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

                                   FORM 10-QSB

[X]  QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
     ACT OF 1934
     For the quarterly period ended September 30, 1997

                                       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: 0-23952

                                   AVERT, INC.
         ---------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

             Colorado                                84-1028716
 ------------------------------            ----------------------------------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization

                      301 Remington, Fort Collins, CO 80524
                     --------------------------------------
                    (Address of principal executive offices)

                                  970/484-7722
               --------------------------------------------------
              (Registrant's telephone number, including area code)

                                    No Change
              ------------------------------------------------------
             (Former name, former address and former fiscal year, if
                           changed from last report).

     Check whether the registrant (1) 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 for such shorter  period that the issuer was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.

                        [X] Yes       [ ] No

     As of November 12, 1997 the issuer had 3,488,125 shares of Common Stock, no
par value, outstanding.

     Transitional Small Business Disclosure Format.
                        [ ] Yes       [X] No


<PAGE>

Form 10-QSB
Quarter Ended September 30, 1997


                                      INDEX


                                                                            PAGE
                                                                            ----
PART I - FINANCIAL INFORMATION

      ITEM 1.  Financial statements

               Unaudited balance sheets.............................           3

               Unaudited statements of income.......................           4

               Unaudited statements of cash flows...................           5

               Notes to unaudited financial statements..............           6

      ITEM 2.  Management's Discussion and Analysis or

               Plan of Operations...................................           7


PART II - OTHER INFORMATION

      ITEMS 1, 2, 3, 4, and 5  Not applicable
      ITEM 6........................................................          12

      Signatures....................................................          13




                                       2


<PAGE>

<TABLE>
<CAPTION>
                         PART I - FINANCIAL INFORMATION
                                   AVERT, INC.
                                 BALANCE SHEETS

                                     ASSETS

                                                                                       SEPTEMBER 30,   DECEMBER 31,
                                                                                           1997           1996
                                                                                       ------------    -----------
                                                                                        (unaudited)
<S>                                                                                    <C>           <C>        
Current assets:
         Cash and cash equivalents .................................................   $ 1,125,100   $   360,300
         Marketable securities .....................................................     5,288,000     5,576,700
         Accounts receivable, net of allowance .....................................     1,279,100       787,900
         Prepaid expenses and other ................................................       166,500       159,000
                                                                                       -----------   -----------
                  Total current assets .............................................   $ 7,858,700     6,883,900

Property and equipment, net ........................................................     3,351,500     2,510,900
                                                                                       -----------   -----------

Total assets .......................................................................   $11,210,200   $ 9,394,800
                                                                                       ===========   ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
         Accounts payable ..........................................................   $   463,600   $   464,400
         Accrued expenses ..........................................................       583,400       224,600
         Deferred revenue ..........................................................        67,200        20,000
                                                                                       -----------   -----------
                  Total current liabilities ........................................     1,114,200       709,000

Shareholders' equity:
         Preferred shares, no par value; authorized
           1,000,000 shares; none outstanding ......................................          --            --
         Common stock, no par value; authorized
           9,000,000 shares; 3,488,125, and 3,446,988
           shares issued and outstanding respectively ..............................     5,276,200     4,745,500
         Retained earnings .........................................................     4,819,800     3,940,300
                                                                                       -----------   -----------
                  Total shareholders' equity .......................................    10,096,000     8,685,800
                                                                                       -----------   -----------

Total liabilities and shareholders' equity .........................................   $11,210,200   $ 9,394,800
                                                                                       ===========   ===========

</TABLE>

               See accompanying notes to the financial statements.


