SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  ___________

                                   Form 10-Q

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

                  For the quarterly period 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 0-12329

                              LCS INDUSTRIES, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

       Delaware                                          13-2648333 
------------------------                    ------------------------------------
(State of incorporation)                    (I.R.S. Employer Identification No.)

         120 Brighton Road, Clifton, New Jersey               07012 
--------------------------------------------------------------------------------
(Address of principal executive offices)                   (Zip Code)

Registrant's telephone number, including area code      (973) 778-5588
                                                        -------------- 

                                      N/A
--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report

         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,  and (2) has been  subject to such filing
requirements for the past 90 days.   Yes ( X )    No (  )

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

               The  number  of shares  outstanding  of the  registrant's  Common
Stock, par value of $.01 per share, as of August 3, 1998, was 4,844,149.
<PAGE>
                              LCS INDUSTRIES, INC.
                                AND SUBSIDIARIES

                                      INDEX


PART I                       FINANCIAL INFORMATION

Item 1.               Financial Statements

                      Consolidated Balance Sheets
                      As of June 30, 1998 (Unaudited) and
                      September 30, 1997  

                      Consolidated Statements of Income
                      For the Three Months and Nine Months Ended
                      June 30, 1998 and 1997 (Unaudited) 

                      Consolidated Statements of Cash Flows
                      For the Nine Months Ended
                      June 30, 1998 and 1997 (Unaudited) 

                      Notes to Consolidated Financial Statements
                      (Unaudited) 

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


PART II                          OTHER INFORMATION

Item 6.               Exhibits and Reports on Form 8-K  
<PAGE>
<TABLE>
<CAPTION>
                                LCS INDUSTRIES, INC. AND SUBSIDIARIES
                                     CONSOLIDATED BALANCE SHEETS


                                                                      June 30,        September 30,
                                                                        1998              1997
                                                                    ------------      ------------
                                                                      (Unaudited)
ASSETS
<S>                                                                  <C>               <C>         
Current assets:
   Cash and cash equivalents ...................................     $ 17,595,134      $ 14,619,271
   Investments - held-to-maturity ..............................       14,029,589        14,410,101
   Accounts receivable (less allowance
       for doubtful accounts:  June 30 - $532,000
       and September 30 - $496,000) ............................       16,829,448        23,163,774
   Prepaid expenses and other current assets ...................        2,011,816         1,460,990
   Deferred taxes ..............................................          308,000           684,000
                                                                     ------------      ------------
     Total current assets ......................................       50,773,987        54,338,136
                                                                     ------------      ------------

Investments - available-for-sale, net ..........................            1,516           123,708
Property and equipment, net ....................................        6,440,457         7,093,790
Goodwill (net of accumulated amortization:  June
    30 - $1,020,967 and September 30 - $806,204) ...............        7,066,214         7,280,977
Other assets ...................................................          849,409           672,656
                                                                     ------------      ------------
                                                                     $ 65,131,583      $ 69,509,267
                                                                     ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable ............................................     $ 10,914,531      $ 14,798,326
   Accrued salaries and commissions ............................        2,300,729         3,127,141
   Other accrued expenses ......................................        3,005,732         3,899,876
   Income taxes payable ........................................          434,629           290,407
   Current portion of long-term debt ...........................        1,037,916         1,087,511
   Current portion of capital lease obligations ................            7,557           211,580
   Deferred revenue ............................................             --           4,124,699
                                                                     ------------      ------------
     Total current liabilities .................................       17,701,094        27,539,540
                                                                     ------------      ------------

Long-term debt, net of current portion .........................        2,673,036         3,444,533
Deferred taxes .................................................          192,000           249,000
Deferred compensation ..........................................          299,000              --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                               LCS INDUSTRIES, INC. AND SUBSIDIARIES
                                     CONSOLIDATED BALANCE SHEETS
                                            (continued)


