SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1998


[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934

                         Commission File Number 1-11135


                                   TREEV, INC.
             (Exact name of registrant as specified in its charter)

          Delaware                                     54-1590649
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

                 500 Huntmar Park Drive, Herndon, Virginia 20170
                    (Address of principal executive offices)


                                 (703) 478-2260
                           (Issuer's 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 past 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 [ ]

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date: 33,875,790 shares of
common stock, $.0001 par value, as of October 23, 1998.


<PAGE>


                                   TREEV, INC.

                                    Form 10-Q


                                Table of Contents



PART I   FINANCIAL INFORMATION

Item 1.  Financial Statements.

           Consolidated Balance Sheets at September 30, 1998
           (unaudited) and December 31, 1997                                2

           Consolidated Statements of Operations (unaudited) for
           the three months ended September 30, 1998 and 1997               3

           Consolidated Statements of Operations (unaudited) for
           the nine months ended September 30, 1998 and 1997                4

           Consolidated Statement of Changes in Stockholders' Equity
           (unaudited) for the nine months ended September 30, 1998         5

           Consolidated Statements of Cash Flows (unaudited)
           for the nine months ended September 30, 1998 and 1997            6
  
           Notes to Consolidated Financial Statements                       7

Item 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations.                            12


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.                                                18

Item 6.  Exhibits and Reports on Form 8-K.                                 18



<PAGE>
                                  TREEV, INC.
                           CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)



                                                      September 30, December 31,
                                                           1998          1997
                                                         ---------    ---------
                                                        (Unaudited)
                                  ASSETS

Current assets:
 Cash and cash equivalents                               $   4,291    $   3,816
 Accounts and notes receivable, net                          9,506        8,569
 Note receivable Dorotech sale                                --          7,000
 Inventories                                                   827          722
 Prepaid expenses and other                                    682        1,108
                                                         ---------    ---------
      Total current assets                                  15,306       21,215
Fixed assets, net                                            1,745        2,165
Long-term notes receivable, net                                138          378
Software development costs and
 purchased technology, net                                   2,637        2,490
Goodwill, net                                                  374          499
Other assets                                                   127          113
                                                         ---------    ---------
      Total assets                                       $  20,327    $  26,860
                                                         =========    =========


                    LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:
 Current debt maturities and
  obligations under capital leases                       $     571    $   2,479
 Accounts payable                                            1,973        2,037
 Accrued compensation and
  related expenses                                           1,078        1,135
 Deferred revenue                                            3,584        3,334
 Other accrued expenses                                      2,714        2,250
                                                         ---------    ---------
      Total current liabilities                              9,920       11,235
Long-term debt and obligations
 under capital leases                                           60        1,108
                                                         ---------    ---------
      Total liabilities                                      9,980       12,343
Commitments
Redeemable Series F preferred stock,
 none and 792,186 shares issued and
 outstanding                                                  --          6,548
Stockholders' equity:
 Preferred stock, $.0001 par value,
  20,000,000 shares authorized;
  3,169,601 and 1,615,675 shares
  issued and outstanding
 Common stock, $.0001 par value,
  100,000,000 shares authorized;
  33,875,790 and 26,236,186 shares
  issued and outstanding                                         3            3
 Additional paid-in-capital                                139,697      132,403
 Accumulated deficit                                      (129,353)    (124,437)
                                                         ---------    ---------
      Total stockholders' equity                            10,347        7,969
                                                         ---------    ---------
      Total liabilities and
       stockholders' equity                              $  20,327    $  26,860
                                                         =========    =========



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

                                       -2-
<PAGE>

                                   TREEV, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except share and per share amounts)
                                   (Unaudited)


                                                Three Months Ended September 30,
                                                   1998                 1997
                                                -----------         -----------

Revenue:
  Products                                      $     5,125         $     5,225
  Services                                            2,902               4,719
                                                -----------         -----------
                                                      8,027               9,944
                                                -----------         -----------
Costs and expenses:
  Cost of products sold                               1,527               2,585
  Cost of services provided                           1,847               3,865
  Sales and marketing                                 2,748               3,649
  General and administrative                            925               1,649
  Product development                                   966               1,142
                                                -----------         -----------
                                                      8,013              12,890
                                                -----------         -----------
Loss before investment and
 interest income and income taxes                        14              (2,946)
  Investment and interest income
  (expense), net                                          3                (130)
                                                -----------         -----------
Loss before income taxes                                 17              (3,076)
  Income tax benefit                                   --                  (142)
                                                -----------         -----------
Net income (loss)                                        17              (2,934)
                                                -----------         -----------

Preferred stock preferences
  Accrued dividends                                    (337)               (930)
  Imputed dividends                                    --                  (774)
                                                -----------         -----------
Net loss applicable to common shares            $      (320)        $    (4,638)
                                                ===========         ===========

Net loss per common share                       $     (0.01)        $     (0.18)
                                                ===========         ===========

Weighted average shares outstanding              32,993,308          25,436,748
                                                ===========         ===========

Net loss per common share -
  assuming dilution                             $     (0.01)        $     (0.18)
                                                ===========         ===========