                                       3

<PAGE>

<TABLE>
<CAPTION>
                                   AVERT, INC.
                              STATEMENTS OF INCOME
                                   (unaudited)

                                                            Three Months Ended               Nine Months Ended
                                                                 Sept 30,                       Sept 30,
                                                       --------------------------      ---------------------------
                                                          1997            1996            1997             1996
                                                          ----            ----            ----             ----
<S>                                                   <C>             <C>             <C>              <C>        
Net revenues:
         Search and product fees ................     $ 2,410,500     $ 2,054,900     $ 6,772,300      $ 5,466,800
         Interest and other income ..............         113,900         158,900         306,500          367,100
                                                      -----------     -----------     -----------      -----------
                                                        2,524,400       2,213,800     $ 7,078,800      $ 5,833,900
Expenses:
         Search and product costs ...............       1,104,800         892,700       3,050,900        2,385,100
         Marketing ..............................         325,200         374,100       1,061,600          984,300
         General and administrative .............         327,500         259,400         945,400          774,700
         Software development ...................          81,700          91,500         281,500          268,400
         Depreciation and amortization ..........         113,200          50,100         291,700          130,600
                                                      -----------     -----------     -----------      -----------
                                                        1,952,400       1,667,800       5,631,100      $ 4,543,100
                                                      -----------     -----------     -----------      -----------

Income before income taxes ......................         572,000         546,000       1,447,700        1,290,800

         Income tax expense .....................        (224,900)       (207,900)       (568,300)        (491,100)
                                                      -----------     -----------     -----------      -----------
Net income ......................................     $   347,100     $   338,100     $   879,400          799,700
                                                      ===========     ===========     ===========      ===========
Net income per common share .....................     $       .10     $       .10     $       .25      $       .23
                                                      ===========     ===========     ===========      ===========
Weighted average common
         shares outstanding .....................       3,502,758       3,422,797       3,574,525        3,423,893
                                                      ===========     ===========     ===========      ===========
</TABLE>


               See accompanying notes to the financial statements.




                                       4

<PAGE>

<TABLE>
<CAPTION>
                                   AVERT, INC.
                            STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                                      NINE MONTHS ENDED SEPTEMBER 30
                                                                      ------------------------------
                                                                            1997           1996
                                                                            ----           ----
<S>                                                                    <C>            <C>        
Cash Flows From Operating Activities:
    Net income .....................................................   $   879,400    $   799,700
    Adjustments to reconcile net income to net cash
      provided by operating activities:
         Depreciation and amortization .............................       291,700        130,600
         Bad debt expense ..........................................        19,500         22,500
         (Increase)/decrease in marketable securities and
                  other gains ......................................       288,700        (76,600)
         Changes in operating assets and liabilities:
              Accounts receivable ..................................      (510,700)      (417,500)
              Prepaid expenses and other current assets ............        (7,500)        90,200
              Other assets .........................................          --            3,200
              Accounts payable .....................................          (800)       (48,400)
              Accrued expenses .....................................       239,000        (36,900)
              Income taxes payable .................................       119,700        125,600
              Deferred revenue and deposits ........................        47,200         (5,600)
                                                                        ----------      ---------

         Net cash provided by operating activities .................   $ 1,366,200    $   586,800

Cash Flows from Investing Activities:
     Additions to furniture and equipment ..........................    (1,132,200)      (877,500)
     Proceeds from sale of furniture and equipment .................          --          542,700
                                                                        ----------      ---------
           Net cash used in investing activities ...................    (1,132,200)      (334,800)
                                                                        ----------      ---------
Cash Flows from Financing Activities:
         Purchase of Treasury Stock ................................          --         (168,200)
                     Warrants exercised ............................       530,800            --
                                                                        ----------      ---------

           Net cash provided by (used in) financing activities .....       530,800       (168,200)

Increase/(Decrease) in Cash and Cash Equivalents ...................       764,800         83,800

Cash and Cash Equivalents, beginning of period .....................       360,300        159,700
                                                                        ----------      ---------
Cash and Cash Equivalents, end of period ...........................   $ 1,125,200    $   243,500
                                                                        ==========      =========
</TABLE>

               See accompanying notes to the financial statements.


                                       5
<PAGE>

                                  AVERT, INC.
                         NOTES TO FINANCIAL STATEMENTS


     The financial information  contained herein is unaudited,  but includes all
adjustments (consisting of only normal recurring accruals) which, in the opinion
of management,  are necessary to present fairly the information  set forth.  The
financial  statements  should be read in conjunction with the Notes to Financial
Statements which are included in the Annual Report on Form 10-KSB of the Company
for the year ended December 31, 1996.

