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, 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: 0-23952

                                   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 9, 1998 the issuer had 3,323,025 shares of Common  Stock,  no par
value, outstanding.

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




<PAGE>


Form 10-QSB
Quarter Ended September 30, 1998


                                      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, 5 and 6                                   Not applicable


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










                                       2

<PAGE>

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

                                     ASSETS

                                                                                           SEPTEMBER 30,   DECEMBER 31,
                                                                                               1998           1997
                                                                                           ------------    -----------
                                                                                           (unaudited)
<S>                                                                                      <C>             <C>         
Current assets:
         Cash and cash equivalents ...................................................   $    (37,000)   $    580,000
         Marketable securities .......................................................      6,355,000       6,113,000
         Accounts receivable, net of allowance .......................................      1,351,000       1,135,000
         Prepaid expenses and other ..................................................        199,000         304,000
                                                                                         ------------    ------------
                  Total current assets ...............................................   $  7,868,000       8,132,000

Property and equipment, net ..........................................................      3,344,000       3,399,000
                                                                                         ------------    ------------


Total assets .........................................................................   $ 11,212,000    $ 11,531,000
                                                                                         ============    ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
         Accounts payable ............................................................   $    464,000    $    388,000

         Accrued expenses ............................................................         94,000         201,000

         Deferred revenue ............................................................         59,000               0
                                                                                         ------------    ------------

                  Total current liabilities ..........................................        617,000         589,000

         Deferred Taxes ..............................................................        507,000         507,000
                                                                                         ------------    ------------
                  Total liabilities ..................................................   $  1,124,000    $  1,096,000

Shareholders' equity:
         Preferred shares, no par value; authorized
           1,000,000 shares; none outstanding ........................................           --              --

         Common stock, no par value; authorized
           9,000,000 shares; 3,339,025 shares issued
           and outstanding ...........................................................      4,786,000       5,276,000
         Retained earnings ...........................................................      5,302,000       5,159,000
                                                                                         ------------    ------------

                  Total shareholders' equity .........................................   $ 10,088,000    $ 10,435,000
                                                                                         ------------    ------------

Total liabilities and shareholders' equity ...........................................   $ 11,212,000    $ 11,531,000
                                                                                         ============    ============
</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,
                                                            --------------------            ---------------------
                                                            1998            1997            1998             1997
                                                            ----            ----            ----             ----
<S>                                                   <C>             <C>             <C>              <C>        
Net revenues:
         Search and product fees ................     $ 2,504,700     $ 2,410,500     $ 7,126,800      $ 6,772,300
         Interest and other income ..............          85,500         113,900         253,400          306,500
                                                      -----------     -----------     -----------      -----------
                                                      $ 2,590,200     $ 2,524,400     $ 7,380,200      $ 7,078,800

Expenses:
         Search and product costs ...............       1,269,400       1,104,800       3,540,700        3,050,900
         Marketing ..............................         414,500         325,200       1,153,600        1,061,600
         General and administrative .............         346,000         327,500       1,043,500          945,400
         Software development ...................         169,200          81,700         420,100          281,500
         Depreciation and amortization ..........         150,900         113,200         412,100          291,700
                                                      -----------     -----------     -----------      -----------
                                                      $ 2,350,000     $ 1,952,400     $ 6,570,000      $ 5,631,100
                                                      -----------     -----------     -----------      -----------

Income before income taxes ......................         240,200         572,000         810,200        1,447,700

         Income tax expense .....................        ( 93,400)       (224,900)       (317,500)        (568,300)
                                                      -----------     -----------     -----------      -----------
Net income ......................................     $   146,800     $   347,100     $   492,700      $   879,400
                                                      ===========     ===========     ===========      ===========
Net income per common share .....................     $       .04     $       .10     $       .15      $       .25
                                                      ===========     ===========     ===========      ===========
Weighted average common
         shares outstanding .....................       3,366,320       3,502,758       3,381,753        3,574,525
                                                      ===========     ===========     ===========      ===========
</TABLE>







               See accompanying notes to the financial statements.











