U. S. SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C.  20549

                            FORM 10-KSB

                            (Mark One)

          [X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                   SECURITIES EXCHANGE ACT OF 1934 (Fee Required)

               For the fiscal year ended   January 31, 1998    

        [ ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)

             For the transition period from  ______________ to 

                    Commission file number:      Z-24196

                               MEDPLUS, INC.
              (Name of small business issuer in its charter)

             OHIO                               48-1094982
 (State or other jurisdiction of   (I.R.S. Employer Identification 
 incorporation or organization)                    No.)

  8805 Governor's Hill Drive, Suite 100, Cincinnati OH     45249      
   (Address of principal executive offices)             (Zip Code)

       Issuer's telephone number               513-583-0500

           Securities registered under Section 12(b) of the 
                         Exchange Act: None

         Securities registered under Section 12(g) of the Exchange
                   Act:  Common Stock, No Par Value
                            (Title of Class)

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

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

(Cover Page continued on Page 2)

The Company's revenues from continuing operations for its fiscal year ended 
January 31, 1998 were $9,031,643.

The aggregate market value of the voting stock held by non-affiliates of the 
Company as of March 10, 1998 was $21,318,856, based on the average bid and ask 
price of such stock on that date as reported on the Nasdaq National Market.

As of April 30, 1998, 6,175,114 shares of the Company's no par value common 
stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the Company's Proxy Statement for the Annual Meeting of 
Shareholders to be held on June 25, 1998, are incorporated by reference into 
Part III of this Form 10-KSB.

Transitional Small Business Disclosure Format (check one):

Yes   ________   No    _____X_____ 

INTEGRATED REPORTS TO SECURITY HOLDERS

Pursuant to General Instruction F of Form 10-KSB and Regulation 240.14a(d) of 
the Securities Exchange Act of 1934, the Company's Annual Report to Security 
Holders for its fiscal year ended January 31, 1998 has been combined with the 
required information of Form 10-KSB and is being filed with the U.S. 
Securities and Exchange Commission and submitted to the registrant's 
shareholders on an integrated basis.

A list of the exhibits to this Form 10-KSB is included in Part III hereof 
under the caption "Exhibits and Reports on Form 8-K."  MedPlus, Inc. will 
provide a copy of any such exhibit to any of its shareholders upon written 
request and payment of a copying charge of $.10 per page.  Requests for copies 
should be directed to:  Investor Relations, MedPlus, Inc., 8805 Governor's 
Hill Drive, Suite, 100, Cincinnati, Ohio 45249. 



PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

General

MedPlus[r], Inc. (the "Company") was incorporated in 1991.  The Company's 
principal executive offices are located at 8805 Governor's Hill Drive, Suite 
100, Cincinnati, Ohio, 45249.  The Company's telephone number is (513) 583-
0500.

The Company provides state-of-the-art information management technology 
products and consulting services to customers predominantly in the health care 
industry.  The Company sells and supports hardware and software solutions to 
meet the needs of health care organizations. The Company's products and 
services  presently consist of enterprise-wide electronic patient systems, an 
optical document archival and retrieval system, and process improvement and 
automation services, primarily in the area of patient care and laboratory 
services.  On January 30, 1998, the Company acquired a majority interest in 
DiaLogos[tm] Incorporated ("DiaLogos") which specializes in assisting 
organizations in the integration of enterprise-wide business systems with 
existing applications and data using distributed object computing, including 
CORBA and Java technologies, through education, consulting and implementation 
services.  DiaLogos is in the initial phases of developing several products 
designed to simplify the effort of legacy system integration.  The Company's 
technology and products are designed to allow health care providers to achieve 
quality and productivity enhancements quickly and easily.  Moreover this 
technology enables the providers to reach cost containment goals which are 
increasingly imposed upon them by legal and regulatory requirements as well as 
economic and consumer pressures.

In January 1998 the Company completed the sale of all the assets of the 
Company's IntelliCode[tm] division to Becton Dickinson and Company for 
approximately $17.3 million plus royalty payments over five years.  Also in 
January the Company decided to sell the net assets of the Step2000[tm] segment 
of its wholly-owned subsidiary, Universal Document Management Systems, Inc. 
("Universal Document"), and is currently negotiating with prospective buyers.  
The disposal of these segments will provide resources in the form of 
management time and additional funds to allow the Company to enhance its focus 
on delivering data management solutions for health care organizations.

In December 1997, the Company changed its fiscal year end from December 31 to 
January 31.  Accordingly, the Company's current fiscal year commenced on 
February 1, 1997 and ended on January 31, 1998.

Industry Background

The health care industry has entered a period of profound change involving 
economic, regulatory and operational factors.  The Company's strategy is 
intended to capitalize on the trend toward more spending by the health care 
industry on information systems and services such as those offered by the 
Company.

Economic.  The dramatic increase in health care costs in the United States has 
caused significant change in the health care industry.  Managed care 
organizations such as health maintenance organizations, preferred providers 
and independent physician associations, as well as other payers have developed 
alternative payment models to control costs, including procedure-based cost 
limitations, contractually approved providers and capitation (a fixed monthly 
fee for members as payment for all required services).  The result has been a 
continuing shift of financial risk from the payers to both the 
physician/provider and the institutional provider (hospitals, clinics, long-
term care, acute providers and rehabilitative care centers).  In response, 
health care organizations are aligning themselves with one another in order to 
form integrated delivery systems in an effort to lower costs and compete more 
effectively in the changing health care environment.

The economic viability of many providers will be dependent upon their ability 
to continue to provide quality health care services while dramatically cutting 
costs and increasing productivity.  The delivery of health care services is 
both labor and information intensive because the functions of tracking, 
organizing, retrieving, evaluating and generally managing the high volume of 
health care data that providers generate are essential to any provider.  
Compared to other industries, the health care industry has been slow to 
automate its information management needs.

Hospitals, because of the lack of efficiency incentives, historically have 
underinvested in information technology, spending only 2-3% of their operating 
budgets on information technology compared to the 6-8% allocated by other 
industries for information technology.  According to Sheldon Dorenfest and 
Associates, the health care information system market was valued at $13.6 
billion in 1997.

Regulatory.  Various regulatory bodies have begun to focus on the information 
management function.  For example, the Joint Commission for Accreditation of 
Health care Organizations ("JCAHO"), which is responsible for accrediting all 
hospitals, has determined that records management can have an important 
clinical impact.  JCAHO has begun to impose specific information management 
requirements for accreditation.  Most of the new requirements mandate 
performance levels which will be difficult to achieve without computerization.  
The Company's products and services are specifically designed to help 
providers comply with these requirements.

Operational.  Hospitals and other health care organizations comprise numerous 
departments, such as the accounting, laboratory, radiology, pharmacy, medical 
records, business office and clinical areas.  The information management 
requirements of these departments tend to be quite distinct.  To the extent 
they have purchased computerized systems, most hospitals have historically 
acquired a collection of separate, stand-alone information systems for their 
various departments.  Moreover, even within a particular systems category, 
such as the laboratory, there are no system standards.  Numerous vendors sell 
proprietary systems which often are not directly compatible with either 
competitive systems or the systems of other departments.  The Company's 
products and services enhance the capabilities of the existing systems by 
adding functionality not otherwise present in these systems.

Strategy

Recognizing all of these factors, the Company's business strategy since its 
inception has been to focus on specific health care information problems that 
the Company believes have not been adequately addressed by other vendors.  It 
is the Company's goal to develop appropriate information management systems 
which address the market needs, are affordable, and can be easily integrated 
with the major systems currently in place at most health care organizations in 
the United States.  The Company's products and services are designed to permit 
customers to leverage their existing investments in computerized information 
systems rather than forcing them to replace entire systems at a much greater 
cost.

The Company concentrates on specific segments of information technology for 
the health care industry including data storage and retrieval, enterprise-wide 
electronic patient records, integration of enterprise-wide business systems 
with existing applications using distributed object computing and process 
engineering and consulting services.  These technologies and services offer 
immediate benefits to health care organizations on a cost-efficient basis.  
The Company considers these areas to be key subsets which directly affect the 
health care provider's efficiency in utilizing its existing information 
systems.  The Company believes this niche has enabled it to provide high 
technology solutions at an affordable user cost.  Over time, it is the 
Company's intention to adapt its current products to changing needs, to 
develop or acquire new products and services, and to address selected 
information management needs throughout the typical health care organization.

While the Company is focused on the health care market, it believes its 
products, services, and intellectual knowledge regarding legacy access and 
distributed object computing can be applied to other markets where access to 
large amounts of stored information from many disparate systems is required.  
The Company may explore these other markets, including the international 
arena, either through strategic partnering or by creating new companies or 
divisions.

Products and Services

The Company pursues the automated data storage and retrieval segment through 
its OptiMaxx[tm] Archival System product line and the computerized enterprise-
wide electronic patient record system segment through its ChartMaxx[tm] 
Enterprise-Wide Patient Record System.  The Company's product strategy is to 
design systems with open architecture and modular functionality which are 
compatible with most existing systems to which they will interface, without 
requiring any support or cooperation from the systems vendors.  By designing 
products to be entirely independent of other system vendors, potential 
customer acceptance of the Company's products is not limited in any way by 
their existing information system configurations.  The Company's ability to 
market its products generally is not subject to the cooperation of third party 
systems vendors.  In July 1996, the Company acquired certain of the assets of 
FutureCORE, Ltd. now FutureCORE[tm], Inc., which specializes in health care 
automation, systems integration, and business process engineering and 
consulting.  FutureCORE has assisted the Company by performing on-site 
operational assessments for potential clients, which identify cost reduction 
and efficiency opportunities via implementation of ChartMaxx or OptiMaxx and 
process improvements.  In January 1998, the Company exercised its option to 
purchase additional shares of the common stock of DiaLogos, a Cincinnati-based 
provider of distributed object computing training and technology.  The Company 
has a 56.5% ownership interest in DiaLogos, which has formed a health care 
information technology division.  This division is currently developing a 
solution called Global Distributed Registration which provides enterprise-wide 
Web access to health care organizations' disparate legacy systems.

OptiMaxx Archival System

The Company offers an optical disk storage and retrieval system under the name 
OptiMaxx which is specially configured for hospitals, medical practices and 
other health care providers.  It consists of hardware (optical drives, disk 
"jukeboxes", personal computers) and software purchased from outside vendors, 
combined with the Company's proprietary software in a manner that provides 
specific benefits to health care industry users.  At its most basic level, 
OptiMaxx permits a user to store automatically on an optical disk any data 
that it previously would have printed out of its system and then stored as 
paper or on microfilm/microfiche.  OptiMaxx can also scan in and manage 
existing paper documents.

A key feature of OptiMaxx is its ability to capture data directly from 
existing computer information systems without special software, other 
interfaces or any data manipulation.  Most optical storage systems must have 
the "host" information system computer configure files in a specific manner or 
convert the electronic format of the outgoing data into a particular format, 
often proprietary, which the optical system can then recognize and use when 
the data is received.  OptiMaxx, which was designed to act as a system 
peripheral (such as a printer), can work with most host systems without the 
need for data configuration by the host system.  Every host system must have 
the capacity to output data to a printer, and OptiMaxx can accept any such 
output "as is" without any special treatment by the host system.  Moreover, 
OptiMaxx itself does not convert or change the incoming data.  OptiMaxx stores 
the data and can retrieve it in its native format, without conversion.  In 
1997, the Company introduced OptiMaxx for Windows NT, which operates on the 
Windows NT operating system.  The Company believes the addition of Windows NT, 
which is considered to be one of the most robust and open operating systems in 
the software industry, will provide a significant competitive advantage in the 
future.


ChartMaxx Enterprise-Wide Patient Record System

The ChartMaxx system is an enterprise-wide electronic medical records system 
that combines multiple technical and functional approaches to computer-based 
patient records development.  The result is an integrated software and 
hardware platform which:
      
  Creates complete, digital medical records that meet administrative and 
legal requirements;
 
  Manages multimedia digital data (structured and unstructured) in both 
report-oriented and discreet data element formats;

  Manages scanned documents (imaging);
  Manages workflow and the work processes associated with health information 
management;
 
  Builds a data repository based on an SQL (an industry standard) database 
and mass storage;
  Forms a system that has both enterprise-wide and remote connections;
  Provides application software to further automate the medical records and 
patient accounts department;
 
  Is useful to providers of care and other health care staff members; and
  Facilitates communication of clinical information within the health care 
organization and to external sources.

ChartMaxx has been proven on the UNIX operating system since the Company 
introduced it to the market in 1995.  Now that ChartMaxx is available for use 
on the Windows NT operating system, ChartMaxx will provide the same 
functionality as the previous version.  The addition of ChartMaxx Windows NT 
will give customers the option of beginning with OptiMaxx for Windows NT and 
migrating to full electronic patient record functionality with ChartMaxx.  
Windows NT is supported on more than 2,000 hardware platforms, runs thousands 
of applications and integrates with NetWare, IBM, UNIX and many other 
networking environments.

Beyond the immediate benefits of automating an organization's medical records 
department and creating an electronic patient record, the Company is creating 
a data repository that can encompass the entire integrated delivery system.  
In 1997, the Company introduced ChartMaxx Web Navigator[tm], a web-based 
application which provides authorized clinicians with chart viewing and query 
capabilities from remote locations via the hospital Intranet.  In February 
1998, the Company introduced ChartMaxx Web Completion[tm], which works in 
conjunction with Web Navigator to enable authorized clinicians to sign patient 
charts with an encrypted digital signature from remote locations.  With both 
ChartMaxx Web applications, clinicians, for the first time, can perform both 
of their chart functions after the patient is discharged - chart completion 
and access to historical charts from any location using a Netscape Navigator 
or Internet Explorer Web browser.

Web Access to Legacy Systems Application

In line with the Company's strategy to enable customers to leverage their 
existing information system investment, the health care division of DiaLogos 
is developing a solution called Global Distributed Registration ("GDR") that 
provides enterprise-wide Web access to disparate hospital information systems.  
GDR will provide users with an entire patient history, including demographic, 
insurance and visit information, which is available to all authorized users, 
at all times, in all locations.  All data is combined into a single, cohesive 
view and easily accessed by any authorized medical professional.

Using the DiaLogos legacy access technology and CORBA distributed object 
technology, all systems are queried to find patient information and, if the 
information is changed, all systems will automatically be updated with any 
applicable information.  This ensures that users are viewing the most current 
information.

The University of Pennsylvania Health Systems ("UPHS"), one of the most 
prestigious health care organizations in the nation, is currently implementing 
GDR with its Shared Medical Systems and IDX information systems.  Once 
completed, GDR will be used throughout UPHS hospitals, physician practices, 
and affiliated facilities.  

DiaLogos has placed an emphasis on distributed technology education.  As such, 
it is creating partnerships and education programs with top Fortune 500 
companies who are demanding that CORBA and Java be deployed in critical 
projects in industries spanning such fields as healthcare, electronic commerce 
and manufacturing.  DiaLogos provides the Senior Developer and System 
Architects of these organizations with the education necessary to craft CORBA 
and Java based solutions today.  DiaLogos works with the educational heads of 
companies such as Oracle to define and deliver the required high-tech training 
necessary for their software developers to do their jobs in the year 2000 and 
beyond.

Consulting Services

The acquisition of FutureCORE in July 1996 significantly enhanced the 
Company's product lines by providing consultative system analysis and process 
improvement methodologies in laboratories, physician offices, hospitals, major 
health care instrumentation firms and integrated delivery networks.  Now, 
rather than just providing new technology for health care providers, the 
Company has the unique advantages of being able to assist health care 
providers re-engineer their existing processes while implementing the 
Company's product line so as to maximize the return on the investment in 
technology.  The services provided by FutureCORE include program management 
involving project planning, workflow analysis, process flow charting, 
productivity improvements, modeling and process simulation.

Sales and Marketing

The Company utilizes selected strategic resellers and reference selling 
arrangements and also employs a direct sales force to market its products.  
Its sales philosophy is to provide consultative selling services to end users, 
conducted by both direct and indirect sales sources who are knowledgeable 
about the health care industry and information management technologies.