     The results for interim periods are not  necessarily  indicative of results
to be expected for the fiscal year of the Company ending  December 31, 1997. The
Company   believes  that  the  three  month  report  filed  on  Form  10-QSB  is
representative of its financial position, its results of operations and its cash
flows as of and for the  periods  ended  September  30,  1997  and 1996  covered
thereby.

     Impact of recently  issued  accounting  standards.  Statement  of Financial
Accounting  Standards  128,  "Earnings  per Share" and  Statement  of  Financial
Accounting  Standards 129 "Disclosure of Information  About an Entity's  Capital
Structure".  Statement 128 provides a different  method of calculating  earnings
per share than is currently used in accordance with Accounting  Principles Board
Opinion 15 "Earnings per Share".  Statement 128 provides for the  calculation of
"basic" and "diluted"  earnings per share.  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 an entity, similar to fully diluted earnings per share.
Statement 129 establishes standards for disclosing information about an entity's
capital structure. Statements 128 and 129 are effective for financial statements
issued for periods ending after December 15, 1997. Their  implementation  is not
expected to have a material effect on the financial statements.

     Statement of Financial Accounting  Standards 130. "Reporting  Comprehensive
Income" and Statement of Financial  Accounting  Standards 131 "Disclosures About
Segments of an Enterprise and Related  Information".  Statement 130  establishes
standards for reporting and display of comprehensive  income, its components and
accumulated balances.  Comprehensive income is defined to include all changes in
equity except those resulting from  investments by owners and  distributions  to
owners. Among other disclosures,  Statement 130 requires that all items that are
required to be recognized  under current  accounting  standards as components of
comprehensive income be reported in a financial statement that displays with the
same  prominence  as  other  financial  statements.   Statement  131  supersedes
Statement of Financial Accounting Standards 14 "Financial Reporting for Segments
of a Business  Enterprise".  Statement 131 establishes standards on the way that
public companies report financial information about operating segments in annual
financial  statements  and  requires  reporting  of selected  information  about
operating segments in interim financial statements issued to the public. It also
establishes   standards  for  disclosures   regarding   products  and  services,
geographic areas and major customers.  Statement 131 defines operating  segments
as  components  of a company  about  which  separate  financial  information  is
available that is evaluated  regularly by the chief operating  decision maker in
deciding how to allocate resources and in assessing performance.

     Statements  130 and 131 are effective for financial  statements for periods
beginning  after  December  15, 1997 and  require  comparative  information  for
earlier years to be restated. Because of the recent issuance of these standards,
management has been unable to fully  evaluate the impact,  if any, the standards
may have on the future financial  statement  disclosures.  Results of operations
and financial position,  however,  will be unaffected by implementation of these
standards.


                                       6

<PAGE>

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION


Results of Operations

Comparison of quarters ended September 30, 1997 and September 30, 1996

     Total net revenues  increased  from  $2,213,800  for the three month period
ended September 30, 1996 to $2,524,400 for the comparable  three month period in
1997,  or  approximately  14.0%.  The  breakdown of net  revenues,  exclusive of
product discounts and other miscellaneous income items, is as follows:
<TABLE>
<CAPTION>
                                               Three Months Ended               Three Months Ended           
                                               September  30, 1997              September 30, 1996           Percent of
                                             -----------------------        --------------------------        Increase
                                              Revenues        % total        Revenues          % total       (Decrease)
                                              --------        -------        --------          -------        --------
<S>                                          <C>               <C>         <C>                  <C>            <C>  
Products:
  Workers compensation histories ........    $  297,600        11.8%       $  354,600           16.0%          (16.1)%
  Criminal history reports ..............    $1,270,200        50.3%       $1,114,200           50.3%           14.0%
  Previous employment reports/
     credit reports .....................    $  329,500        13.1%       $  246,400           11.1%           33.7%
  Motor vehicle driving records .........    $  251,300        10.0%       $  256,700           11.6%           (2.1)%
  Other products ........................    $  123,200         4.9%       $  111,100            5.0%           10.9%
Services ................................    $  141,600         5.6%       $   79,100            3.6%           79.0%

Interest income .........................    $   80,100         3.2%       $   76,700            3.5%            4.4%