                                                                      June 30,        September 30,
                                                                        1998              1997
                                                                    ------------      ------------
                                                                      (Unaudited)
<S>                                                                  <C>               <C>         
Stockholders' equity:
   Preferred stock $.01 par value; authorized
       1,000,000 shares; issued - none
   Common stock $.01 par value; authorized
       15,000,000 shares; issued June 30 - 5,058,174
       shares and September 30 - 4,854,847 shares ..............           50,582            48,548
   Common stock issuable .......................................        1,071,532         1,490,431
   Additional paid-in capital ..................................        9,595,817         8,702,971
   Retained earnings ...........................................       34,254,027        28,245,206
                                                                     ------------      ------------
                                                                       44,971,958        38,487,156
   Less:  Treasury stock, at cost, June 30 - 214,663 shares
               and September 30 - 187,766 shares ...............         (705,505)         (207,953)
          Available-for-sale securities valuation adjustment,
               net of deferred income taxes ....................             --              (3,009)
                                                                     ------------      ------------
     Total stockholders' equity ................................       44,266,453        38,276,194
                                                                     ------------      ------------
                                                                     $ 65,131,583      $ 69,509,267
                                                                     ============      ============
</TABLE>
                    See Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
                                     LCS INDUSTRIES, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  For the Three and Nine Months Ended June 30,
                                                  (Unaudited)



                                                      Three Months                        Nine Months
                                            ------------------------------      ------------------------------ 
                                                 1998              1997              1998              1997
                                                
<S>                                         <C>               <C>               <C>               <C>         
Net sales .............................     $ 22,040,914      $ 24,167,753      $ 71,653,799      $ 75,238,106
Cost of sales .........................       15,255,841        16,451,458        49,577,715        51,758,748
                                            ------------      ------------      ------------      ------------
Gross profit ..........................        6,785,073         7,716,295        22,076,084        23,479,358
Selling and administrative expenses ...        4,106,571         4,410,592        12,282,338        13,349,253
Other (income) expense:
   Dividend and interest income .......         (406,533)         (365,286)       (1,212,783)       (1,051,227)
   Interest expense ...................           78,212           116,820           257,605           350,859
   Loss on investment .................             --             954,000          (210,000)          954,000
                                            ------------      ------------      ------------      ------------
Income before income taxes ............        3,006,823         2,600,169        10,958,924         9,876,473
Provision for income taxes ............        1,250,000         1,410,000         4,419,000         4,388,000
                                            ------------      ------------      ------------      ------------
Net income ............................     $  1,756,823      $  1,190,169      $  6,539,924      $  5,488,473
                                            ============      ============      ============      ============

Per common and common equivalent share:
Basic earnings ........................     $        .36      $        .26      $       1.36      $       1.19
                                            ============      ============      ============      ============

Diluted earnings ......................     $        .34      $        .23      $       1.27      $       1.07
                                            ============      ============      ============      ============

Dividends .............................     $       .038      $       .038      $       .113      $        .10
                                            ============      ============      ============      ============


</TABLE>
                 See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
                           LCS INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                            For the Nine Months Ended June 30,
                                        (Unaudited)



                                                               1998              1997
                                                           ------------      ------------
<S>                                                        <C>               <C>  
Increase (Decrease) in cash and cash equivalents
Cash flows from operating activities:
   Net income ........................................     $  6,539,924      $  5,488,473
                                                           ------------      ------------
   Adjustments to reconcile net income to net cash
       provided  by  operating
       activities:
       Depreciation and amortization .................        2,075,224         1,913,249
       Deferred income taxes .........................          317,000            99,000
       Provision for doubtful accounts receivable ....          110,000            85,000
       Deferred compensation .........................          299,000              --
       Gain on sale of available-for-sale securities .             --                (474)
                                                           ------------      ------------
       Total adjustments .............................        2,801,224         2,096,775
   Changes in operating assets and liabilities:
       Accounts receivable ...........................        6,224,326         2,598,852
       Prepaid expenses and other current assets .....       (1,143,890)         (548,675)
       Accounts payable and accrued expenses .........       (5,552,352)       (1,833,229)
       Income taxes payable ..........................          407,144           506,725
       Deferred revenue ..............................       (4,124,699)       (2,472,917)
       Other assets ..................................         (176,753)         (102,366)
                                                           ------------      ------------
       Total adjustments and changes .................       (1,565,000)          245,165
                                                           ------------      ------------
   Net cash provided by operating activities .........        4,974,924         5,733,638
                                                           ------------      ------------

Cash flows from financing activities:
   Changes in note payable, long-term debt and capital
       leases (including current portion):
       Repayments ....................................       (1,583,364)       (1,196,582)
   Dividends paid ....................................         (531,052)         (455,635)
   Exercise of stock options .........................          151,460           493,872
   Employee Stock Purchase Plan and employment
       agreement proceeds ............................           70,168            85,154
                                                           ------------      ------------
   Net cash used in financing activities .............       (1,892,788)       (1,073,191)
                                                           ------------      ------------