Because of its products' ability to interface with major information system 
vendors, the Company is able to market its products directly to end users, and 
is not required to enter into costly technical support, joint selling or other 
collaborative selling arrangements with vendors of health information systems 
merely to obtain access to the market.  However, the Company has found it to 
be advantageous to enter into reseller and reference seller agreements for 
strategic reasons, including increased acceptance by customers due to the 
association with familiar vendors and exposure to the existing customer bases 
of the resellers and reference sellers.  Presently, the Company has entered 
into strategic reseller, reference selling and preferred vendor arrangements 
with health care industry suppliers including Quorum Health Resources, Inc. 
(one of the nation's largest managers of not-for-profit hospitals), MAGNET, 
Inc. (a regional purchasing organization), Transcend Services, Inc. (a 
provider of medical records systems outsourcing), IPN Network LLC (a provider 
of patient accounts outsourcing), Sunquest Information Systems, Inc.  (a 
provider of laboratory information systems), The Shams Group, Inc. (system 
integrators for MEDITECH environments) and Healthcare Technologies, Inc. (a 
provider of medical data integration solutions).

Competition

The market for information technology in the health care industry is intensely 
competitive.  The Company believes that the principal competitive factors in 
this market include the breadth and
quality of system and product offerings, product pricing, the reputation and 
stability of the information systems provider, the features and capabilities 
of the information systems, management of the system implementation cycle, 
ongoing support for such systems, the potential for enhancements thereto, and 
technical and financial resources.  Certain of the Company's competitors have 
significantly greater resources than the Company.  In addition, the Company's 
products compete with other technologies as well as similar products developed 
by other companies, and other major information management companies may enter 
the markets in which the Company competes.  Competitive pressures and other 
factors, such as new product introductions by the Company or its competitors, 
or the entry into new geographic markets, may result in significant pricing 
pressures that could have a material adverse effect on the Company's business.

There can be no assurance that the Company will be able to continue to compete 
successfully with its existing or any future competitors.  However, the 
Company believes that it possesses certain competitive advantages, in 
particular its concentration on the health care market which enables it to 
tailor all of its products for that particular market, rather than attempting 
to design and sell products of a more generic nature.  The compatibility of 
its products with most of the information systems with which they must 
interact also constitutes an advantage over its present competitors, most of 
whom must secure the support and cooperation of third party vendors in order 
for their products to operate.  Also, any future enterprise-wide systems will 
likely be quite expensive and may not be attractive to hospitals which already 
have substantial investments in numerous departmental systems and may have 
limited budgets for future purchases.


Product Manufacturing and Sources

The Company does not possess internal manufacturing capacity and instead 
relies upon third party manufacturers to fulfill its hardware requirements.  
This reliance on outside suppliers involves several risks, including limited 
control over pricing, availability, quality and delivery schedules.  Hardware 
incorporated into the Company's products, such as optical disk drives and 
computers, are non-proprietary items which are potentially available from 
multiple sources, although the Company currently has limited its purchases to 
certain vendors based on delivery, service and cost factors.  To the extent 
the Company relies on single sources of components, it is vulnerable to 
potential disruptions in supply should such a manufacturer become insolvent or 
otherwise experience production problems.  The Company believes, however, that 
any such disruption would be temporary since there are numerous alternative 
sources of supply available.

The Company relies to a large extent on licensed third party software which is 
integrated into its products through the use of proprietary software.  The 
Company's internal software development capacity is limited, and the Company 
therefore concentrates its efforts on developing and enhancing proprietary 
software that enables various third party software products to work together.  
The Company must rely on the third party suppliers for enhancements and 
ongoing support for the acquired products.  The failure of one or more of such 
vendors to provide services for any reason could, at least temporarily, 
adversely affect the Company's business.

Customers

The Company's contracts for certain systems and related services it sells may 
approach or exceed $1,000,000 per individual customer.  As a result, the 
Company may have certain customers in any one year which represent a 
significant portion of the Company's total revenues for that year.  For the 
year ended January 31, 1998, two customers accounted for 13% and 11%, 
respectively, of the Company's total revenues.  During the year ended December 
31, 1996, two customers accounted for 20% and 12%, respectively, of the 
Company's total revenues.  One customer accounted for 13% of the Company's 
total revenues for the year ended December 31, 1995.

Product Development

The Company has developed new products internally when time permits, but 
believes it can sometimes respond more quickly to market requirements by 
acquiring complementary products or technology.  The Company believes that 
continued investment in research and development for both internally developed 
and acquired products is critical to its long-term growth and success.  The 
Company's product development strategy is to continue to focus on specific 
health care related information management requirements and to expand its 
existing product lines by adapting them to additional but related health care 
applications.  

The Company is presently concentrating its developmental efforts on the 
ChartMaxx Enterprise-wide Patient Record System, the OptiMaxx Archival System 
and DiaLogos' Global Distributed Registration technology.

The Company's total product development expenditures were $1,232,770, 
$1,447,071 and $1,352,199 for the years ended January 31, 1998, December 31, 
1996 and December 31, 1995, respectively. 

Government Regulation

The United States Food and Drug Administration ("the FDA") has issued a series 
of draft guidance documents addressing the regulation of certain computer 
products as medical devices under the Federal Food, Drug, and Cosmetic Act 
(the "FDC Act").  To the extent that computer software is a medical device 
under the policy, the manufacturers of such products will be required, 
depending on the product, to: (i) register and list their products with the 
FDA; (ii) notify the FDA and demonstrate substantial equivalence to other 
products on the market before marketing such products; or (iii) obtain FDA 
approval by filing a pre-market application that establishes the safety and 
effectiveness of the product.  The Company expects that the FDA is likely to 
become increasingly active in regulating computer software that is intended 
for use in health care settings.  None of the Company's products currently are 
regulated by the FDA.  The FDA indicated its intention to consider more 
extensive regulation of additional types of computer software, which could 
include existing or future products offered by the Company, and has solicited 
industry input as to the regulation of computer products as medical devices.  
The FDA has reached no decision to date on this issue.  The FDA, if it chooses 
to regulate such software, can impose extensive requirements governing pre- 
and post-market conditions relating to clinical investigations, approvals, 
labeling and manufacturing.  In addition, such products would be subject to 
the FDC Act's general controls, including those relating to good manufacturing 
practices and adverse experience reporting.

Licenses and Proprietary Rights

To a significant degree, the Company's products consist of third party 
hardware and software integrated with proprietary software of the Company.  
The Company does not hold any patents with respect to any of its current 
products, nor does it expect to apply for any patents in the foreseeable 
future.  To the extent possible, the Company attempts to protect its use of 
third party hardware and software with contractual exclusivity and 
nondisclosure provisions, but because the Company does not own the rights to 
these third party products, there can be no assurance that competitors or 
others will not attempt to integrate the same or similar products into systems 
competitive with those sold by the Company.  To protect its proprietary 
product components, the Company relies upon the law of copyrights, trade 
secrets, nondisclosure agreements with employees and others, and restrictions 
incorporated into agreements with customers.  Notwithstanding these 
safeguards, it could be possible for competitors to obtain and/or imitate the 
Company's software and/or hardware.  Further, there can be no assurance that 
others will not independently develop products similar or superior to those of 
the Company.  The Company also explores technology developed by other entities 
that may be licensed or acquired in an effort to reduce the product 
development cycle or to complement existing product lines.

Federal trademark protection has been obtained for the MedPlus name.  The 
Company has entered into an agreement to use the name ChartMaxx with the owner 
of the trademark, and has applied for federal trademark protection for the 
names OptiMaxx, FutureCORE and Step2000.

Employees

As of January 31, 1998 the Company had 101 full-time employees.  The Company's 
future success will depend, in part, on its ability to continue to attract, 
retain and motivate highly qualified technical, marketing and management 
personnel who are in great demand.

ITEM 2.  DESCRIPTION OF PROPERTY.

The Company currently leases approximately 34,000 square feet of high quality 
office space in Cincinnati, Ohio where it maintains its principal offices.  
The lease terms extend through July 2003.

ITEM 3.  LEGAL PROCEEDINGS.

As of the date hereof, the Company is not a party to any material legal 
proceeding and, to the Company's knowledge, there are no material legal 
proceedings pending against the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of security holders during the fourth 
quarter of fiscal 1998.



PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
MATTERS.

The Company's common stock is traded on the Nasdaq National Market System 
("NMS") under the symbol "MEDP."   There were approximately 114 record holders 
of the Company's common stock as of April 29, 1998.  The following table sets 
forth, for the periods indicated, as reported by Nasdaq, the range of high and 
low sales price (not closing bids) of the Company's common stock on the NMS.  
All prices are rounded to the nearest one-eighth, and bid prices reflect 
inter-dealer prices, without retail mark-up, mark-down or commission, and may 
not necessarily represent actual transactions.

Fiscal Year/Quarter                        High           Low

Fiscal Year Ended January 31, 1998

First Quarter                           $  7.750        $ 4.625
Second Quarter                             7.500          5.125
Third Quarter                             10.500          6.625
Fourth Quarter                            11.000          6.750

Fiscal Year Ended December 31, 1996

First Quarter                            $12.250        $ 8.125
Second Quarter                            15.625         10.625
Third Quarter                             14.375         10.000
Fourth Quarter                            11.250          5.000

The Company has not paid any cash dividends since its inception and presently 
anticipates that earnings, if any, will be retained for future development of 
the Company's business.  No dividends on its common stock will be declared in 
the foreseeable future.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATION.

General

Since its inception in 1991, the Company has provided state-of-the-art 
information management technology products and consulting services to 
customers predominantly in the health care industry. The Company has continued 
to develop systems that enable health care providers to more efficiently 
collect, store and retrieve medical information. It has been the Company's 
practice to continue to develop new products, enhance existing applications, 
make selected strategic acquisitions, and introduce consulting services, which 
has led to significant revenue growth since the commencement of operations. 
The Company's products presently consist of the ChartMaxx Enterprise-wide 
Patient Record System ("ChartMaxx") and  the OptiMaxx Archival System 
("OptiMaxx").  C      hartMaxx is an enterprise-wide electronic patient record 
system. OptiMaxx is an optical disk-based archival system. The Company's 
FutureCORE, Inc. subsidiary ("FutureCORE") provides process improvement and 
automation services, primarily in the areas of patient care and laboratory 
services. On January 30, 1998, the Company acquired a majority interest in 
DiaLogos Incorporated, ("DiaLogos") which specializes in assisting 
organizations in the integration of enterprise-wide business systems with 
existing applications and data using distributed object computing, including 
CORBA and Java technologies, through education, consulting, and implementation 
services.  DiaLogos is in the initial phases of developing several products 
designed to simplify the effort of legacy system integration.

The Company's IntelliCode division, which was sold on January 28, 1998, 
developed and sold the IntelliCode Intelligent Bar Code System 
("IntelliCode"), an intelligent bar coding system for hospitals and other 
health care organizations. The Step2000 Workflow, Document Management, and 
Application Development System ("Step2000") segment, which the Company is 
currently in the process of selling, is a workflow, document management, and 
application development software that enhances the utilization of information 
on an enterprise-wide basis, regardless of hardware platform or operating 
environment. The IntelliCode division and the Step2000 segment have been 
accounted for as discontinued operations in the accompanying consolidated 
financial statements. 

The Company's revenues are derived from systems sales, support contracts and 
consulting services.  Systems sales consist of software licenses for 
proprietary software, third party software and hardware, and related 
installation services.  The gross profit on systems sales may vary among 
customers based upon the relative proportion of proprietary software and third 
party software and hardware included in a sale.  Revenues from support 
contracts include software and hardware maintenance and support.  Consulting 
services revenues are derived from implementation, training and education, 
custom software development and process improvement services. Revenues from 
support contracts and consulting services are expected to increase as the 
number of installed systems increases.  Gross profit on support contracts and 
consulting services may fluctuate based upon the negotiated terms of each 
contract and the Company's ability to fully utilize its customer support, 
implementation and consulting personnel. 

The decision by a health care provider to replace, substantially modify or 
upgrade its information systems is a strategic decision and often involves a 
large capital commitment requiring an extended approval process.  The sales 
cycle for the Company's systems is typically six to eighteen months from 
initial contact to the execution of a sales agreement.  As a result, the sales 
cycle causes variations in quarter to quarter results.  These agreements cover 
the entire implementation of the system and specify the implementation 
schedule, which typically takes place in one or more phases.  The agreements 
generally provide for the licensing of the Company's software and third party 
software with a one-time perpetual license fee that is adjusted depending on 
the number of workstations using the software.  Third party hardware is 
usually sold outright, with a one-time fee charged for installation and 
training.  Site specific customization, interfaces with existing customer 
systems and other consulting services are sold on a fixed fee or a time and 
material basis.

Revenue is recognized in accordance with the provisions of Statement of 
Position 91-1, Software Revenue Recognition. For OptiMaxx systems, revenue is 
recognized upon delivery.   Revenue from ChartMaxx systems is recognized when 
a contract is signed, the system is configured, and the system is shipped.  If 
a contract requires the Company to perform services or provide modifications 
that are deemed significant to customer acceptance, revenue related to the 
delivered hardware and/or software is deferred until such obligations are 
deemed insignificant or have been satisfied.  Revenues from consulting 
services are recognized in the period in which the services are performed.  
Revenues from support contracts are recognized ratably over the term of the 
contract.

The Company has historically experienced significant quarterly fluctuations in 
revenues and operating results  which may continue in the future.  The 
Company's revenues have fluctuated due to the length of the sales cycle, the 
number and timing of systems sales, and the timing of installation, 
implementation and consulting services.  As a significant percentage of the 
Company's operating expenses are fixed, quarterly operating results will vary 
with the fluctuation in revenues.  In addition, period to period comparisons 
of the Company's past operating results may not be meaningful nor are they 
necessarily indicative of future operating results of the Company.


Fiscal Year

In December 1997, the Company changed its fiscal year end from December 31 to 
January 31.  Accordingly, the Company's 1998 fiscal year commenced on February 
1, 1997 and ended on January 31, 1998.  Information for the year ended January 
31, 1998 is compared with information for the year ended December 31, 1996.  
No analysis is provided for the one month ended January 31, 1997.  The amounts 
reflected for the one month period ended January 31, 1997 should not be 
indicative of results that would have been obtained for a full fiscal quarter 
or year.


DiaLogos Acquisition

The Company signed a letter of agreement with DiaLogos, dated July 12, 1996, 
which was subsequently amended on January 31, 1997, in which the Company, on 
or before March 31, 1998, agreed to either (a) pay $1,650,000 to DiaLogos in 
return for 75% of the common shares of DiaLogos, (b) secure a funding 
commitment for DiaLogos' operations in the amount of $1,650,000 from investors 
and/or lenders, or (c) pay a portion of the $1,650,000 as consideration for 
less than 75% of the common shares of DiaLogos, and secure a funding 
commitment for the remainder of the $1,650,000 from investors or lenders.   In 
the event the Company secured a funding commitment from investors and/or 
lenders, then DiaLogos would grant the Company the option to purchase 75% of 
the common shares of DiaLogos less any shares already purchased by the Company 
and/or investors identified by the Company. 

As of December 31, 1996, the Company had advanced $428,350 to DiaLogos.  The 
Company had also converted an additional $51,050 of advances into an equity 
interest in DiaLogos' common shares. Subsequent to December 31, 1996, the 
Company arranged for approximately $400,000 of funding for DiaLogos from 
investors, which consisted of officers and directors of the Company, in 
exchange for these investors receiving 18.5% of DiaLogos' common shares.   

On January 30, 1998, the Company elected to exercise its option and converted 
aggregate advances of $1,191,960 to DiaLogos into common shares of DiaLogos 
stock.  Upon conversion of these advances, MedPlus became a majority owner of 
DiaLogos with 56.5% ownership.   The acquisition of these shares has been 
accounted for under the purchase method. Accordingly, the financial position 
of DiaLogos has been included in the Company's Consolidated Balance Sheet as 
of January 31, 1998, and the results of operations of DiaLogos will be 
included in the Company's Consolidated Statement of Operations effective 
February 1, 1998. 

The Company's purchase price for its majority interest in DiaLogos was 
$1,693,959 which included the conversion of $1,191,960 of advances and the 
attribution of $501,999 of DiaLogos liabilities to the Company's ownership 
interest. The purchase price has been allocated to the identifiable tangible 
and intangible assets acquired based on their estimated fair values.   The 
Company has allocated $781,391 of the purchase price to the excess of cost 
over the fair value of net assets acquired.  An additional $710,318 of the 
purchase price has been allocated to acquired in-process technology and has 
been expensed at the date of acquisition. 


Sale of IntelliCode Assets

On January 28, 1998, the Company completed the sale of all the assets of the 
Company's IntelliCode division to Becton Dickinson and Company ("Becton 
Dickinson") for an initial payment of $17,408,847 plus royalty payments over 
five years.  The initial payment was subsequently adjusted after the closing 
of the transaction based on the actual net book value of the assets sold 
resulting in a payment by the Company to Becton Dickinson of $74,259 in April 
1998. In connection with the sale, Becton Dickinson also assumed certain 
liabilities of the IntelliCode division, primarily deferred revenues and 
obligations related to service contracts and an office lease. The Company has 
recognized a pre-tax gain of $14,724,720 and an after-tax gain of $10,268,710 
related to this transaction for the year ended January 31, 1998. The royalty 
payments are based on future defined revenues and will be recorded as income 
when earned.