                                       4

<PAGE>

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

                                                                                     NINE MONTHS ENDED SEPTEMBER 30
                                                                                     ------------------------------
                                                                                         1998               1997
                                                                                         ----               ----

<S>                                                                                <C>                <C>        
Cash Flows From Operating Activities:
    Net income .............................................................       $   492,700        $   879,400
    Adjustments to reconcile net income to net cash
      provided by operating activities:
         Depreciation and amortization .....................................           412,100            291,700
         Bad debt expense ..................................................            27,400             19,500
         (Increase)/decrease in marketable securities and
                  other gains ..............................................          (242,500)           288,700
         Changes in operating assets and liabilities:
              Accounts receivable ..........................................          (242,000)          (510,700)
              Prepaid expenses and other current assets ....................           104,900             (7,500)
              Other assets .................................................            (3,500)              --
              Accounts payable .............................................           123,900             (  800)
              Accrued expenses .............................................             1,000            239,000
              Income taxes payable .........................................          (106,700)           119,700
              Deferred revenue and deposits ................................            10,300             47,200
                                                                                   -----------        -----------
         Net cash provided by operating activities .........................       $   577,600        $ 1,366,200

Cash Flows from Investing Activities:
     Additions to furniture and equipment ..................................          (354,900)        (1,132,200)
     Proceeds from sale of furniture and equipment .........................              --                 --
                                                                                   -----------        -----------
           Net cash used in investing activities ...........................          (354,900)        (1,132,200)

Cash Flows from Financing Activities:
         Purchase of Treasury Stock ........................................          (490,100)              --
                  Warrants exercised .......................................              --              530,800
         Dividends Declared ................................................          (349,400)              --
                                                                                   -----------        -----------
           Net cash provided by (used in) financing activities .............          (839,500)           530,800

Increase/(Decrease) in Cash and Cash Equivalents ...........................          (616,800)           764,800

Cash and Cash Equivalents, beginning of period .............................           579,500            360,300
                                                                                   -----------        -----------
Cash and Cash Equivalents, end of period ...................................       $  ( 37,300)       $ 1,125,200
                                                                                   ===========        ===========
</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, 1997.

     The results for interim periods are not  necessarily  indicative of results
to be expected for the fiscal year of the Company ending  December 31, 1998. 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,  1998  and 1997  covered
thereby.

     "The Company" or "Avert" is used in this report to refer to Avert, Inc. The
Company may from time to time make written or oral  forward-looking  statements,
including  statements contained in the Company's filings with the Securities and
Exchange  Commission and its reports to shareholders.  This document may contain
forward-looking   statements  that  are  made  pursuant  to  the  "safe  harbor"
provisions  of the  Private  Securities  Litigation  Reform  Act of 1995.  These
statements include,  without  limitation,  statements relating to Avert's growth
and business  strategies,  regulatory  matters affecting Avert,  other plans and
objectives of Avert, management for future operations and activities,  expansion
and growth of Avert's  operations and other such matters.  The words "believes,"
"expects,"  "intends,"  "strategy,"  "considers"  or  "anticipates"  and similar
expressions identify forward-looking  statements. The Company does not undertake
to update, revise or correct any of the forward-looking information.

New  Pronouncement.  SFAS No. 133,  "Accounting  for Derivative  Instruments and
Hedging  Activities,"  was  issued  in  June  1998.  This statement  establishes
accounting and reporting  standards for derivative  instruments  and for hedging
activities.  It requires  that an entity  recognize  all  derivatives  as either
assets or liabilities  in the statement of financial  position and measure those
instruments  at fair  value.  This  statement  is  effective  for the  Company's
financial  statements  for the year ended June 30, 2001 and the adoption of this
standard is not expected to have a material  effect on the  Company's  financial
statements.

