UNITED STATES
              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 December 31, 1996

                 Commission File Number: 33-15370-D
                            -----------

                         CUSA Technologies, Inc.
   ------------------------------------------------------------
       (Exact name of the registrant as specified in charter)

                             Nevada 87-0439511
   --------------------------- --------------------------------
            State of Incorporation IRS Identification Number

            986 West Atherton Drive, Salt Lake City, Utah 84123
   -----------------------------------------------------------
                (Address of principal executive offices)

                                (801) 263-1840
   -----------------------------------------------------------
                (Telephone of registrant including area code)

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

                      Yes ___X___              No ________

                      APPLICABLE ONLY TO ISSUER INVOLVED IN BANKRUPTCY
                        PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the Issuer filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by court.

                                  Yes _______ No ________


                           APPLICABLE ONLY TO CORPORATE ISSUERS

As of February 10, 1996 the Issuer had 8,917,718 shares of its common stock, par
value $0.001 per share, issued and outstanding.


<PAGE>




                                                   PART I
                                           FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

CUSA Technologies,  Inc. (the "Company"),  has included the consolidated balance
sheets of the Company and its  subsidiaries as of December 31, 1996  (unaudited)
and June 30,  1996 (the end of the  Company's  most  recent  fiscal  year),  the
unaudited  consolidated  statements  of  operations  for the three  months ended
December 31, 1996 and 1995 together with unaudited  condensed  notes thereto and
the unaudited  consolidated  statements of operations and cash flows for the six
months ended December 31, 1996 and 1995.

In the opinion of management of the Company,  the financial  statements  reflect
all  adjustments,  all of which are normal recurring  adjustments,  necessary to
fairly  present the financial  condition of the Company for the interim  periods
presented.  The financial statements included in this report on Form 10-Q should
be read in conjunction with the audited financial  statements of the Company and
the notes thereto  included in the annual report of the Company on form 10-K for
the year ended June 30, 1996.

<TABLE>


                                                                   CUSA TECHNOLOGIES, INC.
                                                                 Consolidated Balance Sheets
<CAPTION>

                                                                               (Unaudited)
                                                                                December 31,             June 30,
                                                                                 1996                   1996
                                                                                -----------------    -------------------
  <S>                                                                           <C>                  <C>
                                          Assets

Current Assets:
                    Cash                                                        $1,163,102              583,080
                    Trade accounts receivable,
                    net of allowance for
                    doubtful accounts                                            4,793,485            2,987,680
                    Inventories                                                    252,488              140,402
                    Prepaid expenses and other                                     468,344              425,148
                    assets
                    Net assets of discontinued                                           -            5,081,383
                    operations
                                                                                -----------------    -------------------

                                                   Total current                  6,677,419           9,217,693
                                                   assets

Property and
equipment :
                    Land                                                            297,688             297,688
                    Buildings and improvements                                    2,516,223           2,423,416
                    Furniture, fixtures and                                       2,863,539           2,672,653
                    equipment
                    Other                                                           645,086             668,405
                                                                                -----------------     ------------------

                                                   Total property and             6,322,536           6,062,162
                                                   equipment

                    Less accumulated depreciation                                 1,764,761           1,371,761
                    and amortization
                                                                                -----------------    --------------------

                                                   Net property and               4,557,775           4,690,401
                                                   equipment

Equipment under                                                                     146,816             233,816
capital lease
obligations, net

Receivables from                                                                    499,277             362,849
related parties

Software                                                                          1,457,379           1,531,158
development and
acquisition costs,
net

Other assets                                                                        190,125             220,084

                                                                                =================    ===============
                                                                               $ 13,528,791          16,256,001
                                                                                =================    ===============

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

</TABLE>

<TABLE>

                                                                   CUSA TECHNOLOGIES, INC.
                                                                 Consolidated Balance Sheets