Universal Document Acquisitions and Initial Public Offering

The Company's Universal Document subsidiary has hired a senior management team 
and entered into agreements with two consulting firms to assist it in the 
identification and recruitment of certain design automation software resellers 
and integrators that Universal Document may acquire or combine, and to assist 
Universal Document in an initial public offering of its common stock.  In 
September and October 1997, Universal Document entered into definitive 
agreements, which are contingent upon a successful initial public offering,  to 
acquire nine such companies. On October 10, 1997, Universal Document filed a 
registration statement on Form S-1 with the Securities and Exchange Commission 
to offer its common stock to the public. Universal Document filed subsequent 
amendments to this registration statement on December 15, 1997 and January 9, 
1998.  Under the terms of the initial public offering as disclosed in the 
registration statement, Universal Document and the Company would offer to sell 
1,850,000 and  750,000 shares, respectively. Universal Document would use a 
portion of its proceeds from the sale of shares in the offering and the 
issuance of additional shares to acquire the nine companies with which it had 
entered into acquisition agreements. The Company would retain a minority 
interest in Universal Document after the initial public offering.  In 
connection with its initial public offering, Universal Document would change 
its name to Synergis Technologies[tm], Inc.  Due to adverse market conditions 
for initial public offerings in January 1998, Universal Document postponed the 
initial public offering upon the advice of its underwriters.

Universal Document had capitalized direct, incremental costs during the year 
ended January 31, 1998 related to the potential acquisitions and initial public 
offering for accountants', attorneys', and consultants' fees ("acquisition and 
offering costs") that were to become a cost of the acquired companies upon the 
completion of the acquisitions or costs of the initial public offering. These 
acquisition and offering costs had been recorded as deferred acquisition and 
offering costs in the Company's Consolidated Balance Sheet. As a result of its 
decision to postpone its initial public offering, Universal Document expensed 
$2,979,555 of such costs in January 1998.  The Company also incurred $728,390 
of operating expenses during the year ended January 31, 1998 associated with 
the senior management team hired to manage the acquisitions, offering and 
integration of the target companies.  

The Company and Universal Document have entered into a variety of agreements 
related to the Universal Document acquisitions and initial public offering.  
These agreements include consulting agreements, employment agreements, an 
amendment of the HWB purchase agreement (as discussed, infra, in Note 3 of the 
Consolidated Financial Statements included herein), acquisition agreements with 
the target companies, and stock incentive agreements associated with Universal 
Document common stock.  The significant financial terms of these agreements are 
contingent upon the successful completion of an initial public offering of 
Universal Document's common stock.  The Company is currently evaluating how to 
proceed with the acquisitions and initial public offering. As a result of such 
evaluation, many, if not all, of the agreements referred to above may either be 
terminated or significantly amended.  

While the Company believes that the acquisitions and initial public offering 
("transactions") by Universal Document could result in significant value for 
the Company, there is no assurance that the transactions will ultimately occur 
on the terms as disclosed in the registration statement, or if the 
transactions do occur, that there are no material changes to their terms.  In 
addition, the Company will continue to have expenditures for the Universal 
Document senior management team directing the transactions through the date of 
an initial public offering or a decision by the Company not to pursue these 
transactions.  In the event the Universal Document initial public offering 
proceeds, the Company may be required to make significant expenditures for 
accountants' and attorneys' fees and other costs associated with the 
transactions.  While the Company expects to be reimbursed by Universal 
Document after its initial public offering for funding such costs, there can 
be no assurance that the Company will recover all the costs it has funded to 
date or will fund in the future.


Results of Operations

Years Ended January 31, 1998 and December 31, 1996

Revenues. Revenues for the year ended January 31, 1998 were $9,031,643, an 
increase of $5,564,051, or 160% over the $3,467,592 reported for the 
comparable period in 1996.  System sales increased $4,841,313 or 177% from the 
year ended December 31, 1996 primarily due to increased sales of ChartMaxx 
systems.  Support and consulting revenues increased $722,738 or 98% from the 
year ended December 31, 1996 due to higher support revenues resulting from an 
increase in the installed base of all systems and higher consulting revenues 
from a full year of revenues from consulting services provided by FutureCORE.

Gross Profit. Gross profit for the year ended January 31, 1998 was $2,820,846 
compared to $1,307,749 for the year ended December 31, 1996, an increase of  
$1,513,097 or 116%. The overall gross profit margin decreased from 38% in the 
year ended December 31, 1996 to 31% in the year ended January 31, 1998. The 
gross profit margin on systems sales decreased from 41% in the year ended 
December 31, 1996 to 39% in the year ended January 31, 1998 due to an 
aggressive pricing strategy and an increase in capitalized software 
amortization.  Gross profit margins on support and consulting revenues 
decreased from 27% in the year ended December 31, 1996 to -10% in the year 
ended January 31, 1998 due to an increase in customer support, installation, 
and consulting personnel in advance of related revenues and lower than 
expected utilization rates of those personnel. Future gross profit margins for 
support and consulting services may continue to be depressed in the near term 
as a result of the timing of systems sales, unforeseen delays in 
implementation schedules, the number and timing of additions to the 
implementation and consulting staff relative to when they become billable to 
customers, or the need to use independent consultants while the Company is 
further developing its implementation and consulting staff.

Operating Expenses. Operating expenses increased from $5,554,374 in the year 
ended December 31, 1996  to $9,475,722 in the year ended January 31, 1998, an 
increase of 71%. Included in operating expenses in January 31, 1998 is a non-
recurring charge of $710,318 related to the allocation of a portion of the 
purchase price for the Company's acquisition of a majority interest in 
DiaLogos to acquired in-process technology.  This amount was expensed at the 
date of acquisition, January 30, 1998. The company also incurred expenses of 
$728,390 related to management expenses associated with acquisition, initial 
public offering efforts, and preliminary integration efforts of Universal 
Document discussed above. The Company also continued to add a significant 
number of employees in the areas of development and sales and marketing during 
the year ended January 31, 1998.  Substantial expenditures were made to 
increase market awareness of the Company's products and to expand the direct 
and indirect channels of distribution.

Other Income (Expense). Other income (expense) decreased from $252,382 of 
income for the year ended December 31, 1996  to $3,211,508 of expense for the 
year ended January 31, 1998.  The primary reason for the change was Universal 
Document's expensing of $2,979,555 of capitalized acquisition and offering 
costs in January 1998 as a result of the postponement of Universal Document's 
initial public offering as discussed above.  Also, the Company's interest 
expense increased from $23,493 for income for the year ended December 31, 1996  
to $346,315 of expense for the year ended January 31, 1998 due to increased 
borrowing requirements to fund the Universal Document acquisition and initial 
public offering efforts and the Company's operations.  Consequently, the 
Company's interest income decreased from $308,992 for the year ended December 
31, 1996  to $94,703 for the year ended January 31, 1998.

Discontinued Operations.  Income from discontinued operations, net of income 
tax expense, increased from $925,712 for the year ended December 31, 1996 to 
$9,849,994 for the year ended January 31, 1998.  The primary reason for the 
increase was a pre-tax gain of $14,724,720 related to the sale of the assets 
of the IntelliCode division to Becton as discussed above. The Company realized 
an after-tax gain of $10,268,710 on this transaction. This gain was partially 
offset by two non-recurring charges related to Universal Document's Step2000 
segment which consisted of the following: (a) the amortization of the 
remaining net book value of $774,677 of the excess of cost over fair value of 
net assets acquired due to the impairment of that asset, and (b) the 
amortization of $466,836 of capitalized software development costs due to the 
impairment of that asset.  The Company also recorded a charge for the accrual 
of a loss of $180,000 for the estimated loss on disposal of the net assets of 
the segment and its estimated operating losses through the anticipated date of 
disposal.  These charges, along with operating losses from the Step2000 
segment, resulted in the decline in operating income from discontinued 
operations from $1,523,948 for the year ended December 31, 1996 to an 
operating loss of $105,705 for the year ended January 31, 1998.

Net Income. While net revenues increased 160% over the year ended December 31, 
1996, the significant increase in operating expenses, the Universal Document 
management expenses, and the non-recurring charges for the acquired in-process 
technology of DiaLogos and for the acquisition and offering costs of Universal 
Document resulted in a loss of $6,744,905 from continuing operations for the 
year ended January 31, 1998 compared to a loss of $3,397,904 for the year 
ended December 31, 1996.  Net income (loss) increased from a net loss for the 
year ended December 31, 1996 of $2,472,192 to net income of $3,105,089 for the 
year ended January 31, 1998 primarily due to income from discontinued 
operations of $9,849,944 offset by the items discussed in the preceding 
sentence. 


Years Ended December 31, 1996 and 1995

Revenues. Revenues for the year ended December 31, 1996 were $3,467,592, an 
increase of $502,553, or 17% over the $2,965,039 reported for the comparable 
period for the year ended December 31, 1995.  System sales decreased $127,675 
or 4% from the year ended December 31, 1995 due to a change in the mix and 
size of systems sold from the prior year.  Support and consulting revenues 
increased $630,228 or 579% from the year ended December 31, 1995 due to higher 
support revenues as the Company's installed systems base continued to grow and 
higher consulting revenues related to the ChartMaxx division and FutureCORE 
subsidiary.

Gross Profit. Gross profit for the year ended December 31, 1996 was $1,307,749 
and $1,434,223 for the year ended December 31, 1995, a decrease of $126,474 or 
9%. The overall gross profit margin decreased from 48% in 1995 to 38% in 1996. 
Higher capitalized software amortization led to a decrease in gross profit 
margin on systems sales from 50% for the year ended December 31, 1995 to 41% 
in 1996.  Gross profit margins on support and consulting revenues increased to 
27% from a negative gross profit margin due to higher support revenues from a 
larger installed base partially offset by lower than expected utilization of 
customer support, implementation, and consulting personnel.

Operating Expenses. Operating expenses increased from $4,122,309 for the year 
ended December 31, 1995 to $5,554,374 in for the year ended December 31, 1996, 
an increase of $1,432,065 or 35%.  The increase is a result of an increase in 
personnel related to employees in the areas of sales, marketing, product 
development, administration and the Company's new subsidiary FutureCORE. 
Substantial expenditures were also made during the year ended December 31, 
1996 to increase market awareness of the Company's products.

Discontinued Operations.  Income (loss) from discontinued operations, net of 
income taxes, changed from a loss of $492,438 for the year ended December 31, 
1995 to income of $925,712 for the year ended December 31, 1996.  The loss for 
1995 included a non-recurring charge for acquired in-process technology 
related to the acquisition of Universal Document of $1,465,697.  

Net Loss.  The Company's net loss for the year ended December 31, 1996 was 
$2,472,192 compared to a net loss of $2,616,277 for the year ended December 
31, 1995.  The net loss for the year ended December 31, 1996  is a result of 
the increased operating expenses discussed in the preceding paragraphs and 
lower than expected revenues. 

The weighted average number of shares outstanding for 1996 was 5,868,954 
shares compared to 4,867,288 shares for 1995.  The increase in the weighted 
average number of shares outstanding was primarily due to the issuance of 
900,000 shares of stock in the Company's secondary offering in November 1995.


Liquidity and Capital Resources

The Company's business requires significant amounts of working capital to 
finance new product development, the expansion of its sales and marketing 
organization, anticipated revenue growth, and strategic investments. The 
Company has financed its operations, working capital needs, and investments 
through the sale of common stock, bank borrowings, capital lease financing 
agreements, and recently, the sale of the assets of its IntelliCode division. 
The Company's principal uses of cash since inception have been for funding 
operations, capital expenditures, research and development activities, and 
investments in and advances to companies which are deemed to have strategic 
value to the Company.

The Company's revolving line of credit agreement ("MedPlus line of credit") 
with a bank permits the Company to borrow a maximum of $10,000,000 subject to 
a defined net worth formula. The term of the MedPlus line of credit extends 
through December 31, 1998, and the MedPlus line of credit is secured by 
substantially all of the Company's  assets.  At January 31, 1998, the maximum 
amount available under the MedPlus line of credit was $10,000,000.  No amounts 
were outstanding under the MedPlus line of credit at January 31, 1998 and 
December 31, 1996.

On September 9, 1997, the Company and Universal Document entered into a line 
of credit agreement ("Universal line of credit") with a bank to fund the costs 
associated with Universal Document's acquisitions and initial public offering 
discussed in Note 5 of the consolidated financial statements and for working 
capital.  The amount outstanding under the Universal line of credit at January 
31, 1998 was $1,496,353. The Universal line of credit was paid in full and 
canceled on February 10, 1998.

In connection with the sale of the IntelliCode assets to Becton, the Company 
sold 222,556 shares of its common stock to Becton in exchange for $2,000,000 
in cash on January 28, 1998.  The sale price was based on the average closing 
price of the Company's common stock for the thirty days prior to the 
announcement on November 21, 1997 of the signing of a letter of intent 
relating to the sale of the IntelliCode assets.

The Company's Board of Directors authorized a common stock repurchase program 
in November 1996.   Under the program, the Company may purchase up to 500,000 
shares of the Company's common stock.   As of January 31, 1998, 10,500 shares 
at a cost of $53,554 had been purchased under this program. Subsequently, the 
Company purchased an additional 24,900 shares for $164,348 in March 1998.

The Company believes that its cash and cash equivalents, investment 
securities, available line of credit, and cash generated from operations will 
be sufficient to finance its expected growth and cash requirements for at 
least the next twelve months.  The Company's ability to meet its cash 
requirements on a long-term basis will depend on profitable operations, 
consistent and timely collections of accounts receivable and additional 
sources of liquidity such as additional equity offerings or debt financing.


Inflation

To date, inflation has not had a material impact on the Company's operations.


Year 2000 Compliance

The Year 2000 compliance issue arises from software applications that use only 
two digits to identify a year.  Such applications may fail or create errors in 
the year 2000 ("year 2000 issue").  The Company has been in the process of 
reviewing all relevant year 2000 compliance issues.  The Company's ChartMaxx 
and OptiMaxx 
products have both been developed using four digit date fields and are year 
2000 compliant.  In instances where a two digit date field is passed from 
another system to ChartMaxx or OptiMaxx, the field is populated with the first 
two digits of the current system date.  The Company will complete final 
testing of these systems to verify they are year 2000 compliant by the fall of 
1998.  However, both systems rely upon third party software. The Company is 
currently reviewing these third party products and working with the respective 
vendors to determine what steps, if any, are required to ensure compliance.  
The Company's internal software systems are either already compliant or will 
be upgraded to year 2000 compliant versions.  The Company does not anticipate, 
based on its current understanding of the year 2000 issue and the results of 
its review to date, that the year 2000 issue will have a material effect on 
the Company's results of operations.


Recently Issued Accounting Pronouncement

The American Institute of Certified Public Accountants has recently issued 
Statement of Position SOP 97-2, Software Revenue Recognition, which supersedes 
SOP 91-1. SOP 97-2 is effective for transactions entered into in fiscal years 
beginning after December 15, 1997. The Company is currently completing its 
review of SOP 97-2, but at present, it does not anticipate the implementation 
of SOP 97-2 to have a material change to the Company's revenue recognition 
policy.



ITEM 7.  FINANCIAL STATEMENTS.

Information called for by this item is set forth in the Company's Consolidated 
Financial Statements contained in this report and is herein incorporated by 
this reference.  Specific financial statements and supplemental data can be 
found at the pages listed in the following index:

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                      Page Number
Description                                         In This Report      
Independent Auditors' Report of KPMG 
Peat Marwick LLP. . . . . . . . . . . . . . . . . .       F-2

Consolidated Balance Sheets as of January 31,
1998 and 1997 and December 31, 1996 . . . . . . . .       F-3

Consolidated Statements of Operations for the year ended
January 31, 1998, month ended January 31, 1997 and years
ended December 31, 1996 and 1995. . . . . . . . . .       F-4

Consolidated Statements of Shareholders' Equity for the year  
ended January 31, 1998, month ended January 31, 1997 and 
years ended December 31, 1996 and 1995. . . . . . .       F-5

Consolidated Statements of Cash Flows for the year ended
January 31, 1998, month ended January 31, 1997 and years
ended December 31, 1996 and 1995. . . . . . . . . .       F-6

 Notes to Consolidated Financial Statements. . . . .   F-7 to F-29


                                      ITEM 8.  CHANGES IN AND DISAGREEMENTS 
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.


