<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q
              ----------------------------------------------------

             (Mark One)
             [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 EXCHANGE ACT OF 1934

                  For the transition period from _____ to _____

                         Commission file number 1-19971

                     ---------------------------------------

                       UNIVERSAL SEISMIC ASSOCIATES, INC.
                    (Exact name of Registrant in its Charter)

           DELAWARE                                      76-0256086
(State or Other Jurisdiction of               (IRS Employer Identification No.)
 Incorporation or Organization)

   16420 PARK TEN PLACE, SUITE 300
           HOUSTON, TEXAS                                 77084-5051
(Address of Principal Executive Offices)                  (Zip Code)

                                 (281) 578-8081
                           (Issuer's Telephone Number)
                    -----------------------------------------

         Check whether the issuer (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
                     ---   ---

         State the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 5,234,109 shares of Common
Stock, $.0001 par value, were outstanding as of June 30, 1998.

                                    1 of 15

<PAGE>   2


               UNIVERSAL SEISMIC ASSOCIATES, INC. AND SUBSIDIARIES

                          QUARTERLY REPORT ON FORM 10-Q

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          PAGE
                                                                                          ----
<S>      <C>        <C>                                                                    <C>
PART I.  FINANCIAL INFORMATION

         Item 1.    Unaudited Consolidated Financial Statements

                    Consolidated Balance Sheets at March 31, 1997 and June 30, 1997........3

                    Consolidated Statements of Operation for the three and nine months
                    ended March 31, 1997 and 1996..........................................4

                    Consolidated Statements of Stockholders' Equity for the nine
                     months ended March 31, 1997 and the year ended June 30,
                     1997..................................................................5

                    Consolidated Statements of Cash Flows for the nine months ended
                     March 31, 1997 and 1996...............................................6

                    Notes to Consolidated Financial Statements.............................7

         Item 2.    Management's Discussion and Analysis of Financial Condition
                       and Results of Operations..........................................12

PART II  OTHER INFORMATION

         Item 1.    Legal Proceedings.....................................................14

         Item 2.    Changes in Securities.................................................14

         Item 3.    Defaults Upon Senior Securities.......................................14

         Item 4.    Submission of Matters to a Vote of Security Holders...................14

         Item 5.    Other Information.....................................................14

         Item 6.    Exhibits and Reports on Form 8-K......................................15
</TABLE>


                                    2 of 15

<PAGE>   3




                                     PART I
              ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL INFORMATION


UNIVERSAL SEISMIC ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                       MARCH 31,          JUNE 30,
                           ASSETS                                                        1998              1997
                                                                                         ----              ----
<S>                                                                                  <C>               <C>
Current assets:
  Cash and cash equivalents                                                          $  1,707,676      $  1,859,677
  Accounts receivable, net                                                              3,371,664         5,579,876
  Costs and estimated earnings in excess of billings on uncompleted contracts           2,007,467           702,066
  Prepaid expenses and other current assets                                             1,196,188           498,982
                                                                                     ------------      ------------

                     Total current assets                                               8,282,995         8,640,601

Property and equipment, net:
  Seismic property and equipment                                                       15,397,892        15,896,535
  Seismic property under capital lease                                                  2,486,091                --
  Oil and gas properties, full cost method                                              7,754,251         6,881,115
                                                                                     ------------      ------------

                     Total property and equipment, net                                 25,638,234        22,777,650

Other assets:
  Goodwill, net                                                                           563,561           601,694
  Other                                                                                   126,367           228,088
                                                                                     ------------      ------------
                                                                                          689,928           829,782

                     Total assets                                                    $ 34,611,157      $ 32,248,033
                                                                                     ============      ============
                        LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term obligations                                           $ 23,047,020      $  1,423,859
  Current portion of capital lease obligations                                            584,923                --
  Billings in excess of costs and estimated earnings on uncompleted contracts           3,149,853           499,916
  Accounts payable                                                                      3,440,953         5,912,647
  Accrued and other current liabilities                                                 2,659,237         2,431,164
                                                                                     ------------      ------------
                     Total current liabilities                                         32,881,986        10,267,586

Long-term obligations:
  Long-term obligations, net of current maturities                                      1,505,470        16,729,140
  Capital lease obligation, net of current maturities                                   1,929,208                --
                                                                                     ------------      ------------
                    Total liabilities                                                  36,316,664        26,996,726
                                                                                     ------------      ------------
Commitments and contingencies