         NET REVENUES ...................    $2,524,400                    $2,213,800                           14.0%

</TABLE>

     In total dollars, criminal history reports continues to contribute the most
net  revenues or any  product,  representing  $1,270,200  in net revenues in the
three month period ended  September  30, 1997,  as compared to $1,114,200 in the
three month  period ended  September  30, 1996.  The  criminal  history  reports
product line accounted for  approximately 50% of total net revenues in the third
quarter 1997, and approximately the same percentage of total net revenues in the
third quarter 1996, and represents a 14% growth.  The Company  believes there is
an on-going  nationwide trend to check prospective  employees'  criminal records
and it  continues  to  focus on  obtaining  the  quickest,  most  accurate  data
available.

     Workers'  compensation  histories is no longer our second  largest  product
line in terms of revenues,  and has  continued to decline as a percentage of net
revenues as previously  predicted.  In third quarter 1997, workers' compensation
reports  represented 11.8% of net revenues,  or $297,600 as compared to 16.0% of
net revenues in third quarter 1996,  or $354,600.  The Company  believes it will
continue to decrease  as a  percentage  of total net  revenues,  though  still a
viable product.

     The largest  product growth of  approximately  33.7% continues to be in the
area of Previous  Employment/Credit.  This product  represented  $329,500 in the
third quarter 1997, compared to $246,400 in the third quarter 1996. This product
has moved into the second largest product line position,  representing  13.1% of
total net revenues in the third quarter 1997, as compared to approximately 11.1%
of total net revenues in the third  quarter 1996.  Both products  making up this
category are quick turnaround products, considered attractive to customers.

     Net revenue growth was flat in the area of motor vehicle  driving  records,
representing  approximately 10.6% of total net revenues in the third three month
period of 1997, as compared to 11.6% of total net revenues in the same period of
1996. The revenue generated in third quarter of 1997 was $251,300,  and $256,700
in third quarter of 1996.

                                       7
<PAGE>

     Steady  growth   occurred  in  the   "Services"   area,   increasing   from
approximately  3.6% of total net revenues in third quarter 1996 to approximately
5.6% of total net revenues in third quarter 1997.  This increase is attributable
to increased  number of customer  setups and Avert Advantage  membership,  first
implemented  in July,  1996.  In addition,  Avert  continues to develop  special
services, allowing for customer customization.  This section represents $141,600
in revenues in the three month  period ended  September  30, 1997 as compared to
$79,100 in the three month period ended September 30, 1996.

     Total expenses  increased from  $1,667,800 for the three month period ended
September  30,  1996  to  $1,952,400  for  the  comparable  period  in  1997  or
approximately 17.0% A breakdown in expenses is as follows:
<TABLE>
<CAPTION>
                                                      Three Months Ended               Three Months Ended      Increase (Decrease)
                                                      September 30, 1997               September 30, 1996        % of Revenues
                                                   -------------------------        -------------------------   ---------------
                                                   Expenses      % of Revenue       Expenses     % of Revenue   1997 over 1996
                                                   --------      ------------       --------     ------------   --------------
<S>                                               <C>              <C>           <C>                <C>          <C> 
Search and product ......................         $1,104,800       43.8%         $  892,700         40.3%        3.5%
Marketing ...............................            325,200       12.9             374,100         16.9        (4.0)
General and administrative ..............            327,500       13.0             259,400         11.7         1.3
Software development ....................             81,700        3.2              91,500          4.1        (0.9)
Depreciation and amortization ...........            113,200        4.4              50,100          2.3         2.1
                                                  ----------       ----          ----------         ----         ---
         Expenses .......................         $1,952,400       77.3%         $1,667,800         75.3%        2.0%
                                                  ==========       ====          ==========         ====         ===
</TABLE>

     Search and product fees  increased  from  approximately  40.3% of total net
revenues for third quarter 1996 to 43.8% of total net revenues for third quarter
1997. With criminal history reports  representing a large portion of our product
mix, the Company has  experienced  an increase in state and county fees required
for  report  retrieval.  In  addition,  there  is a  continued  belief  that the
development  of existing  couriers  and  addition of new  couriers  and improved
methods of retrieval of criminal  records has the potential to lower the product
costs.  The  Company  believes  that  there are  enhancements  planned  in these
specific areas once the new software is completed,  that will positively  impact
turnaround  and  ultimately  benefit  customers,  as well as  positively  impact
efficiencies in this area. See "Liquidity and Capital  Resources"  below in this
Item for further discussion.  Costs associated with the criminal history product
line represent the bulk of this expense category.