SFAS No. 132,  "Employers'  Disclosures about Pensions and Other  Postretirement
Benefits,"  was issued in February 1998.  This statement  revises the disclosure
requirement for pensions and other  postretirement  benefits.  This statement is
effective for the  Company's  financial  statements  for the year ended June 30,
1999 and the adoption of this standard is not expected to have a material effect
on the Company's financial statements.

SFAS  No.  131,  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information," was issued in June 1997. This statement  establishes standards for
the way public business enterprises report information about operating segments.
It  also  establishes  standards  for  related  disclosure  about  products  and
services,  geographical  areas and major customers.  This statement is effective
for the company's financial  statements for the year ended June 30, 1999 and the
adoption  of this  standard  is not  expected  to have a material  effect on the
Company's financial statements.

SFAS No. 130,  "Reporting  Comprehensive  Income" was issued in June 1997.  This
statement  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

                                       6

<PAGE>

requires that all components of  comprehensive  income shall be classified based
on their nature and shall be reported in the financial  statements in the period
in which they are recognized.  A total amount for comprehensive  income shall be
displayed  in  the   financial   statements   where  the   components  of  other
comprehensive income are reported. This statement is effective for the Company's
financial  statements  for the year ended June 30, 1999 and the adoption of this
standard is not expected to have a material  effect on the  Company's  financial
statements.


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


Results of Operations

Comparison of quarters ended September 30, 1998 and September 30, 1997

Total net revenues  increased  from  $2,524,400 for the three month period ended
September 30, 1997 to $2,590,200 for the  comparable  three month period in 1998
or approximately  3.0%. A key factor in third quarter  depressed  revenue growth
was our recent technology  conversion.  See "Liquidity and Capital Resources" in
this item  below.  In an effort to  minimize  impact on Avert's  customers,  the
Company  instituted  a "no  questions  asked"  credit  policy  through the third
quarter.  This policy  resulted  in  extraordinary  amount of credits  processed
(directly  reducing  revenues)  due to delays and  inconveniences  caused by the
conversion.  Since the expiration of this credit policy,  the amount of customer
credits being  processed has returned to an average level.  We have begun to see
improvements  from the new system and are  excited  about our  long-term  growth
potential.  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, 1998       September 30, 1997    Percent of
                                              ---------------------    ---------------------    Increase
                                              Revenues      % total    Revenues      % total   (Decrease)
                                              --------      -------    --------      -------   ----------
<S>                                          <C>               <C>    <C>             <C>        <C>    
Products:
  Workers compensation histories ..........  $  253,200        9.8%   $  297,600      11.8%      (14.9)%
  Criminal history reports ...............   $1,461,000       56.4%   $1,270,200      50.3%       15.0 %
  Previous employment reports/ ...........   $  298,100       11.5%   $  329,500      13.1%       (9.5)%
     credit reports
  Motor vehicle driving records ..........   $  243,100        9.4%   $  251,300      10.0%       (3.3)%
  Other products .........................   $   91,700        3.5%   $   96,700       3.8%       (5.2)%
Services: ................................   $  160,300        6.2%   $  141,600       5.6%       13.2 %

Interest income ..........................   $   80,400        3.1%   $   80,100       3.2%        0.0 %


         NET REVENUES ....................   $2,590,200               $2,524,400                   3.0 %
</TABLE>

     The largest  product  growth of  approximately  15.0%  occurred in Criminal
history  reports.  This product  continues to increase both in terms of revenues
and  percentage  of sales.  It  accounts  for  approximately  56.4% of total net
revenues  for 3rd quarter 1998 as compared to  approximately  50.3% of total net
revenues for 3rd quarter 1997.

     The second largest  product group,  Previous  employment and credit reports
accounted for approximately 11.5% of total net revenues for the third nine month
period of 1998 as compared to approximately  13.1% of total net revenues for the
comparable  period of 1997.  Within  this group,  an  approximate  16.5%  growth
occurred in credit reports and represented approximately $101,300 in revenues in
the 3rd quarter  1998 as compared to $86,900 in the 3rd quarter  1997.  Previous

                                       7

<PAGE>

employment  revenues  decreased  to  approximately  $196,700  in the three month
period ended  September  30, 1998 as compared to  approximately  $269,200 in the
three month period ended  September 30, 1997.  In addition to the  extraordinary
amount of credits  mentioned  above,  Avert has  decreased its selling price for
this product from $7.32  average  price in third  quarter 1997 to $6.45  average
price in third quarter 1998.

