<PAGE>   1




                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 1998

                                       OR

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

For the transition period from                    to

                         Commission file number 0-23239

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

           PENNSYLVANIA                                  34-1744587
 (State or other Jurisdiction of            (I.R.S. Employer Identification No.)
  Incorporation or Organization)

   333 TECHNOLOGY DRIVE, SUITE 210 SOUTHPOINTE, CANONSBURG, PENNSYLVANIA 15317
              (Address of Principal Executive Offices)               (Zip Code)

                                 (724) 746-6001
              (Registrant's Telephone Number, Including Area Code)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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:

            Class                          Outstanding at October 31, 1998
            -----                          --------------------------------
Common Stock, $.01 par value                          6,491,400



<PAGE>   2



                                   UBICS, INC.

                                    Form 10-Q

                                TABLE OF CONTENTS

PART I--FINANCIAL INFORMATION

Item 1.  Financial Statements

         Balance Sheets as of December 31, 1997 and September 30, 1998

         Statements of Operations for the three months ended September 30, 1997
         and 1998 and the nine months ended September 30, 1997 and 1998

         Statements of Cash Flows for the nine months ended September 30, 1997
         and 1998

         Notes to Unaudited Financial Statements

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

PART II--OTHER INFORMATION

Item 1.  Legal Proceedings

Item 2.  Changes in Securities and Use of Proceeds

Item 3.  Defaults upon Senior Securities

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

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

SIGNATURES



                                       2
<PAGE>   3



                                   UBICS, INC.

                                 BALANCE SHEETS
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                     December 31,     September 30,
                                                         1997             1998
                                                    ---------------- ----------------
                                                                       (unaudited)
<S>                                                 <C>              <C>    
ASSETS
Current assets:
     Cash and cash equivalents                            $12,790          $11,436
     Accounts receivable, net of allowance for
        doubtful accounts of $185
        and $275, respectively                              2,777            4,521
     Unbilled receivables                                   1,966            2,860
     Employee advances                                        170              428
     Prepaids and other                                       169              364
     Due from affiliates, net                                  33              153
     Deferred tax asset                                       101              101
                                                          -------          -------
     Total current assets                                  18,006           19,863
                                                          -------          -------
Property and equipment:
     Software                                                  --              313
     Motor car                                                 --               72
     Computer equipment                                       110              553
     Furniture and fixtures                                    45              324
     Office and other equipment                                 4               17
                                                          -------          -------
     Total property and equipment                             159            1,279
Accumulated depreciation                                      (33)             (82)
                                                          -------          -------
     Net property and equipment                               126            1,197
                                                          -------          -------
       Total assets                                       $18,132          $21,060
                                                          =======          =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                         923            2,289
     Payroll liabilities                                    1,060            1,472
     Accrued taxes                                            556               --
     Other current liabilities                                309              228
                                                          -------          -------
     Total current liabilities                              2,848            3,989
Long-term liabilities                                          --               --
                                                          -------          -------
     Total liabilities                                      2,848            3,989
                                                          -------          -------

Stockholders' equity:
     Preferred stock, $.01 par value, 2,000,000
        shares authorized, no shares issued and
        outstanding                                            --               --
     Common stock, $.01 par value, 20,000,000
        shares authorized, 6,500,000 shares                    --
        issued, 6,491,400 outstanding                          65               65
Additional paid-in capital                                 13,160           13,160
Treasury Stock (8,600 shares (at cost))                        --              (47)
Retained earnings                                           2,059            3,893
                                                          -------          -------
     Total stockholders' equity                            15,284           17,071
                                                          -------          -------

         Total liabilities and stockholders' equity       $18,132          $21,060
                                                          =======          =======
</TABLE>



    The accompanying notes are an integral part of these financial statements



                                       3
<PAGE>   4



                                   UBICS, INC.