PART III

ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; 
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

      The Company's executive officers and directors are as follows:

Name                           Age        Position
_____________                _______      _____________________

Richard A. Mahoney              50        Chairman of the Board, 
                                           Chief Executive Officer
                                            and President
Philip S. Present II            47        Senior Vice President,
                                           Chief Operating
                                           Officer and Director
Gary L. Price                   43        Senior Vice President of 
                                           Business Development
Timothy P. McMullen             43        Vice President of Sales 
                                           and Marketing
Daniel A. Silber                49        Vice President of 
                                           Finance and Chief 
                                           Financial Officer
Paul F. Albrecht                43        Vice President and Chief 
                                           Technology Officer
Jay Hilnbrand                   64        Director and General
                                           Manager of Universal 
                                           Document
Robert E. Kenny III             42        Secretary and Director
Paul J. Stein                   50        Director
Paul A. Martin                  43        Director 

Directors are elected annually by the shareholders and serve for one year 
terms.  Officers serve at the discretion of the Board of Directors and are 
elected on an annual basis.

Richard A. Mahoney has been the Company's President and a director of the 
Company since January 1991.   While Mr. Mahoney has been the President of the 
Company since its inception, Mr. Mahoney has held the titles of Chairman of 
the Board and Chief Executive Officer of the Company since November 1995.

Philip S. Present II joined the Company in April 1995 as Vice President of 
Corporate Development.  Mr. Present was named the Chief Operating Officer of 
the Company in June 1996.  He became a director of the Company on December 13, 
1997 to fill a vacancy created on the board by an increase in the number of 
directors of the Company from five to six.  From September 1973 to March 1995, 
Mr. Present was employed by the certified public accounting firm of KPMG Peat 
Marwick LLP.  

Gary L. Price joined the Company as Vice President, Sales in January 1992 and 
in June 1996 was named Senior Vice President, Business Development.

Timothy P. McMullen has been the Vice President of Sales and Marketing since 
December 13, 1997.  He joined the Company as Vice President, Corporate 
Accounts and Managed Care in June 1996 after sixteen years with the Hill-Rom 
Co. Inc.  At Hill-Rom, the world's largest manufacturer and distributor of 
patient beds and patient environments, he held several senior positions 
including Vice President of Corporate Accounts, Merchandising, International, 
and Domestic Sales.
 
Daniel A. Silber joined the Company as Vice President of Finance and Chief 
Financial Officer in May 1995.  From 1993 until he joined the Company, he was 
Chief Financial Officer for Saturday Knight LTD, a manufacturer and 
distributor of bathroom accessories.

Paul F. Albrecht was elected Vice President and Chief Technology Officer on 
December 13, 1997 following his tenure as General Manager of the ChartMaxx 
Division of MedPlus since May 16, 1994.  Prior to joining the Company, Mr. 
Albrecht had been the Director of the Systems Development Area for Cincinnati 
Bell Information Systems since December 1991.

Jay Hilnbrand has been a director of the Company since April 1994.  Mr. 
Hilnbrand is the General Manager of Universal Document, a wholly-owned 
subsidiary of the Company since December 1995.  Prior to the  acquisition by 
the Company of Universal Document, Mr. Hilnbrand had been its President since 
1990.

Robert E. Kenny III, an attorney engaged in the private practice of law since 
1980, has served as Secretary and a director of the Company since its 
inception.

Paul J. Stein has been a director of the Company since 1991.  Mr. Stein has 
been a self-employed marketing consultant and manufacturer's representative 
since October 1990.

Paul A. Martin, a director of the Company since August 29, 1996, has been an 
Implementation Consultant for the Company since August 18, 1997.  Prior to 
joining the Company, he had been the Corporate Accounts Receivable Manager for 
CommuniCare Health Services, a home healthcare agency which also owns and 
operates a nursing home, since 1995.  Prior to his position with CommuniCare 
he was the Director of the business office for Dimensions Health Corp., a 
hospital and out-patient center management company.

Additional information regarding the Company's officers and directors is 
incorporated herein by reference to the information set forth under the 
caption "Certain Relationships and Related Transactions" of the Proxy 
Statement for the Company's Annual Meeting of Shareholders to be held on June 
25, 1998.  Such Proxy Statement will be filed with the Securities and Exchange 
Commission within 120 days after the end of the fiscal year covered by this 
Form 10-KSB.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

All transactions executed in 1997 by the Company's directors, officers and 
beneficial owners, were, to the Company's knowledge, reported in a timely 
fashion as required by Section 16(a).

ITEM 10.  EXECUTIVE COMPENSATION.

The information set forth under the caption "Executive Compensation" of the 
Proxy Statement for the Company's Annual Meeting of Shareholders to be held on 
June 25, 1998, is incorporated herein by reference.  Such Proxy Statement will 
be filed with the Securities and Exchange Commission within 120 days after the 
end of the fiscal year covered by the Form 10-KSB.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information set forth under the caption "Security Ownership of Certain 
Beneficial Owners and Management" of the Proxy Statement for the Company's 
Annual Meeting of Shareholders to be held on June 25, 1998, is incorporated 
herein by reference.  Such Proxy Statement will be filed with the Securities 
and Exchange Commission within 120 days after the end of the fiscal year 
covered by this Form 10-KSB.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information set forth under the caption "Certain Relationships and Related 
Transactions" of the Proxy Statement for the Company's Annual Meeting of 
Shareholders to be held on June 25, 1998, is incorporated herein by reference.  
Such Proxy Statement will be filed with the Securities and Exchange Commission 
within 120 days after the end of the fiscal year covered by this Form 10-KSB.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)  The following exhibits are hereby filed as part of this Form 10-KSB:


Exhibit                                            Sequential Page
Number    Description of Exhibits                  Number       
_______   _____________________________________    _______________

2         Asset Purchase Agreement, dated 
          January 28, 1998, by and between 
          Becton, Dickinson and Company and 
          MedPlus, Inc.                              See note 1

3         Amended Articles of Incorporation
          and Code of Regulations                    See note 2

10.1      Lease between MedPlus, Inc. and Duke
          Realty Limited Partnership for principal
          offices, dated April 24, 1995              See note 3

10.2      Executive Employment Agreement dated
          October 31, 1995 between MedPlus, Inc.
          and Richard A. Mahoney                     See note 3

10.3      Consulting Agreement between Universal
          Document and Madison Financial Group Ltd.
          dated September 1, 1996                     See note 4

10.4      First Lease Amendment between MedPlus, 
          Inc. and Duke Realty Limited Partnership 
          for principal offices, dated 
          December 6, 1996                            See note 4

10.5      Second Lease Amendment between MedPlus, 
          Inc. and Duke Realty Limited Partnership 
          for principal offices, dated 
          December 6, 1996                            See note 4

10.6      Asset Purchase Agreement by and between
          Med-Sub, Inc. and FutureCORE, Ltd. dated 
          June 28, 1996                               See note 5

10.7      Letter Agreement by and between MedPlus, 
          Inc. and DiaLogos Incorporated dated
          July 12, 1996                               See note 5

10.8      Cross Corporate Guarantee by MedPlus, 
          Inc. on behalf of DiaLogos Incorporated 
          dated October 3, 1996                       See note 6

10.9      Letter Agreement between MedPlus, Inc. 
          and Dialogos Incorporated dated 
          January 31, 1997                            See note 4

10.10     Agreement by and between MedPlus, Inc. 
          and Growth Management Advisors, Inc. 
          dated July 10, 1997                         See note 7 

10.11     Amendment to Stock Purchase Agreement
          by and among Universal Document, Jay 
          and Judy Hilnbrand and Robert C. Weiss
          dated August 12, 1997                       See note 7

10.12     Agreement by and between MedPlus, Inc. 
          and Jay Hilnbrand dated May 1, 1997         See note 7

10.13     Second Amendment of Stock Purchase 
          Agreement by and among Universal Document,
          Jay and Judy Hilnbrand and Robert C. Weiss 
          dated December 10, 1997

10.14     Amendment to Agreement by and between 
          Jay Hilnbrand and MedPlus, Inc. dated 
          December 10, 1997                              

10.15     Employment Agreement dated January 1, 1998 
          by and between MedPlus, Inc. and 
          Philip S. Present II 

10.16     Employment Agreement dated January 1, 1998 
          by and between Timothy P. McMullen 
          and MedPlus, Inc.                              

10.17     Employment Agreement dated January 1, 1998
          by and between Daniel A. Silber and 
          MedPlus, Inc.                              

10.18     Employment Agreement dated March 16, 1998
          by and between Gary L. Price and MedPlus, Inc.

13        Annual Report to Shareholders               See note 8

21        Subsidiaries of MedPlus, Inc.                              

23        Consent of KPMG Peat Marwick LLP          

Note 1:  Incorporated by reference to the Company's Report on Form 8-K filed 
on February 11, 1998.

Note 2:  Incorporated by reference to the Registration Statement on Form SB-2, 
Registration No. 33-77896C, effective May 24, 1994.

Note 3:  Incorporated by reference to the Registration Statement on Form S-1, 
Registration No. 33-98696, effective November 21, 1995.

Note 4:  Incorporated by reference to the Company's Annual Report on Form 10-
KSB filed March 27, 1997.

Note 5: Incorporated by reference to the Company's Quarterly Report on Form 
10Q-SB filed August 13, 1996.

Note 6: Incorporated by reference to the Company's Quarterly Report on Form 
10Q-SB filed November 14, 1996.

Note 7: Incorporated by reference to the Company's Quarterly Report on Form 
10Q-SB/A filed August 18, 1997.

Note 8:  Pursuant to general Instruction F of Form 10-KSB and Regulation 
240.14a(d) of the Securities Exchange Act of 1934, the Issuer's Annual Report 
to the Security Holders for its fiscal year ended January 31, 1998 has been 
combined with the required information of Form 10-KSB and is being filed with 
the U.S. Securities and Exchange Commission and submitted to the registrant's 
shareholders on an integrated basis.
  
       (b)  The following reports on Form 8-K were filed during the three-
month period ended January 31, 1998:
 
(i)  Current Report on Form 8-K filed November 21, 1997 announcing that on 
November 21, 1997, the Company issued a press release announcing that it had 
signed a letter of intent with Becton Dickinson and Company pursuant to which 
Becton Dickinson would acquire IntelliCode Intelligent Bar Coding Systems, a 
division of the Company, for an initial payment of $18 million and would 
purchase $2 million worth of shares of the Company's common stock.
 
(ii)  Current Report on Form 8-K filed on December 19, 1997 announcing that on 
December 19, 1997, the Company issued a press release announcing a change in 
its fiscal year end and that Philip S. Present II, its chief operating 
officer, had been elected to the Company's board of directors to fill the 
vacancy created by an increase in the number of directors from five to six. 


SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act, the 
registrant caused this report to be signed on its behalf by the undersigned, 
thereunto duly authorized.

                              MEDPLUS, INC., Registrant


                              By:/s/ Richard A. Mahoney
                                   Richard A. Mahoney
                                   President

                              Date:  April 30, 1998


      In accordance with the Exchange Act, this report has been signed below 
by the following persons on behalf of the registrant and in the capacities and 
on the dates indicated.

Signature                         Title                      Date

/s/ Richard A. Mahoney       Chairman of the             April 30, 1998
    Richard A. Mahoney       Board, Chief 
                             Executive Officer 
                             and President
                             (Principal Executive 
                             Officer)        

/s/ Daniel A. Silber         Vice President of Finance   April 30, 1998
    Daniel A. Silber         and Chief Financial 
                             Officer
                             (Principal Financial and
                             Accounting Officer)

        
/s/ Robert E. Kenny III      Secretary and Director      April 30, 1998
    Robert E. Kenny III


/s/ Paul Stein               Secretary and Director      April 30, 1998
    Paul Stein

/s/ Jay Hilnbrand            Director                    April 30, 1998
    Jay Hilnbrand

/s/ Paul A. Martin           Director                    April 30, 1998
    Paul A. Martin                            

/s/ Philip S. Present II     Director                    April 30, 1998
    Philip S. Present II                            

<PAGE

  
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                      Page Number
Description                                         In This Report

Independent Auditors' Report
 of KPMG Peat Marwick LLP  . . . . . . . . . . . . . .       F-2

Consolidated Balance Sheets as of January 31, 1998
 and 1997 and December 31, 1996. . . . . . . . . . . .       F-3
        
Consolidated Statements of Operations for the year ended
January 31, 1998, month ended January 31, 1997 and years
ended December 31, 1996 and 1995 . . . . . . . . . . .       F-4

Consolidated Statements of Shareholders' Equity for the year  
ended January 31, 1998, month ended January 31, 1997 and 
years ended December 31, 1996 and 1995. . . . . . . . .      F-5

Consolidated Statements of Cash Flows for the year ended
January 31, 1998, month ended January 31, 1997 and years
ended December 31, 1996 and 1995 . . . . . . . . . . . .     F-6
       
Notes to Consolidated Financial Statements . . . . . . F-7 to F-29








F-1
<PAGE>




Independent Auditors' Report





The Board of Directors
MedPlus, Inc.:

We have audited the accompanying consolidated balance sheets of MedPlus, Inc. 
and subsidiaries as of January 31, 1998 and 1997 and December 31, 1996, and 
the related consolidated statements of operations, shareholders' equity, and 
cash flows for the year ended January 31, 1998, the one month period ended 
January 31, 1997 and the years ended December 31, 1996 and 1995.   These 
consolidated financial statements are the responsibility of the Company's 
management.   Our responsibility is to express an opinion on these 
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.   Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free of 
material misstatement.   An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements.  
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation.   We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of MedPlus, 
Inc. and subsidiaries as of January 31, 1998 and 1997 and December 31, 1996, 
and the results of their operations and their cash flows for the year ended 
January 31, 1998, the one month period ended January 31, 1997 and the years 
ended December 31, 1996 and 1995, in conformity with generally accepted 
accounting principles.


KPMG Peat Marwick LLP

/s/ KPMG Peat Marwick LLP

Cincinnati, Ohio
April 9, 1998





F-2
<PAGE>


<TABLE>
MEDPLUS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
January 31, 1998 and 1997 and December 31, 1996
<CAPTION>
                                                                  January 31,              January 31,               December 31,
                                                                     1998                    1997                       1996
                                                                 _____________            ____________              _____________
                     ASSETS                                                           
<S>                                                              <C>                      <C>                        <C>  
Current assets:                                                            
 Cash and cash equivalents                                       $ 13,788,668              1,016,654                  2,702,007
 Investment securities                                                 -                     300,510                    300,510
 Accounts receivable, less allowance for doubtful accounts of                                                            
    $115,000 in 1998 and $45,000 in 1997 and 1996                   4,167,702              1,339,265                  1,425,003
 Other receivables                                                     71,728                680,865                    522,047
 Inventories                                                          757,471                285,569                    229,624
 Deferred tax asset                                                   328,497                   -                          -
 Prepaid expenses and other current assets                            523,908                505,833                    436,013
                                                                 _____________            ____________               ____________
     Total current assets                                          19,637,974              4,128,696                  5,615,204
                                                            
Capitalized software development costs, net                         2,020,613              1,861,163                  1,813,443
Fixed assets, net                                                   1,347,465              1,176,134                  1,149,152
Excess of cost over fair value of net assets acquired, net            781,391                 29,044                     29,592
Other assets                                                          322,171                 61,396                     64,225
Net assets of discontinued operations                                 128,461              3,414,610                  3,017,029
                                                                 _____________            ____________               ____________ 
                                                                 $ 24,238,075             10,671,043                  1,688,645
                                                                 _____________            ____________               ____________
                                                                 _____________            ____________               ____________
                                                           
            LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                
Current liabilities:                                                            
 Current installments of obligations under capital leases        $    132,206                 26,191                     31,770
 Borrowings on line of credit                                       1,496,353                    -                          -
 Accounts payable                                                   2,807,105                602,291                    732,807
 Accrued expenses                                                   2,482,723                381,818                    669,953
 Accrued income taxes payable                                       1,346,869                    -                          -
 Deferred revenue                                                     496,306                305,164                    308,039
 Other current liabilities                                            297,000                    -                          -
                                                                 _____________            ____________               ____________
    Total current liabilities                                       9,058,562              1,315,464                  1,742,569

Obligations under capital leases, excluding current installments      167,884                 84,210                     81,229
Deferred tax liability                                                534,644                    -                          -
Deferred revenue                                                        -                      6,854                      6,854
                                                                 _____________            ____________               ____________
    Total liabilities                                               9,761,090              1,406,528                  1,830,652