Weighted average shares outstanding              32,993,308          25,436,748
                                                ===========         ===========




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

                                       -3-
<PAGE>
                                   TREEV, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except share and per share amounts)
                                   (Unaudited)


                                                 Nine Months Ended September 30,
                                                     1998              1997
                                                 ------------      ------------

Revenue:
  Products                                       $     13,760      $     13,591
  Services                                              8,395            14,805
                                                 ------------      ------------
                                                       22,155            28,396
                                                 ------------      ------------
Costs and expenses:
  Cost of products sold                                 5,188             6,740
  Cost of services provided                             5,633            11,681
  Sales and marketing                                   8,585            10,901
  General and administrative                            3,175             4,949
  Product development                                   2,927             3,451
  Gain from extinguishment of debt                       --                (267)
  Restructuring costs                                   1,505              --
                                                 ------------      ------------
                                                       27,013            37,455
                                                 ------------      ------------
Loss before investment and interest
 income and income taxes                               (4,858)           (9,059)
  Investment and interest income
   (expense), net                                         (58)             (163)
                                                 ------------      ------------
Loss before income taxes                               (4,916)           (9,222)
  Income tax benefit                                     --                 (87)
                                                 ------------      ------------
Net loss                                               (4,916)           (9,135)
                                                 ------------      ------------

Preferred stock preferences
  Accrued dividends                                    (1,011)           (2,836)
  Imputed dividends                                      --                (774)
                                                 ------------      ------------
Net loss applicable to common shares             $     (5,927)     $    (12,745)
                                                 ============      ============

Net loss per common share                        $      (0.20)     $      (0.51)
                                                 ============      ============

Weighted average shares outstanding                29,957,510        24,957,354
                                                 ============      ============

Net loss per common share -
 assuming dilution                               $      (0.20)     $      (0.51)
                                                 ============      ============

Weighted average shares outstanding                29,957,510        24,957,354
                                                 ============      ============








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

                                       -4-
<PAGE>
                                   TREEV, INC.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                  For the nine months ended September 30, 1998
                      (In thousands, except share amounts)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                    Additional
                                   Preferred Stock             Common Stock           paid-in         Accumulated
                                  Shares       Amt.         Shares         Amt.       capital           Deficit           Total
                                 --------------------   -----------------------  ----------------  ----------------  -------------
<S>                               <C>          <C>       <C>               <C>        <C>              <C>                  <C>

Balance December 31, 1997         1,615,575    $  --     26,236,186        $3         $132,403         ($124,437)           $7,969

Issuance of common stock,
 net of offering costs of $245                            5,338,500                      4,318                               4,318

Issuance of preferred stock,
 net of offering costs of $763    1,560,576                                             10,667                              10,667

Conversion of preferred stock        (1,300)              1,958,720                                                              0

Redemption of preferred stock        (5,250)                                            (7,085)                             (7,085)

Issuance of warrants                                                                        68                                  68

Dividends on preferred stock                                342,384                       (674)                               (674)

Net loss                                                                                                  (4,916)           (4,916)
                                 --------------------   -----------------------  ----------------  ----------------  -------------

Balance September 30, 1998        3,169,601    $  --     33,875,790        $3         $139,697         ($129,353)          $10,347
                                 ====================   =======================  ================  ================  =============

</TABLE>





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

                                       -5-
<PAGE>
                                   TREEV, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                              Nine Months
                                                           Ended September 30,
                                                            1998        1997
                                                          ---------   ---------
                                                              (In thousands)

Cash flows from operating activities:
 Net loss                                                  $(4,916)     $(9,135)
 Adjustments to reconcile net loss
  to net cash used in operating
  activities:
   Depreciation and amortization                             1,762        3,752
   Restructuring costs                                       1,505         --
   Other non-cash adjustments                                   77           15
   Changes in assets and liabilities:
    Accounts and notes receivable                             (964)      (1,837)
    Inventories                                               (105)          (6)
    Prepaid expenses and other                                   2          145
    Accounts payable                                           (80)       1,698
    Accrued compensation and
     related expenses                                          (57)         242
    Accrued expenses, other                                   (561)         161
    Deferred revenues                                          250          (81)
    Deferred income taxes                                     --            (71)
                                                           -------      -------
Net cash used in operating activities                       (3,087)      (5,117)
                                                           -------      -------

Cash flows from investing activities:
 Capitalized software development and
  license costs                                             (1,072)      (1,059)
 Purchases of fixed assets                                    (548)        (557)
 Proceeds from business divestitures,
  net of related costs                                       7,230           60
                                                           -------      -------
Net cash provided by (used in)
 investing activities                                        5,610       (1,556)
                                                           -------      -------