Stockholders' equity:
  Common stock, $.0001 par value; 20,000,000 shares authorized; 5,239,109 shares
    issued and 5,234,109 shares outstanding at March 31, 1998 and
    June 30, 1997                                                                             523               523
  Additional paid in capital                                                           17,105,444        17,105,444
  Accumulated deficit                                                                 (18,791,474)      (11,834,660)
  Less:  Treasury stock, at cost; 5,000 shares                                            (20,000)          (20,000)
                                                                                     ------------      ------------
                    Total stockholders' equity                                         (1,705,507)        5,251,307
                                                                                     ------------      ------------
                    Total liabilities and stockholders' equity                       $ 34,611,157      $ 32,248,033
                                                                                     ============      ============
</TABLE>

                 See accompanying notes to financial statements.

                                    3 of 15

<PAGE>   4




UNIVERSAL SEISMIC ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED                     NINE MONTHS ENDED
                                                          MARCH 31,                              MARCH 31,
                                              -----------------------------     -------------------------------
                                                 1998              1997                 1998              1997
                                                 ----              ----                 ----              ----
<S>                                          <C>               <C>               <C>               <C>
Operating revenues:
  Data acquisition                           $  3,375,489      $  6,143,351      $ 15,875,642      $ 24,838,884
  Data processing                                 142,046           261,818           651,246         1,052,696
  Oil and gas production                          308,312                --           739,935                --
                                             ------------      ------------      ------------      ------------

        Total operating revenues                3,825,847         6,405,169        17,266,823        25,891,580

Operating expenses:
  Cost of data acquisition                      3,269,515         5,407,490        16,985,553        20,928,812
  Cost of data processing                         176,177           203,176           553,622           627,151
  Oil and gas operating                            50,351                --           156,705                --
  Selling, general and administrative             932,644           545,561         2,260,464         1,604,886
  Cost of aborted merger, proxy
     contest, and stockholder litigation               --           526,815                --           828,045
  Depreciation, depletion and
     amortization                               1,077,864           779,279         2,762,912         2,315,005
                                             ------------      ------------      ------------      ------------

        Total operating expenses                5,506,551         7,462,321        22,719,256        26,303,899
                                             ------------      ------------      ------------      ------------

        Total operating loss                   (1,680,704)       (1,057,152)       (5,452,433)         (412,319)

Interest expense, net of capitalized
  interest                                       (621,254)         (300,364)       (1,565,253)         (962,407)
Other income, net                                  47,353             8,880            60,872            13,777
                                             ------------      ------------      ------------      ------------

Net loss                                     $ (2,254,605)     $ (1,348,636)     $ (6,956,814)     $ (1,360,949)
                                             ============      ============      ============      ============

Basic and diluted loss per share             $       (.43)     $      (0.26)     $      (1.33)     $      (0.28)
                                             ============      ============      ============      ============
Weighted average common shares
  outstanding                                   5,234,109         5,229,942         5,234,109         4,939,208
                                             ============      ============      ============      ============
</TABLE>


                 See accompanying notes to financial statements.

                                    4 of 15

<PAGE>   5




UNIVERSAL SEISMIC ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED MARCH 31, 1998 AND
THE YEAR ENDED JUNE 30, 1997 (UNAUDITED)

<TABLE>
<CAPTION>

                                  COMMON STOCK            TREASURY STOCK        ADDITIONAL                           TOTAL
                                  ------------            --------------          PAID IN       ACCUMULATED       STOCKHOLDERS
                               SHARES       AMOUNT      SHARES      AMOUNT        CAPITAL         DEFICIT            EQUITY
                               ------       ------      ------      ------        -------         -------            ------
<S>                          <C>            <C>          <C>      <C>          <C>              <C>                <C>
Balance June 30, 1996        4,278,147      $  428       5,000    $(20,000)    $13,553,317      $(6,310,497)       $7,223,248

Net loss                                                                                         (5,524,163)       (5,524,163)

  Exercise of stock
     options                    15,000           1                                  51,249                             51,250
  Exercise of convertible
    and exchangeable notes     940,962          94                               3,500,878                          3,500,972
                             ---------      ------      ------    --------     -----------      -----------        ----------

Balance June 30, 1997        5,234,109      $  523       5,000     (20,000)     17,105,444      (11,834,660)        5,251,307

Net loss for nine months
   ended March 31, 1998                                                                          (6,956,814)       (6,956,814)
                             ---------      ------      ------    --------     -----------      -----------        ----------

Balance March 31, 1998       5,234,109      $  523       5,000    $(20,000)    $17,105,444      $(18,791,474)     $ (1,705,507)
                             =========      ======     =======    ========     ===========      ============      ============
</TABLE>


                 See accompanying notes to financial statements.