Shareholders' equity:                                                            
 Common stock, no par value, authorized 15,000,000 shares;                                                            
   issued and outstanding 6,160,712 shares in 1998,                                                            
   5,921,706 in 1997 and 5,919,206 shares in 1996                       -                        -                          -
 Additional paid-in capital                                        17,338,111             14,938,186                 14,735,112
 Treasury stock                                                       (53,554)                   -                          -
 Accumulated deficit                                               (2,619,749)            (5,471,341)                (4,849,580)
 Unrealized gains on investment securities                              -                      1,824                      1,824
 Unearned stock compensation                                         (187,823)              (204,154)                   (29,363)
                                                                 _____________            ____________               ____________
    Total shareholders' equity                                     14,476,985              9,264,515                  9,857,993
                                                                 _____________            ____________               ____________
Commitments
                                                                 $ 24,238,075             10,671,043                 11,688,645
                                                                 _____________            ____________               ____________
                                                                 _____________            ____________               ____________
</TABLE>


See accompanying notes to consolidated financial statements.
F-3
<PAGE>
<TABLE>


MEDPLUS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Year Ended January 31, 1998, Month Ended January 31, 1997
and Years Ended December 31, 1996 and 1995
<CAPTION>

                                          Year Ended                Month Ended                Year Ended              Year Ended
                                          January 31,                January 31,              December 31,            December 31,
                                             1998                       1997                      1996                    1995
                                         ____________              _____________             _____________           _____________
<S>                                      <C>                       <C>                      <C>                      <C>  
Revenues:                                                              
 Systems sales                           $ 7,569,827                  69,085                 2,728,514                2,856,189
 Support and consulting revenues           1,461,816                  76,747                   739,078                  108,850
                                         ____________              _____________             _____________           _____________
   Total revenues                          9,031,643                 145,832                 3,467,592                2,965,039
                                         ____________              _____________             _____________           _____________
Cost of revenues:                                                                
 Systems sales                             4,607,908                  92,377                 1,619,688                1,413,998
 Support and consulting revenues           1,602,889                  91,418                   540,155                  116,818
                                         ____________              _____________             _____________           _____________
   Total cost of revenues                  6,210,797                 183,795                 2,159,843                1,530,816
                                         ____________              _____________             _____________           _____________
   Gross profit                            2,820,846                 (37,963)                1,307,749                1,434,223
                                                                
Operating expenses:                                                                
 Sales and marketing                       4,838,132                 312,628                 2,677,602                2,238,611
 Research and development                    542,296                  51,929                   371,755                  692,033
 General and administrative                2,656,586                 193,309                 2,505,017                1,191,665
 Universal Document management expenses      728,390                    -                         -                       -
 Acquired in-process technology              710,318                    -                         -                       -
                                         ____________              _____________             _____________           _____________
   Total operating expenses                9,475,722                 557,866                 5,554,374                4,122,309
                                         ____________              _____________             _____________           _____________
   Operating loss                         (6,654,876)               (595,829)               (4,246,625)              (2,688,086)


Other income (expense):                                                                        
  Universal Document acquisition 
    and offering costs                    (2,979,555)                   -                         -                       -
  Other income (expense), net               (231,953)                 12,962                   252,382                  (91,761) 
                                         ____________              _____________             _____________           _____________
    Total other income (expense)          (3,211,508)                 12,962                   252,382                  (91,761) 
                                         ____________              _____________             _____________             _____________

    Loss before income tax benefit        (9,866,384)               (582,867)               (3,994,243)              (2,779,847)

Income tax benefit                        (3,121,479)                   -                     (596,339)                (656,008) 
                                         ____________              _____________             _____________           _____________
    Loss from continuing operations       (6,744,905)               (582,867)               (3,397,904)              (2,123,839)
                                                                
Income (loss) from discontinued operations 9,849,994                 (38,894)                  925,712                 (492,438) 
                                         ____________              _____________             _____________           _____________
    Net income (loss)                    $ 3,105,089                (621,761)               (2,472,192)              (2,616,277) 
                                         ____________              _____________             _____________           _____________
                                         ____________              _____________             _____________           _____________
                                                              
Earnings (loss) per share - 
  basic and diluted:                                                                
  Continuing operations                  $    (1.14)                   (0.10)                   (0.58)                    (0.44)
  Discontinued operations                      1.66                    (0.01)                    0.16                     (0.10) 
                                         ____________              _____________             _____________           _____________
    Net income (loss)                    $     0.52                    (0.11)                   (0.42)                    (0.54) 
                                         ____________              _____________             _____________           _____________
                                         ____________              _____________             _____________           _____________

                                                                
Weighted average number of shares of                                                                
  common stock                            5,922,781                5,911,971                 5,868,954               4,867,288
                                         ____________              _____________             _____________           _____________
                                         ____________              _____________             _____________           _____________
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>



<TABLE>
MEDPLUS, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Year Ended January 31, 1998, Month Ended January 31, 1997
and Years Ended December 31, 1996 and 1995
<CAPTION>
                                                                                    Retained     Unrealized
                                                   Common   Additional              earnings   gains (losses) Unearned     Total
                                                   stock-     paid-in   Treasury (accumulated on investment   stock   shareholders'
                                                   shares     capital     stock     deficit)    securities  compensation   equity
                                                 _________   ________   ________   ___________ ___________ ____________ ___________ 
<S>                                              <C>       <C>          <C>        <C>         <C>         <C>          <C>
Balances at December 31, 1994                    4,743,750 $ 5,224,889      -         238,889  (36,129)        -         5,427,649
Issuance of common stock, net of issuance costs  1,058,774   8,766,475      -            -         -           -         8,766,475
Net loss                                              -           -         -      (2,616,277)     -           -        (2,616,277)
Unrealized losses on investment securities, net                                                                                 
of income taxes                                       -           -         -            -      39,387         -            39,387
Unearned compensation under employee stock                                                                                          
award plan, net of amortization                      6,000      45,420      -            -         -        (39,105)         6,315
                                                 _________  __________  _________  ___________ _________   __________  ____________
Balances at December 31, 1995                    5,808,524  14,036,784      -      (2,377,388)   3,258      (39,105)    11,623,549
Issuance of common stock                            64,749     403,886      -            -         -            -          403,886
Options exercised                                   36,933     220,193      -            -         -            -          220,193
Net loss                                              -           -         -      (2,472,192)     -            -       (2,472,192)
Unrealized gains on investment securities, net 
 of income taxes                                      -           -         -            -      (1,434)        -           (1,434)
Unearned compensation under employee stock
 award plan, net of amortization                     9,000      74,249      -            -         -          9,742        83,991
                                                 _________  __________  _________  ___________ _________   __________  ____________
Balances at December 31, 1996                    5,919,206  14,735,112      -      (4,849,580)   1,824      (29,363)     9,857,993
Issuance of common stock, net of issuance costs      2,500      15,000      -            -         -            -           15,000
Net loss                                              -           -         -        (621,761)     -            -         (621,761)
Unearned compensation under employee stock
 award plan, net of amortization                      -           -         -            -         -           1,712         1,712
Fair value of options issued to nonemployees          -        188,074      -            -         -        (176,503)       11,571
                                                 _________  __________  _________  ___________ _________   __________  ____________
Balances at January 31, 1997                     5,921,706  14,938,186      -      (5,471,341)   1,824     (204,154)     9,264,515
Issuance of common stock, net of issuance costs    225,056   2,010,549      -            -         -            -        2,010,549
Purchase of treasury shares                        (10,500)       -     (53,554)         -         -            -          (53,554)
Options exercised                                   16,666     109,719      -            -         -            -          109,719
Tax benefit associated with exercise of options       -         93,500      -            -         -            -           93,500
Net income                                            -           -         -       3,105,089      -            -        3,105,089
Minority shareholders' interest in accumulated
deficit of DiaLogos                                   -           -         -        (253,497)     -            -         (253,497)
Unrealized gains on investment securities,
 net of income tax benefit                            -           -         -            -      (1,824)        -            (1,824)
Unearned compensation under employee stock
 award plan, net of amortization                     7,784      63,610      -            -         -          (4,449)       59,161
Fair value of options issued to nonemployees          -        122,547      -            -         -          20,780       143,327
                                                 _________  __________  _________  ___________ _________   __________  ____________
Balances at January 31, 1998                     6,160,712 $17,338,111  (53,554)   (2,619,749)     -        (187,823)   14,476,985
                                                 _________  __________  _________  ___________ _________   __________  ____________
                                                 _________  __________  _________  ___________ _________   __________  ____________
</TABLE>

See accompanying notes to consolidated financial statements.
F-5
<PAGE>


<TABLE>
MEDPLUS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Year Ended January 31, 1998, Month Ended January 31, 1997 
and Years Ended December 31, 1996 and 1995
<CAPTION>

                                                                    Year Ended     Month Ended     Year Ended    Year Ended
                                                                    January 31,    January 31,    December 31,  December 31,
                                                                       1998           1997            1996          1995
                                                                   ____________    ___________    ___________    ___________
<S>                                                                <C>             <C>            <C>            <C>
Cash flows from operating activities:                                        
  Loss from continuing operations                                  $(6,744,905)      (582,867)    (3,397,904)    (2,123,839)
  Adjustments to reconcile loss from continuing operations                                        
    to net cash used in operating activities:                                        
    Universal Document acquisition and offering costs                2,979,555           -              -              -
    Acquired in-process technology                                     710,318           -              -              -
    Amortization of capitalized software development costs             531,024         27,700        194,228         54,214
    Amortization of unearned stock compensation costs                  222,487         23,283         85,689          6,315
    Depreciation and amortization                                      201,717         17,075        132,468         63,613
    Amortization of excess of cost over fair value of net                                        
      assets acquired                                                   31,811            548          2,736           -
    Provision for loss on doubtful accounts                            112,333           -            73,497         10,000
    Deferred income taxes                                             (356,224)          -           (57,880)      (107,965)
    (Gain) loss on sale of investment securities and fixed assets       (3,691)          -           (18,507)       244,991
    Changes in assets and liabilities, net of business acquisitions:                                         
      Accounts receivable                                           (3,114,118)        85,738       (330,231)      (895,753)
      Other receivables                                                (35,581)        (1,411)       121,991         30,273
      Inventories                                                     (471,902)       (55,946)       (62,961)       (95,913)
      Prepaid expenses and other assets                                 20,315        (61,990)      (130,985)      (145,424)
      Accounts payable and accrued expenses                          2,778,657       (418,651)       352,428        465,171
      Deferred revenue                                                 184,288         (2,875)       175,098         31,588
                                                                   ____________    ___________    ___________    ___________
        Net cash used in operating activities                       (2,953,916)      (969,396)    (2,860,333)    (2,462,729)
                                                                   ____________    ___________    ___________    ___________
                                        
Cash flows from investing activities:                                        
  Capitalization of software development costs                        (690,474)       (75,421)    (1,075,316)      (660,166)
  Purchases of fixed assets                                           (326,747)       (44,057)      (586,612)      (251,007)
  Purchases of investment securities                                      -              -              -          (236,256)
  Proceeds from sales of investment securities and fixed assets        318,248           -           518,507      1,643,312
  Universal Document acquisition and offering costs                 (1,478,838)          -              -              -
  Cash acquired in (payments made for) business acquisitions            16,375           -           (67,328)          -
  Other advances and investments                                      (927,695)      (157,406)      (454,788)          -
                                                                   ____________    ___________    ___________    ___________

      Net cash provided by (used in) investing activities           (3,089,131)      (276,884)    (1,665,537)       495,883
                                                                   ____________    ___________    ___________    ___________
                                     
Cash flows from financing activities:                                        
  Proceeds from issuance of common stock, net of issuance costs      2,105,269           -           461,653      7,897,828
  Purchase of treasury stock                                           (53,554)          -              -              -
  Proceeds from borrowings on line of credit                        11,721,152           -         1,587,815        829,564
  Repayments on line of credit                                     (10,224,799)          -        (1,587,815)      (829,564)
  Principal payments on capital lease obligations and                                        
    notes payable                                                      (32,960)        (2,598)       (32,489)       (43,029)
                                                                   ____________    ___________    ___________    ___________
      Net cash provided by (used in) financing activities            3,515,108         (2,598)       429,164      7,854,799
                                                                   ____________    ___________    ___________    ___________
                                        
Discontinued operations                                             15,299,953       (436,475)      (566,271)       930,032
                                                                   ____________    ___________    ___________    ___________

      Net increase (decrease) in cash and cash equivalents          12,772,014     (1,685,353)    (4,662,977)     6,817,985
                                        
Cash and cash equivalents, beginning of period                       1,016,654      2,702,007      7,364,984        546,998
                                                                   ____________    ___________    ___________    ___________

Cash and cash equivalents, end of period                           $ 13,788,668     1,016,654      2,702,007      7,364,984
                                                                   ____________    ___________    ___________    ___________
                                                                   ____________    ___________    ___________    ___________

Interest paid                                                      $    282,963         1,029         23,493         30,347
                                                                   ____________    ___________    ___________    ___________
                                                                   ____________    ___________    ___________    ___________

Income taxes paid (refunds received)                               $       -             -           (66,192)       (67,928)
                                                                   ____________    ___________    ___________    ___________
                                                                   ____________    ___________    ___________    ___________
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE>


MEDPLUS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(1)  Description of the Business

    MedPlus, Inc. (the "Company") provides state-of-the-art 
information management technology products and consulting services 
to customers predominantly in the health care industry.   The 
Company's products presently consist of the ChartMaxx[tm] 
Enterprise-wide Patient Record System ("ChartMaxx") and  the 
OptiMaxx[tm] Archival System ("OptiMaxx").  ChartMaxx is an 
enterprise-wide electronic patient record system.  OptiMaxx is an 
optical disk-based archival system.  The Company's FutureCORE[tm], 
Inc. subsidiary ("FutureCORE") provides process improvement and 
automation services, primarily in the areas of patient care and 
laboratory services.  On January 30, 1998, the Company acquired a 
majority interest in DiaLogos[tm] Incorporated ("DiaLogos") which 
specializes in assisting organizations in the integration of 
enterprise-wide business systems with existing applications and 
data using distributed object computing, including CORBA and Java 
technologies, through education, consulting and implementation 
services.  DiaLogos is in the initial phases of developing several 
products designed to simplify the effort of legacy system 
integration.

     The Company's IntelliCode[tm] division, which was sold on 
January 28, 1998, developed and sold the IntelliCode Intelligent 
Bar Code System ("IntelliCode"), an intelligent bar coding system 
for hospitals and other health care organizations.  The 
Step2000[tm] Workflow, Document Management, and Application 
Development System ("Step2000") segment, which the Company is 
currently in the process of selling, is a workflow, document 
management, and application development software that enhances the 
utilization of information on an enterprise-wide basis, regardless 
of hardware platform or operating environment. 

Substantially all of the Company's operations are located in 
Cincinnati, Ohio.

(2) Summary of Significant Accounting Policies

(a)  Principles of Consolidation
     
       The consolidated financial statements include the accounts 
of the Company and its wholly-owned subsidiaries, Universal 
Document Management Systems, Inc. ("Universal Document") and 
FutureCORE.  The accounts of DiaLogos, its majority-owned 
subsidiary, have been included in the consolidated financial 
statements as of the date of the Company's acquisition of a 
majority interest, January 30, 1998.  All intercompany accounts 
and transactions have been eliminated in consolidation. 

       The Company's IntelliCode division, which was sold on 
January 28, 1998, and the Step2000 segment of Universal Document, 
which the Company is in the process of selling, have been 
accounted for as discontinued operations.  The accompanying notes 
present amounts related only to continuing operations, unless 
otherwise indicated.  

(Continued)
F-7
<PAGE>

MEDPLUS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(2)  Summary of Significant Accounting Policies, Continued
                       
(b)  Fiscal Year

         In December 1997, the Company changed its fiscal year end 
from December 31 to January 31.  Accordingly, the Company's 
current fiscal year commenced on February 1, 1997 and ended on 
January 31, 1998.  The financial statements for the period from 
January 1, 1997 to January 31, 1997 are also presented herein.  
The amounts reflected for the one month period ended January 31, 
1997 are not indicative of results that would have been obtained 
for a full fiscal quarter or fiscal year.
 
(c)  Cash and Cash Equivalents

         Cash equivalents of $13,691,025 and $2,669,617 at January 
31, 1998 and December 31, 1996, respectively, consist of overnight 
repurchase agreements and investments in money market funds with 
initial terms of less than three months.  The carrying value of 
cash and cash equivalents approximates fair value. 

         Interest income from cash equivalents and investment 
securities was $94,703, $308,992 and $179,863 for the years ended 
January 31, 1998, December 31, 1996, and December 31, 1995, 
respectively.
 
