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

                                 AMENDMENT NO.1
                                       TO
                                    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 SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from __________________ to __________________

                          Commission File No. 000-20068

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

             Delaware                                    41-1425909
--------------------------------------------------------------------------------
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
  incorporation or organization)

              11800 30th Court North, St. Petersburg, Florida 33716
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (813) 572-9300
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 Not applicable
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)


         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 [X] No [ ]

         APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of capital stock as of the latest
practicable date.

         Total number of shares of outstanding capital stock as of May 14, 1998:

Common Stock..........................................................17,805,394



<PAGE>

                         PART I - FINANCIAL INFORMATION


ITEM 1 -- FINANCIAL STATEMENTS

                    PRECISION SYSTEMS, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>


                                                                                   Three months ended March 31,
                                                                              --------------------------------------
                                                                                     1998                1997
                                                                              ------------------  ------------------
<S>                                                                           <C>                 <C>               
Revenues
   Contract revenue.......................................................... $          755,017  $        1,811,053
   Service and support ......................................................          4,983,879           6,284,043
   License fee revenue.......................................................            929,521           1,960,195
                                                                              ------------------- -------------------
                                                                                       6,668,417          10,055,291
                                                                              ------------------- -------------------
   
Cost of Sales, exclusive of depreciation and amortization
   shown separately below....................................................          4,212,263           4,306,864
                                                                              ------------------- -------------------
                                                                                       2,456,154           5,748,427
                                                                              ------------------- -------------------
    
Operating Expenses
   Selling, general, and administrative......................................          4,702,384           5,480,677
   Research, engineering and development.....................................          1,165,346           1,035,828
   Depreciation and amortization.............................................            832,790           1,756,405
                                                                              ------------------- -------------------
                                                                                       6,700,520           8,272,910
                                                                              ------------------- -------------------
Operating loss...............................................................         (4,244,366)         (2,524,483)
Interest expense, net........................................................            (90,627)            (87,753)
                                                                              ------------------- -------------------
Loss before income taxes.....................................................         (4,334,993)         (2,612,236)
Income taxes.................................................................              -                   -
                                                                              ------------------- -------------------
Net Loss.....................................................................         (4,334,993)         (2,612,236)
Preferred stock dividend requirements........................................           (170,949)            (85,808)
                                                                              ------------------- -------------------
Net Loss Applicable to Common Stock.......................................... $       (4,505,942) $       (2,698,044)
                                                                              =================== ===================
Basic and Diluted Loss Per Share
   Net loss.................................................................. $             (.24) $             (.15)
                                                                              =================== ===================
   Net loss applicable to common stock....................................... $             (.25) $             (.15)
                                                                              =================== ===================

</TABLE>

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.

                                        2

<PAGE>

                    PRECISION SYSTEMS, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                   March 31,         December 31,
                                                                                     1998                1997
                                                                              ------------------  ------------------
                                   ASSETS                                         (unaudited)
<S>                                                                           <C>                 <C>               
Current Assets
   Cash and cash equivalents................................................. $        2,006,174  $        4,582,757
   Accounts and contracts receivable, net....................................          8,550,958           9,657,355
   Supplies and other current assets.........................................          2,072,615           1,980,451
   Costs and earnings in excess of billings on uncompleted
     contracts...............................................................          4,595,496           3,333,339
                                                                              ------------------- -------------------
       Total current assets..................................................         17,225,243          19,553,902
                                                                              ------------------- -------------------
Property, Plant and Equipment, Net..........................................           8,940,132           8,869,177
Intangible Assets, Net.......................................................             50,454              52,474
                                                                              ------------------- -------------------
                                                                              $       26,215,829  $       28,475,553
                                                                              =================== ===================