     In  addition,  there was an increase in the  product  costs,  (specifically
labor),  associated with the Previous Employer  Verification product line growth
in third quarter  1997, as compared to third quarter 1996.  This product is very
labor  intensive,  which is  considered  to be a reason that it is an attractive
product for outsourcing to Avert by its customers.

     There was a decrease in marketing  expenses when  expressed as a percentage
of total  net  revenues.  A large  portion  of the  decrease  resulted  from the
elimination  of outside sales  representatives  and a  re-alignment  of in-house
personnel. The department has been revamped to enable more focus on new customer
sales  via   telemarketing,   on-going   account   management,   and  successful
implementation of a pilot process designed to accommodate large companies new to
Avert.

     There is a continued  on-going  marketing  campaign designed to target lead
generation,  marketing  communication  and market  development  for both current
customers  and new  customers.  Due to a decrease  in the number of trade  shows
Avert is  attending,  there was a decrease  in trade show  expenses in the third
quarter 1997 as compared to the third  quarter  1996.  The Company  continues to
believe that lead  generation  can be  performed  more  effectively  using other
methods.

     There was a small  decrease in  software  development  expenses,  both as a
percentage  of total net  revenues,  and in total  dollars,  in the three  month
period  ended  September30,  1997 as compared to the three  month  period  ended
September 30, 1996. The Company also capitalizes  certain  software  development
costs  associated with the further  development of its internal  software system
used in revenue generation.  The majority of these development costs are paid to


                                       8

<PAGE>

third  parties.  See "Liquidity  and Capital  Resources"  below in this Item for
further  discussion.  The depreciation and amortization  expenses have increased
from third  quarter  1996 to third  quarter  1997 as a  percentage  of total net
revenues,  due to the fact that  substantial  computer  hardware  purchases were
required for the computer  software  project Avert has undertaken.  In addition,
Phase I of the software began  depreciation in the second quarter 1997 resulting
in a $43,600 increase in software  depreciation in third quarter 1997 over third
quarter 1996. Phase II of software depreciation was originally expected to begin
in fourth quarter 1997, but has been postponed until first quarter of 1998.

     Income before income taxes increased from $572,000 in third quarter 1996 to
$546,000  in  third  quarter  1997,  or   approximately   4.8%  and  represented
approximately  22.7% of total net  revenues in 1997  compared  to  approximately
24.7% in 1996.

     Income taxes varied  slightly for the combined  federal and state statutory
rate of approximately 38.1% in the third quarter 1996 and approximately 39.3% in
the third quarter 1997, resulting in net income of $338,100 or $.10 per share on
3,422,797  shares for the third  three  months  ended  September  30,  1996,  as
compared to net income of $347,100 or $.10 per share on 3,502,758 shares for the
third three months ended September 30, 1997.


Comparison of nine months ended September 30, 1997 and September 30, 1996

     Net  revenues  increased  from  $5,833,900  for the nine month period ended
September 30, 1996, to $7,078,800 for the  comparable  nine month period in 1997
or  approximately  21.3%.  The breakdown of net  revenues,  exclusive of product
discounts and other miscellaneous income items, is as follows:
<TABLE>
<CAPTION>
                                                 Nine Months Ended                Nine Months Ended 
                                                 September 30, 1997              September 30, 1996         Percent of
                                               -----------------------       ------------------------        Increase
                                               Revenues       % total        Revenues        % total        (Decrease)
                                               --------       -------        --------        -------         --------
<S>                                          <C>               <C>        <C>                 <C>            <C>   
Products:
  Workers compensation histories ........    $  893,900        12.6%      $  964,800          16.5%          (7.4)%
  Criminal history reports ..............    $3,535,700        49.9%      $2,982,900          51.1%          18.5%
  Previous employment reports/ ..........    $  852,700        12.0%      $  645,200          11.1%          32.2%
     credit reports
  Motor vehicle driving records .........    $  773,700        10.9%      $  704,800          12.1%           9.8%
  Other products ........................    $  346,800         4.9%      $  320,100           5.5%           8.3%

