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 March 31, 1998


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

                         Commission File Number 0-22970


                           NETWORK IMAGING CORPORATION
        (Exact name of small business issuer 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: 28,794,985 shares of
common stock, $.0001 par value, as of April 23, 1998.


<PAGE>


                           NETWORK IMAGING CORPORATION

                                    Form 10-Q


                                Table of Contents



PART I   FINANCIAL INFORMATION

Item 1.  Financial Statements.

           Consolidated Balance Sheets at March 31, 1998
           (unaudited) and December 31, 1997                             2
    
           Consolidated Statements of Operations (unaudited)
           for the three months ended March 31, 1998 and 1997            3

           Consolidated Statement of Changes in Stockholders' Equity
           (unaudited) for the three months ended March 31, 1998         4

           Consolidated Statements of Cash Flows (unaudited)
           for the three months ended March 31, 1998 and 1997            5
    
           Notes to Consolidated Financial Statements                    6

Item 2. Management's Discussion and Analysis of Financial
           Condition and Results of Operations.                          7


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.                                              12

Item 6.  Exhibits and Reports on Form 8-K.                               12



<PAGE>


                  NETWORK IMAGING CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)



                                                          March 31, December 31,
                                                            1998         1997
                                                         ----------   ---------
                                                               (Unaudited)
                                ASSETS

Current assets:
  Cash and cash equivalents                              $   4,811    $   3,816
  Accounts and notes receivable, net                         6,149        8,569
  Note receivable Dorotech sale                               --          7,000
  Inventories                                                  796          722
  Prepaid expenses and other                                   986        1,108
                                                         ---------    ---------
        Total current assets                                12,742       21,215
Fixed assets, net                                            2,039        2,165
Long-term notes receivable, net                                283          378
Software development costs and
 purchased technology, net                                   2,634        2,490
Goodwill, net                                                  457          499
Other assets                                                   121          113
                                                         ---------    ---------
          Total assets                                   $  18,276    $  26,860
                                                         =========    =========


                  LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:
  Current debt maturities and
  obligations under capital leases                       $     948    $   2,479
  Accounts payable                                           2,547        2,037
  Accrued compensation and related
  expenses                                                     867        1,135
  Deferred revenue                                           4,963        3,334
  Other accrued expenses                                     1,594        2,250
                                                         ---------    ---------
          Total current liabilities                         10,919       11,235
Long-term debt and obligations
  under capital leases                                       1,105        1,108
                                                         ---------    ---------
          Total liabilities                                 12,024       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;
   1,614,575 and 1,615,675 shares
   issued and outstanding
  Common stock, $.0001 par value,
   100,000,000 shares authorized;
   28,784,985 and 26,236,186 shares
   issued and outstanding                                        3            3
  Additional paid-in-capital                               133,120      132,403
  Accumulated deficit                                     (126,871)    (124,437)
                                                         ---------    ---------
          Total stockholders' equity                         6,252        7,969
                                                         ---------    ---------
          Total liabilities and
           stockholders' equity                          $  18,276    $  26,860
                                                         =========    =========









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

                                      -2-
<PAGE>


                  NETWORK IMAGING CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except share and per share amounts)
                                   (Unaudited)


                                                   Three Months Ended March 31,
                                                     1998              1997
                                                 ------------      ------------

Revenue:
  Products                                       $      3,539      $      4,259
  Services                                              2,661             4,860
                                                 ------------      ------------
                                                        6,200             9,119
                                                 ------------      ------------
Costs and expenses:
  Cost of products sold                                 1,815             1,958
  Cost of services provided                             1,845             3,882
  Sales and marketing                                   2,734             3,612
  General and administrative                            1,176             1,611
  Product development                                     996             1,042
  Gain from extinguishment of debt                       --                (267)
                                                 ------------      ------------
                                                        8,566            11,838
                                                 ------------      ------------
Loss before interest income
  and income taxes                                     (2,366)           (2,719)
  Interest income, net                                    (68)               31
                                                 ------------      ------------
Loss before income taxes                               (2,434)           (2,688)
  Income tax benefit                                     --                  (6)
                                                 ------------      ------------
Net loss                                               (2,434)           (2,682)
                                                 ------------      ------------