Cash flows from investing activities:
   Additions to property and equipment ...............       (1,207,128)       (1,313,713)
   Net sales (purchases) of investments ..............        1,100,855        (3,083,100)
                                                           ------------      ------------
   Net cash used in investing activities .............         (106,273)       (4,396,813)
                                                           ------------      ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                           LCS INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                            For the Nine Months Ended June 30,
                                        (Unaudited)



                                                               1998              1997
                                                           ------------      ------------
<S>                                                        <C>               <C>  
Cash and cash equivalents:
   Net increase in cash and cash equivalents .........        2,975,863           263,634
   Cash and cash equivalents at beginning of period ..       14,619,271        11,893,982
                                                           ------------      ------------
   Cash and cash equivalents at end of period ........     $ 17,595,134      $ 12,157,616
                                                           ============      ============
<CAPTION>

For the Nine Months Ended June 30, ...................         1998              1997
                                                           ------------      ------------ 
Supplementary disclosures of cash flow information:
  Cash paid during the period for:
       Interest ......................................     $    204,588      $    233,830
       Income taxes  .................................     $  3,518,950      $  3,937,260
</TABLE>

Supplemental disclosures of non-cash investing
   and financing activities:

   Valuation adjustment:
       In fiscal 1998, the valuation adjustment account is no longer required as
       a result of selling the available-for-sale  securities portfolio to which
       the  valuation  adjustment  related.  For the nine months  ended June 30,
       1997, the account was adjusted to reflect an increase in market values of
       the  available-for-sale  securities portfolio of $31,216, net of deferred
       income taxes.

   Stock dividends:
       On October 7, 1997, 144 shares of the Company's common stock were paid as
       dividends upon exchange of 33 shares of the Company's "old" common stock.

   Treasury stock:
       For the nine months ended June 30, 1998,  26,897  shares of the Company's
       outstanding  Common Stock were received in exchange for options exercised
       covering 176,000 shares of Common Stock.

   Long-term debt and acquisition of business:
       As a result of Amendment No. 2 of the Catalog  Resources,  Inc.  purchase
       agreement,  (as  explained  in  Note  3  to  the  Consolidated  Financial
       Statements),  additional long-term debt of $506,250 was recorded,  offset
       by charges to common stock  issuable of $418,899 and  additional  paid-in
       capital of $87,351 during fiscal 1998. During the nine month period ended
       June 30, 1997,  $455,552 of common  stock  issuable  was  converted  into
       38,762 issued shares of the Company's  common stock,  in accordance  with
       the terms of the Catalog Resources, Inc. purchase agreement, as amended.

                 See Notes to Consolidated Financial Statements.
<PAGE>
                      LCS INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1) In the opinion of management, the accompanying unaudited financial statements
include all adjustments (consisting only of normal recurring accruals) which are
necessary for a fair presentation of results for the periods indicated.  Certain
information and footnote  disclosures  normally  included in complete  financial
statements prepared in accordance with generally accepted accounting  principles
have been  omitted.  Therefore,  these  financial  statements  should be read in
conjunction  with the financial  statements  and the  footnotes  included in the
Company's  Annual Report on Form 10-K (as amended by Form 10-K/A-1) for the year
ended  September 30, 1997.  The results of operations  for the nine months ended
June 30, 1998 are not  necessarily  indicative of the results for the full year.
The September 30, 1997 Balance Sheet was derived from the audited  Balance Sheet
at that date.

2) Effective October 1, 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share", issued in
March,  1997.  The  Statement  requires dual  presentation  of basic and diluted
earnings per share by entities with complex capital  structures.  Basic earnings
per share includes no dilution and is computed by dividing  income  available to
common shareholders by the weighted-average  number of common shares outstanding
for the period.  Diluted  earnings per share reflects the potential  dilution of
securities  that could share in the  earnings of the  Company.  The prior year's
earnings per share amounts have been restated to reflect the  provisions of SFAS
No. 128.

3) On  December  30,  1997,  the  Company  and  former  shareholders  of Catalog
Resources,  Inc. agreed to Amendment No. 2 of the purchase agreement dated April
1, 1993 and amended August 1, 1994. This Amendment provides for the payment made
January 2, 1998 of  $1,012,500  to be 100% in cash  compared  to the  previously
agreed 50% in cash and 50% in Common Stock of the Company,  subject to a maximum
number of shares to be issued of 660,000.  Accordingly,  the current  portion of
long-time  debt at December  31,  1997 was  increased  by  $506,250  (50% of the
$1,012,500 payment).  This was offset by a reduction in common stock issuable of
$418,899, representing the present value at September 30, 1995 of the originally
anticipated  stock  issuance,  and a charge to  additional  paid-in  capital  of
$87,351.