Interest income .........................    $  234,400         3.3%      $  237,700           4.1%          (1.4)%


         NET REVENUES ...................    $7,078,800                   $5,833,900                         21.3%
</TABLE>

     Moderate to strong  growth in sales of most all of the  Company's  products
continued during the first nine months of 1997 with the biggest  exception being
workers'  compensation  reports.  As predicted,  sales of workers'  compensation
histories actually decreased approximately 7.4% from the nine month period ended
September 30, 1996 to the same nine month period in 1997.  However,  it is still
the second largest  product line  representing  $893,900 for nine months of 1997
and $964,800 for nine months of 1996. The Company believes that it will continue
to decrease as a percentage of total revenues.


                                       9
<PAGE>


     Growth of  approximately  18.5%  continued in the criminal  history product
line  representing  approximately  49.9% of net revenues in the first nine month
period of 1997 as compared to  approximately  51.1% of net revenues in the first
nine month period of 1996.  Criminal history reports  continues to represent the
most net  revenues,  representing  $3,535,700  in the first nine month period of
1997 as compared to $2,982,900 in the first nine month period of 1996.

     The strongest growth occurred in the area of previous employment and credit
reports  representing  an  approximate  32.2%  growth from the nine month period
ended September 30 1996 to the nine month period ended September 30 1997.  These
products  accounted for  approximately  12.9% of net revenues in the nine months
ended September 30, 1997 as compared to  approximately  11.1% of net revenues in
the same period in 1996.

     Other  products  experienced  moderate  growth  in  revenues,  representing
approximately  4.9% of total net revenues,  and $346,800 in the first nine month
period of 1997 as  compared to  approximately  5.5% of total net  revenues,  and
$320,100 in the same period of 1996.

     Total expenses  increased  from  $4,543,100 for the nine month period ended
September 30, 1996 to $5,631,100 for the comparable  period in 1997. A breakdown
in expenses is as follows:

<TABLE>
<CAPTION>
                                                        Nine Months Ended                Nine Months Ended       Increase (Decrease)
                                                        September 30, 1997              September 30, 1996          % of Revenues
                                                   -----------------------------    --------------------------    ----------------
                                                      Expense       % of Revenue     Expense      % of Revenue    1996 over 1995

<S>                                                <C>                  <C>         <C>                <C>              <C> 
Search and product .......................         $3,050,900           43.1%       $2,385,100         40.9%            2.2%
Marketing ................................          1,061,600           15.0           984,300         16.9            (1.9)
General and administration ...............            945,400           13.4           774,700         13.3             0.1
Software development .....................            281,500            4.0           268,400          4.6            (0.6)
Depreciation and amortization ............            291,700            4.1           130,600          2.2             1.9
                                                   ----------           ----        ----------         ----             ---

         Expenses ........................         $5,631,100           79.6%       $4,543,100         77.9%            1.7%
                                                   ==========           ====        ==========         ====             ===
</TABLE>

     Total expenses remained relatively stable, increasing approximately 1.7% as
a percentage  of total net  revenues,  in the first nine month period of 1997 as
compared to the first nine month period of 1996.

     Search and product costs increased approximately 2.2% of total net revenues
resulting  from  the  large  proportion  of  criminal  history  reports,  and  a
substantial  increase  in previous  employment  verifications.  The  decrease in
Marketing  expenses in the nine month period ended  September  30, 1997 over the
nine month period ended September 30, 1996 resulted primarily from a decrease in
monies spent for outside sales representatives,  lead generation costs and trade
show expenses. Due to the development of new software used in revenue generation
activities and increased  computer hardware costs associated with this software,
depreciation  and  amortization  expenses have increased  approximately  1.9% of
total net revenues  from the nine month period ended  September  30, 1996 to the
nine month  period ended  September  30,  1997.  Phase I of the  software  began
depreciating in the second quarter 1997 and with Phase II software  depreciation
expected to begin in first quarter 1998.