Preferred stock preferences                              (337)             (976)
                                                 ------------      ------------
Net loss applicable to
  common shares                                  $     (2,771)     $     (3,658)
                                                 ============      ============

Net loss per common share                        $      (0.10)     $      (0.15)
                                                 ============      ============

Weighted average shares
  outstanding                                      27,488,054        24,463,511
                                                 ============      ============














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

                                      -3-
<PAGE>
<TABLE>


                  NETWORK IMAGING CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                    For the three months ended March 31, 1998
                      (In thousands, except share amounts)
                                   (Unaudited)


<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 $26                                 1,108,947                     1,049                             1,049

Conversion of preferred stock           (1,000)               1,449,852                                                           0

Issuance of warrants                                                                            5                                 5

Dividends on preferred stock                                                                 (337)                             (337)

Net loss                                                                                                    (2,434)          (2,434)
                                  ----------------------   -------------------------  --------------   --------------   ------------

Balance March 31, 1998               1,614,575     --        28,794,985        $3         133,120         (126,871)          $6,252
                                  ======================   =========================  ==============   ==============   ============



</TABLE>














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

                                      -4-
<PAGE>


                  NETWORK IMAGING CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                    Three months Ended March 31,
                                                         1998           1997
                                                      -----------   -----------
                                                             (In thousands)

Cash flows from operating activities:
 Net loss                                                $(2,434)       $(2,682)
 Adjustments to reconcile net loss
  to net cash used in operating
  activities:
  Depreciation and amortization                              636          1,338
  Other non-cash adjustments                                  14           --
  Changes in assets and liabilities:
    Accounts and notes receivable                          2,413           (797)
    Inventories                                              (74)           (66)
    Prepaid expenses and other                               114           (165)
    Accounts payable                                         511            309
    Accrued compensation and
     related expenses                                       (268)           343
    Accrued expenses, other                                 (967)          (754)
    Deferred revenues                                      1,629          2,298 
    Deferred income taxes                                   --               15
                                                         -------        -------
Net cash provided by (used in)
 operating activities                                      1,574           (161)
                                                         -------        -------

Cash flows from investing activities:
 Capitalized software development
  and license costs                                         (353)          (436)
 Purchases of fixed assets                                  (183)          (231)
 Proceeds from business divestitures,
   net of related costs                                    7,076             42
                                                         -------        -------
Net cash provided by (used in)
 investing activities                                      6,540           (625)
                                                         -------        -------

Cash flows from financing
 activities:
 Proceeds from issuance of
  common stock, net                                        1,049            124
 Proceeds from issuance of
  preferred stock, net                                      --              (25)
 Cash dividends paid on
  preferred stock                                           --             (977)
 Redemption of Mandatory
  Redeemable Preferred Stock                              (6,548)        (3,500)
 Redemption of convertible
  debentures                                              (1,300)          --
 Proceeds from borrowings                                   --            3,500
 Principal payments on capital
  lease obligations                                         (320)          (250)
 Principal payments on debt                                 --             (532)
                                                         -------        -------
Net cash used in financing
 activities                                               (7,119)        (1,660)
                                                         -------        -------

Effect of exchange rate changes
 on cash and cash equivalents                               --              (97)
Net increase (decrease) in cash
 and cash equivalents                                        995         (2,543)
Cash and cash equivalents at
 beginning of year                                         3,816          7,601
                                                         -------        -------
Cash and cash equivalents at March 31,                   $ 4,811        $ 5,058
                                                         =======        =======

Supplemental Cash Flow Information:
 Interest paid                                           $   120        $    72
 Income taxes paid                                       $   155        $   112




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

                                      -5-
<PAGE>


                  NETWORK IMAGING CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 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 three month period ended March 31,
1998 may not be  indicative  of the results  that may be  expected  for the year
ending December 31, 1998.


2.   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 $6.5 million payment  retired the obligations  under the Series F
Stock. The Company used the $7.0 million 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.


3.    CONVERTIBLE NOTES 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. At
March 31, 1998, $600,000 of the Notes remained outstanding.


4.    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.  Proceeds  from the  offering  were  $1.1  million  and
offering costs of $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 by August 31, 1998.