                                    5 of 15


<PAGE>   6



UNIVERSAL SEISMIC ASSOCIATES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                       NINE MONTHS ENDED MARCH 31,
                                                                       ---------------------------
                                                                          1998            1997
                                                                          ----            ----
<S>                                                                   <C>              <C>
Cash flows from operating activities:
  Net income (loss)                                                   $(6,956,814)     $(1,360,949)
  Adjustments to reconcile net (loss) to net cash provided by
    operating activities:
        Depreciation, depletion and amortization                        2,762,912        2,315,005
        Loss on disposal of assets                                        528,630
        Changes in operating assets and liabilities:
           Accounts receivable                                          2,208,212          416,039
           Costs and estimated earnings in excess of billings on
                uncompleted contracts                                  (1,305,401)         (62,767)
           Prepaid expenses and other current assets                      638,232          509,239
           Accounts payable                                            (2,471,694)         797,263
           Billings in excess of costs and estimated earnings on
               uncompleted contracts                                    2,649,937          472,834
           Accrued and other current liabilities                        2,482,456          566,618
           Other assets                                                    23,287           31,512
                                                                     ------------     ------------
                 Net cash provided by operating activities                559,757        3,684,794
                                                                     ------------     ------------
Cash flows from investing activities:
  Capital expenditures                                                 (5,093,281)      (7,796,673)
  Proceeds from sale of assets                                          2,707,764        1,244,457
  Proceeds from receivable from stockholder                                    --           28,440
                                                                     ------------     ------------
              Net cash (used in) investing activities                  (2,385,517)      (6,523,776)
                                                                     ------------     ------------
Cash flows from financing activities:
  Proceeds from debt and obligations                                   12,233,432       24,564,046
  Payments on debt and obligations                                    (10,421,974)     (22,541,267)
  Payments on capital lease obligation                                   (137,699)              --
  Proceeds from issuance of common stock, net                                  --           38,750
                                                                     ------------     ------------
               Net cash provided by financing activities                1,673,759        2,061,529
                                                                     ------------     ------------
Net decrease in cash and cash equivalents                                (152,001)        (777,453)
Cash and cash equivalents at beginning of period                        1,859,677          982,431
                                                                     ------------     ------------
Cash and cash equivalents at end of period                           $  1,707,676     $    204,978
                                                                     ============     ============
Supplemental disclosures:
  Cash paid for interest                                                  681,471        1,052,260
  Equipment financed by note payable                                    2,069,893               --
  Prepaid expense financed by note payable                                263,757          214,505
  Conversion of long-term obligations to common stock                          --        3,500,972
  Stockholder litigation settlement financed by note payable            1,880,000               --
</TABLE>

                 See accompanying notes to financial statements.

                                    6 of 15

<PAGE>   7



               UNIVERSAL SEISMIC ASSOCIATES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       GENERAL

         The consolidated financial statements of Universal Seismic Associates,
         Inc. and Subsidiaries (the "Company") included herein have been
         prepared by the Company, without audit, pursuant to the rules and
         regulations of the Securities and Exchange Commission. Certain
         information and footnote disclosures normally included in financial
         statements prepared in accordance with generally accepted accounting
         principles have been condensed or omitted pursuant to such rules and
         regulations, although the Company believes that the disclosures are
         adequate to make the information presented not misleading. These
         condensed financial statements should be read in conjunction with the
         consolidated financial statements and the notes thereto included in the
         Company's amended Annual Report on Form 10-KSB/A filed with the
         Securities and Exchange Commission for the fiscal year ended June 30,
         1997. In the opinion of the Company, all adjustments, consisting only
         of normal recurring adjustments, necessary to present fairly the
         financial position as of March 31, 1998, the results of operations for
         the three and nine-month periods ended March 31, 1997 and 1998,
         stockholders' equity for the nine months ended March 31, 1998 and 
         statements of cash flows for the nine-month periods ended 
         March 31, 1998 and 1997, have been included.