<CAPTION> 
                                                                                (Unaudited)
                                                                                December 31,             June 30,
                                                                                1996                       1996
                                                                                ------------------    -----------------
<S>                                                                             <C>                   <C>
                           Liabilities and Stockholders' Deficit
Current
liabilities:
                    Line of credit with bank                                       229,017                 891,022
                    Current installments of                                      2,609,312               3,258,269
                    long-term debt
                    Current installments of                                        183,982                 205,888
                    obligations under capital
                    leases
                    Current installments of long                                   100,000                       -
                    term debt with related parties
                    Accounts payable                                             2,617,673               3,823,560
                    Accrued liabilities                                          2,299,351               3,309,083
                    Customer deposits                                            3,480,742               1,690,973
                    Income taxes payable                                            12,676                  18,081
                    Payables to related parties                                          -               1,167,398
                    Net liabilities of                                             687,072                       -
                    discontinued operations
                    Deferred revenue                                             5,999,210                5,057,444
                                                                                ---------------        ------------------
                                                   Total current                18,219,035               19,421,718
                                                   liabilities

Long-term debt                                                                   2,445,000                2,445,000
with related
parties

Long-term debt,                                                                          -                  430,894
excluding current
installments

Obligations under                                                                   144,356                 193,977
capital leases,
excluding current
installments

                                                                                -----------------       -----------------
                                                   Total liabilities              20,808,391             22,491,589

Commitments and                                                                            -                      -
contingent
liabilities

Stockholders'
deficit:
                    Series A convertible
                    preferred stock, $.001  par
                    value; authorized                                                  1,000                  1,000
                    1,500,000 shares; issued and outstanding
                    1,000,000 shares Common stock,
                    $.001 par value; authorized 25,000,000 shares; 
                    issued and outstanding 8,917,718 shares 
                    at December 31, 1996 and 8,916,438 shares at 
                    June 30, 1996                                                       8,918                  8,916
                                                   
                    Additional paid-in capital                                     10,530,307             10,530,308
                    Accumulated deficit                                           (17,819,825)           (16,775,812)
                                                                                -----------------        ---------------
                                                   Total                           (7,279,600)            (6,235,588)
                                                   stockholders'
                                                   deficit

                                                                                =================        ===============
                                                                               $    13,528,791             16,256,001
                                                                                =================        ===============

</TABLE>
The accompanying notes are an integral part of these financial
statements.

<TABLE>
                                                                                    0                          0


                             CUSA TECHNOLOGIES, INC.
                      Consolidated Statements of Operations
                                   (Unaudited)

<CAPTION>
                                                                                Three months ended             Six months ended
                                                                                  December 31,                    December 31,
                                                                                ----------------------------------------------------
                                                                                1996               1995        1996        1995
                                                                                ----------------------------------------------------
<S>                                                                             <C>             <C>          <C>          <C>
Net revenues:
                      Hardware and software                                     $ 2,758,924     4,428,857    4,556,540    7,707,872
                      sales
                      Support, maintenance                                        4,566,848     3,932,889    8,777,740    7,704,380
                      and other services
                      Other revenue                                                 251,620       269,137      433,113      485,551
                                                                                ----------------------------------------------------
                                             Total revenues                       7,577,392     8,630,883   13,767,393   15,897,803
                                                                                ----------------------------------------------------

Cost of goods sold
and other direct
costs:
                      Hardware and software                                       1,105,374     2,130,425    1,906,635    3,526,048
                      Support, maintenance                                        2,842,953     2,397,403    5,599,628    4,607,049
                      and other services
                      Other                                                         103,047        77,079      186,014      162,806
                                                                                ----------------------------------------------------
                                             Total cost of goods sold and other   4,051,374     4,604,907    7,692,277    8,295,903
                                             direct costs
                                                                                ----------------------------------------------------

                                             Gross profit                         3,526,018     4,025,976     6,075,116   7,601,900

Product development                                                                 692,174       257,132     1,293,993     545,588
costs
Selling, general and                                                              2,579,527     3,336,583     5,306,031   6,319,264
administrative
expenses

                                                                                ----------------------------------------------------
                                             Operating income (loss)                254,317       432,261      (524,908)    737,048

Other income
(expense):
                      Interest expense                                             (137,566)      (96,590)     (298,278)   (178,641)
                      Other, net                                                      5,888        22,676          (649)     24,152

                                                                                ----------------------------------------------------
                                             Income (loss) from continuing 
                                                  operations before income taxes    122,639       358,347      (823,835)    582,559

Income tax expense                                                                        -       200,878             -     335,749

                                                                                ----------------------------------------------------
Income (loss) from                                                                  122,639       157,469      (823,835)    246,810
continuing operations

Loss from                                                                                 -       (53,640)            -    (180,162)
discontinued
operations, net of
income taxes

Loss from disposal
of discontinued
operations,
net of income taxes                                                                 (78,455)            -       (160,176)         -