                                       -6-
<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.  The risks  and  uncertainties  of the
Company include those set forth in the Company's Prospectus dated April 6, 1998,
such as the following:

         The Company has had net losses in each period of its  operations  since
its  inception,  except for one quarter,  and it had an  accumulated  deficit at
December 31, 1997 of $124.4 million.  Net losses applicable to Common Stock were
$14.3 million for the twelve months ended  December 31, 1997,  $21.1 million for
the year ended  December 31, 1996, and $34.9 million for the year ended December
31, 1995. Included in those losses were non-recurring charges including in 1995,
non-recurring  net charges of $9.3 million in connection  with the bankruptcy of
IBZ Digital  Production  AG ("IBZ"),  a company  that had been  purchased by the
Company as a wholly  owned  subsidiary,  and business  divestitures  and charges
associated  with a  delay  in the  commercial  release  of the  Company's  1View
product,  the lead time to close sales and recognize revenues,  increasing sales
and  marketing   efforts  and  costs   associated  with  product   research  and
development. See "Description of Network Imaging - Business."

         The adverse  results of operations  that the Company has experienced is
expected  to  continue  at least  until the  latter  part of 1998.  The  Company
believes that the combination of existing cash,  potential  future proceeds from
such  additional  offerings of equity  securities  as may be  required,  and any
anticipated cash flows from operations,  should provide sufficient  resources to
fund its activities  through the next twelve months and to maintain net tangible
assets  of at least $4  million  as  required  for  continued  inclusion  of the
Company's  securities on Nasdaq.  Any anticipated cash flows from operations are
largely  dependent  upon the  Company's  ability to achieve  its sales and gross
profit objectives for its 1View and other products.  If the Company is unable to
meet these objectives,  it will consider alternative sources of liquidity,  such
as additional offerings of equity securities. Although the Company believes that
it can successfully implement its

                                       -7-
<PAGE>

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.

                  The  computer  industry,  including  the  information  access,
imaging  and  optical  disk  storage  segments,  is highly  competitive,  and is
characterized  by rapid  and  continuous  technological  change,  short  product
cycles,  frequent product  innovations and new product  introductions,  evolving
industry standards,  and changes in customer  requirements and preferences.  The
Company's future  profitability  will depend on, among other things,  wide-scale
market  acceptance  of  the  Company's   products,   the  Company's  ability  to
demonstrate the potential advantages of its products over other types of similar
products  and  on  the  Company's   ability  to  develop  in  a  timely  fashion
enhancements  to existing  products or new products  that are  responsive to the
demands of the  marketplace  for  information  access,  imaging and optical disk
storage  systems.  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.  In addition,  the Company faces
existing competitors that are larger and more established and have substantially
greater  resources  than the  Company.  Because  of the rapid  expansion  of the
information  access,  imaging and optical disk storage market,  the Company will
also face  competition  from new  entrants,  possibly  including  the  Company's
customers,  suppliers  or  resellers.  Technological  advances  by  any  of  the
Company's   current  or  future   competitors  could  render  obsolete  or  less
competitive the products being offered by the Company. The Company believes that
the principal  competitive  factors affecting the market for information access,
imaging  and optical  disk  storage  products  include  effectiveness,  scope of
product  offerings,  technical  features,  ease  of use,  reliability,  customer
service and support, name recognition, distribution resources and price. Current
and  potential  competitors  have  established,  or may establish in the future,
strategic  alliances  to increase  their  ability to compete  for the  Company's
prospective  customers.  Accordingly,  it is possible  that new  competitors  or
alliances  may  emerge  and  rapidly  acquire  significant  market  share.  Such
competition  could have a material  adverse  effect on the  Company's  business,
financial condition and results of operations.