                    LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
   Current portion of long-term debt......................................... $        6,214,869  $          294,375
   Accounts payable..........................................................          5,410,232           5,505,996
   Accrued expenses..........................................................          5,944,508           6,110,800
   Billings in excess of costs and earnings on uncompleted
     contracts...............................................................          3,951,392           2,780,251
   Deferred revenue..........................................................          2,302,004           1,270,825
                                                                              ------------------- -------------------
     Total current liabilities...............................................         23,823,005          15,962,247
                                                                              ------------------- -------------------
Long-term Debt...............................................................            246,977           6,240,184
                                                                              ------------------- -------------------
Commitments and Contingencies (Note 4).......................................
Stockholders' Equity
   Non-redeemable preferred stock -- $.01 par value; authorized 50,000 shares:
       Series A 6 percent Cumulative Convertible Preferred Stock; convertible at
         $4.76 per share; issued and outstanding
         10,000 shares; liquidation preference $5,800,000....................                100                 100
       Series B 8 percent Cumulative Convertible Preferred Stock;
         convertible at $4.47 per share, issued and outstanding
         4,500 shares; liquidation preference $4,500,000.....................                 45                  45
   Common stock-- $.01 par value; authorized 30,000,000 shares,
     issued 17,912,525 and 17,906,025 shares, respectively...................            179,125             179,061
   Additional paid-in capital................................................        113,829,119         114,000,071
   Accumulated deficit.......................................................       (113,629,098)       (109,294,105)
   Treasury stock (132,937 shares)-- at cost.................................           (422,360)           (422,360)
   Accumulated preferred stock dividends.....................................          1,846,150           1,675,201
   Cumulative foreign currency translation adjustment........................            431,516             312,609
   Unearned compensation.....................................................            (88,750)           (177,500)
                                                                              ------------------- -------------------
     Total stockholders' equity..............................................          2,145,847           6,273,122
                                                                              ------------------- -------------------
                                                                              $       26,215,829  $       28,475,553
                                                                              =================== ===================

</TABLE>

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.

                                        3

<PAGE>

                    PRECISION SYSTEMS, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                      Three months ended March 31,
                                                                                -------------------------------------
                                                                                       1998                 1997
                                                                                ----------------    -----------------
<S>                                                                               <C>                <C>             
Cash Flows -- Operating Activities:
   Net loss..................................................................     $   (4,334,993)    $    (2,612,236)
   Adjustments to reconcile net loss to net cash (used in)
     provided by operating activities:
     Depreciation and amortization...........................................            832,790           1,756,405
     Provision for losses on accounts receivable.............................              -                  82,806
     Amortization of unearned compensation...................................             88,750               -
     Loss on sale of property, plant and equipment...........................             55,146               -
     Change in current assets and liabilities:
       Accounts and contracts receivable.....................................          1,100,807           1,396,690
       Costs and estimated earnings in excess of billings....................         (1,262,157)           (834,434)
       Supplies and other current assets.....................................            (97,339)            (25,493)
       Accounts payable......................................................            (95,764)          1,047,724
       Accrued expenses......................................................            (30,705)           (785,529)
       Billings in excess of earnings on incomplete contracts................          1,171,141            (694,144)
       Deferred revenue......................................................          1,031,179           1,172,024
                                                                              ------------------- -------------------
         Net cash (used in) provided by operating activities.................         (1,541,145)            503,813
                                                                              ------------------- -------------------

Cash Flows -- Investing Activities:
   Purchase of property, plant and equipment.................................           (941,396)           (393,127)
                                                                              ------------------- -------------------
     Net cash used in investing activities...................................           (941,396)           (393,127)
                                                                              ------------------- -------------------

Cash Flows -- Financing Activities:
   Repayment of note payable.................................................            (94,106)         (1,438,940)
   Proceeds from issuance of common stock....................................                 64               2,679
                                                                              ------------------- -------------------
     Net cash used in financing activities...................................            (94,042)         (1,436,261)
                                                                              ------------------- -------------------

Net decrease in cash and cash equivalents....................................         (2,576,583)         (1,325,575)
Cash and cash equivalents at beginning of period.............................          4,582,757           4,601,818
                                                                              ------------------- -------------------
Cash and cash equivalents at end of period................................... $        2,006,174  $        3,276,243
                                                                              =================== ===================
</TABLE>
         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.