     As predicted,  sales in the Workers'  compensation  histories  product line
continue to decrease and  represent  approximately  $253,200 in revenue in the
three month period ended  September  30, 1998 as compared to $297,600 in revenue
in the same three month period of 1997. The Company  believes this decrease is a
result of increased regulation requirements,  causing a background check of this
type to be slower and more effort than  desired  for  employers'  need for quick
hiring.

     Service sales experienced  approximately 13.2% revenue growth from $141,600
in third  quarter  1997 to $160,300 in third  quarter  1998.  This is  primarily
attributable  to growth of the customer base  membership in the Avert  Advantage
program,  which  increased  from  $45,000 in revenues  for the third three month
period in 1997, to $81,500 in revenues for the third three month period in 1998.
In addition,  the membership  fees for partner and reseller  customers that were
implemented earlier in 1998,  represented  approximately  $28,200 in revenues in
third quarter  1998,  as compared to $0 in the third  quarter  1997.  During the
third  quarter  1998,  Avert,  Inc.  announced the extension of an earlier pilot
agreement with ADP. The extension called for Avert services to be offered to ADP
customers  in the  greater  Chicago  area during a 90-day  pilot.  Avert and ADP
management are scheduled to begin discussions regarding the outcome of the pilot
and future marketing efforts to the ADP customer based.

     Growth in the remaining sales  categories  remained flat as a percentage of
total net  revenues  in the three  month  period  ended  September  30,  1998 as
compared to the same three month period in 1997.

     Income before income taxes decreased from $347,100 in third quarter 1997 to
$146,800  in  third  quarter  1998,  or  approximately   57.7%  and  represented
approximately 13.7% of total net revenues in 1997 compared to approximately 5.7%
in 1998,  resulting  from  increases in several  expense  categories  as well as
depressed revenue growth.

     Total expenses  increased from  $1,952,400 for the three month period ended
September  30,  1997  to  $2,350,000  for  the  comparable  period  in  1998  or
approximately 20.4%. A breakdown in expenses is as follows:

<TABLE>
<CAPTION>
                                         Three Months Ended         Three Months Ended    Increase (Decrease)
                                         September 30, 1998         September 30, 1997      % of Revenues
                                       -----------------------    ----------------------  ------------------
                                       Expenses   % of Revenue    Expenses  % of Revenue    1998 over 1997
                                       --------   ------------    --------  ------------    --------------
<S>                                  <C>             <C>        <C>             <C>            <C> 
Search and product ...............   $1,269,400      49.0%      $1,104,800      43.8%          5.2%
Marketing ........................      414,500      16.0          325,200      12.9           3.1
General and administration .......      346,000      13.4          327,500      13.0            .4
Software development .............      169,200       6.5           81,700       3.2           3.3
Depreciation and amortization ....      150,900       5.8          113,200       4.4           1.4
                                     ----------      ----       ----------      ----          ----

         Expenses ................   $2,350,000      90.7%      $1,952,400      77.3%         13.4%
                                     ==========      ====       ==========      ====          ====
</TABLE>


                                        8

<PAGE>


     Search and product fees increased approximately 5.2% as a percentage of net
revenues in the third quarter 1998 over the third quarter 1997.  The majority of
the increase was  attributable to the increasing costs from sources of obtaining
criminal history information,  as well as the criminal history product,  Avert's
largest product group, as the one most susceptible to market pricing  pressures.
Another main area of increased expenses in this category resulted from increased
personnel costs associated with staffing an expanded customer service department
and initiation of a quality  assurance  department to improve  overall  customer
service.  There was a decrease in expenses  when  expressed as a  percentage  of
total net revenues in the areas of motor vehicle  records,  telephone  costs and
name link reports.