                            STATEMENTS OF OPERATIONS
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                             Three Months                      Nine Months
                                          Ended September 30,              Ended September 30,
                                     ----------------------------     ----------------------------
                                         1997            1998             1997            1998
                                     (unaudited)      (unaudited)     (unaudited)      (unaudited)
                                     -----------      -----------     -----------      -----------
<S>                                  <C>             <C>              <C>             <C>    
Revenues                              $   5,828       $   8,451        $  14,513       $  21,627
Cost of revenues                          3,887           5,937            9,870          14,899
                                      ---------       ---------        ---------       ---------
  Gross profit                            1,941           2,514            4,643           6,728
Selling, general and
  administrative expense                    915           1,621            2,452           4,128
                                      ---------       ---------        ---------       ---------
Income from operations                     1026             893            2,191           2,600
Interest income (expense), net              (17)            147              (38)            474
                                      ---------       ---------        ---------       ---------
Income before income   taxes               1009            1040            2,153           3,074
Provision for income taxes                  403             420              869           1,240
                                      ---------       ---------        ---------       ---------
  Net income                          $     606       $     620        $   1,284       $   1,834
                                      =========       =========        =========       =========
Basic earnings per share              $    0.12       $    0.10        $    0.26       $    0.28
                                      =========       =========        =========       =========
Diluted earnings per share            $    0.12       $    0.10        $    0.26       $    0.28
                                      =========       =========        =========       =========

Weighted average shares               5,000,000       6,498,738        5,000,000       6,499,575
  outstanding - basic

Weighted average shares               5,000,000       6,499,149        5,000,000       6,576,338
  Outstanding - diluted
</TABLE>



    The accompanying notes are an integral part of these financial statements



                                       4
<PAGE>   5



                                   UBICS, INC.

                            STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                    Nine Months
                                                Ended September 30,
                                            --------------------------
                                                1997          1998
                                            (Unaudited)    (Unaudited)
                                            -----------    -----------
<S>                                         <C>           <C>    
Cash flows from operating activities:                      
  Net income                                    $ 1,284       $ 1,834
  Adjustments to reconcile net
     income to net cash provided by
     operating activities--
     Depreciation                                    12            49
     Changes in operating assets and
       liabilities--
       Accounts receivable, net                  (1,595)       (1,744)
       Unbilled receivables                      (1,112)         (894)
       Employee advances                            (41)         (258)
       Due from principal
         stockholder                               (443)           --
       Due to affiliates, net                      (169)         (120)
       Deferred tax asset                           (11)           --
       Prepaids and other                           (91)         (195)
       Accounts payable                             587         1,366
       Payroll liabilities                          363           412
       Accrued taxes and other
         current liabilities                        809          (637)
                                                -------       -------
     Net cash (used) provided by
       operating activities                        (407)         (187)
                                                -------       -------

Cash flows from investing activities:                      
  Purchases of property and
     Equipment                                      (73)       (1,120)
                                                -------       -------
     Net cash used by investing
       Activities                                   (73)       (1,120)
                                                -------       -------

Cash flows from financing activities:                      
  Net borrowings (payments under
    credit facility                                 475            --
  Treasury Stock purchased                                        (47)
     Net cash provided by financing
       activities                                   475           (47)
                                                -------       -------

Net increase (decrease) in cash
  and cash equivalents                               (5)       (1,354)
Cash and cash equivalents, at
  beginning of period                                94        12,790
                                                -------       -------
Cash and cash equivalents, at
  end of year                                   $    89       $11,436
                                                =======       =======

Supplemental data:                                         
  Cash payments for interest                    $    38       $    --
  Cash payments for income taxes                $   270       $ 1,863
</TABLE>


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



                                       5
<PAGE>   6




                                   UBICS, INC.

                     NOTES TO UNAUDITED FINANCIAL STATEMENTS
                 (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)


1. BASIS OF PRESENTATION

    The financial statements of UBICS, Inc. ("UBICS" or "the Company") presented
herein are unaudited. Certain information and footnote disclosures normally
prepared in accordance with generally accepted accounting principles have been
either condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. Although the Company believes that all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair presentation have been made, interim periods are not necessarily indicative
of the financial results of operations for a full year. As such, these financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for its fiscal year
ended December 31, 1997.


2. OPERATIONS:

    UBICS, a Delaware corporation, provides information technology professional
services to large and mid-sized organizations. The Company provides its clients
with a wide range of professional services in such areas as client/server design
and development, enterprise resource planning package implementation and
customization, applications maintenance programming and database and systems
administration.


3. REVOLVING CREDIT FACILITY:

    The Company has available borrowings under a revolving credit facility with
PNC Bank, National Association ("PNC"). Borrowings under this arrangement are
limited to $1,000, bear interest at prime (8.50% at December 31, 1997 and
September 30, 1998, respectively) as defined plus 0.5% and are payable upon
demand. The revolving credit facility is secured by the assets of the Company
and personally guaranteed by the Company's chairman.

    There were no borrowings outstanding as of December 31, 1997 and September
30, 1998, respectively.