2.       LIQUIDITY AND OPERATING LOSSES

         The accompanying consolidated financial statements have been prepared
         assuming that the Company will continue as a going concern. As more
         fully explained below, the Company has incurred continuing losses from
         operations of $4,239,383 and $429,877 for the years ended June 30, 1997
         and 1996, respectively, and these losses have continued during the
         nine months ended March 31, 1998 with an operating loss of $5,452,433,
         and a net loss of $6,956,814 for the nine months ended March 31, 1998.
         In addition, the Company had an accumulated deficit and a net working
         capital deficiency of $18,791,474 and $24,598,991, respectively, as 
         of March 31, 1998. All debt due to the Company's major debtholder,
         RIMCO (defined below), has been classified as current maturities as
         of March 31, 1998.

         As of March 31, 1998, the Company had a cash balance of $1,707,676. If
         losses from operations continue (as is anticipated), the Company
         believes this cash, along with anticipated cash flow from its seismic
         and exploration and production operations and funds available under its
         credit facilities, will not be adequate for its overall working capital
         requirements. The Company believes that it can generate substantial
         cash flow from its oil and gas properties if it had sufficient funding
         of its drilling program. Future cash flows are subject to a number of
         uncertainties, particularly the condition of the oil and gas industry
         and related seismic activity in the Company's markets. Liquidity of the
         Company should be considered in light of the significant fluctuations
         in demand that may be experienced by seismic data acquisition
         contractors and exploration and production owners as rapid changes in
         oil and gas producers' expectations and budgets occur. These

                                    7 of 15

<PAGE>   8

         fluctuations can rapidly impact the Company's liquidity as supply and
         demand factors directly affect utilization and contract revenues, which
         are primary determinants of cash flow from the Company's operations.

         As of March 31, 1998, the Company was in default on certain covenants
         of its financing agreements with RIMCO Partners, L.P., RIMCO Partners
         II, L.P., RIMCO Partners III, L.P. and RIMCO Partners IV, L.P.
         (collectively, "RIMCO"). RIMCO has waived such defaults and principal
         and interest payment covenants through July 1, 1998. The Company is
         negotiating an extension of this waiver and a debt-to-equity exchange
         with RIMCO whereby the indebtedness to RIMCO, including accrued
         interest, would be converted into equity and subordinated debt. In the
         original agreement with RIMCO, which was executed on February 9, 1998
         and expired on June 1, 1998, $15,000,000 was to be converted into
         common stock of the Company and the balance into convertible
         subordinated notes. The shares to be issued in the conversion were to
         be tied to the average price of the Company's common stock for the
         30-day period prior to receiving stockholder approval. As of June 30,
         1998, the Company was indebted to RIMCO under the various financing
         agreements for $22,168,899 principal and $1,896,450 accrued interest.
         Until such time as the Company and RIMCO are able to consummate the
         debt-to-equity exchange, all RIMCO debt has been classified as current
         maturities.

         The above factors raise substantial doubt about the Company's ability
         to continue as a going concern. The financial statements do not include
         any adjustments relating to the recoverability and classification of
         assets carrying amounts or the amount and classification of liabilities
         that might result should the Company be unable to continue as a going
         concern.

3.       RESTATEMENT AND RECLASSIFICATIONS

         In its June 30, 1997 Form 10-KSB/A, the Company restated and
         reclassified its financial statements for the fiscal years ended June
         30, 1997 and 1996. In addition, unaudited quarterly financial data for
         fiscal 1997 and 1996 have also been restated and reclassified. Except
         as otherwise stated herein, all information presented in this Report on
         Form 10-Q includes all such restatements and reclassifications as they
         apply to the fiscal 1997 period.

         In February 1998, the Company's independent accountants (Coopers &
         Lybrand L.L.P.), who had issued opinions on the financial statements
         for the years ended June 30, 1997 and 1996, resigned and stated that
         their opinions with respect to the financial statements for those years
         should no longer be relied upon. In March 1998, the Company engaged
         Arthur Andersen LLP as its independent public accountants to perform
         the necessary audits to issue new auditors' reports on the financial
         statements for fiscal 1997 and 1996.