(d)  Investment Securities

         The Company accounts for its investment securities under 
the provisions of Statement of Financial Accounting Standards 
("SFAS") No. 115, Accounting for Certain Investments in Debt and 
Equity Securities.   The Company's investment securities are 
classified under SFAS No. 115 as "available-for-sale," and 
accordingly, are carried at fair market value. The fair values of 
investment securities are based on the quoted market prices at the 
reporting date for those investments.   Unrealized holding gains 
and losses are included as a component of shareholders' equity, 
net of income tax effects, until realized.

          No investment securities were held at January 31, 1998. 
Investment securities at December 31, 1996 consisted entirely of a 
General Electric Capital Corporation bond with a market value of 
$300,510, cost of $297,660, unrealized gain of $2,850, and a 
maturity date in May 1997.

         Other income (expense) for the year ended December 31, 
1995 included a permanent impairment loss of approximately 
$230,000 related to an investment security acquired in 1995.




(Continued)

F-8
<PAGE>



MEDPLUS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(2)  Summary of Significant Accounting Policies, Continued

(e)  Revenue Recognition

       The Company's revenues are derived from systems sales, 
which include software licenses and hardware, support contracts 
and installation, implementation, training and education, and 
consulting services.   Revenue is recognized in accordance with 
the provisions of Statement of Position ("SOP") 91-1, Software 
Revenue Recognition. For OptiMaxx systems, revenue is recognized 
upon shipment.   Revenue from ChartMaxx systems is recognized when 
a contract is signed, the system is configured, and the system is 
shipped.  If a contract requires the Company to perform services 
or provide modifications that are deemed significant to system 
acceptance, revenue related to the delivered hardware and/or 
software is deferred until such obligations are deemed 
insignificant or have been satisfied. 

       Revenues from installation, implementation, training and 
education, and consulting services are recognized in the period in 
which the services are performed.  Revenue from support contracts 
is recognized ratably over the term of the contract. Deferred 
revenues primarily represent support contracts that have been 
billed in advance of the support to be provided.

       The American Institute of Certified Public Accountants has 
recently issued Statement of Position SOP 97-2, Software Revenue 
Recognition, which supersedes SOP 91-1. SOP 97-2 is effective for 
transactions entered into in fiscal years beginning after December 
15, 1997.  The Company is currently completing its review of SOP 
97-2, but at present, it does not anticipate the implementation of 
SOP 97-2 to have a material change to the Company's revenue 
recognition policy.

   (f) Concentrations of Credit Risk

       Financial instruments which potentially expose the Company 
to concentrations of credit risk, as defined by SFAS No. 105, 
consist primarily of cash equivalents, investment securities, and 
trade accounts receivable. The Company's cash equivalents and 
investment securities consist of highly liquid money market funds, 
U.S. government or agency obligations, and corporate obligations. 
The Company's trade accounts receivables are concentrated in the 
health care industry.  However, the Company's credit risk is 
limited due to the geographic dispersion and diversity of 
customers making up the Company's receivable portfolio.

   (g)  Inventories

       Inventories are stated at the lower of cost or market and 
cost is determined by the first-in, first-out (FIFO) method.



(Continued)
F-9
<PAGE>

MEDPLUS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(2) Summary of Significant Accounting Policies, Continued

    (h)  Capitalized Software Development Costs

        The Company accounts for software development costs in 
accordance with the provisions of SFAS No. 86, Accounting for the 
Costs of Computer Software to be Sold, Leased or Otherwise 
Marketed.   Costs incurred in designing and developing computer 
software products are expensed as research and development until 
technological feasibility has been established.   Technological 
feasibility is established upon completion of a detail program 
design or, in its absence, completion of a working model.   Upon 
the achievement of technological feasibility, software production 
costs are capitalized and subsequently reported at the lower of 
unamortized cost or net realizable value.

        Annual amortization expense is the greater of the amount 
computed, using the ratio of the current year's revenues to the 
total of current and anticipated future revenues, or the straight-
line method over the remaining economic life which does not exceed 
five years.   Amortization of capitalized software development 
costs amounted to $531,024, $194,228, and $54,214 for the years 
ended January 31, 1998, December 31, 1996 and December 31, 1995, 
respectively.  Accumulated amortization for capitalized software 
development costs was $835,777 and $277,053 at January 31, 1998 
and December 31, 1996, respectively.

        (i) Fixed Assets

            Fixed assets are stated at cost, except for equipment 
held under capital leases which is stated at the present value of 
minimum lease payments.   Depreciation is computed using the 
straight-line method over the estimated useful lives of the 
assets, which range from three to ten years.   Leasehold 
improvements and equipment held under capital leases are amortized 
using the straight-line method over the shorter of the lease term 
or estimated useful life of the asset. 
     
        (j) Excess of Cost Over Fair Value of Net Assets Acquired

            The excess of the cost over fair value of net assets 
acquired from business acquisitions is being amortized on the 
straight-line method over the expected periods to be benefited, 
which is principally ten years.   Accumulated amortization of the 
excess of the cost over the fair value of net assets acquired was 
$35,095 and $2,736 at January 31, 1998 and December 31, 1996, 
respectively. 

            The Company assesses the recoverability of this 
intangible asset by determining whether the amortization of the 
intangible balance over its remaining life can be recovered 
through undiscounted future operating cash flows of the acquired 
operation.   The amount of the intangible impairment, if any, is 
measured based on projected discounted future operating cash flows 
using a discount rate reflecting the Company's average cost of 
funds.   The assessment of the recoverability of the intangible 
asset will be impacted if estimated future operating cash flows 
are not achieved.

(Continued)
F-10
<PAGE>


MEDPLUS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(2) Summary of Significant Accounting Policies, Continued

    (k) Income Taxes

        The provisions for income taxes are accounted for in 
accordance with SFAS No. 109, Accounting for Income Taxes.  Under 
the asset and liability method of SFAS No. 109, deferred tax 
assets and liabilities are recognized for the future tax 
consequences attributable to differences between the financial 
statement carrying amounts of existing assets and liabilities and 
their respective tax bases.   Deferred tax assets and liabilities 
are measured using enacted tax rates expected to apply to taxable 
income in the years in which those temporary differences are 
expected to be recovered or settled.

    (l) Stock Option Plan

        Prior to January 1, 1996, the Company accounted for its 
stock option plan in accordance with the provisions of Accounting 
Principles Board ("APB") Opinion No. 25, Accounting for Stock 
Issued to Employees, and related interpretations.   As such, 
compensation expense would be recorded on the date of grant only 
if the current market price of the underlying stock exceeded the 
exercise price.   On January 1, 1996, the Company adopted SFAS No. 
123, Accounting for Stock-Based Compensation, which requires 
entities to recognize as expense over the vesting period the fair 
value of all stock-based awards on the date of grant.   
Alternatively, SFAS No. 123 allows entities to continue to apply 
the provisions of APB Opinion No. 25 and provide pro forma net 
income and pro forma earnings per share disclosures for employee 
stock option grants made in 1995 and future years as if the fair-
value-based method defined in SFAS No. 123 had been applied.   The 
Company has elected to continue to apply the provisions of APB 
Opinion No. 25 and provide the pro forma disclosure provisions of 
SFAS No. 123.

     (m) Earnings (Loss) Per Share

         The Company has adopted the provisions of SFAS No. 128, 
Earnings per Share, in calculating earnings per share.  SFAS No. 
128 replaced the calculation of primary and fully diluted earnings 
per share with basic and diluted earnings per share.  Basic 
earnings per share excludes any dilutive effects of options, 
warrants or convertible securities.  Diluted earnings per share 
reflects the assumed conversion of all dilutive securities. 
Earnings (loss) per share amounts for all periods have been 
presented, and where appropriate, restated to conform to SFAS No. 
128.
         Basic and diluted earnings per share are based on the 
weighted average number of shares of common stock outstanding for 
each period excluding any shares related to nonvested employee 
stock awards.  Dilutive securities have not been included in the 
weighted average shares used for the calculation of diluted 
earnings per share in periods of losses from continuing operations 
because the effect of such securities would be antidilutive. At 
January 31, 1998, dilutive securities consisted of options to 
purchase 1,013,292 shares of common stock.

(Continued)
F-11
<PAGE>


MEDPLUS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(2) Summary of Significant Accounting Policies, Continued

   (n) Supplemental Cash Flow Information

       In the year ended January 31, 1998, the Company converted 
$1,191,960 of advances to DiaLogos into common shares of DiaLogos 
in connection with its acquisition of a majority interest in 
DiaLogos.  In April 1996 and December 1995, the Company issued 
14,429 and 99,274 shares of common stock, valued at $160,728 and 
$868,648 at the date of issuance in connection with the 
acquisition of Universal Document.  The Company entered into 
capital leases for equipment totaling approximately $128,000 
during the year ended December 31, 1995. 

       During the years ended January 31, 1998, December 31, 1996 
and December 31, 1995, the Company granted employees 7,784, 8,900, 
and 6,000  shares of common stock, respectively, under a stock 
award plan.   The market value of the stock at the dates of grant 
was approximately $64,000, $74,000, and $45,000, respectively, and 
is being amortized over periods of one to three years in 
accordance with the terms of the awards. In January and February 
1997, the Company issued 5,000 shares of restricted common stock 
valued at $30,000 to a vendor in exchange for services rendered. 
In January 1997 and December 1997, the Company also granted 
options to purchase 85,000 and 50,000 shares, respectively,  of 
the Company's common stock as compensation to consultants to the 
Company.  These options have a fair value of approximately 
$188,000 and $155,000, respectively, which is being amortized into 
expense over the related service periods of one to two years. 

       The Company realized a tax benefit of $93,500 during the 
year ended January 31, 1998 associated with the exercise of stock 
options.  The tax benefit reduced the income tax liability and was 
credited to paid-in capital.

       As these are non-cash transactions, they have not been 
presented in the Consolidated Statements of Cash Flows.

  (o)  Use of Estimates
                
       Management of the Company has made a number of estimates 
and assumptions relating to the reporting of assets and 
liabilities and the disclosure of contingent assets and 
liabilities to prepare these consolidated financial statements in 
conformity with generally accepted accounting principles.   Actual 
results could differ from those estimates.

  (p)  Reclassifications

       Certain reclassifications have been made to the 1996 and 
1995 consolidated financial statements to conform with the current 
period presentation.


(Continued)
F-12
<PAGE>



MEDPLUS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(3) Acquisitions
        
   (a) DiaLogos 

       The Company signed a letter of agreement with DiaLogos, 
dated July 12, 1996, which was subsequently amended on January 31, 
1997, in which the Company, on or before March 31, 1998, agreed to 
either (a) pay $1,650,000 to DiaLogos in return for 75% of the 
common shares of DiaLogos, (b) secure a funding commitment for 
DiaLogos' operations in the amount of $1,650,000 from investors 
and/or lenders, or (c) pay a portion of the $1,650,000 as 
consideration for less than 75% of the common shares of DiaLogos, 
and secure a funding commitment for the remainder of the 
$1,650,000 from investors or lenders.   In the event the Company 
secured a funding commitment from investors and/or lenders, then 
DiaLogos would grant the Company the option to purchase 75% of the 
common shares of DiaLogos less any shares already purchased by the 
Company and/or investors identified by the Company. 

       As of December 31, 1996, the Company had advanced $428,350 
to DiaLogos which was included in other receivables.   The Company 
had also converted an additional $51,050 of advances into an 
equity interest in DiaLogos' common shares.   This investment was 
accounted for on the equity method, and it was included in other 
assets at December 31, 1996.   Subsequent to December 31, 1996, 
the Company arranged for approximately $400,000 of funding for 
DiaLogos from investors, which consisted of officers and directors 
of the Company, in exchange for these investors receiving 18.5% of 
DiaLogos' common shares.   

       On January 30, 1998, the Company elected to exercise its 
option and converted aggregate advances of $1,191,960 to DiaLogos 
into common shares of DiaLogos stock.  Upon conversion of these 
advances, MedPlus became a majority owner of DiaLogos with 56.5% 
ownership.   The acquisition of these shares has been accounted 
for under the purchase method. Accordingly, the financial position 
of DiaLogos has been included in the Company's Consolidated 
Balance Sheet as of January 31, 1998, and the results of 
operations of DiaLogos will be included in the Company's 
Consolidated Statement of Operations effective February 1, 1998.  
However, upon consolidation of DiaLogos' acquisition date balance 
sheet, the minority interest's share in the historical accumulated 
deficit of DiaLogos was $318,998.  Given that such amount exceeded 
the minority interest in the equity capital of DiaLogos, the 
excess of $253,497 has been charged against the consolidated 
retained earnings of the Company. 



(Continued)
F-13
<PAGE>



MEDPLUS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(3) Acquisitions, Continued

   (a) DiaLogos, Continued

       The Company's purchase price for its majority interest in 
DiaLogos was $1,693,959 which included the conversion of 
$1,191,960 of advances and the attribution of $501,999 of DiaLogos 
liabilities to the Company's ownership interest. The purchase 
price has been allocated to the identifiable tangible and 
intangible assets acquired based on their estimated fair values.   
The Company has allocated $781,391 of the purchase price to the 
excess of cost over the fair value of net assets acquired.  An 
additional $710,318 of the purchase price has been allocated to 
acquired in-process technology and has been expensed at the date 
of acquisition. To determine the fair market value of the acquired 
in-process technology, the Company utilized the income approach 
which focuses on the income-producing capability of the assets 
acquired and best represents the present value of the future 
economic benefits expected to be derived from these assets.   
Technological feasibility for the acquired in-process technology 
had not been reached based on design and development activities in 
place, requiring further refinement and testing.  The acquired 
technology represents unique and emerging technology, the 
application of which is limited to the Company's legacy system 
integration software strategy.  Accordingly, the acquired 
technology has no alternative future use. 

      The following unaudited pro forma data presents the results 
of operations as if the acquisition of DiaLogos had occurred at 
the beginning of each period.   This summary is provided for 
information purposes only.   It does not necessarily reflect the 
actual results that would have occurred had the acquisitions been 
made as of those dates or of results that may occur in the future.   
DiaLogos had no operations prior to January 1, 1996.

<TABLE>
<CAPTION>
                                    Year Ended   Year Ended
                                    January 31, December 31,
                                       1998         1996
                                    ___________  ___________ 
<S>                                <C>           <C>
Revenues                           $ 9,607,221    3,469,750
Loss from continuing                    
    operations                      (7,993,588)  (3,899,579)
Net income (loss)                  $ 1,856,406   (2,973,867)
                                    ___________  ___________ 
                                    ___________  ___________ 

Earnings (loss) per share - basic                    
    and diluted:                    
    Continuing operations          $     (1.35)       (0.66)
    Discontinued operations               1.66         0.16
    Net income (loss)              $      0.31        (0.51)
                                    ___________  ___________ 
                                    ___________  ___________ 
</TABLE>

(Continued)
F-14
<PAGE>


MEDPLUS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued


(3) Acquisitions, Continued

    (b) FutureCORE
        
        Effective June 28, 1996, the Company acquired all of the 
assets of FutureCORE, Ltd., a hospital, laboratory, and physician 
services consulting firm.   The acquisition has been accounted for 
under the purchase method; accordingly, the results of operations 
of FutureCORE have been included in the Company's consolidated 
financial statements since the date of the acquisition.         
The effect of FutureCORE on the results of operations for periods 
prior to its acquisition would not have been material.  The total 
consideration paid for these assets consisted of cash of $61,250.  
The purchase price for FutureCORE has been allocated to the 
identifiable tangible and intangible assets acquired based on 
their fair market value.   

    (c) Universal Document  

        Effective December 14, 1995, the Company acquired all of 
the outstanding shares of Universal Document, a developer of 
document and workflow management software.   The Company also 
purchased all of the outstanding shares of HWB, Inc. the owner and 
licenser of the principal software product of Universal Document.   
The acquisitions have been accounted for under the purchase 
method; accordingly, results of operations of these entities have 
been included in the Company's consolidated financial statements 
since the date of acquisition.

        Total consideration for the acquisition of Universal 
Document and HWB consisted of $1,700,000, including cash of 
$831,352 and 99,274 shares of Company common stock valued at 
$868,648.   The agreements also provide for additional 
consideration contingent upon future revenue performance of 
Universal Document, which if earned, would be accounted for as an 
additional cost of the acquired companies.   For the period from 
December 14, 1995 to December 31, 1995, the contingent 
consideration earned was $277,845.   No additional contingent 
consideration has been earned since December 31, 1995.   Maximum 
future potential payments under these agreements for the remaining 
eleven month period ending December 31, 1998 are $3,000,000.