4. RELATED PARTY TRANSACTIONS:

    As of December 31, 1997 and September 30, 1998, the Company had a net
receivable from the UB Group, including UB Information and Consultancy Services
Ltd. ("UB Services"), totaling $33 and $153, respectively, resulting from
expenses incurred by the Company on behalf of the UB Group.


5. EARNINGS PER SHARE:

    Under Financial Accounting Standards Board Statement on Financial Accounting
Standards ("SFAS") No. 128, "Earnings Per Share," earnings per share are
classified as basic earnings per share and diluted earnings per share. Basic
earnings per share included only the weighted average common shares outstanding.
Diluted earnings per share included the weighted average common shares
outstanding and any dilutive common stock equivalent shares in the calculation.

    The following table reflects the calculation of earnings per share under
SFAS No. 128:



                                       6
<PAGE>   7



<TABLE>
<CAPTION>
                                             Three Months                       Nine Months
                                          Ended September 30,               Ended September 30,
                                     ----------------------------      ----------------------------
                                         1997            1998              1997            1998
                                     (unaudited)      (unaudited)      (unaudited)      (unaudited)
                                     -----------      -----------      -----------      -----------
<S>                                  <C>              <C>              <C>              <C>       
(Dollars in thousands, except per
share data)

BASIC EARNINGS PER SHARE

Net income                            $      606      $      620       $    1,284       $    1,834

DIVIDED BY:

Weighted average common shares         5,000,000       6,498,738        5,000,000        6,499,575

Basic Earnings per share                    0.12            0.10             0.26             0.28
                                      ----------      ----------       ----------       ----------

DILUTED EARNINGS PER SHARE:

Net income                                   606             620            1,284            1,834

DIVIDED BY:
Weighted average common shares         5,000,000       6,498,738        5,000,000        6,499,575

Dilutive effect of options                                   411                            76,763
                                                    
Dilutive average common shares         5,000,000       6,499,149        5,000,000        6,576,338

Diluted earnings per share            $     0.12      $     0.10       $     0.26       $     0.28
</TABLE>



                                       7
<PAGE>   8



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

         The following discussion should be read in conjunction with, and is
qualified in its entirety by, the financial statements and notes thereto
included in Item 1 of this report.

         The following Management's Discussion and Analysis of Results of
Operations and Financial Condition contains certain forward looking statements
that involve substantial risks and uncertainties. When used in this section, the
words "anticipate," "believe," "estimate," "expect" and similar expressions as
they relate to the Company or its management are intended to identify such
forward looking statements. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward looking statements.


OVERVIEW

         UBICS, Inc. ("UBICS" or the "Company"), founded in 1993, provides IT
professional services to large and mid-sized organizations. UBICS provides its
clients with a wide range of professional services in such areas as
client/server design and development, ERP package implementation and
customization, applications maintenance programming and database and systems
administration. UBICS' services are provided on a time-and-materials basis to
client-managed projects, with UBICS IT professionals providing integral support
as project team members. The Company currently has offices in the Canonsburg,
Pennsylvania and San Francisco, California areas. UBICS is an affiliate of the
UB Group, a multinational group of companies headquartered in India (the "UB
Group").

         The Company's revenues are based on the hourly billing of its IT
professionals. Revenue is recognized as services are provided. The Company has
increased the average billing rates of its IT professionals as the demand for
skilled and experienced professionals has expanded, in particular for IT
professionals placed on ERP package implementation and customization projects.
As of September 30, 1998, 51 IT professionals, or over one-sixth of the
Company's deployed IT professionals, were placed on such projects.

         UBICS attempts to minimize the number of days IT professionals are not
assigned to projects by proactively marketing these professionals to clients.
Resource managers closely monitor the availability of IT professionals and
utilize subcontractors when UBICS IT professionals are unavailable. The Company
maintains strong relationships with nearly 50 subcontractors located worldwide.
Approximately 42% of the Company's revenues were derived from IT professionals
deployed from subcontractors for the three months ended September 30, 1998. As
of September 30, 1998, IT professionals deployed from subcontractors comprised
119 of the Company's 276 deployed IT professionals. The Company believes that
its network of subcontractors enables it to maintain closer relationships with
clients by fulfilling more of their needs for IT professional services.
Management believes that as the Company increases its investment in recruiting
and retaining qualified IT professionals, the ratio of UBICS IT professionals to
subcontractor IT professionals will increase.