         As a result of a comprehensive review begun by the Company in December
         1997, and the audits performed by new independent public accountants,
         it was determined that certain adjustments and reclassifications were
         necessary to fairly state the financial statements for the years ended
         June 30, 1997 and 1996, and all respective quarterly data. These
         adjustments principally relate to the timing for recognition of
         contract revenue and associated costs under percentage of completion
         accounting and to certain costs which


                                    8 of 15

<PAGE>   9

         were expensed as cost of data acquisition but should have been recorded
         as capitalized oil and gas properties. In addition, it was determined
         that the gain on the sale of oil and gas properties previously reported
         of $559,461 in fiscal 1997, should not have been recognized in income
         but instead recorded as a reduction of oil and gas properties in
         accordance with full cost accounting. The following is a summary of the
         adjustments and the related impact on the statement of operations for
         the three and nine-month periods ended March 31, 1997:

<TABLE>
<CAPTION>
                                                  RESTATEMENTS FOR PERIODS
                                                     ENDED MARCH 31, 1997
                                               --------------------------------
                                                    THREE              NINE
                                                    MONTHS            MONTHS
                                                    ------            ------
<S>                                              <C>            <C>
         Data acquisition revenue                $(130,841)     $ 1,372,812
         Cost of data acquisition                  450,006         (489,750)
         Gain on sale of oil and gas property                      (559,461)
         Interest expense                           18,042           54,126
                                                 ---------      -----------
               Net adjustments                     337,207          377,727

               Net loss previously reported     (1,685,843)      (1,738,676)
                                                ----------      -----------

         Restated net loss for periods         $(1,348,636)     $(1,360,949)
                                               ===========      ===========
</TABLE>

         The net financial impact of these adjustments decreases the net loss
         previously reported for the three-month period ended March 31, 1997 by
         $337,207 to $1,348,636 and decreases the net loss previously reported
         for the nine-month period ended March 31, 1997 by $377,727 to
         $1,360,949.

4.       DEBT AND FINANCING ARRANGEMENTS

         A summary of the Company's debt and obligations at the respective dates
         is presented below:

<TABLE>
<CAPTION>
                                                       MARCH 31,      JUNE 30,
                                                         1998           1997
                                                         ----           ----
          <S>                                         <C>           <C>
          Notes and obligations due RIMCO             $21,660,098   $16,108,995
          Operating lease for equipment not
           expected to be utilized in the future          815,529       929,191
          Other notes payable                           2,076,863     1,114,813
                                                      -----------   -----------
                                                       24,552,490    18,152,999
          Less current maturities                     (23,047,020)   (1,423,859)
                                                      -----------   -----------
                Total long-term debt                  $ 1,505,470   $16,729,140
                                                      ===========   ============
</TABLE>


         RIMCO has waived defaults under the covenants in its various financing
         agreements until July 1, 1998. (See Note 2 to the Consolidated
         Financial Statements for further discussion.)

                                    9 of 15

<PAGE>   10



5.       EARNINGS (LOSS) PER SHARE

         In February 1997, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 128, Earnings Per Share
         ("SFAS 128"). SFAS 128 requires presentation of "basic" and "diluted"
         earnings per share which is effective for financial statements issued
         for periods ending after December 15, 1997 and requires restatement of
         all prior period earnings per share amounts. The Company has adopted
         SFAS 128 and has applied the provisions of the statement to current and
         prior periods. While the Company has outstanding stock options and
         warrants, these are not included in the computation of diluted earnings
         (loss) per share because to do so would be anti-dilutive. Earnings
         (loss) per share under SFAS 128 is the same as has been reported under
         the previously required accounting standards.

6.       COMMITMENTS AND CONTINGENCIES

         The Company is involved in various claims and legal actions arising in
         the ordinary course of business. In the opinion of management, the
         ultimate disposition of these matters will not have a material adverse
         effect on the Company's consolidated financial position. The resolution
         in any reporting period of one or more of these matters in a manner
         adverse to the Company could have a material impact on the Company's
         results of operations and cash flows for that period.