Cash flows from financing activities:
 Proceeds from issuance of common
  stock, net                                                 4,318           23
 Proceeds from issuance of preferred
  stock, net                                                 9,707        2,901
 Cash dividends paid on preferred stock                       (337)      (1,779)
 Redemption of  Mandatory Redeemable
  Preferred Stock                                           (6,548)      (3,500)
 Redemption of convertible preferred
  stock                                                     (7,085)        --
 Redemption of convertible debentures                       (1,500)        --
 Proceeds from borrowings                                     --          5,000
 Proceeds from issuance of long-term
  debt                                                        --          2,000
 Principal payments on capital lease
  obligations                                                 (603)        (800)
 Principal payments on debt                                   --           (843)
                                                           -------      -------
Net cash (used in) provided by
 financing activities                                       (2,048)       3,002
                                                           -------      -------

Effect of exchange rate changes on cash
 and cash equivalents                                         --           (148)
Net increase (decrease) in cash and cash
 equivalents                                                   475       (3,819)
Cash and cash equivalents at beginning of year               3,816        7,601
                                                           -------      -------
Cash and cash equivalents at September 30,                 $ 4,291      $ 3,782
                                                           =======      =======

Supplemental Cash Flow Information:
     Interest paid                                         $   191      $   478
     Income taxes paid                                     $   188      $   261


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

                                       -6-

<PAGE>


                                   TREEV, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           September 30, 1998 and 1997

1.  BASIS OF PRESENTATION

The  unaudited  financial  statements  presented  herein  have been  prepared in
accordance with the  instructions to Form 10-Q and should be read in conjunction
with the financial statements and notes thereto included in the Company's Annual
Report  on Form  10-K  for the  year  ended  December  31,  1997  which  include
information  and  note  disclosures  not  included  herein.  In the  opinion  of
management  all  adjustments,  which  include  only those of a normal  recurring
nature, necessary to fairly present the Company's financial position, results of
operations  and  cash  flows  have  been  made  to  the  accompanying  financial
statements.  The results of operations for the nine month period ended September
30, 1998 may not be  indicative of the results that may be expected for the year
ending December 31, 1998.


2.   NAME CHANGE

During the second  quarter of 1998,  the Company  changed its name from  Network
Imaging  Corporation to TREEV, Inc. The name change more accurately reflects the
Company's new orientation as a provider of integrated, production level document
management  solutions and was done in conjunction  with the  introduction of the
Company's new integrated document management software product suite.


3.   RESTRUCTURING CHARGES

During the second quarter of 1998, the Company incurred a charge of $1.5 million
as a result of effecting a  restructuring  plan ("the Plan").  The Plan provided
for the  elimination  of duplicate job  functions  and outdated or  discontinued
products.  Under the Plan, the Company is combining its three separate  customer
support organizations into one support organization, and the Company's strategic
focus will shift to its newest suite of integrated  document management software
using a  Microsoft  based  architecture.  The  restructuring  charge  includes a
$827,000 write down to net realizable  value of prepaid licenses and capitalized
software  which  related to products  abandoned  in favor of the new  integrated
document management  software suite. In addition,  $677,000 of the restructuring
charge related to severance costs for 29 employees located  throughout the U.S.,
including  customer support,  sales,  marketing,  engineering and administrative
personnel.  The Plan is expected to be completed by the end of the first quarter
of 1999.  At September 30, 1998,  24 employees  had been  terminated,  severance
benefits of $539,000 had been paid out and the accrual  balance  relating to the
Plan was $138,000.

                                       -7-
<PAGE>

4.   REDEMPTION OF SERIES K AND L CONVERTIBLE PREFERRED STOCK

In  September  1998,  the Company  redeemed in cash the  remaining  2,000 shares
outstanding of Series K Convertible  Preferred  Stock ("Series K Stock") and all
of the outstanding 3,250 shares of Series L Convertible Preferred Stock ("Series
L Stock") for $7,100,000 including outstanding interest.  The $7,100,000 payment
retired the  obligations  under the Series K Stock and Series L Stock.  Proceeds
from the $10,000,000  issuance of the Company's  Series N Convertible  Preferred
Stock  ("Series N Stock")  were used,  in part,  to fund the  redemption  of the
Series K Stock and Series L Stock (See Note 5).


5.   ISSUANCE OF SERIES N CONVERTIBLE PREFERRED STOCK

In September 1998, the Company completed a private placement of 1,559,576 shares
of Series N Stock,  together  with warrants to purchase and  additional  800,000
shares of Common Stock at an exercise  price of $0.625 per share.  Proceeds from
the offering were  $10,000,000  and offering costs were $619,000.  In accordance
with the terms of the Series N Stock offering,  approximately  $7,100,000 of the
proceeds was used to redeem the Company's Series K Stock and Series L Stock, and
the  remainder  will be used for  working  capital  purposes  (See Note 4).  The
Company also issued  warrants to purchase  509,091  shares of Common Stock at an
exercise price of $0.69 per share to the placement agent in the transaction.  In
connection  with the sale of the Series N Stock,  the Company agreed to register
the Common Stock issuable upon  conversion of the preferred  stock and execution
of the warrants upon such time as the Company files a registration  statement to
register shares for any other stockholder of the Company. At September 30, 1998,
the 1,559,576 shares of Series N Stock were  convertible into 15,595,760  shares
of Common Stock.