         Since inception the Company has developed relationships with 289
clients in a range of industries and currently has IT professionals deployed at
nearly 170 of these clients. Although the Company's five largest clients
accounted for approximately 19% of revenues for the third quarter of 1998, this
revenue concentration has been declining since the Company's inception. The
Company believes that the continuing growth in its client base will further
reduce the percentage of revenue attributable to its largest clients. The
Company's strategy is to continue to provide services to clients across the U.S.
in a range of industries in order to reduce credit risk from conditions or
occurrences within any specific industry or region in which these clients
operate.



                                       8
<PAGE>   9



RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, selected
statements of operations data as a percentage of revenues:

<TABLE>
<CAPTION>
                                                                          PERCENTAGE OF REVENUES
                                                                          ----------------------
                                                                  THREE MONTHS                NINE MONTHS
                                                               ENDED SEPTEMBER 30,        ENDED SEPTEMBER 30,
                                                              --------------------        --------------------
                                                               1997          1998           1997          1998
                                                               ----          ----           ----          ----
                  <S>                                         <C>           <C>            <C>           <C>   
                  Revenues.............................       100.0%        100.0%         100.0%        100.0%
                  Cost of revenues.....................        66.7          70.2           68.0          68.9
                                                              -----         -----          -----         -----
                  Gross profit.........................        33.3          29.8           32.0          31.1
                  Selling, general and
                    administrative expense.............        15.7          19.2           16.9          19.1
                                                              -----         -----          -----         -----
                  Income from operations...............        17.6          10.6           15.1          12.0
                  Interest income
                    (expense), net.....................        (0.3)          1.7           (0.3)          2.2
                                                              -----         -----          -----         -----
                  Income before income taxes...........        17.3          12.3           14.8          14.2
                  Provision for income taxes...........         6.9           5.0            6.0           5.7
                                                              -----         -----          -----         -----
                  Net income...........................        10.4%          7.3%           8.8%          8.5%
                                                              =====         =====          =====         =====
</TABLE>



THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997.

Revenues

         Revenues for the quarter ended September 30, 1998 were $8.5 million,
compared to $5.8 million for the quarter ended September 30, 1997, an increase
of $2.6 million, or 45%. Approximately 87% of the increase in revenues was due
to an increase in the number of IT professionals deployed to provide services to
new and existing clients and approximately 13% of the increase in revenues was
due to higher average hourly billing rates resulting from a shift toward higher
value-added services including ERP-related services as well as increased demand
for IT professionals.

Gross Profit

         Gross profit for the third quarter of 1998 was $2.5 million, compared
to $1.9 million for the third quarter of 1997, an increase of $0.6 million, or
30%. Gross profit as a percentage of revenues decreased to 29.8% for the third
quarter of 1998, compared to 33.3% for the third quarter of 1997. The decrease
in gross profits as a percentage of revenues was primarily due to increases in
the rates paid for subcontractor professionals, an increase in the number of
employee professionals waiting to be deployed, and an increase in recruitment
fees for ERP consultants in the U.S. and training costs of ERP consultants.

Selling, General and Administrative Expense

         Selling, general and administrative expense for the quarter ended
September 30, 1998 was $1.6 million, compared to $915,000 for the same quarter
of 1997, an increase of $706,000, or 77%. Selling, general and administrative
expense as a percentage of revenues increased to 19.2% for the third quarter of
1998 from 15.7% for the third quarter of 1997. The increase in expense was
primarily due to increases in salaries and other costs to support the Company's
growth. In addition, the Company incurred one time expenses of approximately
$50,000 for relocation of the Company's principal offices and establishing
subsidiaries, including one in India.


                                       9
<PAGE>   10



Interest Income (Expense) Net

         Interest income for the third quarter of 1998 was $147,000, compared to
interest expense of $17,000 for the third quarter of 1997. The increase resulted
from interest income from the investment of the net proceeds of the Company's
initial public offering which was completed in November 1997 and the absence of
borrowings under the Line of Credit (defined below) during the third quarter of
1998.

Provision for Income Taxes

         The Company's effective tax rate was 40.4% for the quarter ended
September 30, 1998 compared to 39.9% for the quarter ended September 30, 1997.



NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1997.

Revenues

         Revenues for the nine months ended September 30, 1998 were $21.6
million, compared to $14.5 million for the nine months ended September 30, 1997,
an increase of $7.1 million, or 49%. Approximately 80% of the increase in
revenues was due to an increase in the number of IT professionals deployed to
provide services to new and existing clients and approximately 20% of the
increase in revenues was due to higher average hourly billing rates resulting
from a shift toward higher value-added services including ERP-related services
as well as increased demand for IT professionals.