                                                                                ====================================================
                                             Net Income (loss)                  $    44,184        103,829      (984,011)    66,648
                                                                                ====================================================

Income (loss) per
common and common
equivalent share:
                      Primary
                                             From continuing operations         $      0.01           0.01         (0.10)      0.02
                                             From discontinued operations       $     (0.01)         (0.01)        (0.02)     (0.02)
                      Fully Diluted
                                             From continuing operations         $      0.01           0.01                     0.02
                                             From discontinued operations       $     (0.01)         (0.01)                   (0.02)

Weighted average
common and common
equivalent shares:
                      Primary                                                     8,917,718      9,814,539     8,917,718  9,721,645
                      Fully Diluted                                               9,917,718      9,921,639                9,885,194

</TABLE>

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

<TABLE>
                                                              CUSA TECHNOLOGIES, INC.
                                                       Consolidated Statements of Cash Flows
                                                                    (Unaudited)
                                                           Six months ended December 31,
<CAPTION>

                                                                                     1996                         1995
                                                                                  _______________              ____________

<S>                                                                             <C>                            <C>                
Cash flows from
operating
activities:
Income (loss) from                                                              $  (823,835)                    246,810
continuing
operations
Adjustments to
reconcile income
(loss) from
continuing
operations
to net cash used
in operating
activities:
                                         Depreciation and                            763,859                  1,072,687
                                         amortization
                                         Provision for                                35,749                     22,222
                                         doubtful accounts
                                         Net change in
                                         current assets
                                         and liabilities:
                                                    Trade accounts receivable     (1,841,554)                  (948,099)
                                                    Inventories                     (112,086)                   222,006
                                                    Prepaids expenses and other      (43,196)                  (154,421)
                                                     assets
                                                    Accounts payable and accrued  (2,215,619)                   846,682
                                                     liabilities
                                                    Customer deposits              1,789,769                    909,170
                                                    Income taxes payable              (5,405)                   (20,061)
                                                    Deferred income taxes                  -                    406,376
                                                    Deferred revenue                 941,766                    731,664
                                                                                -----------------           ------------------
                                                 Net cash provided by (used in)   (1,510,552)                  3,335,036
                                                 continuing operating activities

Net cash used in                                                                  (2,091,721)                (1,233,159)
discontinued
operations
                                                                                ------------------          -------------------

                                                  Net cash provided by (used in)  (3,602,273)                 2,101,877
                                                   operating activities

Cash flows from
investing
activities:
                                         Software                                   (210,081)                  (352,414)
                                         development costs
                                         Capital                                    (260,374)                  (800,804)
                                         expenditures
                                         Cash paid for                                     -                          -
                                         acquisitions
                                         Advances to                                (136,428)                   -
                                         related parties
                                         Decrease in other                            29,959                    (3,664)
                                         assets
                                         Net cash provided                         7,700,000                  (617,617)
                                         by (used in)
                                         investing
                                         activities of
                                         discontinued
                                         operations
                                                                                ------------------          -----------------
                                                 Net cash provided by (used in)    7,123,076                (1,774,499)
                                                   investing activities

Cash flows from
financing
activities:
                                         Net borrowings                             (662,005)                  (329,211)
                                         under lines of
                                         credit
                                         Repayments of                               (71,527)                  (104,437)
                                         obligations under
                                         capital leases
                                         Repayment of                             (1,167,398)                  (439,026)
                                         long-term debt
                                         with related
                                         parties
                                         Proceeds from                                     -                  1,300,000
                                         long-term debt
                                         with related
                                         parties
                                         Issuance of                                       -                      2,009
                                         common stock and
                                         exercise of stock
                                         options
                                         Payments to                                       -                    (50,000)
                                         acquire common
                                         stock
                                         Repayments of                              (979,851)                  (148,492)
                                         long-term debt
                                         Preferred                                   (60,000)                   (60,000)
                                         dividend
                                         distributions
                                                                                ----------------           ----------------
                                                 Net cash provided by (used in)   (2,940,781)                   170,843
                                                  financing activities

                                                 Net increase in cash                580,022                    498,221

Cash at beginning                                                                    583,080                    818,883
of period

                                                                                =================         ==================
Cash at end of                                                                  $  1,163,102                  1,317,104
period
                                                                                =================         ==================




</TABLE>
The accompanying notes are an integral part of these financial
statements.