Each share of Series N Stock is convertible at the option of each holder into 10
shares  of Common  Stock.  Upon  stockholders'  approval  of the  Series N Stock
offering at a special  meeting of the  stockholders,  scheduled  for December 9,
1998,  any  Series  N Stock  that has not  previously  been  converted  shall be
immediately  converted  into shares of Common Stock.  Assuming that no shares of
the Series N Stock have been  converted  prior to such time,  the Series N Stock
shall immediately  convert into 15,595,760 shares of the Company's Common Stock.
The conversion  price of the Series N Stock is $0.6412 per share,  which was the
average  volume  market  price of the Common Stock on the date the terms for the
Series N Stock were agreed to by the parties.


6.   CONVERSION OF LINE OF CREDIT TO PREFERRED STOCK

In June 1998, the Company  converted  the  remaining $1.0 million of the  Stock-
holder line of credit into equity through the issuance of 1,000 shares of Series

                                      -8-
<PAGE>

M1 Convertible  Stock ("Series M1 Stock").  The Company agreed,  by amendment to
the  securities   purchase  agreement  for  the  Series  M1  Stock,  to  file  a
registration  statement to register the Common Stock issuable upon conversion of
the preferred stock on or before March 30, 1999.

The Company  received no proceeds from the conversion of the Stockholder line of
credit to equity.  The Series M1 Stock issued and  outstanding  in December 2001
automatically  converts  into Common  Stock.  At September  30, 1998,  the 1,000
shares of Series  M1 Stock  were  convertible  into  1,256,823  shares of Common
Stock.

The  Series M1 Stock  has a per share  liquidation  preference,  subject  to the
liquidation  preference of the Series A Stock,  of an amount equal to the sum of
$1,000 plus 8 1/2% per annum  simple  interest  thereon for the period since the
date of issuance. Each share is convertible at the option of the holder into the
number of shares of Common Stock  determined  by dividing an amount equal to the
initial  purchase  price of  $1,000  by  $0.8125.  The  Series  M1  Stock  has a
cumulative  dividend  rate of 8 1/2% per annum  which is  payable at the time of
conversion or  redemption in cash or shares of Common Stock,  at the election of
the Company.  If the  cumulative  dividend is paid in stock,  the amount paid is
based on 95% of the  closing  bid price on the date of notice of  conversion  or
redemption.

The Series M1 holder has a right of redemption under certain circumstances,  all
of which are under the sole control of the  Company.  The Company has the right,
at any time, to redeem all of the then  outstanding  Series M1 Stock for a price
per share equal to $1,000 plus the accrued unpaid dividend.


7.   ISSUANCE OF COMMON STOCK

During the first quarter of 1998, the Company  completed a private  placement of
1,108,947  shares of  Common  Stock,  together  with  warrants  to  purchase  an
additional  50,000  shares of Common  Stock,  pursuant to Regulation D under the
Securities  Act of 1933, as amended (the  "Securities  Act").  Proceeds from the
offering were $1,100,000 and offering costs were $26,000.  Pursuant to the terms
of the  private  placement,  the  Company is  obligated  to file a  registration
statement  with the  Securities  and Exchange  Commission to register the shares
when the Company files a registration statement to register shares for any other
stockholder, but in no event later than March 30, 1999.

During the second quarter of 1998, the Company  completed a private placement of
2,907,126 shares of Common Stock,  pursuant to Regulation D under the Securities
Act.

                                       -9-
<PAGE>

Proceeds from the offering were  $2,500,000  and offering  costs were  $150,000.
Pursuant to the terms of the private placement, the Company is obligated to file
a registration statement with the Securities and Exchange Commission to register
the shares when the Company files a  registration  statement to register  shares
for any other stockholder, but in no event later than March 30, 1999.

During the second  quarter of 1998,  the Company issued 342,384 shares of Common
Stock as a quarterly  dividend to the  shareholders  of the  Company's  Series A
Preferred Stock.

During the third quarter of 1998, the Company  completed a private  placement of
750,000  shares of Common Stock  pursuant to  Regulation D under the  Securities
Act.  Proceeds from the offering were $750,000 and offering  costs were $60,000.
Pursuant to the terms of the private placement, the Company is obligated to file
a registration statement with the Securities and Exchange Commission to register
the shares when the Company files a  registration  statement to register  shares
for any other  stockholder,  but in no event  later  than  March 30,  1999.  The
Company also  completed a private  placement  of 200,000  shares of Common Stock
pursuant to Regulation D under the  Securities  Act.  Proceeds from the offering
were  $200,000 and  offering  costs were  $10,000.  Pursuant to the terms of the
private placement,  the Company agreed to file a registration statement with the
Securities and Exchange Commission to register the shares.

During the third quarter of 1998,  the Company  issued  122,427 shares of Common
Stock under the Company's  Employee  Stock  Purchase Plan ("the Plan").  Through
payroll  deductions,  employees can purchase the Company's Common Stock at a 15%
discount to the market price.  Under the Plan, there are two six-month  offering
periods  beginning on January 1st and July 1st. The purchase price is determined
by taking 85% of the lower of (a) the average of the high and low market  prices
on the offering commencement date and (b) the average of the high and low market
prices on the offering  termination date. The terms of the Plan require that the
purchaser hold the shares  purchased  under the Plan for a minimum of six months
from the date the offering period ends.