7.       SHAREHOLDER LITIGATION

         The Company was involved in an aborted merger earlier in fiscal 1997
         that led to a proxy fight with a group of shareholders that styled
         themselves "The Universal Seismic Stockholders' Protective Committee"
         (the "Stockholders' Committee"). The proxy fight was resolved at the
         reconvened Annual Meeting of Shareholders on February 11, 1997, at
         which time management's slate of directors was reelected and all of the
         Stockholders' Committee's proposals were defeated.

         Thereafter, Michael T. Kanarellis, one of the members of the
         Stockholders' Committee, submitted letters to various members of the
         Audit Committee of the Company, alleging that "the Company's financial
         statements for the fiscal year ended June 30, 1996 and the fiscal
         quarters ended September 30, 1996 and December 31, 1996 were false and
         materially misstated" and alleging certain specific items of
         misstatement. The Stockholders' committee also filed a suit against the
         Company and its directors styled "The Universal Seismic Associates,
         Inc. Stockholders' Protective Committee, Michael T. Kanarellis, and
         Robert J. Kecseg Vs. Michael J. Pawelek, Ronald L. England, Calvin G.
         Cobb, Gary Milavec, Steven Oakes, Rick Trapp, RIMCO Associates, L.P.,
         Resource Investors Management Company, L.P. and Universal Seismic
         Associates, Inc.", in the United States District Court (the "Court") in
         Delaware. All parties entered into a Stipulation of Settlement which
         was tendered to the Court on August 7, 1997, whereby RIMCO agreed to
         purchase all of the shares of the Company's common stock owned by the
         Stockholders' Committee for an aggregate purchase price of $650,000, or
         $3.17 per share. Also in connection with the settlement, RIMCO entered
         into a $2,000,000 loan agreement with the Company, with the proceeds
         being used to fund the immediate costs of settlement and to pay other
         expenses associated with the lawsuit. The settlement was

                                    10 of 15

<PAGE>   11

         approved by the Court on October 1, 1997, at which time the Court
         entered judgment dismissing all claims with prejudice. The Company
         believes that it will recover a substantial portion of its costs of
         settlement and expenses associated with the lawsuit from its directors'
         and officers' liability insurance carrier. As of January 30, 1998, the
         Company had received a settlement of $1,245,000 and is pursuing
         additional recovery.



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

NINE MONTHS ENDED MARCH 31, 1998 COMPARED TO NINE MONTHS ENDED MARCH 31, 1997

OPERATING REVENUES AND EXPENSES

         Operating Revenues. Overall revenues for the nine-month period were
down from $25.9 million to $17.3 million, or 33%, from the comparable period in
fiscal 1997. This decrease was primarily due to a slow down in the data
acquisition activities as backlog was not replaced as rapidly as contracts were
completed. Data processing revenues were down from $1,052,696 to $651,246, or
38%, as a result of fewer jobs being processed. Oil and gas operations began
initial production in May and June 1997 with total revenues of $739,935 in the
period averaging more than $82,000 per month with increased sales expected as
additional production comes on stream. However, any increase is likely to be
limited because the Company lacks sufficient financial resources to fully
develop its properties. Substantially all oil and gas revenue comes from natural
gas sales.

         Operating Expenses. Overall expenses were down from $26.3 million to
$22.7 million, or 14%, reflecting a significant erosion of operating margins of
the data acquisition activity. As backlog was not replaced, down time and
operating problems resulted in several jobs experiencing losses. Increases in
selling, general and administrative expenses and depreciation, depletion and
amortization expenses were offset by the prior-year nonrecurring aborted merger,
proxy contest and shareholder litigation expenses of $828,045 in the prior-year
period.

         Selling, General and Administrative Expenses. Expenses in the fiscal
1997 period increased from $1.6 million to $2.3 million or 41%. Much of this
increase was due to higher consulting fees (audit and legal) and higher salary
costs as several management changes occurred in the second and third quarters.

         Depreciation, Depletion and Amortization (DD&A). DD&A was up in the
period by $447,907, or 19%, reflecting, in part, the DD&A from the oil and gas
operations of $209,166 for the nine months ended March 31, 1998, along with
additional seismic equipment upgrades.

         Interest Expense. Interest expense has increased on a period to period
basis by $602,846, or 63%, due to more debt outstanding and payable to RIMCO.
The additional borrowings were for expansion of the oil and gas development 
and working capital needs.

         Income Taxes. At the current time the Company has significant net
operating loss carryforwards of approximately $14,145,000 available to  offset
future federal taxable income which will expire if not used in fiscal years
2007 through 2012. Therefore, no income tax provision has been reflected in the
accompanying financial statements.
                  

