SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-Q/A



X     Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998

                                       OR

      Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 For the transition period from ____________ to
      --------------

                          Commission File No: 00-113959

                                CPS SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

                TEXAS                                      75-1607857
    (STATE OR OTHER JURISDICTION OF      (I.R.S. EMPLOYER IDENTIFICATION NO.)
    INCORPORATION OR ORGANIZATION)

                           3400 CARLISLE, SUITE 500
                            DALLAS, TEXAS 75204
                                 (214) 855-5277

 (Address,         including zip code, and telephone number, including area
                   code, of Registrant's principal executive offices)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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                   No       X
                                                   --------              -------

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                  CLASS                     OUTSTANDING AS OF  MAY 07, 1998
                  -----                     ---------------------------------
             Common stock
         Par value $.01 per share                      6,732,502


                                        1
<PAGE>
ITEM 2.  CHANGES IN SECURITIES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-Q/A



X     Quarterly  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
      Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998

                                       OR

      Transition  Report  Pursuant  to  Section  13 or 15(d)  of the  Securities
      Exchange Act of 1934 for the transition period from ____________ to
      --------------

                          Commission File No: 00-113959

                        CPS SYSTEMS, INC. AND SUBSIDIARY
             (Exact name of registrant as specified in its charter)

                TEXAS                                      75-1607857
    (STATE OR OTHER JURISDICTION OF      (I.R.S. EMPLOYER IDENTIFICATION NO.)
    INCORPORATION OR ORGANIZATION)

                            3400 CARLISLE, SUITE 500
                               DALLAS, TEXAS 75204
                                 (214) 855-5277

   (Address,        including zip code,  and telephone  number,  including  area
                    code, of Registrant's principal executive offices)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (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                   No       X
                               --------              -------

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

                  CLASS                     OUTSTANDING AS OF MARCH 31, 1998
                  -----                     ---------------------------------
             Common stock
         Par value $.01 per share                      6,732,502




                                        1
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES

(d) Use of  Proceeds  from  Registered  Securities.  Pursuant to Rule 463 of the
Rules  and  Regulations  of the  Securities  Act of 1933,  as  amended,  the CPS
Systems, Inc. (the "Company") is furnishing the use of proceeds from its initial
public offering in its first periodic report after effectiveness.

          (1)  The  Company's  Form  SB-2,   Registration  Statement  Under  the
     Securities Act of 1933, Registration No. 333-39173,  was declared effective
     by oral order of the Securities  and Exchange  Commission on March 25, 1998
     (the "IPO Registration Statement").

          (2) The offering pursuant to the IPO Registration  Statement commenced
     on March 25, 1998 (the "Offering").

          (4)  (i) The Offering  continued  uninterrupted  thereafter  until the
          sale  of  all  securities   registered   under  the  IPO  Registration
          Statement.

               (ii) The managing  underwriters  of the Offering were  Cruttenden
          Roth Incorporated and Josephthal & Co. Inc.

               (iii) The title of the only class of securities registered is the
          common stock, par value $0.01 per share.

               (iv) The following  information for the account of the Company is
          provided:

               Aggregate Price                             Aggregate Price
Amount         of Offering Amount                          of Offering Amount
Registered     Registered               Amount Sold        Sold to Date
----------     ----------               -----------        ------------
1,900,000       $7,600,000              1,900,000          $7,600,000

The amount of securities registered by the Company is hereinafter referred to as
the "Shares."
<TABLE>
<CAPTION>
                  The  following  information  for the  account  of the  Selling
Shareholders is also provided:

                                        Aggregate Price                    Aggregate Price
Selling                    Amount      of Offering Amount                 of Offering Amount
Shareholder                Registered     Registered      Amount Sold        Sold to Date
-----------                ----------     ----------      -----------        ------------
<S>                         <C>         <C>                 <C>              <C>       
Sidney H. Cordier           85,660      $  342,640          85,660           $  342,640
Brian R. Wilson             85,660         342,640          85,660              342,640
G. Dean Booth, Jr.          18,288          73,152          18,288               73,152
Hanifen Imhoff
 Mezzanine Fund, LP         63,472         253,888          63,472              253,888
John K. Percival            21,280          85,120          21,280               85,120
Robert J. Newcorn           10,640          42,560          10,640               42,560
</TABLE>

All of the proceeds from the Offering of the shares by the Selling  Shareholders
were part of the  over-allotment  option exercised on April 14, 1998 and are for
the benefit of the Selling Shareholders only.  Accordingly,  the aggregate price
of the Offering  amount sold by the selling  shareholders is not included in the
net proceeds to the Company of the Offering.

               (v) From March 25, 1998  through  March 31, 1998,  the  effective
          date of the IPO  Registration  Statement  to the end of the  reporting
          period, the amount of expenses incurred for the account of the Company
          in  connection  with the issuance and  distribution  of the Shares is,
          based upon reasonable estimate, as follows:

Underwriting discounts and commissions                    $   760,000
Finders fees                                                        0
Expenses paid to or for Underwriters                          228,000
Other expenses                                                801,500
                                                         ------------
TOTAL EXPENSES                                            $ 1,789,500

Additional expenses totaling approximately  $150,000,  incurred on behalf of the
Selling  Shareholders  upon exercise of the  over-allotment  option on April 14,
1998, are not reflected herein. None of the expenses of the Offering constituted
direct or 

<PAGE>
indirect  payments to  directors,  officers  or general  partners,  or
associates thereof, persons owning 10% or more of any class of securities or any
affiliates of the Company.

               (vi) The net proceeds to the Company of the Offering  pursuant to
          the IPO  Registration  Statement,  after  the  expenses  listed in (v)
          above, is $5,810,500.

               (vii) From March 25, 1998 through March 31, 1998, the Company has
          applied the  following  amounts of its net proceeds  from the Offering
          pursuant to the IPO Registration Statement:

Construction of plant, building and facilities                       $         0
Purchase and installation of machinery and equipment                           0
Purchases of real estate                                                       0
Acquisitions of other business(es)                                             0
Repayment of indebtedness                                                      0
Working capital                                                                0
Temporary investments (as specified below)                             5,270,000
Other uses of at least $100,000 (as specified below)                 $   540,500

None of the uses  constituted  direct  or  indirect  payments  to the  Company's
directors,  officers or general partners, or associates thereof,  persons owning
10% or more of any class of  securities or any  affiliates  of the Company.  The
temporary  investments  consist of money  market  accounts  available on a daily
basis.  Other  uses of at  least  $100,000  reflects  research  and  development
expenses.

Date:    July 7, 1998



                                /s/ Paul E. Kana
                                -----------------------------------------------
                                Paul E. Kana
                                CHAIRMAN OF THE BOARD OF DIRECTORS,
                                CHIEF EXECUTIVE OFFICER
                                AND DIRECTOR (PRINCIPAL EXECUTIVE OFFICER)


                                /s/ Kevin L. Figge
                                -----------------------------------------------
                                Kevin L. Figge
                                VICE PRESIDENT, CHIEF FINANCIAL OFFICER
                                (PRINCIPAL FINANCIAL OFFICER)