBSIDIARY


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

Results of Operations

     The  Company  derives  its  revenue  from  the  licensing  of its  software
packages,  installation,   training  and  customer  modifications,   maintenance
agreements and equipment  sales and  commissions.  Results of operations for the
period  ended March 31,  1998  include  revenues  of $367,579  and a net loss of
$14,347 as compared  to  revenues  of $458,479  and a net loss of $6,418 for the
same period in 1997.

     The Company's  expenses  continued to be adjusted downward during the first
quarter of 1998.  The  Company is  continuing  its  development  of its  asystTM
product  line, a Windows  product line that operates in a single user or network
environment  and is  seamlessly  interfaced  with  the  other  Microsoft  Office
products.  The asystTM product line has been installed at over 150 locations and
includes General Ledger, Accounts Payable,  Accounts Receivable,  Cash Receipts,
Purchase Orders, Budgeting,  Reporting, and Utility Billing modules. The Company
is currently  developing its asystTM Public Safety products and anticipates that
the initial modules will be released later this year. The Company  believes that
its asystTM  product  line will  continue  to offer its current and  prospective
customers  with an  attractive  software  solution,  both from a  financial  and
functionality standpoint and follows the trend of clients moving to PC networks.
This trend  resulted in a continued  decrease in the  licensing of the Company's
DOS (QuestTM ) and mid-range  (LegacyTM ) products in the first quarter of 1998.
The Company is  offering a Year 2000  version of certain  QuestTM  and  LegacyTM
modules and expects to begin shipping these products in the 4th quarter of 1998.

Three Month Period Ended March 31, 1998 and 1997

     The Company's  total revenue  decreased 20% from $458,479  during the first
quarter in 1997 to $367,579 in 1998. Software license fees decreased 39% in 1998
due,  in part,  to a decrease  in the  licensing  of the  Company's  QuestTM and
LegacyTM product lines, while the volume of the licensing of the Company's newer
asystTM  products did not increase to a level sufficient to offset the decrease.
The Company continues to market its products to prospective customers,  which it
believes are best suited for its products.  Installation and training  decreased
45% in 1998 due to the  decrease  in  licensing  of the  Company's  minicomputer
products,  which require a higher amount of these type of services.  Maintenance
revenue  decreased 8% during 1998 , due in part,  to a decrease in the number of
the Company's QuestTM and LegacyTM  customers that elected to select maintenance
coverage.  Equipment  and supplies  sales  decreased 34% in the first quarter of
1998 due, in part,  to a decrease in the volume of  computer  equipment  sold in
conjunction with its products.

     Total costs and expenses decreased 18% from $463,997 in 1997 to $382,534 in
1998.  Salary  expense  decreased  18% in  1998  as a  result  of the  Company's
continued  adjustments  in  staffing  to align  with its  anticipated  levels of
revenue.  Other general,  administrative and selling expense costs decreased 10%
in 1998 as a  result  of  continued  efforts  to  control  or  reduce  expenses.
Depreciation and amortization  expense decreased 8% in 1998.  Commission expense
decreased  56% in 1998 due, in part,  to a decrease  in the volume of  licensing
Company's  software by agents in 1998. Cost of equipment sold decreased 43% as a
result of decreased sales of computer equipment during the period.

Liquidity and Capital Resources

     The Company had net cash  provided  from  operating  activities  of $40,629
during the three months ended March 31, 1998,  as compared to net cash  provided
by  operations  of $40,740 for the same  period in 1997.  Net cash of $6,127 was
utilized during 1998 for investing in capital expenditures as compared to $5,272
in 1997.

     Management believes that the effect of its continued focus on adjusting the
Company's  expenses  to the  level  of  revenue,  which  management  anticipates
achieving,  and the Company's  current cash balance will be adequate to meet its
working capital requirements in the near future.  However, if the Company is not
able to continue to generate  positive  cash flows in the future by  achieving a
level of sales  adequate to support the  Company's  cost  structure,  additional
financing may be required, of which there can be no assurance.

     The Company is  currently in arrears in the payment of dividends to holders
of its  preferred  stock.  As of March 31,  1998,  dividends  were in arrears on
Series B preferred stock in the amount of $332,430,  on Series D preferred stock
in the  amount of  $284,315  and on Series E  preferred  stock in the  amount of
$142,915.

Year 2000

     Until just a few years ago, most  computer  programs were written to define
an applicable  year by using two digits for the year instead of four. The effect
on a computer program that was written in such a way is to define a year that is
entered  with the two digits "00" as 1900  rather than 2000.  When the Year 2000
arrives,  any computer programs that are written in this manner will either have
to be modified to accept a date in the 21st century or the programs will have to
be  replaced.  This issue not only  effects  the  Company's  internal  automated
information  systems but also has an effect on the software products the Company
develops,  supports and markets to its customers.  The Company has evaluated the
computer  programs that is utilizes  internally for its information  systems and
has  determined  that  substantially  all of its systems are currently Year 2000
compliant.  The  Company's  asystTM  product  line is Year 2000  compliant.  The
Company's  customers that are utilizing its LegacyTM,  and QuestTM product lines
are being offered a Year 2000 compliant version of certain packages within these
product lines or are being encouraged to migrate to the Company's  products that
are Year 2000 compliant.  Based on currently available information,  the Company
does not  anticipate  that the costs to address  the issues  related to the Year
2000 will have a material adverse impact on the Company's  financial  condition,
results of operations or liquidity.