                                        4

<PAGE>
                    PRECISION SYSTEMS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION

     The interim condensed consolidated financial statements of Precision
Systems, Inc. (the "Company") are unaudited and should be read in conjunction
with the audited financial statements and notes thereto as of and for the year
ended December 31, 1997, the four month transition period ended December 31,
1996, and the years ended August 31, 1996 and 1995.

     In the opinion of the Company, all adjustments necessary for a fair
presentation of such financial statements have been included. Such adjustments
consist only of normal recurring items. Interim results are not necessarily
indicative of results for a full year. The interim financial statements and
notes thereto are presented as permitted by the Securities and Exchange
Commission and do not contain information included in the Company's annual
financial statements and notes thereto.

     Certain amounts for previous periods have been reclassified to conform with
the 1998 presentation.

2.   BASIC AND DILUTED LOSS PER SHARE

     Basic and diluted loss per share for the three months ended March 31, 1998
and 1997, have been computed based upon the weighted average common shares
outstanding of 17,786,107 and 17,571,812, respectively. The diluted loss per
share calculation does not include preferred convertible securities and stock
options, which are common stock equivalents, as their inclusion would be
anti-dilutive.

   
     The following table provides information on the weighted average shares of
dilutive securities which are not included in the diluted loss per share
calculation because their inclusion would be anti-dilutive:

<TABLE>
<CAPTION>

                                                                                    Three months ended March 31,
                                                                              ---------------------------------------
                                                                                     1998                   1997
                                                                              ------------------- -------------------
<S>                                                                                    <C>                 <C>      
     Preferred convertible securities........................................          3,500,198           1,218,487
     Stock options and restricted stock......................................          2,193,445           2,094,196
                                                                              ------------------- -------------------
                                                                                       5,693,643           3,312,683
                                                                              =================== ===================
</TABLE>
    

3.   LONG-TERM DEBT
<TABLE>
<CAPTION>
                                                                                    March 31,         December 31,
                                                                                     1998                 1997
                                                                              ------------------- -------------------
                                                                                    (unaudited)
<S>                                                                           <C>                 <C>               
Notes payable to shareholders, interest at 8 percent, unsecured, and
   due January 1999.......................................................... $        6,000,000  $        6,000,000
Capital lease obligation, interest rates varying from 6 percent to
   9 percent; collateralized by assets with net book value of
   approximately $400,000 and maturing through the year 2001.................            461,846             534,559
                                                                              ------------------- -------------------
                                                                                       6,461,846           6,534,559
Less current portion.........................................................         (6,214,869)           (294,375)
                                                                              ------------------- -------------------
                                                                              $          246,977  $        6,240,184
                                                                              =================== ===================
</TABLE>
                                        5

<PAGE>

                    PRECISION SYSTEMS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


4.   SUBSEQUENT EVENT

     In April 1998, Precision Systems, Inc. announced that its Board of
Directors approved and the Company entered into a definitive agreement
("Agreement") with various privately held entities controlled by Roy M. Speer to
acquire a controlling interest in the Company. The transaction is valued at
approximately $100 million and is subject to shareholder and certain antitrust
and regulatory approvals and other customary conditions.

     Under terms of the Agreement, which was initially proposed on March 6,
1998, the Speer entities (Speer Communication Holdings Limited Partnership,
Speer WorldWide Digital Transmission and Vaulting Limited Partnership, Speer
Virtual Media Limited Partnership, and Speer Productions Limited Partnership)
will contribute to Precision Systems $15 million in cash and their digital
storage, audiovisual production and telecommunications assets and businesses in
Nashville, Tennessee, and Washington, D.C., in exchange for approximately 105
million shares of Precision Systems' common stock.