8.   EXCHANGE OF NOTE RECEIVABLE FOR EQUITY

During the second  quarter of 1998,  the Company  exchanged a $1.1  million note
receivable,  that  had  been  received  from  the  sale  of a  previously  owned
subsidiary, for equity in the company that acquired the subsidiary.  Previously,
the note had been reserved in its  entirety,  and the Company has made a similar
reserve on the equity received in the exchange.


                                      -10-
<PAGE>

9.   RETIREMENT OF REDEEMABLE PREFERRED STOCK

During the first quarter of 1998,  the Company  redeemed the  remaining  792,186
shares  of  Series F  Preferred  Stock for $6.5  million  including  outstanding
interest.  The $6,500,000  payment  retired the  obligations  under the Series F
Stock.  The Company used the $7,000,000  proceeds  received in January 1998 from
the sale of its subsidiary in France, Dorotech, S.A., to finance the buy back of
the Company's Series F Stock.


10.   CONVERTIBLE NOTE REDEMPTION

During the first quarter of 1998,  the Company  redeemed in cash $1.3 million of
the 8%  Convertible  Notes ("the  Notes") due July 8, 2002 and August 20,  2002.
During the second quarter of 1998, the Company  redeemed in cash $200,000 of the
Notes. At September 30, 1998, $400,000 of the Notes remained outstanding. During
October 1998, the Company  redeemed in cash an additional  $200,000 of the Notes
(See Note 11)


11.   SUBSEQUENT EVENTS

During October 1998,  the Company redeemed in cash $200,000 of the Notes.  After
the October 1998 redemption, $200,000 of the Notes remained outstanding.





















                                      -11-
<PAGE>


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements and Certain Risk Factors

         This "Management's  Discussion and Analysis of Financial  Condition and
Results of Operations"  section of this  Quarterly  Report on Form 10-Q contains
certain  forward  looking  statements  that are subject to a number of risks and
uncertainties.  In  addition,  the Company may publish or make  forward  looking
statements  from time to time relating to such matters as anticipated  financial
performance,  business  prospects and strategies,  sales and marketing  efforts,
technological  developments,  new products, research and development activities,
and  similar  matters.  The  Private  Securities  Litigation  Reform Act of 1995
provides a safe harbor for forward looking  statements.  In order to comply with
the terms of the safe harbor,  the Company notes that a variety of factors could
cause the Company's  actual results to differ  materially  from the  anticipated
results or other  expectations made in the Company's forward looking  statements
in this Quarterly Report or elsewhere.  Readers should carefully review the risk
factors  described in other  documents  the Company files from time to time with
the Securities and Exchange Commission, specifically any Current Reports on Form
8-K filed by the  Company.  Some risks and  uncertainties  of the  Company  that
should be considered by the reader include:

         The adverse results of operations that the Company has experienced have
been declining,  and the Company's  operating results were break even during the
quarter  ended  September  30, 1998.  Although the Company  expects the trend of
improved  operating  results to continue,  there can be no  assurances  that the
Company will not experience adverse results of operations in the future.

         The Company has had net losses in each period of its  operations  since
its inception, except for two quarters including the most current, and it had an
accumulated deficit at September 30, 1998 of $129.4 million.

         Pursuant to Nasdaq requirements,  common and preferred stock trading on
Nasdaq must  maintain a minimum bid price of $1.00.  Nasdaq has  indicated  that
because the Company's Common Stock has traded below the Nasdaq minimum bid price
below $1.00,  the Company is not  currently in  compliance  with the minimum bid
price  requirement  to maintain  listing on the Nasdaq  National  Market System.
Nasdaq  indicated that the Company's  Common Stock needed to be in compliance by
October  7,  1998.  The  Company  was out of  compliance  at that  time  and has
requested a hearing. The Company understands that, under Nasdaq procedures,  the
Company's  Common Stock will continue to trade on the Nasdaq pending the outcome
of that hearing. A hearing date has not yet been scheduled. The Company has also
filed  proxy  materials  with the SEC to seek  shareholder  approval to effect a
one-for-four  reverse  stock  split to bring the stock price  above  $1.00.  The
Company believes that if a reverse stock  split is  approved by shareholders and

                                      -12-
<PAGE>

implemented,  the Company's Common Stock will trade at a price above the minimum
required bid price for continued  listing on the Nasdaq  National Market System.
However,  no  assurances  can be  given  that the  market  price  would  rise in
proportion to the reverse split or remain at levels necessary for such continued
listing.  Any  inability to trade on Nasdaq would  likely  adversely  effect the
market price and liquidity of the Common Stock.  In the event that the Company's
Common  Stock  trades at a minimum  price of more than  $1.00 for a period of 10
consecutive trading days, and the Company is thereby able to maintain its Nasdaq
National  Market System  listing,  the Company will reassess  whether to proceed
with the reverse stock split.