     There  was  an  approximate  3.1%  increase  in  marketing  expenses  as  a
percentage of total net revenues,  in the third three months of 1998 as compared
to the third  three  months of 1997.  There is an  on-going  marketing  campaign
designed  to  target  lead  generation,   marketing   communication  and  market
development  for both current  customers and new customers.  The majority of the
increase  in  marketing  expenses  was  costs  associated  with  increased  lead
generation  activities.  In addition,  there was increased  commissions  paid to
partners in third  quarter  1998 as compared to third  quarter  1997.  Marketing
personnel   costs   decreased  as  a  percentage  of  total  net  revenues  from
approximately 5.6% in third quarter 1998 from 6.5% in third quarter 1997.

     General  and  Administrative   expenses  increased  slightly   representing
approximately  13.4% of total net revenues in the third three month period ended
September 30, 1998, as compared to approximately  13.0% of total net revenues in
the third  three month  period  ended  September  30,  1997.  The  increase  was
primarily  due to an increase in accruals for potential  uncollectible  accounts
and the acquisition of errors and omission insurance in 1998.

     The increase of approximately  3.3% in software  development  expenses as a
percentage  of total net revenues in the three month period ended  September 30,
1998 as compared to the three month period ended  September  30, 1997,  resulted
from the no longer  capitalizing  personnel and consultant costs associated with
software  development  and  upgrade in third  quarter  1998 as was done in third
quarter  1997.   Additional   consultant  and  training  costs  associated  with
enhancements will continue through 1998.

     The depreciation and amortization  expenses have increased by approximately
1.4% of total net  revenues in the three month period in 1998 as compared to the
same period in 1997 due to the fact that the software  previously  developed had
been put into actual use fully on April 1, 1998.

     Income taxes remained  stable for the combined  federal and state statutory
rate at  approximately  39% for both third  quarter 1998 and third quarter 1997,
resulting  in net income of $347,100 or $.10 per share on  3,502,758  shares for
the third three months ended  September  30, 1997,  as compared to net income of
$146,800 or $.04 per share on 3,366,320  shares for the third three months ended
September 30, 1998.




                                       9
<PAGE>

Comparison of nine months ended September 30, 1998 and September 30, 1997

     Net  revenues  increased  from  $7,078,800  for the nine month period ended
September 30, 1997, to $7,380,200 for the  comparable  nine month period in 1998
or  approximately  4.3%.  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, 1998           September 30, 1997      Percent of
                                               -------------------          -------------------       Increase
                                               Revenues   % total           Revenues      % total    (Decrease)
                                               --------   -------           --------      -------    ----------
<S>                                          <C>            <C>           <C>               <C>        <C>    
Products:
  Workers compensation histories ..........  $  746,100     10.1%         $  893,900        12.6%      (16.5)%
  Criminal history reports ...............   $4,038,500     54.7%         $3,535,700        49.9%       14.2 %
  Previous employment reports/ ...........   $  882,000     12.0%         $  926,500        13.1%       (4.8)%
     credit reports                                                      
  Motor vehicle driving records ..........   $  750,300     10.2%         $  773,700         10.9       (3.0)%
  Other products .........................   $  307,200      4.2%         $  273,100         3.9%       12.5 %
Services: ................................   $  409,100      5.5%         $  374,800         5.3%        9.2 %
                                                                         
Interest income ..........................   $  245,100      3.3%         $  234,500         3.3%        4.5 %
                                                                         
                                                                         
         NET REVENUES ....................   $7,380,200                   $7,078,800                     4.3 %
</TABLE>

     Moderate growth in sales of most of the Company's  products occurred during
the first nine months of 1998 with the largest  increase being Criminal  history
reports.  They  represented  approximately  54.7%  of  total  net  revenues,  or
$4,038,500 in the first nine months of 1998, as compared to approximately  49.9%
of total net revenues, or $3,535,700 in the first nine months of 1997.