         The Company's  development of enhancements to existing  products and of
new products is subject to the kinds of problems  and delays that are  routinely
encountered  in the  development  of  software.  For  example,  the  Company may
experience schedule overruns in software  development  triggered by factors such
as insufficient staffing or the unavailability of development-related  software,
hardware  or  technologies.  Further,  during the  development  of new  software
products,  or the enhancement of existing  products,  the Company's  development
schedules  may be  altered  as a  result  of the  discovery  of  software  bugs,
performance  problems  or changes to the  product  specification  in response to
customer requirements, market developments or Company initiated changes. Changes
in product  specifications  may delay completion of documentation,  packaging or
testing,  which may, in turn,  affect the release  schedule of the  product.  In
connection  with complex  software  products,  the  technology  market may shift
during the 
           
                                       -8-
<PAGE>

development cycle, requiring the Company either to enhance or change a product's
specifications  to meet a customer's  changing  needs.  Any of these factors may
cause a product to enter the market behind schedule,  which may adversely affect
market  acceptance  of  the  product,  or  place  it  at  a  disadvantage  to  a
competitor's  product that has already gained market share or market  acceptance
during the delay. The Company does not believe,  however, that it is practicable
to  quantify  the impact  that such delays have had or in the future may have on
its  operating  results.  There can be no  assurance  that the Company  will not
experience  difficulties  that will interrupt the marketing and  distribution of
its current products or that the Company will not experience difficulties in the
future that could  materially  delay or prevent the  successful  development  of
other products.

Results of Operations - Three months ended March 31, 1998 and 1997

                   Revenues.  Total  revenues were $6.2 million and $9.1 million
for the three  months  ended  March 31,  1998 and 1997,  respectively.  The $2.9
million  decrease in revenue was the result of decreases  in product  revenue of
$720,000, or 17%, and a decrease in service revenue of $2.2 million, or 45%. The
decrease in product  revenue was primarily  attributable  to the  disposition in
1997 of the Company's subsidiary in France  ("Dorotech"),  which reduced product
revenues by $1.1  million,  offset by an  increase  of  $385,000 in  comparative
company  product  revenues.  Similarly,  the  decrease in service  sales of $2.2
million was the result of a $2.5  million  decrease  due to the  disposition  of
Dorotech,  offset by a $297,000 increase in comparative  company revenues.  On a
comparative  company basis,  overall revenues increased  $682,000,  or 12%, from
$5.5  million for the three  months ended March 31, 1997 to $6.2 million for the
same period in 1998.

                   Profit Margins.  Profit margins for product sales decreased 5
percentage  points in the first  quarter of 1998 over the same period in 1997 as
cost of products  increased  from 46% to 51% of sales.  The  decrease in product
sales margins was  primarily due to the increased  sales mix of hardware sold in
conjunction with the Company's  internally  developed software products.  Profit
margins for service sales  increased 11  percentage  points for the three months
ended March 31, 1998 as compared to 1997 as the cost of services  decreased from
80% to 69% of sales.  The increase in service  sales margins from 20% to 31% was
due  to  the  Company   increasing   emphasis  on  its  custom  development  and
professional services.

                   Sales and marketing.  Sales and marketing  expenses were $2.7
million or 44% of revenue, for the three months ended March 31, 1998 compared to
$3.6 million,  or 40% of revenue in 1997. The decrease of $878,000,  or 24%, was
the result of the Company's  disposition of Dorotech during 1997,  which reduced
sales and marketing  expenses  $836,000,  and a $42,000  decrease in comparative
company expenses.

                                       -9-
<PAGE>

                   General and administrative. G&A expenses were $1.2 million or
19% of revenue,  for the three  months  ended  March 31,  1998  compared to $1.6
million,  or 18% of revenue in 1997.  The decrease of $435,000,  or 27%, was the
result of the Company's  disposition of Dorotech during 1997,  which reduced G&A
expenses $391,000, and a $44,000 decrease in comparative company G&A expenses.

                   Product development.  The Company's  expenditures on software
research and development  activities ("R&D") in the three months ended March 31,
1998 were  $1,350,000,  of which  $354,000  was  capitalized  and  $996,000  was
expensed.  Software  research and development  expenditures  for the 1997 period
were $1,478,000,  of which $436,000 was capitalized and $1,042,000 was expensed.
The $128,000  decrease in research and development  expenditures is attributable
to the  Company's  1997  disposition  of  Dorotech,  which  reduced R&D expenses
$336,000, offset by a $208,000 increase in comparative company R&D expenses.