         The computer  industry,  including  the  information  access,  document
management,  imaging and optical disk storage segments,  is highly  competitive,
and is characterized by rapid and continuous technological change. The Company's
future  profitability  will depend on,  among other  things,  wide-scale  market
acceptance of the Company's  products and on the Company's ability to develop in
a timely fashion enhancements to existing products or new products. There can be
no assurance  that the Company will be able to market  successfully  its current
products,  develop and market enhancements to existing products or introduce new
products.

Results of Operations - Nine months ended September 30, 1998 and 1997

                   Revenues. Total revenues were $22.2 million and $28.4 million
for the nine months ended  September 30, 1998 and 1997,  respectively.  The $6.2
million  decrease in revenue was the result of an increase in product revenue of
$169,000,  or 1%, offset by a decrease in service  revenue of $6.4  million,  or
43%. The  increase in product  revenue was  attributable  to an increase of $3.7
million,  or 37%, in comparative  company  revenues offset by a decrease of $3.6
million due to the  disposition  in 1997 of the  Company's  subsidiary in France
("Dorotech").  The decrease in service sales of $6.4 million was the result of a
$7.7 million  decrease  due to the  disposition  of  Dorotech,  offset by a $1.3
million,  or 19%,  increase in comparative  company  revenues.  On a comparative
company  basis,  overall  revenues  increased  $5.1 million,  or 30%, from $17.1
million for the nine months ended  September  30, 1997 to $22.2  million for the
same period in 1998.

                   Profit margins. Profit margins for product sales increased 12
percentage points for the first nine months of 1998 over the same period in 1997
as cost of products  decreased from 50% to 38% of sales. The increase in product
sales  margins was  primarily  due to the  increased  sales mix of the Company's
internally  developed  software  products.  Profit  margins  for  service  sales
increased 12 percentage  points for the nine months ended  September 30, 1998 as
compared to 1997 as the cost of services decreased from 79% to 67% of sales. The
increase  in  service  sales  margins  from 21% to 33% was due to the  Company's
continued  emphasis on its custom  development and professional  services.  On a
comparative company basis, overall profit margins increased 10 percentage points
to 51% for the nine months ended September 30, 1998 from 41% for the same period
in 1997.
                                      -13-
<PAGE>

                   Sales and marketing.  Sales and marketing  expenses were $8.6
million or 39% of revenue, for the nine months ended September 30, 1998 compared
to $10.9 million,  or 38% of revenue in 1997.  The decrease of $2.3 million,  or
21%, was the result of the Company's  disposition of Dorotech during 1997, which
reduced  sales and  marketing  expenses  $2.5  million,  offset  by an  $144,000
increase in comparative company expenses.

                   General and administrative. G&A expenses were $3.2 million or
14% of revenue,  for the nine months ended  September  30, 1998 compared to $5.0
million,  or 17% of revenue in 1997.  The decrease of $1.8 million,  or 36%, was
the result of the Company's  disposition of Dorotech during 1997,  which reduced
G&A expenses  $1.1  million,  and a $671,000,  or 17%,  decrease in  comparative
company G&A expenses due to the Company's efforts in cost reduction.

                   Product development.  The Company's  expenditures on software
research and development  activities  ("R&D") in the nine months ended September
30,  1998 were $4.0  million,  of which $1.1  million was  capitalized  and $2.9
million was expensed.  Software  research and development  expenditures  for the
1997 period were $4.5 million,  of which $1.1 million was  capitalized  and $3.4
million  was  expensed.  The  $502,000  decrease  in  research  and  development
expenditures  is  attributable  to the Company's  1997  disposition of Dorotech,
which  reduced  R&D  expenses  $790,000,   offset  by  a  $288,000  increase  in
comparative company R&D expenses.

                   Restructuring  costs.  During the second  quarter  1998,  the
Company  committed  to a plan of  restructuring  and  incurred  a charge of $1.5
million.

                   Gain on  extinguishement  of debt.  During the first  quarter
1997, the Company's  French  subsidiary,  Dorotech,  realized a $267,000 gain in
connection with the partial forgiveness of a grant made from a French government
agency.

                   Net loss.  The  Company's  net loss for the nine months ended
September  30,  1998  was $4.9  million  as  compared  to $9.1  million  for the
comparable  period of 1997.  The net loss  decrease of $4.2  million is due to a
$3.4 million decrease in net loss from the Company's  continuing  operations and
due to the disposition of Dorotech,  which reduced the net loss by $835,000. The
$3.4 million  decrease in net loss from the Company's  continuing  operations is
primarily  attributable  to an increase of $4.3  million in gross  margins and a
$671,000 decrease in G&A expense, offset by the $1.5 restructuring charge.

                   Net loss applicable to Common Shares. The net loss applicable
to common  shares  includes  adjustments  for  dividend  amounts  related to the
Company's  Series A preferred  stock and,  during 1997, for a $774,000  non-cash
charge to preferred stock dividends for the Company's  Series K Preferred Stock.
The net loss applicable to the nine months ended common shares was $5.9 million,

                                      -14-
<PAGE>

or ($.20) per share, for the nine months ended September 30, 1998 as compared to
$12.7  million or ($.51)  per  share,  for the  comparable  period of 1997.  The
decrease in net loss applicable to common shares is attributable to the decrease
in net loss  described  above,  the decrease in annual Series A Preferred  Stock
dividends  from  $2.00 to $0.84  per share and the  $774,000  Series K  non-cash
dividend charge in 1997.