                            CUSA TECHNOLOGIES, INC.
                    Notes to Consolidated Financial Statements
                                  (Unaudited)

(1) Basis of Presentation

The   accompanying   unaudited   consolidated   financial   statements  of  CUSA
Technologies, Inc. (the Company) have been prepared in accordance with generally
accepted  accounting  principles for interim financial  information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly,  these
financial  statements  do  not  include  all  of the  information  and  footnote
disclosures  required by generally accepted  accounting  principles for complete
financial statements. These financial statements and footnote disclosures should
be read in conjunction with the audited  consolidated  financial  statements and
the notes thereto  included in the Company's  latest report on Form 10-K for the
year  ended  June 30,  1996.  In the  opinion of  management,  the  accompanying
unaudited consolidated financial statements contain all adjustments  (consisting
of only normal recurring  adjustments) necessary to fairly present the Company's
consolidated  financial  position as of December  31, 1996 and its  consolidated
results of operations  and cash flows for the six months ended December 31, 1996
and 1995.  The results of operations for the three and six months ended December
31, 1996 may not be  indicative of the results that may be expected for the year
ending June 30, 1997.


(2) Liquidity

During the six months ended December 31, 1996, the Company  incurred a loss from
continuing operations of $823,835, incurred a net loss of $984,011, used cash in
operating  activities of $3,602,273 and at December 31, 1996 had a stockholders'
deficit of  $7,279,600.  The losses have resulted in a violation of certain debt
covenants  with the Company's  primary  financial  institution,  which have been
waived by the financial  institution  through September 30, 1996. The Company is
negotiating to amend such covenants to conform to currently  anticipated  future
operating results.  During the second quarter of the fiscal year, management has
partially  implemented a plan to return the Company to profitable operations and
a positive cash flow. As a result of the  operations  for the three months ended
December 31, 1996, the Company had income from continuing operations of $122,639
and net income  (including  a loss on disposal  of  discontinued  operations  of
$78,455) of $44,184. In the opinion of management,  full implementation of these
plans will permit the Company to meet its operating  and debt cash  requirements
through the next year. The Company is subject to many  uncertainties  over which
management  has limited  control,  any one of which could  adversely  affect the
Company's  operating  cash flow,  and thus  create  cash flow  problems  for the
Company.  Subsequent to December 31, 1996 the Company agreed to sell 8.6 million
shares  of common  stock  for $8.0  million  in cash to its  Chairman  and Chief
Executive Officer. (See foot note 6).


(3) Discontinued Operations

In June 1996, the Board of Directors of the Company  committed to dispose of the
business and assets of the medical and  commercial  divisions.  On July 2, 1996,
the Company  consummated  an asset purchase  agreement  with Physician  Computer
Network,  Inc.  (PCN)  whereby  PCN agreed to acquire  substantially  all of the
assets and assume certain liabilities of the medical and commercial divisions.

The medical and commercial  divisions  have been  accounted for as  discontinued
operations, and accordingly, the results of their operations are segregated from
continuing  operations in the  accompanying  statements of operations.  Revenue,
operating  costs and  expenses,  other income and  expense,  and income taxes of
these  divisions for the three and six months ended  December 31, 1996 and 1995,
have been  reclassified  as  discontinued  operations.  No allocation of general
corporate  overhead has been made to  discontinued  operations  related to these
divisions.

In June 1996, upon adoption of the plan to dispose of the medical and commercial
divisions,  the  Company  recorded a  provision  for the  estimated  loss on the
disposal of the divisions in the amount of $2,494,451 (net of income tax benefit
of $-0-). This provision relates to the expected loss on the sale to PCN, net of
disposal costs, severance benefits to division employees,  certain occupancy 
costs under non-cancelable leases, and anticipated future  losses  related to 
assets  and  operations  not sold to PCN until  their ultimate disposition is 
completed. The estimation of the loss on the disposal of the divisions requires
management to make estimates and assumptions that affect the reported  amount 
of the loss on disposal.  Actual  results could differ from those estimates. 
As such estimates are adjusted or as actual results occur, the adjustments  to 
the estimates  are reported in the current  period as additional gain or loss 
on disposal.  During the three and six month periods ended December 31,  1996,  
the  Company  recorded  additional  losses  on the  disposal  of the
divisions in the amount of $78,455 and  $160,176,  respectively,  (net of income
tax benefit of $-0-).