        The purchase price for the acquired companies was 
allocated to the identifiable tangible and intangible assets 
acquired based on their estimated fair values. The Company 
allocated $987,391 of the purchase price to the excess of cost 
over the fair value of net assets.  An additional $1,465,697 of 
the purchase price was allocated to the acquired in-process 
technology of Universal Document and HWB.  This amount was 
expensed at the date of acquisition during the year ended December 
31, 1995 and is included in loss from discontinued operations. 




(Continued)
F-15
<PAGE>

MEDPLUS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued


(3)  Acquisitions, Continued

    (c) Universal Document, Continued

        The following unaudited pro forma data presents the 
results of operations as if the acquisitions of Universal Document 
and HWB had occurred at the beginning of the year ended December 
31, 1995.  This summary is provided for information purposes only.   
It does not necessarily reflect the actual results that would have 
occurred had the acquisitions been made as of that date or of 
results that may occur in the future.   

Year Ended
                                        December 31,
                                            1995
                                        ____________
Revenues                                $ 2,965,039
Loss from discontinued operations          (816,878)
Net loss                                $(2,940,717)
                                        ____________
                                        ____________
Loss per share - basic and diluted:          
    Continuing operations               $     (0.44)
    Discontinued operations                   (0.16)
    Net income (loss)                   $     (0.59)
                                        ____________
                                        ____________


(4) Discontinued Operations

    On January 28, 1998, the Company completed the sale of all the 
assets of the Company's IntelliCode division to Becton Dickinson 
and Company ("Becton Dickinson") for an initial payment of 
$17,408,847 plus royalty payments over five years.  The initial 
payment was subsequently adjusted after the closing of the 
transaction based on the actual net book value of the assets sold 
resulting in a payment by the Company to Becton Dickinson of 
$74,259 in April 1998. In connection with the sale, Becton 
Dickinson also assumed certain liabilities of the IntelliCode 
division, primarily deferred revenues and obligations related to 
service contracts and an office lease. The Company has recognized 
a pre-tax gain of $14,724,720 and an after-tax gain of $10,268,710 
related to this transaction for the year ended January 31, 1998. 
The royalty payments are based on future defined revenues and will 
be recorded as income when earned.

    In January 1998, the Company decided to sell the net assets of 
the Step2000 segment of Universal Document and is currently 
negotiating with prospective buyers.  The Company expects to 
complete the sale by the end of December 1998.  In connection with 
the planned sale of the Step2000 segment, the Company has accrued 
a loss of approximately $180,000 for the disposal of the net 
assets of the segment and for its estimated operating losses 
through the anticipated date of disposal.  In addition, the 
Company has also amortized the remaining  net book value of  

(Continued)
F-16
<PAGE>


MEDPLUS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(4) Discontinued Operations, Continued

$774,677 of the excess of cost over fair value of net assets 
acquired and $466,836 of capitalized software development costs 
related to the Step2000 segment in January 1998 based on its 
assessment of the recoverability of these assets which indicated 
that their value was impaired. This additional amortization 
expense is included in the operating loss of discontinued 
operations for the year ended January 31, 1998 shown below.

    Income (loss) from the IntelliCode and Step2000 discontinued 
operations, as shown on the accompanying Consolidated Statements 
of Operations, includes the following:

<TABLE>            
<CAPTION>
                         Year Ended   Year Ended  Year Ended
                         January 31, December 31, December 31,
                             1998        1996         1995
                           __________  _________  _________ 
<S>                       <C>          <C>        <C>
Revenues                  $ 8,443,788  7,472,864  5,639,532
                           __________  _________  _________ 
                           __________  _________  _________ 
   
Operating income (loss)   $  (105,705) 1,523,948    185,186
Gain on sale               14,724,720       -          - 
Income tax expense          4,769,021    598,236    677,624
                            __________  _________  _________ 
Net income (loss) from 
  discontinued operations $ 9,849,994    925,712   (492,438)
                            __________  _________  _________ 
                            __________  _________  _________ 
</TABLE>

     Net assets of discontinued operations at January 31, 1998 
consist only of assets and liabilities related to the Step2000 
segment. At December 31, 1996, net assets of discontinued 
operations consist of assets and liabilities related to both 
Step2000 and IntelliCode.  These balances are summarized as 
follows:

<TABLE>               
<CAPTION>
                            January 31,  December 31,
                               1998          1996
                             _________   __________
<S>                         <C>          <C>
Cash (cash overdraft)       $   5,805       (1,400)
Trade accounts receivable     352,631    2,251,611
Inventories                      -         597,995
Prepaid expenses and other 
  current assets               44,860      181,724
Capitalized software 
  development costs, net         -         464,916
Fixed assets, net             137,410      313,665
Excess of cost over fair 
  value of net assets                    
       acquired, net             -         881,810
Other noncurrent assets         5,972       22,280
Accounts payable              (85,786)    (691,338)
Accrued expenses             (193,273)    (393,155)
Deferred revenues            (139,158)    (611,079)
                             _________   __________
Net assets of discontinued
  operations                $ 128,461    3,017,029
                             _________   __________
                             _________   __________
</TABLE>
      
       Included in the accounts payable and accrued expenses of 
the Company at January 31, 1998 are $233,701 and $795,932 of 
liabilities related to the discontinued operations and the 
IntelliCode sale that will not be assumed by Becton or the future 
purchaser of Step2000.

(Continued)
F-17
<PAGE>



MEDPLUS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued
 
(5)  Universal Document Initial Public Offering and Acquisitions

     The Company's Universal Document subsidiary has hired a 
senior 
management team and entered into agreements with two consulting 
firms to assist it in the identification and recruitment of 
certain 
design automation software resellers and integrators that 
Universal 
Document may acquire or combine, and to assist Universal Document 
in an initial public offering of its common stock.  In September 
and October 1997, Universal Document entered into definitive 
agreements, which are contingent upon a successful initial public 
offering,  to acquire nine such companies.  On October 10, 1997, 
Universal Document filed a registration statement on Form S-1 with 
the Securities and Exchange Commission to offer its common stock 
to 
the public. Universal Document filed subsequent amendments to this 
registration statement on December 15, 1997 and January 9, 1998.  
Under the terms of the initial public offering as disclosed in the 
registration statement, Universal Document and the Company would 
offer to sell 1,850,000 and  750,000 shares, respectively.  
Universal Document would use a portion of its proceeds from the 
sale of shares in the offering and the issuance of additional 
shares to acquire the nine companies with which it had entered 
into 
acquisition agreements.  The Company would retain a minority 
interest in Universal Document after the initial public offering.  
In connection with its initial public offering, Universal Document 
would change its name to Synergis Technologies, Inc.  Due to 
adverse market conditions for initial public offerings in January 
1998, Universal Document postponed the initial public offering 
upon 
the advice of its underwriters.

     Universal Document had capitalized direct, incremental costs 
during the year ended January 31, 1998 related to the potential 
acquisitions and initial public offering for accountants', 
attorneys', and consultants' fees ("acquisition and offering 
costs") that were to become a cost of the acquired companies or 
costs of the initial public offering upon the completion of the 
transactions.  These acquisition and offering costs had been 
recorded as deferred acquisition and offering costs in the 
Company's Consolidated Balance Sheet. As a result of its decision 
to postpone its initial public offering, Universal Document 
expensed $2,979,555 of such costs in January 1998.  The Company 
also incurred $728,390 of operating expenses during the year ended 
January 31, 1998 associated with the senior management team hired 
to manage the acquisitions, offering and integration of the target 
companies.  

     The Company and Universal Document have entered into a 
variety 
of agreements related to the Universal Document acquisitions and 
initial public offering.  These agreements include consulting 
agreements, employment agreements, an amendment of the HWB 
purchase 
agreement, acquisition agreements with the target companies, and 
stock incentive agreements associated with Universal Document 
common stock.  The significant financial terms of these agreements 
are contingent upon the successful completion of an initial public 
offering of Universal Document's common stock.  The Company is 
currently evaluating how to proceed with the acquisitions and 
initial public offering. As a result of such evaluation, many, if 
not all, of the agreements referred to above may either be 
terminated or significantly amended.





(Continued)
F-18
<PAGE>



MEDPLUS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued


(6) Fixed Assets

    Fixed assets consist of the following at January 31, 1998 and 
December 31, 1996:

<TABLE>
<CAPTION>
                         January 31,      December 31,
                            1998              1996
                          __________       __________
<S>                     <C>                <C>
Equipment               $ 1,278,904          895,794
Furniture and fixtures      463,246          381,101
Leasehold improvements      152,433          152,433
Purchased software          106,488           52,913
                          __________       __________
                          2,001,071        1,482,241
Accumulated depreciation
  and amortization         (653,606)        (333,089)
                          __________       __________
                        $ 1,347,465        1,149,152
                          __________       __________
                          __________       __________
</TABLE>

(7) Bank Agreements

    In February 1995, the Company executed a $3,000,000 line of 
credit agreement with a bank. Interest was payable at the bank's 
prime rate.   The line of credit was secured by all assets of the 
Company, and the Company was required to maintain a net worth of 
$4,000,000 and a maximum leverage ratio, both as defined in the 
credit agreement.

    In November 1995, the Company amended the credit agreement 
which permitted the Company to borrow a maximum of $10,000,000, 
subject to a defined net worth formula, and retained the existing 
maximum leverage ratio, also as defined.   The amended credit 
agreement was scheduled to expire on December 31, 1997.

    In December 1996, the Company amended the credit agreement 
("MedPlus line of credit") to extend the term to December 31, 
1998.   
The MedPlus line of credit requires the Company to pay a .25% 
commitment fee per annum payable quarterly in arrears on the 
unused portion of the line of credit.   At January  31, 1998, the 
maximum amount available under the MedPlus line of credit was 
approximately $10,000,000.   No amounts were outstanding under the 
MedPlus line of credit at January 31, 1998 and December 31, 1996.

    On September 9, 1997, the Company and Universal Document 
entered into a line of credit agreement ("Universal line of 
credit") with a bank to fund the costs associated with Universal 
Document's acquisitions and initial public offering discussed in 
Note 5 and for working capital.  The amount outstanding under the 
Universal line of credit at January 31, 1998 was $1,496,353.  The 
Universal line of credit was paid in full and canceled on February 
10, 1998.

    Interest expense included in other income (expense) from the 
lines of credit and capital lease obligations was $346,315, 
$23,493 and $30,432 for the years ended January 31, 1998, December 
31, 1996, and December 31, 1995, respectively.


(Continued)
F-19
<PAGE>


MEDPLUS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

(8) Common Stock 

    In October 1995, the Board of Directors approved the filing of 
a Registration Statement under the Securities Act of 1933 in 
connection with a secondary offering of 1,000,000 shares of the 
Company's common stock, 100,000 shares of which were sold by an 
officer of the Company. The secondary offering was completed on 
November 24, 1995, and the Company received $7,611,171, net of 
issuance costs. 

    In connection with the sale of the IntelliCode assets to 
Becton, the Company sold 222,556 shares of its common stock to 
Becton in exchange for $2,000,000 in cash on January 28, 1998.  
The sale price was based on the average closing price of the 
Company's common stock for the thirty days prior to the 
announcement on November 21, 1997 of the signing of a letter of 
intent relating to the sale of the IntelliCode assets.

(9) Stock Incentive Plans

    In March 1994, the Company adopted the 1994 Long-Term Stock 
Incentive Plan (Long-Term Plan) and the Directors' 
Nondiscretionary Stock Option Plan (Directors' Plan), collectively 
the "Option Plans."   The Long-Term Plan provides for the grant of 
stock-based incentives to employees in the form of stock options, 
stock appreciation rights, stock awards, or any combination 
thereof.   The maximum number of shares with respect to which 
stock incentives may be granted under the Long-Term Plan is 
currently 1,000,000 shares. A total of 100,000 shares is reserved 
for issuance under the Directors' Plan.

    Options granted under the Long-Term Plan may be either 
nonqualified or incentive options.   Under the terms of both the 
Long-Term Plan and the Directors' Plan, options may not be granted 
at less than fair market value on the date of the grant.   Options 
granted under both plans are exercisable in installments; however, 
no options are exercisable earlier than six months or later than 
ten years from the date of the grant.

    At January 31, 1998, there were 68,225 additional shares 
available for grant under the Directors' Plan and no additional 
shares available for grant under the Long-Term Plan.   In December 
1997, the compensation committee of the Board of Directors granted 
65,000 options under the Long-Term Plan.  These option grants are 
contingent upon approval by shareholders at the Company's 1998 
annual shareholders' meeting of an amendment to the Long-Term Plan 
which would increase the maximum number of shares with respect to 
which stock incentives may be granted to 2,000,000.  The following 
disclosures of pro forma expense, option transactions, options 
outstanding, and options exercisable as of and for the year ended 
January 31, 1998 include the options granted in December 1997.



(Continued)
F-20
<PAGE>


MEDPLUS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(9) Stock Incentive Plans, Continued

    The per share weighted average fair values at the date of 
grant for options granted during the years ended January 31, 1998, 
December 31, 1996 and December 31, 1995 were $3.25, $4.83, and 
$3.15, respectively.  These fair values were estimated using the 
Black Scholes option-pricing model with the following weighted 
average assumptions:  1998 - expected dividend yield 0%, risk-free 
interest rate of 6.16%, expected volatility of 41%, and an 
expected life of 4.79 years; 1996 - expected dividend yield 0%, 
risk-free interest rate of 6.09%, expected volatility of 38%, and 
an expected life of 4.78 years; 1995 - expected dividend yield 0%, 
risk-free interest rate of 6.33%, expected volatility of 34%, and 
an expected life of 4.48 years.

    The Company applies APB Opinion No. 25 in accounting for the 
Option Plans; accordingly, no compensation cost has been 
recognized for its options granted to employees in the 
consolidated financial statements.  The Company recognized $59,160 
and $85,689 of compensation cost during the years ended January 
31, 1998 and December 31, 1996 related to stock awards granted 
under the Long-Term Plan.  Had the Company determined compensation 
cost based on the fair value at the grant date for its stock 
options under SFAS No. 123, the Company's net income (loss) would 
have been reduced (increased) to the pro forma amounts indicated 
below:

<TABLE>
<CAPTION>
                  January 31,      December 31,      December 31,
                     1998              1996             1995
                  ___________      ____________      ____________
<S>              <C>               <C>               <C>
Net income
 (loss)
  As reported    $ 3,105,089       (2,472,192)       (2,616,277)
  Pro forma        2,239,941       (3,321,232)       (2,826,115)
                  ___________      ____________      ____________
                  ___________      ____________      ____________ 
                            
Net income (loss)
 per share - 
 basic and 
 diluted                              
  As reported    $      0.52            (0.42)            (0.54)
   Pro forma            0.38            (0.57)            (0.58)
                 ____________      ____________      ____________
                 ____________      ____________      ____________
</TABLE>

    Pro forma net income (loss) reflects only  options granted 
since January 1, 1995.   Therefore, the full impact of calculating 
compensation cost for options under SFAS No. 123 is not reflected 
in the pro forma net loss amounts presented above because 
compensation cost is reflected over the options' vesting periods 
of six months to five years, and compensation cost for options 
granted prior to January 1, 1995 is not considered.

    The Company also granted options to purchase 85,000 shares of 
common stock as compensation to consultants during January 1997.  
These options had an estimated fair value of approximately 
$188,000 on the date of grant. In December 1997, the Company 
granted options to purchase an additional 50,000 shares of the 
Company's common stock as compensation to one of these 
consultants.  These options had an estimated fair value of 
approximately $155,000 on the date of grant.  The estimated fair 
value of the options granted to the consultants in January 1997 
and December 1997 was determined using the Black Scholes option-
pricing model with the same weighted average assumptions as those 
used for 


 (Continued)
F-21
<PAGE>


MEDPLUS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued


(9) Stock Incentive Plans, Continued

    the employee option grants during the years ended December 31, 
1996 and January 31, 1998, respectively, with the following 
exceptions: 1996 - expected life of 2.5 years; 1998 - expected 
life of 2.5 years.  The fair value of these options is being 
amortized over the related service periods of one to two years.  
The Company recognized $143,327 in amortization expense related to 
these option grants in the year ended January 31, 1998.