Results of Operations - Three months ended September 30, 1998 and 1997

                   Revenues.  Total  revenues were $8.0 million and $9.9 million
for the three months ended September 30, 1998 and 1997,  respectively.  The $1.9
million  decrease in revenue was the result of a decrease in product  revenue of
$100,000,  or 2%, and a decrease in service revenue of $1.8 million, or 39%. The
decrease in product  revenue was primarily  attributable  to an increase of $1.0
million,  or 25%,  in  comparative  company  product  revenues  offset by a $1.1
million   reduction  due  the  disposition  in  1997  of  the  Company's  French
subsidiary,  Dorotech.  The decrease in service revenues of $1.8 million was the
result of a $2.3 million decrease due to the disposition of Dorotech,  offset by
a $472,000,  or 19%,  increase in comparative  company  service  revenues.  On a
comparative company basis, overall revenues increased $1.5 million, or 23%, from
$6.5  million for the nine months ended  September  30, 1997 to $8.0 million for
the same period in 1998.

                   Profit margins. Profit margins for product sales increased 19
percentage  points in the third  quarter of 1998 over the same period in 1997 as
cost of products  decreased  from 49% to 30% of sales.  The  increase in product
sales  margins was  primarily  due to the  increased  sales mix of the Company's
internally  developed  software  products.  Profit  margins  for  service  sales
increased 18 percentage  points for the three months ended September 30, 1998 as
compared to 1997 as the cost of services decreased from 82% to 64% of sales. The
increase  in  service  sales  margins  from 18% to 36% was due to the  Company's
continuing  emphasis on its custom development and professional  services.  On a
comparative company basis, overall profit margins increased 15 percentage points
to 58% for the  three  months  ended  September  30,  1998 from 43% for the same
period in 1997.

                   Sales and marketing.  Sales and marketing  expenses were $2.7
million  or 34% of  revenue,  for the three  months  ended  September  30,  1998
compared to $3.6 million,  or 37% of revenue in 1997.  The decrease of $901,000,
or 25%, was the result of the  Company's  disposition  of Dorotech  during 1997,
which reduced sales and marketing  expenses  $784,000 and by a $117,000 decrease
in comparative company expenses.

                   General and administrative. G&A expenses were $925,000 or 12%
of revenue,  for  the  three  months  ended  September 30, 1998 compared to $1.6
million, or 17% of revenue in 1997. The decrease of $724,000,  or 44%,  was  the

                                      -15-
<PAGE>

result of the Company's  disposition of Dorotech during 1997,  which reduced G&A
expenses $349,000,  and a $375,000,  or 29%, decrease in comparative company G&A
expenses due to the Company's efforts in cost reduction.

                   Product development.  The Company's  expenditures on software
R&D  activities in the three months ended  September 30, 1998 were $1.3 million,
of which  $300,000  was  capitalized  and $1.0  million was  expensed.  Software
research and development  expenditures for the 1997 period were $1.5 million, of
which $300,000 was capitalized  and $1.2 million was expensed.  The $0.2 million
decrease in research and development  expenditures is primarily  attributable to
the Company's 1997 disposition of Dorotech.

                   Net income  (loss).  The  Company's  net income for the three
months ended  September  30, 1998 was $17,000 as compared to a $2.9 million loss
for the comparable  period of 1997. The net loss decrease of $2.9 million in the
third  quarter of 1998 as  compared  to the same period in 1997 is due to a $2.4
million  decrease in net loss from the Company's  continuing  operations and the
disposition  of  Dorotech,  which  reduced  the net loss by  $500,000.  The $2.4
million  decrease  in net  loss  from the  Company's  continuing  operations  is
primarily attributable to an increase of $1.8 million in gross margins, $375,000
decrease in G&A expense and $117,000 reduction in sales and marketing expense.

                   Net loss applicable to Common Shares. The net loss applicable
to common  shares  includes  adjustments  for  dividend  amounts  related to the
Company's  Series A preferred  stock and,  during 1997, for a $774,000  non-cash
charge to preferred stock dividends for the Company's  Series K Preferred Stock.
The net loss applicable to common shares was $320,000,  or ($.01) per share, for
the three months ended  September 30, 1998 as compared to $4.6 million or ($.18)
per  share,  for the  comparable  period  of  1997.  The  decrease  in net  loss
applicable  to  common  shares  is  attributable  to the  decrease  in net  loss
described above and to the decrease in annual Series A Preferred Stock dividends
from $2.00 to $0.84 per share and the $774,000 Series K non-cash dividend charge
in 1997.


Liquidity and Capital Resources

      As of September  30,  1998,  the Company had $4.3 million in cash and cash
equivalents,  as  compared  to $3.8  million  in cash  and cash  equivalents  at
December  31,  1997.  Net working  capital was $5.4 million at June 30, 1998 and
$10.0 million at December 31, 1997.