Gross Profit

         Gross profit for the first nine months of 1998 was $6.7 million,
compared to $4.6 million for the first nine months of 1997, an increase of $2.1
million, or 45%. Gross profit as a percentage of revenues decreased to 31.1% for
the nine months ended September 30 1998, compared to 32.0% for the same period
of 1997. The decrease in gross profit as a percentage of revenues resulted
primarily due to increases in rates paid by the Company for subcontractor
professionals, an increase in the number of employee professionals waiting to be
deployed, an increase in the recruitment fees for ERP consultants in the U.S.
and increase in training costs of ERP consultants. This decrease in gross profit
was partially offset by an increase in the contribution to revenues from higher
value-added services.

Selling, General and Administrative Expense

         Selling, general and administrative expense for the nine months ended
September 30, 1998 was $4.1 million, compared to $2.5 million for the same
period of 1997, an increase of $1.7 million or 68%. Selling, general and
administrative expense as a percentage of revenues increased to 19.1% for the
nine months ended September 30, 1998 from 16.9% for the nine months ended June
30, 1997. The increase in expense was primarily due to increases in salaries and
other costs to support the Company's growth, and public company costs. The
expenses included one time expense of approximately $50,000 for relocation of
the Company's principal offices and establishing subsidiaries, including one in 
India.

Interest Income (Expense) Net

         Interest income for the first nine months of 1998 was $474,000,
compared to interest expense of $38,000 for the first nine months of 1997. The
increase resulted from interest income from the investment of the net proceeds
of the Company's initial public offering which was completed in November 1997
and the 



                                       10
<PAGE>   11
 


absence of borrowings under the Line of Credit (defined below) during the first
nine months of 1998.

Provision for Income Taxes

         The Company's effective tax rate was 40.3% for the nine months ended
September 30, 1998 compared to 40.3% for the nine months ended September 30,
1997.


LIQUIDITY AND CAPITAL RESOURCES

         In November 1997, the Company generated net proceeds of approximately
$13.2 million from its underwritten initial public offering of 1,500,000 shares
of Common Stock (the "Offering"). Since that time the Company has used
approximately $775,000 of the net proceeds of the Offering to repay its
outstanding indebtedness under a $1,000,000 Committed Line of Credit from PNC
Bank, National Association (the "Line of Credit"). The Company also has used a
portion of the net proceeds of the Offering for general corporate purposes and
intends to use a portion of such net proceeds for the capital expenditures
described below.

         The Company's principal uses of cash have been to fund receivables and
other working capital, reflecting the Company's growth. Prior to completion of
the Offering, the Company has financed its working capital requirements through
internally generated funds, borrowings under the Line of Credit and loans and
advances from certain UB Group affiliates. Amounts outstanding under the Line of
Credit bear interest at a variable annual rate equal to 0.5% in excess of PNC's
prime rate. As of September 30, 1998 the Company had no outstanding borrowings
under the Line of Credit. As of September 30, 1998, the annual interest rate
under the Line of Credit was 9.0%. The indebtedness previously incurred under 
the Line of Credit was used for working capital and other corporate purposes.
Net cash used by operating activities was $187,000 for the first nine months of
1998 compared to net cash used by operating activities of $407,000 for the same
period in 1997.

         Capital expenditures for the first nine months of 1998 and 1997 were
$1,120,000 and $73,000, respectively. The Company intends to use approximately
$2.0 million of the net proceeds of the Offering to expand its existing
operations, including approximately $1.2 million for expansion of the Company's
recruiting and training center in India. The initial phase of the center was
placed in operation in the fall of 1998 and the expansion is expected to be
operational by the end of 1999 (including additional purchase of hardware and
software with respect thereto). Because the Company currently has a sufficient
supply of IT professionals awaiting deployment, as well as a shift in the
Company's strategic focus in favor of domestic sales growth, the Company has
deferred previously disclosed plans to establish offshore recruiting offices in
various foreign locations (except that the Company expects to establish a sales
and recruiting office in the United Kingdom within the next six months). Except
as set forth above, the Company currently has no material commitments for
capital expenditures.

         In September 1998, the Board of Directors of the Company authorized a
program to repurchase up to 300,000 shares of the Company's outstanding common
stock. The Company had repurchased 8,600 shares as of September 30, 1998.