     The Agreement further contemplates that all debt and preferred stock of the
Company held by its major stockholders will be converted into common stock at
the rate of $1.00 per share. The agreement provides for a $3 million line of
credit to be made available by Speer upon signing of the Agreement for operating
capital requirements. After the transaction, Mr. Speer will control over 80% of
the outstanding stock of Precision Systems. Mr. Speer currently controls RMS
Limited Partnership, an entity that is one of Precision Systems' major
stockholders. RMS L.P. will also contribute certain real estate in Nashville as
part of the transaction.



                                        6

<PAGE>

ITEM 2 -- Management's Discussion And Analysis of Financial Condition
          and Results of Operations

     Precision Systems, Inc. (the "Company" or "PSI") is a global company that,
together with its subsidiaries, Vicorp N.V. and BFD Productions, Inc., delivers
telecommunications solutions to service providers and corporations. Vicorp's
software and hardware products support enhanced calling and prepaid services,
toll-free services, and advanced call center applications. BFD Productions is a
service bureau specializing in audiotext and Internet applications.
Headquartered in St. Petersburg, Florida (USA), Precision Systems meets the
needs of customers in more than thirty countries.

     The following table sets forth for the periods indicated (i) the percentage
of total revenues represented by certain items in the financial statements of
the Company, and (ii) the percentage change in the dollar amount of such items
from period to period.

<TABLE>
<CAPTION>

                                                                    Percentage of Revenue            
                                                                     Three Months Ended                Percentage       
                                                                          March 31,                     Increase        
                                                           ---------------------------------------     (Decrease)       
                                                                  1998                1997            1998 vs. 1997
                                                           ------------------- ------------------- ----------------
<S>                                                                     <C>                 <C>                <C>    
Revenues:
   Contract revenue.......................................              11.3%               18.0%              (58.3%)
   Service and support....................................              74.7%               62.5%              (20.7%)
   License fee revenue....................................              14.0%               19.5%              (52.6%)
                                                           ------------------- -------------------
     Total revenues.......................................             100.0%              100.0%              (33.7%)
Cost of Sales.............................................              63.2%               42.8%              (20.8%)
Gross Margin..............................................              36.8%               57.2%              (41.4%)
Operating Expenses:
   Selling, general and administrative....................              70.5%               54.5%              (10.7%)
   Research, engineering and development                                17.5%               10.3%              105.9%
   Depreciation and amortization..........................              12.5%               17.5%              (52.6%)
                                                           ------------------- -------------------
Operating loss............................................             (63.6%)             (25.1%)              68.1%
Interest expense..........................................              (1.4%)              (0.9%)               3.3%
Loss before income taxes..................................             (65.0%)             (26.0%)               65.9%
Net Loss..................................................             (65.0%)             (26.0%)               65.9%
</TABLE>

Total Revenues

     Total revenues decreased to $6,668,417 for the three months ended March 31,
1998, compared to $10,055,291 for the three months ended March 31, 1997. The
various components of revenue fluctuated as explained below.

   
     Effective January 1, 1998, the Company adopted the American Institute of
Certified Public Accountants ("AICPA") Statement of Position ("SOP") 97-2,
"Software Revenue Recognition." Adoption of SOP 97-2 did not have a material
impact on the financial condition or the results of operations of the Company.
    

Contract Revenue

   
     Contract revenue, consisting primarily of telecommunications equipment
hardware sales, was $755,017 for the three months ended March 31, 1998, compared
to $1,811,053 during the same period in 1997. The decrease in contract revenue
during the three months ended March 31, 1998 versus 1997 is primarily due to
certain BETEX product sales by Vicorp completed during the three months ended
March 31, 1997, which did not recur during the same period in 1998.
    

                                        7

<PAGE>

Service and Support

   
     Service and support revenue, consisting primarily of custom development
services, maintenance services, and service bureau services, decreased to
$4,983,879 for the three months ended March 31, 1998, compared to $6,284,043 for
the three months ended March 31, 1997.
    