     Workers' compensation reports continued its downward trend, decreasing from
$893,900 in  revenues  for the nine month  period  ended  September  30, 1997 to
$746,100 in revenues  for the nine month period ended  September  30, 1998.  The
regulation  requirements  of  this  product  have  made it  less  viable  in the
marketplace.

     The Services  category  increased as a percentage  of total net revenues by
approximately 9.2% when comparing first nine months of 1998 to first nine months
of 1997. The increase  resulted  primarily  from  increased  membership in Avert
Advantage  programs,  along with the  implementation of the partner and reseller
equivalent programs.

     The category of "Other  Products"  experienced an increase of approximately
12.5% of total net revenues in the first nine months ended September 30, 1998 as
compared to the first nine months ended  September 30, 1997. This increase was a
result of increased employment applications sales, Name Link, and package sales.
Packages are a direct  result of  increased  capabilities  made  possible by the
recent  computer  conversion,  allowing  customers  to set up  custom  packages,
comprised of products and services to allow ease of order entry.  Avert believes
this area will have a positive impact on future revenues.

     Income  before  income taxes  decreased  from  $1,447,700 in the nine month
period  ended  September  30, 1997 to $810,200  in the nine month  period  ended
September 30, 1998 or approximately  44.0%, and represented  approximately 11.0%
of net revenues in the first nine months of 1998 compared to approximately 20.5%
in the first nine months of 1997.


                                       10
<PAGE>

         Total  expenses  increased  from  $5,631,100  for the nine month period
ended  September 30, 1997 to  $6,570,000  for the  comparable  period in 1998. A
breakdown in expenses is as follows:

<TABLE>
<CAPTION>
                                               Nine Months Ended            Nine Months Ended      Increase (Decrease)
                                              September 30, 1998           September  30, 1997        % of Revenues
                                             ----------------------      -----------------------   ------------------
                                             Expense   % of Revenue      Expense    % of Revenue     1998 over 1997
                                             -------   ------------      -------    ------------     --------------

<S>                                       <C>              <C>         <C>            <C>                 <C> 
Search and product ....................   $3,540,700       48.0%       $3,050,900     43.1%               4.9%
Marketing .............................    1,153,600       15.6         1,061,600     15.0                0.6
General and administration ............    1,043,500       14.1           945,400     13.3                0.8
Software development ..................      420,100        5.7           281,500      4.0                1.7
Depreciation and amortization..........      412,100        5.6           291,700      4.1                1.5
                                          ----------       ----        ----------     ----                ---


         Expenses .....................   $6,570,000       89.0%       $5,631,100     79.5%               9.5%
                                          ==========       ====        ==========     ====                ===
</TABLE>

     Total expenses  increased  approximately  9.5% as a percentage of total net
revenues  in the first nine month  period of 1998 as  compared to the first nine
month  period  of 1997.  The  primary  increase  was in the area of  Search  and
Products  costs,  which  increased due to an  increasingly  large  proportion of
criminal  history  reports in Avert's  product  mix  resulting  in an  increased
proportion of product costs. In addition,  this product is susceptible to a high
degree of market pricing  pressure,  and there have been increases in data costs
directly from public sources.

     The slight  increase in  Marketing  expenses in the nine month period ended
September 30, 1998 over the nine month period ended  September 30, 1997 resulted
primarily from an increase in outgoing marketing activities.

     There  was an  increase  of  approximately  2.1% of total net  revenues  in
general  and  administrative  expenses  in the first  nine  month  period  ended
September 30, 1998 as compared to the same period in 1997,  resulting  primarily
from  increased  accruals for  uncollectible  accounts,  and the  acquisition of
errors and omissions liability insurance..