                   Gain on  extinguishement  of debt.  During the first  quarter
1997,  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 three months ended
March 31, 1998 was $2.4 million as compared to $2.7  million for the  comparable
period of 1997.  The net loss  decrease of $248,000 in the first quarter of 1998
as compared to the same period in 1997 is due to the  disposition  of  Dorotech,
which reduced the net loss by $227,000,  and a $21,000 decrease in net loss from
the Company's continuing operations.

                   Net loss applicable to Common Shares. The net loss applicable
to common  shares  includes  adjustments  for  dividend  amounts  related to the
Company's  preferred  stock.  The net loss  applicable to common shares was $2.8
million,  or ($.10) per share,  for the three  months  ended  March 31,  1998 as
compared to $3.7 million or ($.15) 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.


Liquidity and Capital Resources

      As of March  31,  1998,  the  Company  had $4.8  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 $1.8 million at March 31, 1998 and
$10.0 million at December 31, 1997.

      For the three months ended March 31, 1998,  the $995,000  increase in cash
and cash equivalents resulted from $1.6 million in cash generated  by  operating
activities and $6.5

                                      -10-
<PAGE>

million provided by investing activities, offset by $7.1 million in cash used to
fund financing activities.

       The $1.6 million  provided by operating  activities  arose primarily with
respect to the $2.4 million  reduction in accounts and notes receivable and $1.1
million  increase in deferred  revenues,  offset by the $2.5 million net loss in
operations.  The $6.5 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  $7.1  million  in cash  used by
financing  activities  arose  primarily from the $6.5 million  redemption of the
Company's Series F Preferred Stock.

      The adverse  results of operations  which the Company  experienced in 1997
and the first  quarter of 1998 are expected to continue,  in declining  amounts,
ending later in 1998. The Company believes that its existing cash, together with
the anticipated future proceeds from the sale of Series L Convertible  Preferred
Stock and any anticipated cash flows from operations,  should provide sufficient
resources to fund its activities  through the next twelve months and to maintain
net tangible  assets of at least $4.0  million,  which is required for continued
inclusion of the Company's securities on Nasdaq-NMS.  Any anticipated cash flows
from operations are largely  dependent upon the Company's ability to achieve its
sales and gross  profit  objectives  for its  1View and other  products.  If the
Company is unable to meet these objectives, it will consider alternative sources
of liquidity,  such as additional  offerings of equity securities and/or further
reductions of operating  expenses  (such as travel,  marketing,  consulting  and
salaries).  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.

         Nasdaq has  adopted  new listing  and  maintenance  requirements  which
became effective February 23, 1998. Pursuant to the new requirements, common and
preferred stock trading on Nasdaq must maintain a minimum bid price of $1.00. At
times in 1997 and the first part of 1998,  the Company's  Common Stock has had a
minimum bid price below $1.00.  The Company's  Preferred Stock has  consistently
traded with a minimum bid price of over $1.00.  Although  the  Company's  Common
Stock is currently trading with a minimum bid price above $1.00, there can be no
assurance  that the  Company's  Common Stock will  continue to trade with such a
minimum bid price.  In the event that the  Company's  Common Stock has a minimum
bid price below $1.00,  the Company believes it can propose and effect a plan to
achieve compliance;  however, there can be no assurance that the Company will be
able to stay in  compliance  with the  Nasdaq  requirement.  While  the  Company
believes that it can meet Nasdaq's  National  Market or the  requirements of The
Nasdaq Stock Market, any ability to trade on a national exchange could adversely
impact the value of the Company's stock.


                                      -11-
<PAGE>

PART II.           OTHER INFORMATION

Item 1.            Legal Proceedings.

         The Company is not involved in any legal proceedings,  other than those
proceedings and matters incidental to the business.

Item 6.            Exhibits.

(a)                Exhibits

                   None


(b)                Reports on Form 8-K.

                   None
























                                      -12-

<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.


                                           NETWORK IMAGING CORPORATION
                                                  (Registrant)


Date:  April 23, 1998                           By /s/ James Leto
                                                   --------------
                                                James J. Leto
                                                President and Chief Executive
                                                Officer


Date:  April 23, 1998                           By /s/ Jorge R. Forgues
                                                   --------------------
                                                Jorge R. Forgues
                                                Senior Vice President of Finance
                                                and Administration, Chief
                                                Financial Officer and Treasurer