           As a result of Amendment No. 2, the parties have agreed to reduce the
maximum  number of shares  issuable  under the amended  agreement  by the shares
which would have been issued on January 2, 1998 based on the  provisions  of the
original agreement.  The revised maximum number of shares issuable is 628,020 of
which 538,287 shares have been previously issued.

4) On January 6, 1998,  the Company  announced it had entered into an additional
one-year   agreement  to  provide   computer   services  for  a  major  non-U.S.
telecommunications  company.  Total  revenue of $6 million is  expected  and the
assignment  began  July 1, 1998  immediately  following  the  conclusion  of the
initial three-year project.

5) Other  income for the nine months  ended June 30, 1998  represents  a payment
from McIntyre and King, Ltd. ("M&K")  representing final settlement of a portion
of the  down-payment  made  in  connection  with  the  1997  rescinded  purchase
agreement. During fiscal 1997, the Company had written off its entire investment
in M&K since any recovery, at that time, was uncertain.
<PAGE>
Item 2.          Management's Discussion and Analysis of Financial
                 Condition and Results of Operations.


Results of Operations

           Three Months ended June 30, 1998

           Sales  declined 9% in the quarter ended June 30, 1998 to  $22,041,000
from  $24,168,000 for the comparable  quarter of the prior year and is accounted
for by decreases of 15% in computer services, 13% in list marketing services and
2% in fulfillment  services.  The lower computer  services  revenues continue to
reflect reduced billings,  compared to the prior year, for the last phase of the
three-year $40 million  contract to build and manage a marketing  database for a
major non-U.S.  telecommunications company. This contract was completed June 30,
1998. On July 1, 1998,  the Company began work under an additional  $6.0 million
one-year contract with the same  telecommunications  company. The list marketing
decline reflects  customer  attrition and industry  softness not fully offset by
new  customers.  The  fulfillment  decrease  is  comprised  of a 6%  increase in
continuity  services  offset  by  a  10%  decline  in  the  catalog  fulfillment
operation.  The  continuity  services  increase  resulted  primarily from higher
activity levels from existing  clients.  The decline in the catalog  fulfillment
operation  resulted from several  customers being acquired by third parties,  as
previously  reported.  Recently,  contracts with several new customers have been
finalized.

           Gross profit decreased 12% to $6,785,000 for the current quarter from
$7,716,000 in the comparable quarter of 1997. Gross profit margin was 31% in the
current quarter compared to 32% in the comparable  prior period.  The decline in
gross profit amount resulted primarily from the decreased sales volumes.

           Selling and administrative expenses decreased 7% to $4,107,000 in the
current quarter from $4,411,000 in the comparable  quarter of 1997.  Selling and
administrative  expenses,  as a  percentage  of sales,  were 19% for the current
quarter  and  18%  in  1997.   The   decrease  in  the  amount  of  selling  and
administrative  expenses is primarily  the result of continued  lower  executive
compensation and travel expenses.  This decrease,  however, was not proportional
to the decline in revenues and, as a result, the percentage of these expenses to
revenues increased.

           Net  dividend  and  interest of $328,000  was realized in the current
quarter  compared to $248,000  in the  comparable  1997  quarter.  Dividend  and
interest income increased $41,000 in the current fiscal quarter as a result of a
higher level of funds  available for short-term  investment and higher  interest
rates during the current quarter.  The decrease in interest expense quarter over
quarter of $39,000  resulted  primarily  from  reduced  debt and  capital  lease
obligations.  The unsecured line of credit held available to the Company was not
utilized in either quarter.

           In the quarter  ended June 30, 1997, a loss on investment of $954,000
($901,000 net of taxes) was recorded which  represented a  non-recurring  charge
for the write-off of the Company's  investment in McIntyre & King, Ltd. ("M&K").
This charge  represented  $.18 per share in the quarter.  The Company's Board of
Directors decided to sever the relationship with M&K due to unexpected operating
losses that would have required  unacceptable  demands on management's  time and
the financial support required to attempt to return M&K to  profitability.  As a
result,  effective  April 5, 1997, the Company agreed to rescind its acquisition
<PAGE>
of M&K. The rescission  agreement,  dated June 30, 1997, provided for the return
of a portion of the down payment in one year.  However,  recovery was  uncertain
and,  therefore,  the Company  expensed all  payments,  advances and all related
costs.  During  the first  quarter  of the  current  fiscal  year,  a payment of
$210,000 was received and recorded as other income in settlement of a portion of
the down payment under the rescinded agreement.