     Due  to  the  development  of  new  software  used  in  revenue  generation
activities and increased  computer hardware costs associated with this software,
depreciation and amortization and software  development  personnel expenses have
increased  as a percent of total net  revenues  from the nine month period ended
September 30, 1997 to the nine month period ended September 30, 1998. Phase I of
the  software  began  depreciating  in the  second  quarter  1997,  and Phase II
software depreciation began in April 1998.

     Income taxes varied  slightly for the combined  federal and state statutory
rate of  approximately  39% in both of the first  nine  months of 1997 and 1998.
This  resulted  in a  decrease  of net income of  $879,400  or $.25 per share on
3,574,525  shares for the nine months ended September 30, 1997, to net income of
$492,700  or $.15 per  share on  3,381,753  shares  for the  nine  months  ended
September 30, 1998.




                                       11

<PAGE>

Liquidity and Capital Resources

     The Company's financial position at September 30, 1998 remained strong with
working  capital at that date of  $7,251,000  compared to $7,543,000 at December
31,1997.  Cash and cash  equivalents and marketable  securities at September 30,
1998 were  $6,318,000  and decreased  from  $6,693,000 at December 31, 1997. Net
cash provided from operations for the nine month period ended September 30, 1998
was $577,600  and  consisted  primarily  of net income of  $492,700,  a $242,000
increase in accounts receivable,  a $123,900 increase in accounts payable, and a
$412,100 increase in depreciation expenses. The Company had capital expenditures
of $354,900 for the nine month period  ended  September  30, 1998 as compared to
$1,132,200  for the nine months ended  September  30, 1997.  The majority of the
capital  expenditures  during the nine  months  ended  September  30,  1998 were
attributable to the development of new software and upgrade of existing hardware
and software.  The Company expects  ongoing  enhancements to its computer system
through 1998. Such  enhancements are believed to be necessary in order to foster
cost-effective partnerships. Other enhancements are expected to directly enhance
Avert's  ability  to  produce  a higher  volume  of  reports  without  incurring
additional  staffing  expenses.  Development and upgrade of the software will be
financed  by  available   cash  derived  from  past  or  continued   operations.
Implementation  of the new  software was April,  1998 with ongoing  enhancements
throughout 1998. Net cash used in financing activities for the nine month period
ended  September  30, 1998 was  $839,500  and  consisted  of $490,100  for stock
repurchased  and $349,400 for the special  dividend  declared in first  quarter,
1998.


Year 2000 Issue

     The  Company  believes  it has  fully  addressed  the  Year  2000  issue in
connection  with its  internal  computer  software.  The Year 2000  problem is a
result of computer programs being written using two digits, rather than four, to
define the  applicable  year.  Any programs  that have time  sensitive  data may
recognize  a date using "00" as the year 1900,  rather  than the year 2000.  The
Company has  re-written  its internal  programs and believes  that the Year 2000
will not create any major future system failure or miscalculation.

     The Year 2000  problem may impact  other  entities,  with which the Company
transacts  business,  and the  Company  cannot  predict  the effect of Year 2000
problems on such  entities.  The Company has not completed its  assessment,  but
currently  believes that costs of addressing this issue will not have a material
adverse impact on the Company's financial position.  However, if the Company and
third  parties upon which it relies are unable to address this issue in a timely
manner, it could result in a material financial risk to the Company. In order to
assure  that this does not occur,  the  Company  plans to devote  all  resources
required to resolve any significant year 2000 issues in a timely manner.


                           PART II - OTHER INFORMATION


ITEM 1.   Legal Proceedings

          NONE


ITEM 6.   Exhibits and Reports on Form 8-K

          (a) Joint Marketing Agreement with Restrac, Inc.

          (b) Second Stage Pilot with ADP

          (c) Additional Funds Approved for Repurchase of Shares


                                       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 11, 1998              BY: /s/ Dean A. Suposs
                                          --------------------------------------
                                          Dean A. Suposs, President



DATE:   November 11, 1998              BY: /s/ Jamie M. Burgat
                                          --------------------------------------
                                          Jamie M. Burgat, Vice President of
                                          Operations and Chief Financial Officer













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