The remaining assets and liabilities related to the discontinued operations have
been  separately  classified  on the  balance  sheets  as  net  assets  (or  net
liabilities)  of  discontinued   operations.  A  summary  of  these  assets  and
liabilities as of December 31, 1996 is as follows:

         Assets:
           Trade accounts receivable, net                     $  140,453
           Prepaid expenses and other assets                     200,000
                                                                 -------
                  Total assets                                   340,453

         Liabilities:
           Customer deposits                                       50,491
           Liability for estimated loss on disposal               977,030
                  Total liabilities                             1,027,521

         Net liabilities of discontinued operations           $   687,072
                                                                =========


(4) Income (loss) per Share

Income or loss per common and common  equivalent  share is  computed by dividing
net income (loss) by the weighted average common shares  outstanding  during the
period,  including common  equivalent  shares (if dilutive).  Common  equivalent
shares include stock options,  convertible preferred stock and convertible debt.
Common  equivalent  shares are calculated on stock options and convertible  debt
only when the market price of the common stock  obtainable has been in excess of
the exercise price for substantially all of the three consecutive  months ending
with the last month of the period reported.  No common stock  equivalent  shares
related to stock options or convertible  debt have been included in the earnings
per share  calculation  for the three months ended  December 31, 1996.  No fully
diluted  loss per  share  has been  reported  for the six  month  period  ending
December 31, 1996,  since the  inclusion of such shares would be  anti-dilutive.
Income used in this  calculation is reduced (loss is increased) by the dividends
paid to preferred stockholders.


(5) Contingent Liabilities

The Company is  involved  in certain  legal  matters in the  ordinary  course of
business.  In the opinion of management and legal counsel, such matters will not
have a material effect on the financial position or results of operations of the
Company.



 (6)      Subsequent Event

Subsequent  to December 31, 1996 the Company  agreed to sell  approximately  8.6
million shares of its common stock,  representing  49% of the common stock to be
outstanding  after  the  completion  of the  sale,  to its  Chairman  and  Chief
Executive Officer for $8.0 million in cash.  Approximately  $3.8 million will be
used to  retire  long-term  debt,  $2.0  million  will be  used  to  redeem  the
outstanding  preferred  stock  and the  remainder  will be added to the  working
capital of the Company. The following unaudited condensed consolidated pro forma
balance sheet as of December 31, 1996, represents an estimate of how the balance
would have  appeared if the  transaction  had  occurred on that date.  The above
information was used to estimate the Pro forma adjustments listed below:
<TABLE>
<CAPTION>

                                                                                                Pro forma
                                          Balance                                                 Balance
                                         December 31,              Pro forma                     December 31,
                                           1996                   Adjustments                      1996
                                      ------------------          -----------                   ------------

<S>                                   <C>                       <C>                             <C>
Assets                                $     13,528,791            2,000,000                     15,528,791
                                        ==============          ===========                     ============


Liabilities and Stockholders' Deficit:
   Liabilities                        $  20,808,391              (4,000,000)                    16,808,391
   Stockholders' Deficit               (  7,279,600)              6,000,000                     (1,279,600)
                                       ----------------        ------------                    ---------------

                                      $      13,528,791           2,000,000                     15,528,791
                                       ================        ============                    ===============

</TABLE>
As of the date of this  report  the  agreement  had not been  consummated.  As a
result the above  estimated Pro forma  adjustments  may not represent the actual
results of the transaction.


<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

General

In June of 1994,  the Company  entered into the credit union  software  business
through the  acquisition  of CUSA,  Inc.  ("CUSA") and the credit union software
division of CUSA's largest  distributor.  From June of 1994 to July of 1995, the
Company acquired all of the significant  distributors of the CUSA software, some
of which were  distributors  of software  products in the medical and commercial
open systems  markets.  In June of 1996, the Board of Directors voted to dispose
of the business and assets of the  Company's  medical and  commercial  divisions
through a sale of assets to Physician Computer Network,  Inc. ("PCN").  With the
divestiture of the medical and commercial  divisions the Company plans to devote
its  resources  primarily to the  development  and expansion of its credit union
software business.

Net revenues

The Company's net revenues  decreased 12.0 percent from  $8,630,883 in the first
quarter of fiscal 1996 to $7,577,392 in the first quarter of fiscal 1997 and 7.3
percent from  $15,897,803  in first six months of fiscal 1996 to  $13,767,393 in
the first six months of fiscal 1997.