    Transactions with respect to options, including options 
granted to consultants, for the years ended January 31, 1998, 
December 31, 1996 and December 31, 1995 and the month ended 
January 31, 1997 were as follows:

<TABLE>
<CAPTION>
                                Number of   Weighted Average
                                 Shares      Exercise Price
                              __________    ________________
<S>                           <C>             <C>
Shares under option, 
  December 31, 1994              60,000       $  5.58
Options granted                 177,500          7.47
                              __________    
Shares under option, 
  December 31, 1995             237,500          6.99
Options exercised               (36,933)         5.96
Options forfeited or canceled    (6,667)         7.56
Options granted                 352,500         11.34
                              __________
Shares under option, 
  December 31, 1996             546,400          9.86
Options forfeited or canceled   (50,000)         6.88
Options granted                 270,250          5.82
                              __________
Shares under option, 
  January 31, 1997              766,650          8.63
Options exercised               (16,666)         5.97
Options forfeited or canceled   (12,467)         9.51
Options granted                 275,775          7.26
                              __________
Shares under option, 
  January 31, 1998            1,013,292          8.29
                              __________    
                              __________
</TABLE>



<TABLE>
        The following table summarizes information about options, including options granted to consultants, 
at January 31, 1998:

<CAPTION>
                   Options Outstanding                                      Options Exercisable
_______________________________________________________________  __________________________________________
                                 Weighted                              
     Range of                    Average          Weighted                            Weighted
     Exercise      Number       Remaining          Average           Number            Average
     Prices      of Options   Contractual Life  Exercise Price     of Options       Exercise Price
  ____________  ____________  ________________  ______________    ___________       ______________
<C>             <C>                <C>           <C>              <C>                 <C>
$ 5.13- 7.69      571,626          3.6           $ 6.19           326,997             $ 6.13
  7.70-11.53      207,666          3.6             9.63            99,835              10.07
 11.54-14.13      234,000          3.3            12.24           111,672              12.04
                ____________                                      ___________  
                1,013,292          3.5             8.29           538,504               8.09
                ____________                                      ___________  
                ____________                                      ___________  



</TABLE>
(Continued)
F-22
<PAGE>


MEDPLUS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(10) Income Taxes

     Total income tax expense (benefit) for the years ended 
January 31, 1998, December 31, 1996 and December 31, 1995 was 
allocated as follows:

<TABLE>                              
<CAPTION>
                         January 31, December 31, December 31,
                             1998       1996        1995
                          ___________ __________   __________
<S>                      <C>          <C>          <C>
Loss from operations     $(3,121,479) (596,339)    (656,008)
Discontinued operations    4,769,021   598,236      677,624
Shareholders' equity, for                              
  compensation expense for                               
  tax purposes in excess                               
  of amounts recognized                              
  for financial reporting
  purposes                   (93,500)     -           -
Shareholders' equity,                               
  unrealized gains (losses)                              
  on marketable securities                               
  recorded for financial
  reporting purposes          (1,026)     (806)      20,290
                          ___________ _________    _________
                         $ 1,553,016     1,091       41,906
                          ___________ _________    _________
                          ___________ _________    _________
</TABLE>

        Income tax benefit attributable to loss from continuing 
operations was as follows:

<TABLE>
<CAPTION>

             January 31, December 31, December 31,
                1998         1996        1995
             ___________  _________   __________
<S>        <C>            <C>         <C>
Federal:                              
  Current  $ (2,268,874)  (508,521)   (517,572)
  Deferred     (231,146)   (54,900)   (106,286)
             ___________  _________   __________
             (2,500,020)  (563,421)   (623,858)
             ___________  _________   __________
State:                              
  Current      (496,381)   (29,938)    (30,471)
  Deferred     (125,078)    (2,980)     (1,679)
             ___________  _________   __________
               (621,459)   (32,918)    (32,150)
             ___________  _________   __________
           $ (3,121,479)  (596,339)   (656,008)
             ___________  _________   __________
             ___________  _________   __________

</TABLE>


(Continued)
F-23
<PAGE>

MEDPLUS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued


(10) Income Taxes, Continued

     Income tax expense (benefit) differs from the amounts 
computed by applying the Federal statutory rate to pre-tax loss 
from continuing operations as a result of the following:

<TABLE>
<CAPTION>
                          January    December   December 
                          31, 1998   31, 1996   31, 1995
                        ___________ ___________ _________ 
<S>                    <C>          <C>         <C>
Computed "expected"
 tax expense (benefit) $(3,354,571) (1,358,043) (945,148)
Acquired in-process 
 technology                241,508        -         -
Change in valuation 
 allowance                 468,754     843,673   346,623
State income taxes, net 
 of Federal benefit       (410,163)    (21,726)  (21,219)
Other                      (67,007)    (60,243)  (36,264)
                        ___________ ___________ _________
                       $(3,121,479)   (596,339) (656,008)
                        ___________ ___________ _________
                        ___________ ___________ _________
</TABLE>

        The significant components of deferred income tax expense 
(benefit) attributable to loss from continuing operations for the 
years ended January 31, 1998, December 31, 1996 and December 31, 
1995 are as follows:

<TABLE>
<CAPTION>
                           January    December   December
                          31, 1998   31, 1996   31, 1995
                          _________  _________  _________
<S>                      <C>         <C>        <C>
Deferred tax expense 
 (benefit) (exclusive                              
 of the effects of 
 other components                              
 listed below)           $(824,978)  (901,553)  (454,588)
Increase in the 
 beginning-of-the-year                              
 balance of the 
 valuation allowance                              
 for deferred taxes        468,754    843,673    346,623
                          _________  _________  _________
                         $(356,224)   (57,880)  (107,965)
                          _________  _________  _________
                          _________  _________  _________
</TABLE>

     Included in income tax expense for discontinued operations 
for the year ended January 31, 1998 is $2,115,339 of deferred tax 
expense associated with the utilization of approximately 
$5,420,000 in net operating loss carryforwards.  This deferred tax 
expense is offset by a deferred tax benefit of $1,396,449 related 
to the reduction of the valuation allowance previously established 
for those net operating loss carryforwards. 

(Continued)
F-24
<PAGE>

MEDPLUS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued


(10) Income Taxes, Continued

     The tax effects of temporary differences that give rise to 
deferred tax assets and deferred tax liabilities at January 31, 
1998 and December 31, 1996 are as follows:

<TABLE>
<CAPTION>
                                    January 31, December 31,
                                       1998         1996
                                    ___________ ___________ 
<S>                                 <C>         <C>
Deferred tax assets:                    
 Net operating loss carryforward    $  820,628   1,847,491
 Organization and acquisition costs    804,662        -
 Accruals                              297,666      92,083
 Capital loss carryforward              84,922      78,390
 Research and experimentation                   
  credit carryforward                    2,612      85,018
 Other                                  25,105      66,460
                                    ___________ ___________
  Total gross deferred  tax assets   2,035,595   2,169,442
  Less valuation allowance          (1,288,977) (1,326,286)
                                    ___________ ___________
  Net deferred tax assets              746,618     843,156
                                    ___________ ___________
Deferred tax liabilities:                    
 Software costs                       (767,617)   (662,636)
 Fixed assets                         (159,269)   (128,055)
 Other                                 (25,879)    (52,465)
                                    ___________ ___________
  Total gross deferred tax                    
   liabilities                        (952,765)   (843,156)
                                    ___________ ___________
   Net deferred tax liabilities     $ (206,147)       -
                                    ___________ ___________
                                    ___________ ___________
</TABLE>

     In assessing the realizability of deferred tax assets, 
management considers whether it is more likely than not that some 
portion or all of the deferred tax assets will not be realized.   
The ultimate realization of deferred tax assets is dependent upon 
the generation of future taxable income during the periods in 
which those temporary differences become deductible.

     At January 31, 1998, the Company and DiaLogos have net 
operating loss carryforwards for Federal income tax purposes of 
approximately $213,000 and $1,844,000, respectively, which are 
available to offset future Federal taxable income, if any, through 
2010 and 2012, respectively. As DiaLogos files a separate Federal 
income tax return, its net operating loss carryforwards cannot be 
used to offset future taxable income of the MedPlus consolidated 
tax group.  The Company also has a capital loss carryforward of 
approximately $218,000 which is available to offset future capital 
gains, if any, through 2001.


(Continued)
F-25
<PAGE>

MEDPLUS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued


(11) Related Party Transactions

     As discussed in Note 3, the Company purchased all of the 
outstanding common stock of Universal Document in December 1995.   
The majority owner and president of that company at the date of 
purchase has been a director of the Company since 1994.

     DiaLogos has leased office space from the Company under a 
sublease since October 1, 1996.  The Company recognized $120,204 
and $15,195 of sublease income from DiaLogos for the years ended 
January 31, 1998 and December 31, 1996.  Any future sublease 
income from DiaLogos will be eliminated as an intercompany 
transaction.  The Company has also provided a guarantee to a 
leasing company under which the Company has guaranteed the 
payments due by DiaLogos under certain lease agreements for 
equipment and furniture.   


(12)  Retirement Savings and Investment Plan

     The Company has a Retirement Savings and Investment Plan 
(401(k) Plan) in which employees may participate by contributing 
specified percentages of qualified compensation subject to 
Internal Revenue Service limitation.   The Company may make 
discretionary contributions to a maximum of 100% of each 
participant's contribution.   For the year ended January 31, 1998, 
the Company recognized expense of $213,495, of which $147,174 
related to continuing operations, for discretionary and profit-
sharing contributions to the Plan.  The Company's contributions to 
the Plan were funded in March 1998 through the issuance of 31,629 
shares of the Company's common stock. There were no expenses 
recorded related to the Plan for the years ended December 31, 1996 
and 1995.         


(13) Commitments

     (a) Leases

         The Company leases office space and certain equipment 
under noncancelable operating lease agreements which extend 
through June 30, 2002.  Rent expense related to these operating 
leases amounted to $201,000, $168,000, and $81,000 for the years 
ended January 31, 1998, December 31, 1996, and December 31, 1995, 
respectively. 

         The Company also leases certain equipment and furniture 
and fixtures under capital leases with terms ranging from three to 
five years.  Amortization expense related to fixed assets held 
under capital leases is included with depreciation and 
amortization expense.




(Continued)
F-26
<PAGE>


MEDPLUS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued


(13) Commitments, Continued

    (a) Leases, Continued

        Future minimum lease payments under non-cancelable 
operating leases with remaining terms in excess of one year and 
future minimum lease payments under capital leases as of January 
31, 1998 are as follows:

<TABLE>
<CAPTION>
                                Capital    Operating
                                 Leases       Leases
                                 _______   __________
<S>                              <C>        <C>
Year ending January 31:                    
1999                             156,326      338,000
2000                             126,649      372,000
2001                              39,767      366,000
2002                              17,033      361,000
2003                                -         211,000
Thereafter                          -          21,000
                                 _______   __________
Total minimum lease payments     339,775    1,669,000
                                           __________
                                           __________ 
Less amounts representing 
 interest                         39,685
                                 _______
Present value of minimum lease 
 payments                        300,090
Less current portion of capital 
 lease obligations               132,206
                                 _______
Long-term portion of capital 
 lease obligations               167,884
                                 _______
                                 _______
</TABLE>

     (b) Employment Agreements

     The Company has entered into an employment agreement with an 
officer that expires on June 30, 2001.   In addition to a defined 
base salary, the officer is entitled to discretionary bonus and 
stock incentive arrangements, as approved by the Board of 
Directors.   The annual discretionary bonus is to be determined by 
the Board of Directors and cannot exceed 100% of the annual base 
salary.   This individual is also entitled to defined termination 
benefits under specified employment or change in control 
conditions.

     The Company has also entered into employment agreements with 
other officers and employees that generally provide annual salary, 
discretionary bonus and stock incentive provisions, all subject to 
the approval of the Board of Directors.


(14) Significant Customers

     For the year ended January 31, 1998, two customers accounted 
for 13% and 11% of the Company's total revenues.  During the year 
ended December 31, 1996, two customers accounted for 20% and 12%, 
respectively, of the Company's total revenues.  One customer 
accounted for 13% of the Company's total revenues for the year 
ended December 31, 1995.

(Continued)
F-27
<PAGE>

MEDPLUS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued


(15) Quarterly Results of Operations (Unaudited) 

<TABLE>


     The following tables set forth selected quarterly financial 
information for the fiscal years ended January 31, 1998 and 
December 31, 1996. 

<CAPTION>
Year Ended January 31, 1998:                                        
                                     First       Second        Third       Fourth
                                  Quarter (a)  Quarter (a)  Quarter (a)  Quarter (a)     Total
                                  ___________  ___________  ___________  ___________  ___________
<S>                            <C>             <C>         <C>          <C>          <C>
Revenues                       $   1,249,465   2,736,894    2,763,259    2,282,025    9,031,643
Operating loss from                                                  
 continuing operations (b)        (1,550,379)   (676,516)  (1,467,507)  (2,960,474)  (6,654,876)
Loss from continuing                                                  
 operations (c)                   (1,487,883)   (510,154)  (1,406,370)  (3,340,498)  (6,744,905)
Income from discontinued                                                  
 operations (d)                       59,495     307,088      229,020    9,254,391    9,849,994
Net income (loss)              $  (1,428,388)   (203,066)  (1,177,350)   5,913,893    3,105,089
                                  ___________  ___________  ___________  ___________  ___________
                                  ___________  ___________  ___________  ___________  ___________
Earnings per share - basic
 and diluted: 
 Continuing operations         $       (0.25)      (0.09)       (0.24)       (0.56)       (1.14)
 Discontinued operations                0.01        0.05         0.04         1.56         1.66
 Net income (loss) (e)         $       (0.24)      (0.03)       (0.20)        1.00         0.52
                                  ___________  ___________  ___________  ___________  ___________
                                  ___________  ___________  ___________  ___________  ___________
Weighted average shares                                                          
 outstanding                       5,921,546   5,913,413    5,919,985    5,936,139    5,922,781
                                  ___________  ___________  ___________  ___________  ___________
                                  ___________  ___________  ___________  ___________  ___________

<CAPTION>
Year Ended December 31, 1996:
                                     First       Second        Third       Fourth          
                                    Quarter      Quarter      Quarter      Quarter       Total
                                  ___________  ___________  ___________  ___________  ___________
<S>                            <C>             <C>          <C>         <C>          <C>
Revenues                       $     602,590      529,000   1,385,894      950,108    3,467,592
Operating loss from                                                  
 continuing operations              (857,803)  (1,175,928)   (751,260)  (1,461,630)  (4,246,621)
Loss from continuing                                                  
 operations                         (598,555)    (801,699)   (676,196)  (1,321,452)  (3,397,902)
Income (loss) from discontinued                                                  
 operations                          252,994      488,448        (752)     185,020      925,710
Net loss                       $    (345,561)    (313,251)   (676,948)  (1,136,432)  (2,472,192)
                                  ___________  ___________  ___________  ___________  ___________
                                  ___________  ___________  ___________  ___________  ___________
Earnings per share - basic                                                   
 and diluted:                                                  
 Continuing operations (e)     $       (0.10)       (0.14)      (0.11)       (0.22)       (0.58)
 Discontinued operations (e)            0.04         0.08        0.00         0.03         0.16
 Net loss (e)                  $       (0.06)       (0.05)      (0.11)       (0.19)       (0.42)
                                  ___________  ___________  ___________  ___________  ___________
                                  ___________  ___________  ___________  ___________  ___________
Weighted average shares                                                          
 outstanding                       5,808,656     5,850,401  5,905,549    5,910,363    5,868,954
                                  ___________  ___________  ___________  ___________  ___________
                                  ___________  ___________  ___________  ___________  ___________


</TABLE>

(Continued)
F-28
<PAGE>

MEDPLUS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued


(14) Quarterly Results of Operations (Unaudited), Continued

     Notes to quarterly results of operations:

     (a)  As a result of the Company's change in fiscal year end 
in December 1997, the quarterly information for the year ended 
January 31, 1998 is for the quarterly periods ended on the 
following dates:  First - April 30, 1997; Second - July 31, 1997; 
Third - October 31, 1997; and Fourth - January 31, 1998.
     (b)  During the fourth quarter of the year ended January 31, 
1998 and in conjunction with the Company's acquisition of a 
majority interest in DiaLogos, $710,318 of in-process research and 
development was charged to the results of operations as of the 
date of acquisition.
     (c)  During the fourth quarter of the year ended January 31, 
1998, the Company expensed $2,979,555 in deferred acquisition and 
offering costs related to the postponed initial public offering 
and acquisitions by its subsidiary, Universal Document.
     (d)  Income from discontinued operations includes a 
$10,268,710 after-tax gain related to the sale of the assets of 
the Company's IntelliCode division and $1,241,513 in additional 
amortization expense due to the impairment of the excess of cost 
over net assets acquired and capitalized software development 
costs associated with Universal Document's Step2000 segment.
     (e)  Quarterly amounts are not additive.













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