         The Company currently anticipates that the proceeds from the Offering,
together with the existing sources of liquidity and cash generated from
operations, will be sufficient to satisfy its cash needs at least through the
next 24 months.


                                       11
<PAGE>   12



RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
(SFAS No. 130), the objective of which is to report and disclose a measure
("comprehensive income") of all changes in equity of a company that result from
transactions and other economic events of the period other than transactions
with owners. SFAS No. 130 is effective for financial statements issued for
periods beginning after December 15, 1997. The Company has adopted SFAS No. 130
beginning with its 1998 fiscal year.

         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, "Disclosure About Segments of an
Enterprise and Related Information" (SFAS No. 131), which requires the use of
the "management approach" model for segment reporting. The management approach
model is based on the way a company's management organizes segments within the
company for making operating decisions and assessing performance. Reportable
segments are based on products and services, geography, legal structure,
management structure or any other manner in which management segregates a
company. SFAS No. 131 is effective for financial statements issued for periods
beginning after December 15, 1997. The Company will adopt SFAS No. 131 at the
end of its 1998 fiscal year.

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133). SFAS No. 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. SFAS No. 133 requires that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met. Special accounting for qualifying hedges allows a derivative's gains and
losses to offset related results on the hedged item in the income statement, and
requires that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting. SFAS No. 133 is
effective for fiscal years beginning after June 15, 1999.

         The Company has not yet quantified the impact of adopting SFAS No. 133
but does not believe that it will have a significant impact.

YEAR 2000 COMPLIANCE

         The "Year 2000" issue concerns the potential exposures related to the
automated generation of business and financial misinformation resulting from the
use of computer programs which have been written using two digits, rather than
four, to define, the applicable year of business transactions. The Company has
evaluated its principal staffing and financial systems, which are licensed from
and maintained by third party software development companies, and believes that
such systems are Year 2000 compliant. The Company is currently in the process of
selecting additional staffing and financial systems which management expects to
be Year 2000 compliant. The Company's total costs with respect to Year 2000
compliance as of September 30, 1998 have not been material. Management does not
anticipate that any remaining costs associated with assuring that its internal
systems will be Year 2000 compliant will be material to its business, operations
or financial condition.

         The Company intends to initiate an assessment to determine the
preparedness level of its significant clients, vendors, and other service
providers with respect to Year 2000 issues and the subsequent impact on the
Company. If a significant client of the Company encounters Year 2000 problems,
such client could be forced to reduce its expenditures on IT projects involving
the Company's IT professionals, either because the client would have to divert
resources from such projects to address its Year 2000 problem or because of the
adverse financial effects of such problems on the client. In addition, clients
which incur significant costs in achieving Year 2000 compliance could be forced
or could elect to reallocate funds being used for projects involving the
Company's IT professionals to address Year 2000 compliance issues. The Company
does not believe its current projects 


                                       12
<PAGE>   13



will be adversely affected by problems its clients may encounter resulting from
lack of Year 2000 compliance because most such projects will be completed before
the Year 2000. However, reallocation of IT-related expenditures by a client in
connection with achieving Year 2000 compliance could affect the duration of the
Company's existing projects with such client or the availability to the Company
of future IT projects.

         In addition, a small number of the Company's IT professionals perform
Year 2000 work for certain clients as an adjunct to other projects performed for
such clients. The Company has a $5 million professional liability insurance
policy which covers, among other things, Year 2000 compliance work performed by
UBICS at client sites.


         The Company's review of client and vendor readiness with respect to
Year 2000 is expected to be completed by the first half of 1999 and based upon
the results of the review, ongoing Year 2000 impact analysis and risk assessment
will continue as management deems appropriate. Such review also will involve the
development of an appropriate contingency plan to help limit the impact of any
failure of clients, vendors or other third parties with respect to Year 2000
compliance. The Company expects to incur internal staff costs as well as
consulting and other expenses related to the assessment project but is unable to
form an estimate of such costs at this time.