Revenues from hardware and software sales decreased 48.1 percent from $4,428,857
in the first quarter of fiscal 1996 to $2,758,924 in the first quarter of fiscal
1997 and 45.9 percent from  $7,707,872 in the first six months of fiscal 1996 to
$4,556,540  in the first  six  months of fiscal  1997.  The  decrease  in system
revenues was the result of increased  management  focus on the  profitability of
system sales and the increase in the lead times for procuring certain components
of hardware from the Company's  major hardware  vendor,  both of which increased
the length of sales  cycle for new  systems  sales.  As would be  expected,  the
Company's backlog for hardware/software  deliveries increased from approximately
$1,100,000  at December  31, 1995 to  approximately  $2,200,000  at December 31,
1996. Additionally,  revenues from system sales in the Company's rental division
were  significantly  less in the first and second quarters of 1997 when compared
to 1996.

Revenues from support,  maintenance  and other  services  increased 18.6 percent
from  $3,932,889  in the first quarter of fiscal 1996 to $4,566,848 in the first
quarter of fiscal 1997 and 21.5 percent from  $7,704,380 in the first six months
of  fiscal  1996 to  $8,777,740  in the first six  months  of fiscal  1997.  The
increase  was due to  increased  sales  of the  Company's  statement  processing
services and the addition of software and hardware  maintenance accounts through
new system sales.

Revenues  are derived from  computer  system  sales,  hardware  maintenance  and
software  support,  and the sale of products  which are related to the Company's
core  computer  systems  such as  statement  printing,  disaster  recovery,  and
microfiche services.

<PAGE>

Gross margin

The hardware and software gross margin  increased from 51.9 percent in the first
quarter of fiscal 1996 to 59.9  percent in the first  quarter of fiscal 1996 and
from 54.3  percent in the first six months of fiscal 1996 to 58.2 percent in the
first six months of fiscal  1997.  In the same  period,  the gross  margin  from
support,  maintenance and other services revenue  decreased from 39.0 percent in
the first  quarter of fiscal 1996 to 37.8 percent in the first quarter of fiscal
1997 and from  40.2  percent  in the first  six  months  of fiscal  1996 to 36.2
percent in the first six months of fiscal  1997.  The  increases in the hardware
and software  gross margin are primarily  attributable  to increased  management
emphasis on the profitability of systems shipped in 1997. The decreases,  in the
first and second  quarters  of fiscal  1997,  in the gross  profit  margin  from
support,  maintenance and other services  revenue are due to decreased  software
and  hardware  sales,  resulting in a decrease in the amount of revenue to cover
the  fixed  costs  of  the  Company's  installation  and  training  departments,
increased  software support costs from the build up of support resources for the
Reliance product,  and increased lower margin statement processing services as a
percentage  of  support,  maintenance  and other  services.  Costs of goods sold
consist  of the  cost  of  hardware  and  software  purchased  for  resale,  the
amortization  of  capitalized  software  development  costs,  and the expense of
supporting and installing the systems sold.

Product development costs

Product  development  costs  include  funds used for research  and  development,
system operational error fixes and maintenance  software upgrades.  As expected,
product development costs increased from $257,132 in the first quarter of fiscal
1996 to  $692,174 in the first  quarter of fiscal 1997 and from  $545,588 in the
first six months of fiscal 1996 to  $1,293,993 in the first six months of fiscal
1997.  The increase  reflects the  Company's  commitment  to continue to improve
current  products  and to invest in the  development  of new  products,  with an
increased emphasis on research and development,  which is expensed in the period
incurred, over capitalized expenditures.

Selling, general and administrative costs

The selling, general, and administrative expenses for the Company decreased 22.7
percent from  $3,336,583  in the first  quarter of fiscal 1996, to $2,579,527 in
the first  quarter of fiscal 1997 and 16.0 percent from  $6,319,264 in the first
six months of fiscal 1996 to  $5,306,031 in the first six months of fiscal 1997.
This  decrease  was due to the  reduction,  in the first and second  quarters of
fiscal  1997,  of  selling  and  general  corporate  overhead  expenses  and the
elimination  of  the  amortization  of  goodwill,  which  was  written  off as a
nonrecurring  charge in fiscal fiscal 1996.  These expense  reductions have been
achieved through the gradual reduction of overhead and administrative personnel.
Although the Company  believes that continued  efforts will result in additional
redirections of selling, general and administrative expenses in the remainder of
fiscal  fiscal  1997,  no  assurance  can be given  that  such  efforts  will be
successful.