     Service and support revenue for Vicorp BETEX products was $3,391,302 for
the three months ended March 31, 1998, compared to $4,752,455 for the three
months ended March 31, 1997. Vicorp's service and support revenue includes
maintenance and custom development services provided to its customers.

     Service and support provided to MCI decreased to $470,029 for the three
months ended March 31, 1998, compared to $513,724 for the three months ended
March 31, 1997. Maintenance revenue generated from MCI regarding its ESP
equipment increased to $467,640 for the three months ended March 31, 1998,
compared to $426,704 for the same period in 1997. In addition, the Company's
service and support revenue relating to its software development services
provided to MCI decreased to $2,389 for the three months ended March 31, 1998,
from $87,020 for the same period in 1997.

     Service and support revenue for BFD was $1,030,357 for the three months
ended March 31, 1998, compared to $939,462 for the three months ended March 31,
1997. BFD's service and support revenue primarily includes interactive voice
response service bureau activity.

License Fee Revenue

     License fee revenue for the three months ended March 31, 1998, was $929,521
compared to $1,960,195 for the three months ended March 31, 1997. License fee
revenue for the three months ended March 31, 1998, relating to its BETEX product
line was $689,446 and $240,075 for the UniPort product line. The Company
anticipates generating future license fee revenue for its BETEX and UniPort
products, although no assurance can be given for such future revenue.

   
Cost of Sales
    

     Cost of sales decreased to $4,212,263 (63% of revenue) for the three months
ended March 31, 1998, compared to $4,306,864 (43% of revenue) for the three
months ended March 31, 1997. The Company's gross margin decreased to $2,456,154
(37% of revenue) for the three months ended March 31, 1998, compared to
$5,748,427 (57% of revenue) for the three months ended March 31, 1997. The
primary reason for the decrease in the Company's gross margin dollar amount is a
decrease in the Company's total revenue. The decrease in the Company's gross
margin percentage is primarily associated with a change in product mix. A
greater portion of the Company's revenue for the three months ended March 31,
1998 related to lower margin service and support services versus the same period
in 1997.

Selling, General and Administrative Expenses

     Selling, general and administrative expenses decreased to $4,702,384 for
the three months ended March 31, 1998, compared to $5,480,677 for the three
months ended March 31, 1997. The decrease in selling, general and administrative
expenses for the three months ended March 31, 1998, is primarily due to the
Company's efforts at managing and controlling costs in order to improve the
alignment of cost outlays against potential revenue opportunities. Specific cost
savings include the following:

     o The Company implemented a restructuring plan, including a 10 percent
       headcount reduction, in January 1998.

                                        8

<PAGE>



     o The Company decreased its payroll and related costs due to consolidation
       and elimination of certain functions (i.e., sales and marketing, product
       management, customer service).

     o The Company improved its controls and accountability for the use of third
       party professional vendors (legal, public relations, management
       consultants, etc.) and independent contractors.

Research, Engineering, and Development

     Research, engineering and development expenses increased to $1,165,346 for
the three months ended March 31, 1998, compared to $1,035,828 for the three
months ended March 31, 1997. The increase in research, engineering and
development expenses primarily relates to further development work associated
with the Company's BETEX product. Resources will continue to be directed toward
product improvements and enhancements for future purchased releases of the
Company's products. Additionally, the Company will continue to evaluate its
different product lines to maximize the impact of the research, engineering and
development expenditures.

     The Company believes it operates in a highly competitive market; and, in
order to maintain a competitive position, the Company's existing products must
be continually improved and new products must be developed. The amount and
timing of future research, engineering, and development expenditures will depend
upon, among other factors, future new contract revenue and the Company's ability
to fund these costs from future operating cash flow and bank or other forms of
financing.