           The effective tax rate in the current  fiscal quarter was 40 per cent
compared to 54 per cent in the  comparable  period of the prior fiscal year.  In
1997, the Company did not anticipate  realizing  sufficient capital gains during
the tax carryforward  period to offset capital losses related to M&K, therefore,
no tax benefit was recorded.

           Net income was  $1,757,000  ($.34 per share  diluted)  in the current
quarter  compared to $1,190,000  ($.23 per share diluted) in the comparable 1997
quarter.

           Nine Months ended June 30, 1998

           Sales  decreased  5% for the  nine  months  ended  June  30,  1998 to
$71,654,000 from $75,238,000 for the comparable  period of the prior year and is
represented  by decreases of 17% in computer  services and 5% in list  marketing
services  partially  offset by a 1% increase in fulfillment.  The lower computer
services revenues  continue to reflect reduced  billings,  compared to the prior
year,  for the last phase of the  three-year  $40 million  contract to build and
manage a marketing  database for a major  non-U.S.  telecommunications  company.
This  contract was completed  June 30, 1998.  On July 1, 1998,  the Company bean
work  under  an  additional  $6.0  million  one-year   contract  with  the  same
telecommunications   company.  The  list  marketing  decline  reflects  customer
attrition  and  industry  softness  not  fully  offset  by  new  customers.  The
fulfillment  decrease is  comprised  of a 15%  increase in  continuity  services
offset by a 74%  decrease in  telemarketing  services  and an 11% decline in the
catalog  fulfillment  operation.   The  continuity  services  increase  resulted
primarily from higher  activity  levels from existing  clients.  The decrease in
telemarketing  services is in line with the  Company's  program to  de-emphasize
this activity.  The decline in the catalog  fulfillment  operation resulted from
several  customers  being  acquired by third  parties,  as previously  reported.
Recently, contracts with several new customers have been finalized.

           Gross profit  decreased 6% to  $22,076,000  for the nine month period
from  $23,479,000 in the comparable  period of 1997. Gross profit margin was 31%
in each period.  The decrease in gross profit amount resulted primarily from the
decreased sales volumes.

           Selling and administrative  expenses decreased 8% to $12,282,000 from
$13,349,000. Selling and administrative expenses, as a percentage of sales, were
17% in the current nine month  period  compared to 18% in the  comparable  prior
year  period.  The  decrease  in  the  amount  and  percentage  of  selling  and
administrative expenses is primarily the result of lower executive compensation,
travel and communications expenses.

           Net  dividend  and  interest of $955,000  was realized in the current
period  compared to $700,000 in 1997.  Dividend  and interest  income  increased
$162,000 in the current nine month period as a result of a higher level of funds
available for short-term  investment  coupled with higher  interest  rates.  The
decrease in interest  expense period over period of $93,000  resulted  primarily
from reduced debt and capital lease  obligations.  The unsecured  line of credit
held available to the Company was not utilized in either period.

           During the nine month period, a payment of $210,000 was received from
McIntyre & King,  Ltd.  ("M&K")  and  recorded  as other  income.  This  payment
represented final settlement of a portion of the down-payment made in connection
with the 1997 rescinded  purchase  agreement,  as previously  described.  During
fiscal 1997, the Company had written off its entire  investment in M&K since any
recovery, at that time, was uncertain.
<PAGE>
           The  effective  tax rate for the nine month period in fiscal 1998 was
40  percent  compared  to 44 per cent in  1997.  In 1997,  the  Company  did not
anticipate realizing sufficient capital gains during the tax carryforward period
to offset capital losses related to M&K, therefore, no tax benefit was recorded.

           Net income was  $6,540,000  ($1.27 per share  diluted) in the current
period  compared to $5,488,000  ($1.07 per share diluted) in the comparable 1997
period.

Financial Condition, Liquidity and Capital Resources

           Working capital was $33,073,000 at June 30, 1998. The working capital
increase  resulted from a decrease in current assets of $3,564,000 while current
liabilities  decreased  by  $9,838,000.  The  decrease  in  current  assets  was
primarily   the   result   of  lower   accounts   receivable-net   ($6,334,000),
investments-held-to-maturity  ($381,000) and deferred taxes ($376,000) offset by
an increase in cash and cash  equivalents  ($2,976,000) and prepaid expenses and
other current assets ($551,000).  The decrease in current  liabilities  resulted
primarily   from  lower  deferred   revenue   ($4,125,000),   accounts   payable
($3,884,000),  other  accrued  expenses  ($894,000)  and  accrued  salaries  and
commissions ($826,000).

