UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10KSB/A
                               (Amendment No. 1)

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

                  For the fiscal year ended June 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 0-24036

                     HORIZON FINANCIAL SERVICES CORPORATION
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

             Delaware                                          42-1419757
(State or other jurisdiction of incorporation              (I.R.S. Employer
or organization)                                           Identification No.)

301 First Avenue East, Oskaloosa, Iowa                         52577-0008
--------------------------------------------------------------------------------
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code:         (515) 673-8328
                                                     ---------------------------

           Securities Registered Pursuant to Section 12(b) of the Act:
                                      None
           Securities Registered Pursuant to Section 12(g) of the Act:
                     Common Stock, par value $0.01 per share
                                (Title of class)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports)  and (2) has been subject to such filing  requirements  for the past 90
days. YES [X]   NO  [ ]

         Check if there is no  disclosure  of  delinquent  filers in response to
Item  405 of  Regulation  S-B  contained  herein,  and  no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

         State  the  issuer's   revenues  for  its  most  recent   fiscal  year:
$7,052,163.
<PAGE>
         The aggregate  market value of the voting stock held by  non-affiliates
of the  registrant,  computed by reference to the average of the closing bid and
asked price of such stock as reported on the Nasdaq  System as of September  15,
1998, was $10.4 million.  (The exclusion from such amount of the market value of
the  shares  owned  by any  person  shall  not be  deemed  an  admission  by the
registrant that such person is an affiliate of the registrant.)

         As of September  15, 1998,  there were issued and  outstanding  879,942
shares of the Registrant's Common Stock

                       DOCUMENTS INCORPORATED BY REFERENCE

         Part II of Form 10-KSB - Annual Report to  Stockholders  for the fiscal
         year ended June 30, 1998.

         Part III of Form  10-KSB - Proxy  Statement  for the Annual  Meeting of
         Stockholders held in October 1998.

        Transitional Small Business Disclosure Format: YES [ ]; NO   [X].
<PAGE>
         Registrant  is filing this  Amendment  No. 1 to its Form 10-KSB for the
fiscal year ended June 30, 1998, to correct the  inadvertent  text omission from
its  electronic  filing of certain  pages of its Annual  Report to  Stockholders
filed as Exhibit 13 hereto.


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                          HORIZON FINANCIAL SERVICES
                                          CORPORATION



                                          By:  /s/ Sharon K. McCrea
                                               ---------------------
                                               Sharon K. McCrea, Treasurer and
                                               Comptroller
                                               (Duly Authorized Representative)

                                        Date:  October 26, 1998