                                    11 of 15

<PAGE>   12

         Net Loss. The Company reported a net loss of $7.0 million for the 
nine-month period compared with a net loss of $1.4 million in the same period 
in fiscal  1997. Much of this loss came as the result of down time of $2.3
million;  provision for lost equipment of $.48 million; losses on two large
contracts of  $1.27 million and higher overhead charges of $2.04 million in the
data  acquisition group for a total of $6.09 million. In addition, DD&A was up 
$.45 million and interest expense was up $.6 million.

THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997

OPERATING REVENUES AND EXPENSES

         Operating Revenues. Operating revenues for the three months ended March
31, 1998 were down 40% to $3.83 million, reflecting the steep decline in data
acquisition revenues due to the Company being unable to generate new contracts
in this area of operations and a slow down in the overall oil and gas sector.
Data processing revenues were also down in the period from $261,818 to $142,046,
a 46% decline due to fewer data processing jobs. Oil and gas revenues are being
reported for the first time in the quarter ended March 31, 1998 at an average
monthly rate of approximately $100,000 compared with $82,000 per month for the 
nine-month period. Substantially all oil and gas revenues come from natural
gas sales.

         Operating Expenses. Overall operating expenses decreased by 26%, mostly
due to a 40% decline in cost of data acquisition offset by higher selling,
general and administrative and depreciation, depletion and amortization
expense. Idle crews due to insufficient work continue to keep the data
acquisition group from having adequate profit margins. The Company has reduced
expenses to reflect current market conditions.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses were up in the quarter over the prior period from
$545,561 to $932,644 reflecting in part increased legal and accounting expenses
and higher salary expenses due to changes in management.

         Depreciation, Depletion and Amortization. Depreciation, depletion and
amortization (DD&A) was up 38% from $779,279 in the prior three-month period to
$1,077,864. This is due in part to DD&A for the oil and gas operations of 
$89,314 which was not in operation in the fiscal 1997 period and the 
amortization of seismic property under capital lease of $165,000.

         Interest Expense. Interest expense increased from $300,364 to $621,254.
This increase is due to additional borrowings for financing of the oil and gas
operations and for working capital needs.

         Income Taxes. At the current time the Company has significant net
operating loss carryforwards of approximately $14,145,000 available to  offset
future federal taxable income which will expire if not used in fiscal years
2007 through 2012. Therefore, no income tax provision has been reflected in the
accompanying financial statements.

         Net Loss. The Company had a net loss of $2,254,605 for the current
three-month period compared with $1,348,636 in the same period in fiscal 1997.
The current period loss is primarily due to losses in the data acquisition group
where revenues were down 45% and the group incurred low margins due to slowing
of available contract jobs and idle work crews. Higher selling, general and
administrative and DD&A expense also contributed to the overall loss for the
period due, in part, to increased consulting expenses and higher salary expenses
as a result of management changes.

                                    12 of 15

<PAGE>   13

LIQUIDITY AND CAPITAL RESOURCES

         For the nine-month period ended March 31, 1998, cash and cash
equivalents decreased by $152,001 to $1,707,676. Cash provided by operating
activities was $559,757 reflecting the need for the Company to carefully manage
its receivables and payables. Investing activities used cash of $5,093,281 as
the Company continued investing heavily in oil and gas properties of $4,783,200.
In addition, $27,800 was invested in data processing equipment and upgrades with
the balance of $282,281 used for miscellaneous data acquisition equipment. These
capital expenditures were offset by $2,707,764 for sale of interests in certain
of the Company's oil and gas properties.

         In August 1997, the Company borrowed an additional $2,000,000 from
RIMCO. The proceeds were utilized to fund the shareholder litigation settlement
and legal and accounting fees incurred as a result of such litigation. The
Company expects to recover a substantial portion of its costs of the settlement
and expenses associated with the lawsuit from its directors' and officers'
liability insurance carrier. As of January 30, 1998, the Company had received a
settlement of $1,245,000 and is pursuing additional recovery.