           For the nine month period,  cash  generated by  operations  decreased
$759,000 over such amounts generated in the comparable period of the prior year.
This  decrease  was the result of  decreases  in  adjustments  to net income and
changes in operating assets and liabilities  ($1,810,000)  offset by an increase
in net  income  ($1,051,000).  The  decrease  in  adjustments  to net income and
changes in operating assets and liabilities resulted primarily from decreases in
accounts  payable  and  accrued  expenses   ($3,719,000)  and  deferred  revenue
($1,652,000) partially offset by a decrease in accounts receivable ($3,625,000).

           For the  nine  month  period  ended  June  30,  1998,  funds  used by
financing activities increased $820,000 compared to the comparable period of the
prior year. The increased usage resulted  primarily from increased  repayment of
debt ($387,000),  reduced receipts from the exercise of stock options ($342,000)
and increased payment of dividends ($75,000).  For the same period, cash used by
investing  activities  decreased  $4,291,000 as a result of net investment sales
($4,184,000) and reduced additions to property and equipment ($107,000).

           Pursuant to the purchase agreement, as amended, with CRI, the Company
is obligated to pay to CRI's selling  shareholders,  in cash or stock,  up to an
aggregate  of  $10,000,000.  Under such  purchase  agreement,  the Company  paid
$1,012,500 (one-half in cash and one-half in stock) on January 1, 1997. Further,
such amounts  will be payable each January 1 through 2002  totaling a maximum of
$5,062,500.  The  discounted  value of these  future  payments  was  recorded at
September 30, 1995 since it is probable that the future  earnings levels will be
attained which will require the maximum payments to be made.

           Management  believes cash generated from current operations and other
liquid assets  combined  with the  available  bank credit line and the five year
term loan mentioned  above will be sufficient to meet cash flow needs during the
fiscal year.
<PAGE>
Year 2000 Issues

           Certain of the Company's operational computer programs use two digits
to identify a year in the date field which does not consider the impact, if any,
of the upcoming change in the century.  The Company  anticipates,  at a cost not
material to financial  results,  the timely completion of any programming needed
to address this issue and result in successful  computer  processing in the year
2000 and beyond.

           The Company has not, however,  fully completed its review of the Year
2000 issues, particularly, but not limited to, non-operational computer programs
and third party  vendor and  customer  issues.  The Company is in the process of
completing that review.

           Management  cannot provide assurance that the result of its Year 2000
compliance  efforts or the cost of such efforts will not differ  materially from
estimates.  Accordingly, business continuity and contingency plans are currently
being developed to address high risk areas as they are identified.

           The above discussion contains  statements that are  "forward-looking"
within the  meaning of the  Private  Securities  Litigation  Reform Act of 1995.
Although  the  Company  believes  that its  estimates  are  based on  reasonable
assumptions,  there can be no  assurance  that  actual  results  will not differ
materially from these estimates.

<PAGE>

PART II                      OTHER INFORMATION


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

             (a)  Exhibit 11 - Computation of earnings per share.

             (b)  Reports on Form 8-K - LCS  Industries,  Inc.  did not file any
                  reports on Form 8-K during the quarter ended June 30, 1998.

<PAGE>


                                   SIGNATURES



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


Date:        Clifton, New Jersey
             August 10, 1998


                                                   LCS INDUSTRIES, INC.
                                                       (Registrant)


                                               By: /s/ William Rella
                                                   -----------------
                                                       William Rella
                                                       President and
                                                       Chief Executive Officer



                                               By: /s/ Pat R. Frustaci
                                                   -------------------
                                                       Pat R. Frustaci
                                                       Vice President-Finance
                                                       (Chief Financial Officer)
<PAGE>







                              LCS INDUSTRIES, INC.


                           Commission File No. 0-12329



                                     ------


                          Quarterly Report on Form 10-Q

                                     for the

                         Nine Months Ended June 30, 1998




                                     EXHIBIT




<PAGE>




                                INDEX TO EXHIBIT


      Exhibit
         No.                         Description
         ---                         -----------

         11             Statement re: Computation of Per Share Earnings