Depreciation and Amortization

     Depreciation and amortization was $832,790 for the three months ended March
31, 1998, compared to $1,756,405 for the three months ended March 31, 1997. The
decrease is primarily due to amortization expenses incurred during the three
months ended March 31, 1997, relating to intangible assets acquired with The
Renaissance Group, Vicorp and BFD acquisitions that were written off subsequent
to March 31, 1997, and, therefore, created no amortization during the 1998
period.

Income Tax Expense

     The Company uses the asset and liability method to account for deferred
income taxes. Under the asset and liability method, deferred income taxes are
recognized for the tax consequences of "temporary differences" by applying
enacted statutory tax rates applicable to future years to differences between
the financial statement carrying amounts and the tax basis of existing assets
and liabilities. The effect on deferred taxes of a change in tax rates is
recognized in income in the period that includes the enactment date.

Interest Expense

     For the three months ended March 31, 1998, net interest expense was $90,627
compared to $87,753 during the same period in 1997. The increase in net interest
expense is primarily due to interest relating to promissory notes of $6,000,000
that the Company issued in September 1997 that bear interest at 8 percent.

                                        9

<PAGE>

Litigation

     Reference is made to the legal proceedings described at Part 1, Item 3, in
the Company's December 31, 1997 Form 10-K. The Company is subject to certain
legal actions arising in the normal course of business. After taking into
consideration legal counsel's evaluation of such actions, management is of the
opinion that their final resolution will not have any significant adverse effect
upon the Company's business or its consolidated financial statements.

Financial Position, Liquidity, and Capital Resources

     At March 31, 1998, the Company had working capital deficiency of $6,597,762
compared to net working capital of $3,591,655 at December 31, 1997. The decrease
in net working capital is primarily due to notes maturing in January 1999 issued
to the Company's shareholders in September 1997.

     In April 1998, Precision Systems, Inc. announced that its Board of
Directors approved and the Company entered into a definitive agreement
("Agreement") with various privately held entities controlled by Roy M. Speer to
acquire a controlling interest in the Company. The transaction is valued at
approximately $100 million and is subject to shareholder and certain antitrust
and regulatory approvals and other customary conditions.

     Under terms of the Agreement, which was initially proposed on March 6,
1998, the Speer entities (Speer Communication Holdings Limited Partnership,
Speer WorldWide Digital Transmission and Vaulting Limited Partnership, Speer
Virtual Media Limited Partnership, and Speer Productions Limited Partnership)
will contribute to Precision Systems $15 million in cash and their digital
storage, audiovisual production and telecommunications assets and businesses in
Nashville, Tennessee, and Washington, D.C., in exchange for approximately 105
million shares of Precision Systems' common stock.

     The Agreement further contemplates that all debt and preferred stock of the
Company held by its major stockholders will be converted into common stock at
the rate of $1.00 per share. The agreement provides for a $3 million line of
credit to be made available by Speer upon signing of the Agreement for operating
capital requirements. After the transaction, Mr. Speer will control over 80% of
the outstanding stock of Precision Systems. Mr. Speer currently controls RMS
Limited Partnership, an entity that is one of Precision Systems' major
stockholders. RMS L.P. will also contribute certain real estate in Nashville as
part of the transaction.

     The Company's accounts and contracts receivable decreased to $8,550,958 as
of March 31, 1998, from $9,657,355 as of December 31, 1997. The decrease is
primarily due to collection of certain receivables outstanding at December 31,
1997.

     The Company's supplies and other current assets increased to $2,072,615 as
of March 31, 1998, from $1,980,451 as of December 31, 1997. The increase is
primarily due to an increase in certain deferred costs and prepaid expenses as
of March 31, 1998.

     The Company's costs and earnings in excess of billings on uncompleted
contracts increased to $4,595,496 as of March 31, 1998, from $3,333,339 as of
December 31, 1997. The increase is primarily associated with certain of Vicorp's
product delivery contracts in process for its customers. Such amounts as of
March 31, 1998, are expected to be fully billed by Vicorp by June 1998.