        For the nine months ended September 30,  1998, the $475,000  increase in

                                      -16-
<PAGE>

cash and cash  equivalents  resulted  from $5.6  million  in cash  generated  by
investing  activities,  offset by $3.1 million used to fund operating activities
and $2.0 million in cash used to fund financing activities.

        The $5.6 million  provided by investing  activities arose primarily with
respect to cash collected from the promissory note received as consideration for
the sale of  Dorotech.  The $3.1  million  used by  operating  activities  arose
primarily with respect to the $4.9 million net loss in  operations,  offset by a
$1.8 million in depreciation  charges, $1.5 million in restructuring costs, $1.0
million  reduction  in  accounts  receivable  and  $561,000  increase in accrued
expenses. The $2.0 million used by financing activities arose primarily from the
$6.5 million  redemption of the Company's Series F Preferred Stock, $7.1 million
redemption of the Company's Series K and L Preferred Stock, $1.5 million used to
redeem the Company's  convertible  debentures  and payments in capital leases of
$603,000, offset by the $4.3 million proceeds from the issuance of common stock,
$9.7 million  proceeds from the issuance of preferred stock and $337,000 paid in
preferred stock dividends.

         The adverse results of operations that the Company has experienced have
been  declining and the Company's  operating  results were break even during the
quarter  ended  September  30, 1998.  Although the Company  expects the trend of
improved  operating  results to continue,  there can be no  assurances  that the
Company will not  experience  adverse  results of operations in the future.  The
Company believes that the combination of existing cash, benefits from its second
quarter restructuring,  potential future proceeds from such additional offerings
of equity  securities as may be required,  and any  anticipated  cash flows from
operations, will provide sufficient resources to fund its activities through the
next twelve  months.  Any  anticipated  cash flows from  operations  are largely
dependent  upon the  Company's  ability  to achieve  its sales and gross  profit
objectives for its TREEV product  suite.  If the Company is unable to meet these
objectives,  it will consider  alternative  sources of  liquidity.  Although the
Company believes that it can  successfully  implement its operating plan and, if
necessary,   raise   additional   capital,   there  can  be  no  assurance  that
implementation of the plan will be successful or that financing, if sought, will
be available.


PART II. OTHER INFORMATION

Item 1.              Legal Proceedings

         The Company is not  involved in any legal  proceedings,  other than the
routine litigation incidental to the business.




                                      -17-
<PAGE>

Item 2.           Changes in Securities

         In September  1998,  the Company  redeemed in cash the remaining  2,000
shares  outstanding of Series K Stock and all of the outstanding 3,250 shares of
Series L Stock for $7,100,000  including  outstanding  interest.  The $7,100,000
payment retired the obligations under the Series K Stock and Series L Stock.

         In  September  1998,  the  Company  completed  a private  placement  of
1,559,576  shares of Series N Stock,  together  with  warrants to  purchase  and
additional  800,000  shares of Common  Stock at an exercise  price of $0.625 per
share.  Proceeds  from the offering  were  $10,000,000.  The Company also issued
warrants  to purchase  509,091  shares of Common  Stock at an exercise  price of
$0.69 per share to the  placement  agent in the  transaction.  At September  30,
1998, the 1,559,576  shares of Series N Stock were  convertible  into 15,595,760
shares of Common Stock.

                   During the third  quarter of 1998,  the  Company  completed a
private  placement of 950,000  shares of Common Stock  pursuant to  Regulation D
under the Securities Act. Proceeds from the offering were $950,000.

Item 3.           Changes Upon Senior Securities

                  None.

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

                  None.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits.

3.35 Certificate of Designations, Preferences and Rights of Series N Convertible
Preferred Stock to be filed with the Secretary of State of the State of Delaware
on October 30, 1998.

10.36 Securities Purchase Agreement between TREEV,  Inc. and Horace T. Ardinger,
Jr.,  Ardinger  Family  Partnership,  Baker Family Trust,  and the Adkins Family
Trust as of September 22, 1998.

27.1     Financial data schedule



                                      -18-
<PAGE>

(b)      Reports on Form 8-K.

Form 8-K filed on  September  17,  1998 to report  the  Company's  plans to seek
stockholders'  approval  for a reverse  stock  split and to  announce  an equity
financing through a private placement of convertible preferred stock.


























                                      -19-



<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 hereunto duly authorized.

                                             TREEV, INC.
                                             (Registrant)


Date:  October 27, 1998                      By /s/ James J. Leto
                                                -----------------
                                             James J. Leto
                                             Chief Executive Officer


Date:  October 27, 1998                      By /s/ Thomas A. Wilson
                                                --------------------
                                             Thomas A. Wilson
                                             President and Chief Operating
                                             Officer


Date:  October 27, 1998                      By /s/ Jorge R. Forgues
                                                --------------------
                                             Jorge R. Forgues
                                             Senior Vice President of Finance
                                             and Administration, Chief Financial
                                             Officer and Treasurer