     Income  before  income taxes  increased  from  $1,290,800 in the nine month
period ended  September  30, 1996,  to $1,447,700 in the nine month period ended
September 30, 1997, or approximately  12.2% and represented  approximately 20.5%
of net  revenues  in the first nine  months of 1997  compared  to  approximately
22.13% in the first nine months of 1996.


                                       10
<PAGE>


     Income taxes varied  slightly for the combined  federal and state statutory
rate of  approximately  38% in the first nine  months of 1996 and  approximately
39.3% in the first nine  months of 1997.  This  resulted  in an  increase of net
income of  $799,700  or $.23 per share on  3,423,893  shares for the nine months
ended  September  30,  1996,  to net  income  of  $879,400  or $.25 per share on
3,574,525 shares for the nine months ended September 30, 1997.


Liquidity and Capital Resources

     The Company's financial position at September 30, 1997 remained strong with
working  capital at that date of  $6,743,500  compared to $6,174,900 at December
31,1996.  Cash and cash  equivalents and marketable  securities at September 30,
1997 were  $6,413,100  and increased  from  $5,576,700 at December 31, 1996. Net
cash provided from operations for the nine month period ended September 30, 1997
was $1,366,200  and consisted  primarily of net income of $879,400 plus $291,700
in depreciation, a $239,000 increase in accrued expenses, a $510,700 increase in
accounts  receivable,  and a $288,700  decrease in  marketable  securities.  The
Company had capital  expenditures  of $1,132,200 for the nine month period ended
September  30, 1997 as compared to $877,500 for the nine months ended  September
30, 1996. The majority of the capital  expenditures during the nine months ended
September  30, 1997 is  attributable  to the  development  of new  software  and
upgrade of existing  software and hardware.  The Company has completed  Phase I,
the on-line internet ordering system, which integrates all partners,  resellers,
and  customers on to a common Oracle web server based  environment.  Phase II of
the project involving internal process improvements,  originally scheduled to be
completed in fourth  quarter 1997, has been postponed to first quarter 1998. The
budget impact of the postponement is approximately an increase from $1.5 million
originally  estimated,  to approximately $1.6 million. The majority of these are
costs paid to independent consultants.  The Company expects the new software and
upgrade of its existing  software to allow the Company to: (1) manage its higher
volume  with a lower  cost per  transaction;  (2)  introduce  new  products  and
services  at  a  much  quicker  pace;  (3)  directly   integrate  the  Company's
information  technology systems with strategic  partners,  suppliers,  and large
customers;  and (4)  maintain  the  Company's  competitive  position and provide
leading edge, but safe and proven, technology for its customers. Development and
upgrade of the software will be financed by available  cash derived from past or
continued  operations.  Development  and upgrading of the software  presently is
expected to be complete in early 1998 with scheduled software releases occurring
prior to that time. In addition, April 30, 1997, there was $530,800 attributable
to the exercise of warrants, which represented 88,125 shares of common stock.


                                       11

<PAGE>



                          PART II - OTHER INFORMATION -


ITEM 1.   Legal Proceedings

          NONE

ITEM 2.   Changes in Securities

          NONE

ITEM 3.   Defaults Upon Senior Securities

          NONE

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

          NONE

ITEM 5.   Other Information

          NONE

ITEM 6.   Exhibits and Reports on Form 8-K

          (a)     NONE

          (b)     Reports on Form 8-K

                  The  registrant filed  the following report on Form 8-K during
                  the third quarter ended September 30, 1997:

                  Form 8-K  dated September  3, 1997,  announcing second quarter
                  1997 results.



                                       12


<PAGE>


                                   SIGNATURES



In accordance with 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.


                                      AVERT, INC.


DATE:  November 12, 1997              BY: /s/ Dean A. Suposs
                                          --------------------------------------
                                          Dean A. Suposs, President



DATE:  November 12, 1997              BY: /s/ Jamie M. Burgat
                                          --------------------------------------
                                          Jamie M. Burgat, Vice President of
                                          Operations and Chief Financial Officer









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