<PAGE>

Forward-Looking Statements

     This report  contains  forward-looking  statements,  other than  historical
facts,  which  reflect the view of Company's  management  with respect to future
events.  Such  forward-looking  statements are based on assumptions  made by and
information currently available to the Company's management. Although management
believes that the expectations reflected in such forward-looking  statements are
reasonable,  it can give no assurance that such  expectations will prove to have
been  correct.  Important  factors  that could  cause  actual  results to differ
materially from such expectations  include,  without limitation,  the ability of
the Company i) to generate  levels of revenue and  adequate  cash flows from its
operations to support and maintain its current cost structure and ii) to develop
and deliver products that are  competitive,  accepted by its markets and are not
rendered  obsolete  by  changing  technology.   The  forward-looking  statements
contained  herein  reflect the current  views of the Company's  management  with
respect to future  events  and are  subject to these  factors  and other  risks,
uncertainties and assumptions relating to the operations,  results of operations
and  financial  position of the Company.  The Company  assumes no  obligation to
update the  forward-looking  statements or to update the reasons  actual results
could differ from those contemplated by such forward-looking statements.

<PAGE>

                           Part II - Other Information

Item 1.  Legal Proceedings

         The Company is involved in the following legal proceedings:

     On December 10, 1993,  Plaintiff  County of Essex filed suit against  USTI,
USTEI, New Jersey Municipal Data Management ("MDM") and MDM's surety in Superior
Court of New Jersey. The suit is based on allegations that MDM failed to perform
its  obligations  related to software  and related  services  sold by MDM to the
County of Essex,  that USTI and USTEI succeeded to the obligations of MDM by the
acquisition  of the assets of MDM,  and that there was a failure to comply  with
the New Jersey bulk sales act in USTEI's  acquisition of the assets of MDM. USTI
and USTEI did not assume any  obligations  or liabilities of MDM with respect to
the County of Essex in the acquisition transaction. USTEI did agree to pay up to
$50,000  in defense  costs of MDM with  respect  to such  claim.  USTI and USTEI
answered each of such lawsuits,  denying all material  allegations  therein, and
intend to vigorously defend such  allegations.  On March 20, 1996, the County of
Essex's  claim  that  USTI and USTEI  succeeded  to the  obligations  of MDM was
dismissed with prejudice. Subsequently, the Court found that the New Jersey bulk
sales  act was not  complied  with  but has made no  finding  on the  amount  of
damages,  if any,  with  respect  thereto.  The  Company  has filed  third party
complaints against counsel representing the parties to the transaction for their
failure to have caused the bulk sales act to be complied with. Additionally,  on
April 10,  1997,  the  County of Essex  obtained  a  judgement  against  MDM for
approximately  $600,000  on its  claim for  failure  of  performance  by MDM and
recovered  $248,277  from the surety and the surety  succeeded  to the County of
Essex's  claim  against MDM,  USTI and USTEI in such amount.  The  litigation is
still in the discovery  phase.  As stated above,  USTI and USTEI have denied all
material allegations of the County of Essex and intend to vigorously defend such
litigation and pursue its third party claims.

     The Company is also a defendant in various legal  actions,  which arose out
of the normal course of business,  In the opinion of  management,  none of these
actions are extexted to have a material  effect on the  consolidated  results of
operations or financial position of the Company.

Item 2.  Change In Securities

         Not Applicable


Item 3.  Defaults Upon Senior Securities

     The  company is in arrears in the  payment of  dividends  to holders of its
Series B, D and E  Preferred  Stock.  Holders  of Series B  Preferred  Stock are
entitled to annual  dividends of $.07 per share,  payable  quarterly  and, as of
March 31,  1998,  are  entitled  to the  payment of  approximately  $332,430  in
dividends  which are currently in arrears.  Holders of Series D Preferred  Stock
are entitled to annual dividends of $.07 per share, payable quarterly and, as of
March 31,  1998,  are  entitled  to the  payment of  approximately  $284,315  in
dividends  which are currently in arrears.  Holders of Series E Preferred  Stock
are entitled to annual dividends of $.07 per share, payable quarterly and, as of
March 31,  1998,  are  entitled  to the  payment of  approximately  $142,915  in
dividends which are currently in arrears.

<PAGE>

Item 4.  Submission of Matters to a Vote of Security Holders

         Not Applicable

Item 5.  Other Information

         Not Applicable


Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits - No exhibits are required to be filed with this report.

         (b)  No reports on Form 8-K were filed during the quarter for which
              this report is filed.

<PAGE>

                                   Signatures


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                            United Systems Technology, Inc.


Date:  May 14, 1998                         By: /s/  Thomas E. Gibbs
                                                --------------------
                                                Thomas E. Gibbs, President
                                                and Chairman of the Board
                                               (Principal Executive Officer)


Date:  May 14, 1998                         By: /s/  Randall L. McGee
                                                ----------------------
                                                Randall L. McGee, Secretary
                                                 and Treasurer
                                                (Principal Financial and
                                                 Accounting Officer)


<PAGE>