         The Company's accounts payable balance decreased by $2,471,694 in the
nine-month period ended March 31, 1998. This decrease can be attributed to the
Company's continuing efforts to reduce payables. Accounts receivable (net)
decreased by $2,208,212 during the nine-month period, primarily as a result of
settling a number of past due problem accounts. The Company had approximately
$1,580,000 of receivables over 90 days old as of March 31, 1998 for which
adequate reserves have been provided.

         The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As more fully
explained below, the Company has incurred continuing losses from operations of 
$4,239,383 and $429,877 for the years ended June 30, 1997 and 1996, 
respectively, and these losses have continued during the nine months ended 
March 31, 1998, with an operating loss of $5,452,433 and a net loss of
$6,956,814.  In addition, the Company had an accumulated deficit and a net
working capital deficiency of $18,791,474  and $24,598,991, respectively, as of
March 31, 1998. All debt due to the Company's major debt holder, RIMCO, has
been classified as current maturities as of March 31, 1998.

         As of March 31, 1998, the Company had a cash balance of $1,707,676. If
losses from operations continue (as is anticipated), the Company believes this
cash, along with anticipated cash flow from its seismic and exploration and
production operations and funds available under its credit facilities, will not
be adequate for its overall working capital requirements. The Company believes
that it can generate substantial cash flow from its oil and gas properties if it
had sufficient funding for its drilling program. Future cash flows are subject
to a number of uncertainties, particularly the condition of the oil and gas
industry and related seismic activity in the Company's markets. Liquidity of the
Company should be considered in light of the significant fluctuations in demand
that may be experienced by seismic data acquisition contractors and exploration
and production owners as rapid changes in oil and gas producers' expectations
and budgets occur. These fluctuations can rapidly impact the Company's liquidity
as supply and demand factors directly affect utilization and contract revenues,
which are primary determinants of cash flow from the Company's operations.


                                    13 of 15

<PAGE>   14

         Reference is made to Note 2 to the Consolidated Financial Statements
for further discussion of defaults under the RIMCO financing agreements.

SUBSEQUENT EVENTS

         Reference is made to Note 2 and Note 3 to the Consolidated Financial
Statements for a discussion relating to subsequent events regarding liquidity
and continuing operating losses and the restatement and reclassification of the
financial statements.



                                     PART 2
                                OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

           None

ITEM 2.    CHANGES IN SECURITIES

           None

ITEM 3.    DEFAULT UPON SENIOR SECURITIES

           As of March 31, 1998, the Company was in default on certain covenants
of its RIMCO financing agreements and RIMCO has waived such defaults and
principal and interest payment covenants through July 1, 1998. the Company is
negotiating an extension of this waiver and debt-to-equity exchange with RIMCO
whereby the indebtedness to RIMCO, including accrued interest, would be
converted into equity and subordinated debt. IN a proposed agreement with RIMCO,
which was executed on February 9, 1998 and expired on June 1, 1998, $15,000,000
was to be converted into common stock of the Company and the balance into
convertible subordinated notes. The shares to be issued in the conversion were
to be tied to the average price of the Company's common stock for the 30-day
period prior to receiving stockholder approval. As of June 30, 1998, the Company
was indebtedness to RIMCO under the various financing agreements for $22,168,899
principal and $1,896,450 accrued interest.

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

           None

ITEM 5.    OTHER INFORMATION

           None

                                    14 of 15

<PAGE>   15




ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           On February 23, 1998, the Company filed a Form 8-K in which the
Company provided information under "Item 4. - Changes in Registrant's Certifying
Accountant." The date of the report was February 13, 1998, the date Coopers &
Lybrand L.L.P. resigned as the Company's independent accountants.

           On March 16, 1998, the Company filed a Form 8-K in which the Company
provided information under "Item 4. - Changes in Registrant's Certifying
accountant". The date of the report was March 13, 1998, and disclosed that the
Company had engaged Arthur Anderson LLP as the independent public accountants of
the Company approved by the Board Of Directors on March 12, 1998.


                                   SIGNATURES

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

                                   UNIVERSAL  SEISMIC  ASSOCIATES, INC.



                                   /S/ JOE T. RYE
DATE:  JULY 23, 1998               PRESIDENT/CHIEF EXECUTIVE OFFICER

                                    15 of 15
<PAGE>   16

                                INDEX TO EXHIBIT
                                ----------------
<TABLE>
<CAPTION>

Item
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<S>                             <C>
Ex-27                           Financial Data Schedule
</TABLE>