U.S. REGULATION OF IMMIGRATION

         The Company's services historically have been performed in the U.S. and
the Company has recruited most of its IT professionals outside the U.S. The
Company's business, therefore, is subject to U.S. immigration laws. Over 90% of
the Company's IT professionals are citizens of other countries, with most of
those in the U.S. working under H-1B temporary work permits. There is a limit on
the number of new H-1B permits that may be approved in any U.S. government
fiscal year. In the federal fiscal year ended September 30, 1997, this limit was
reached in August and in the federal fiscal year ended September 30, 1998, this
limit was reached in May. The inability to obtain additional H-1B permits during
the federal fiscal year ended September 30, 1998 resulted in increased use of
subcontractor professionals by UBICS. If in future years the limit on H-1B
permits is reached, the Company may again be unable to obtain enough H-1B
permits to meet its requirements. If the Company were unable to obtain H-1B
permits for its IT professionals in sufficient quantities or at a sufficient
rate, the Company's business, operating results and financial condition could be
materially adversely affected. The U.S. government has increased the limit on
the number of new H-1B permits to 115,000 for each of fiscal years 1999 and
2000, and to 107,500 for fiscal year 2001 before reverting to existing limits
from fiscal year 2002 onwards. The U.S. Government in addition to increasing the
limits, has also imposed a fee to be paid by companies for new approvals and for
renewals.

         Furthermore, Congress and administrative agencies with jurisdiction
over immigration matters have periodically expressed concerns over the levels of
legal and illegal immigration into the U.S. These concerns have often resulted
in proposed legislation, rules and regulations aimed at reducing the number of
work permits that may be issued. Any changes in such laws making it more
difficult to hire foreign nationals or limiting the ability of the Company to
retain foreign employees could require the Company to incur additional
unexpected labor costs and expenses. Any such restrictions or limitations on the
Company's hiring practices could have a material adverse effect on the Company's
business, operating result and financial condition.




                                       13
<PAGE>   14



                          PART II--OTHER INFORMATION

Item 1.  Legal Proceedings--Not Applicable

Item 2.  Changes in Securities and Use of Proceeds--Not applicable

         (a)      Not applicable.

         (b)      Not applicable.

         (c)      Not applicable.

         (d)      The following information relates to the Company's use of the
         net proceeds of the Company's initial public offering (the "Offering"):

                  On October 27, 1997, the Company's registration statement on
         Form S-1, No. 333-35171, became effective. The Company sold a total of
         1,500,000 shares of common stock, par value $.01 per share at a price
         per share of $10.00 pursuant to the Offering. The Offering, which was
         managed by Parker/Hunter Incorporated, as lead underwriter, and Scott &
         Stringfellow, Inc., as co-manager, closed on November 4, 1997.

                  The following table summarizes the expenses incurred for the
         Company's account in connection with the Offering:

                       Underwriting discounts                      $1,050,000
                       Finder's fees                                       --
                       Expenses paid to or for underwriters                --
                       Other expenses                                 775,000
                                                                   ----------
                       TOTAL                                       $1,825,000


                  The following table summarizes the amount of net offering
                  proceeds to the Company ($13,175,000) used for the purposes
                  listed below:

                       Construction of plant, building            $         0
                         and facilities
                       Purchase and installation of machinery       1,120,000
                         and equipment
                       Acquisition of other business(es)                    0
                       Repayment of indebtedness                      775,000
                       Working capital                                136,000
                       Temporary investments*                      11,144,000
                       Other Purposes                                       0
                                                                  -----------
                       Total                                      $13,175,000


-------------
*Such amount is currently invested in a nine-month ready access certificate of
deposit with PNC Bank.



                                       14
<PAGE>   15



Item 3.  Defaults Upon Senior Securities--Not Applicable

Item 4.  Submission of Matters to a Vote of Security Holders--Not Applicable.

Item 5.  Other Information--Not Applicable

Item 6.  Exhibits and Reports on Form 8-K


(a)      Exhibits:

         10.1     UBICS, Inc. 1997 Stock Option Plan(1)
         10.2     Noncompetition Agreement dated October 27, 1997 among the
                  Company, Vijay Mallya and UB Information Consultancy Services
                  Ltd.(2)
         10.3     Employment Agreement between the Registrant and 
                  Vijay Mallya(2)
         10.4     Employment Agreement between the Registrant and 
                  Manohar B. Hira(2)
         10.5     Employment Agreement between the Registrant and 
                  O'Neil Nalavadi(2)
         10.6     Employment Agreement between the Registrant and 
                  Babu Srinivas(2)
         10.8     Lease dated May 28, 1996 between the Company and Marin
                  Executive Park, as amended(1)
         10.9     Services Agreement dated October 27, 1997 among the Company,
                  Vijay Mallya and United Breweries Limited(2)
         10.10    Letter Agreement dated July 26, 1996 between PNC Bank,
                  National Association and the Registrant, and Amendment to Note
                  and Letter Agreement dated November 1, 1996, Second Amendment
                  to Note and Letter Agreement dated April 1, 1997, Third
                  Amendment to Note and Letter Agreement dated August 29, 1997
                  and Fourth Amendment to Note and Letter Agreement dated
                  September 5, 1997(1)
         10.11    Form of Director Indemnification Agreement(2)
         10.12    Form of Sublease and Consent among the Company, Marin
                  Executive Park and United Breweries of America, Inc.(2)
         10.13    Noncompetition Agreement dated October 27, 1997 among the
                  Company, Vijay Mallya and United Breweries Limited(2)
         10.14    Noncompetition Agreement dated October 27, 1997 among the
                  Company, Vijay Mallya and UB International Limited(2)
         10.15    Services Agreement dated October 27, 1997 among the Company,
                  Vijay Mallya and UB International Limited(2) 
         10.16    Lease Agreement dated June 30, 1998 between the Company and
                  Stealth Technology Associates(3) 
         27       Financial Data Schedule


-------------
(1)      Incorporated by reference to the registrant's Registration Statement on
Form S-1, No. 333-35171, filed September 8, 1997.

(2)      Incorporated by reference to Post-Effective Amendment No. 1 to the
registrant's Registration Statement on Form S-1, No. 333-35171, filed 
October 29, 1997.

(3)      Filed herewith.


                                       15
<PAGE>   16



(b)      Reports on Form 8-K:

         No reports on Form 8-K were filed for the three months ended 
September 30, 1998.





                                       16
<PAGE>   17



                                   SIGNATURES

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


                                          UBICS, Inc.
                                          (Registrant)


Date:    November 13, 1998

                                          By:/s/ Manohar B. Hira
                                             -----------------------------------
                                                 Manohar B. Hira
                                                 President


                                          By:/s/ O'Neil Nalavadi
                                             -----------------------------------
                                                 O'Neil Nalavadi
                                                 Senior Vice President and Chief
                                                     Financial Officer





                                       17
<PAGE>   18




                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
No.      Description                                                                      Page
----     -----------                                                                      ----
<C>      <C>                                                                              <C>
10.1     UBICS, Inc. 1997 Stock Option Plan(1) 10.2 Noncompetition Agreement
         dated October 27, 1997 among the Company, Vijay Mallya and UB
         Information Consultancy Services Ltd.(2)
10.3     Employment Agreement between the Registrant and Vijay Mallya(2)
10.4     Employment Agreement between the Registrant and Manohar B. Hira(2)
10.5     Employment Agreement between the Registrant and O'Neil Nalavadi(2)
10.6     Employment Agreement between the Registrant and Babu Srinivas(2)
10.8     Lease dated May 28, 1996 between the Company and Marin Executive Park,
         as amended(1)
10.9     Services Agreement dated October 27, 1997 among the Company, 
         Vijay Mallya and United Breweries Limited(2)
10.10    Letter Agreement dated July 26, 1996 between PNC Bank, National
         Association and the Registrant, and Amendment to Note and Letter
         Agreement dated November 1, 1996, Second Amendment to Note and Letter
         Agreement dated April 1, 1997, Third Amendment to Note and Letter
         Agreement dated August 29, 1997 and Fourth Amendment to Note and Letter
         Agreement dated September 5, 1997(1)
10.11    Form of Director Indemnification Agreement(2)
10.12    Form of Sublease and Consent among the Company, Marin Executive Park
         and United Breweries of America, Inc.(2)
10.13    Noncompetition Agreement dated October 27, 1997 among the Company,
         Vijay Mallya and United Breweries Limited(2)
10.14    Noncompetition Agreement dated October 27, 1997 among the Company,
         Vijay Mallya and UB International Limited(2)
10.15    Services Agreement dated October 27, 1997 among the Company, 
         Vijay Mallya and UB International Limited(2)
10.16    Lease Agreement dated June 30, 1998 between the Company and Stealth
         Technology Associates(3)
27       Financial Data Schedule
</TABLE>


-------------
(1)      Incorporated by reference to the registrant's Registration Statement on
Form S-1, No. 333-35171, filed September 8, 1997.

(2)      Incorporated by reference to Post-Effective Amendment No. 1 to the
registrant's Registration Statement on Form S-1, No. 333-35171, filed
October 29, 1997.

(3)      Filed herewith.


                                       18