<PAGE>

Interest and income tax expense

Interest expense increased 42.4 percent in the first quarter of fiscal 1997 when
compared to the first  quarter of fiscal 1996 and 67.0  percent in the first six
months of fiscal 1997 when compared to the first six months of fiscal 1996.  The
increase was due  primarily to an increase in average debt  outstanding.  In the
third quarter of fiscal 1997, the Company expects interest  expenses to decrease
as long  term  obligations  are  retired  with  the  capital  received  from the
scheduled  private  placement of the  Company's  common stock (see ITEM. 5 OTHER
INFORMATION).

Income tax expense was $200,878 in the first  quarter of fiscal 1996  (resulting
in an effective tax rate of 56.1  percent)  compared to a tax expense of zero in
the first  quarter of fiscal 1997. In the first six months of fiscal 1996 income
tax expense was $335,749  (resulting  in an effective  tax rate of 61.1 percent)
compared  to a tax expense of zero in the first six months of fiscal  1997.  The
difference  in the tax  expense is due to the losses  incurred  in the first and
second  quarters  of  fiscal  1997,  for which no income  tax  benefit  has been
recorded.

Discontinued Operations

In June of 1996,  the  Company  adopted a plan to  dispose  of the assets of its
medical and commercial software divisions (the "Discontinued  Operations").  The
liability for the estimated loss on the disposal of the Discontinued  Operations
was established in June of 1996. The disposal of the assets of the  Discontinued
Operations  (except those assets  related to the medical  records  software) was
completed on July 2, 1996.  No material  adjustments  to the  estimated  loss on
disposal previously provided for in June of 1996 are currently anticipated.  The
losses  from  discontinued  operations  in the first  quarter  and the first six
months of fiscal 1997 of $78,455 and $160,176  reflect the operating  results of
the Discontinued Operations prior to their disposal.

Capital Resources and Liquidity

At December 31, 1996,  the Company had current  assets of $6,677,419 and current
liabilities  of  $18,219,035.  The current  liabilities  include  $5,999,210  of
deferred revenue which primarily represents billings for services to be provided
over  the  remaining  term  of  software  and  hardware  maintenance   contracts
(generally one year).

<PAGE>


The  Company  has a term loan in the  original  principal  amount of  $1,700,000
($1,525,461.51  as of December 31, 1996),  which matures December 1, 2006, bears
interest  at a rate of 9.75% per annum,  and is secured,  primarily,  by a trust
deed on the Company's real property located in Sparks, Nevada.

The Company has a second term loan in the original  principal amount of $300,000
($196,756.84 as of December 31, 1996) matures  December 2, 1999,  bears interest
at 9.75% per annum,  and is secured  primarily by a trust deed on the  Company's
real  property  located in Sparks,  Nevada.  Additionally,  the  Company  has an
equipment  loan  (the  "Equipment  Loan")  and a line of  credit  (the  "Line of
Credit") with its principal  bank. The Equipment Loan in the original  aggregate
amount of $1,481,023  ($834,435.99 as of December 31, 1996) matures on September
1, 1997,  bears  interest at a rate of prime plus 1.5% and is secured by a first
lien on all  assets  purchased  with  the  proceeds  of the loan  plus  accounts
receivable and inventory.  The Line of Credit,  which had a maximum availability
of $1,128,063 as of December 31, 1996 (of which  $229,017.04  was advanced as of
December  31,  1996),  is secured by  accounts  receivable,  inventory,  general
intangibles  and a trust deed on real  estate,  bears an interest  rate of prime
plus one and one half percent, and matures in February of 1997.

From June 20, 1995 to October 6, 1995, the Company received  $1,450,000 pursuant
to the issuance of debentures (the  "Debentures") to an entity  controlled by an
officer,  director and major shareholder of the Company.  The Debentures,  which
are due June 30, 1998, are convertible into shares of the Company's common stock
at the  discretion  of the holder at a rate of $3.50 per share through June 1996
and  $4.00 per share  through  June 30,  1998,  and bear an  interest  rate of 8
percent per annum,  payable  quarterly.  In  December  of 1994,  the Company was
advanced $995,000 from certain individual investors through a loan company which
is affiliated  with an officer,  director and major  shareholder  of the Company
pursuant to a  subordinated  line of credit (the  "Subordinated  Line") which is
secured by accounts  receivable.  The Equipment  Loan,  the Line of Credit,  the
Subordinated  Line, and the  Debentures  will be retired in the third quarter of
fiscal 1997 with funds received pursuant to the Purchase and Sale Agreement (see
ITEM 5 OTHER INFORMATION).

On July 2, 1996 the Company sold its medical and commercial divisions to PCN for
$10,100,000  cash and the  assumption  of certain  related  liabilities.  Of the
purchase  price,  $200,000 had not been received as of February 7, 1997 and will
be paid to the Company upon the delivery of certain  assets which are  currently
subject to a court order  restricting  such transfer  pending the  settlement of
certain judgments

The Company  anticipates that these financing  sources,  together with cash flow
from operations,  will be sufficient to permit it to meet its cash  requirements
through at least December 31, 1997.

In fiscal 1996, the Company  recorded  nonrecurring  charges of approximately $7
million in connection with the  revaluation of certain balance sheet  intangible
assets and the accrual of restructuring  costs. Also in fiscal 1996, the Company
recorded a combined loss from disposal and from discontinued  operations of $7.6
million.  As a  result  of  these  nonrecurring  charges  and  the  losses  from
continuing  operations  in fiscal  1996 and the first  quarter  of fiscal  1997,
retained earnings decreased from $.8 million at June 30, 1995 to a $16.8 million
accumulated  deficit at June 30, 1996 and further  decreased to a $17.8  million
accumulated  deficit as of  December  31,  1996,  resulting  in a  shareholders'
deficit  of  $7.3 at  December  31,  1996.  This  deficit  will  be  reduced  by
approximately  $6,000,000  upon the receipt of the  $8,000,000  in cash from the
private placement, of which $2,000,000 will be used to redeem the Company's 1994
Series  Preferred  Stock in accordance with the Purchase and Sale Agreement (see
ITEM 5. OTHER INFORMATION).


<PAGE>



                                          PART II
                                     OTHER INFORMATION


ITEM 3. LEGAL PROCEEDINGS

The Company is  involved  in certain  legal  matters in the  ordinary  course of
business.  In the opinion of management and in-house legal counsel, the ultimate
resolution  of these  matters will not have a material  effect on the  financial
position or results of operations of the Company.


ITEM 5.  OTHER INFORMATION

On January 24, 1997 the Company  entered into a Purchase and Sale Agreement (the
"Agreement")  whereby it agreed to sell on  February  10, 1997 at the offices of
the  Company  or at such  other time and place as  mutually  agreed  upon by the
parties,  approximately 8.6 million shares of its common stock, representing 49%
of the common stock to be  outstanding  after the completion of the sale, to its
Chairman and Chief Executive  Officer (the "Investor") for $8.0 million in cash.
In accordance with the terms of the Agreement, the cash received will be used to
retire the Equipment Loan, the Line of Credit, the Debentures, and the 
Subordinated Line and to redeem the outstanding 1994 Series Preferred Stock. The
remaining cash, approximately $2.0 million, will be added to the working capital
of the Company.  The transaction was negotiated  between the CEO and an 
independent committee of the Board of Directors.

Also pursuant to the Agreement,  the Investor will surrender  approximately  
1,208,400 five year  options to purchase  shares of the  Company's  common stock
at prices from $1.50 to $5.00 in exchange for the grant of 1,000,000  five year
options to purchase the Company's  common stock at $1.00 per share for the first
year, with the option price  increasing  by $.25 each year on the  anniversary
date of the grant.


<PAGE>



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


(a) Exhibits

The following exhibits are included as part of this report:

Exhibit              SEC Ref
Number               Number             Title of Document
-------              -------           -------------------

10.53                  10              Stock Purchase and Sale Agreement

27.1                   27              Financial Data Schedule


(b)   Reports on Form 8K.

                            None.


<PAGE>



SIGNATURES

Pursuant  to the  requirements  of  section  13 or 15(d) of the  Securities  and
Exchange  Act of 1934 as amended,  the Company has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.


Dated:  February 12, 1997


CUSA Technologies, Inc.



------------------------------------------------------
D. Jeff Peck, Principal Accounting Officer