                                       10

<PAGE>

     The Company's current portion of long-term debt increased to $6,214,869 as
of March 31, 1998, from $294,375 as of December 31, 1997. The Company's
long-term debt decreased to $246,977 as of March 31, 1998, from $6,240,184 as of
December 31, 1997. The increase in the current portion of long-term debt and the
decrease in long-term debt is primarily due to a reclassification of $6,000,000
in promissory notes maturing in January 1999.

     The Company's accounts payable decreased to $5,410,232 as of March 31,
1998, from $5,505,996 as of December 31, 1997. The decrease is primarily due to
the timing of certain vendor payments.

     The Company's accrued expenses decreased to $5,944,508 as of March 31,
1998, from $6,110,800 as of December 31, 1997. The decrease is primarily due to
payments made during the first quarter of 1998 relating to amounts accrued at
December 31, 1997.

     The Company's billings in excess of costs and earnings on uncompleted
contracts increased to $3,951,392 as of March 31, 1998, from $2,780,251 as of
December 31, 1997. The increase is primarily associated with the billing of
certain of Vicorp's software development contracts in process for its customers.

     The Company's deferred revenue balance increased to $2,302,004 as of March
31, 1998, from $1,270,825 as of December 31, 1997. The Company's deferred
revenue balance primarily represents prepaid maintenance contracts for services
to be provided to its customers.

     The Company incurred approximately $941,000 in expenditures for capital
assets during the three months ended March 31, 1998. Future levels of capital
expenditures will be dependent upon cash availability from operating activities
and additional sources of bank funding or other forms of financing which may or
may not be available to the Company upon acceptable terms and conditions.

Forward-looking Information

     The foregoing discussion in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contains forward-looking
statements that reflect management's current views with respect to future events
and the financial performance and condition of the Company. Such statements
involve risks and uncertainties, and there are certain important factors that
could cause actual results to differ materially from those anticipated. Some of
the important factors that could cause actual results to differ materially from
those anticipated include:

     o The Company competes in an industry marked by frequent technological
       changes which will force the Company to expend funds to develop new
       products and implement new technologies

     o The various markets into which the Company sells its products are
       undergoing significant changes with increasing demands for product
       innovations

     o The Company must be successful in competing against many competitors,
       many of which have significantly greater assets than the Company

     o The Company will be required to properly estimate costs under fixed price
       contracts

     o Increased risk of litigation in the Company's industry resulting from 
       aggressive prosecutions of intellectual property claims

     o The Company's ability to retain its larger customers, including MCI


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<PAGE>



     o Availability of certain hardware and software components which are
       incorporated with the Company's products and are purchased from a limited
       number of vendors

     o The Company's ability to hire and retain qualified personnel

     o Legislative changes affecting the Company's markets, including the
       Telecommunications Act of 1996

     o Given the Company's acquisition of Vicorp and its large presence in
       international markets, regulatory, monetary and inflationary factors can
       negatively impact the Company's operations in the future.

     o The Company's reliance on large sales orders that increase the risk of
       significant revenue fluctuations, from quarter to quarter and year to
       year.

     o The Company's ability to generate sufficient cash, from operations or
       from external sources, to fund its global operations.

     Many of such uncertainties are outside the Company's control and could
postpone, delay, or eliminate potential sales opportunities and, therefore,
affect the Company's operations. Due to such uncertainties and risk, readers are
cautioned not to place undue reliance on such forward-looking statements, which
speak only as of the date hereof.



                                       12

<PAGE>

                           PART II - OTHER INFORMATION


ITEM 1 -- Legal Proceedings

     Reference is made to the legal proceedings described at Part 1, Item 3, in
the Company's December 31, 1997, Form 10-K. The Company is subject to certain
legal actions arising in the normal course of business. After taking into
consideration legal counsel's evaluation of such actions, management is of the
opinion that their final resolution will not have any significant adverse effect
upon the Company's business or its consolidated financial statements.


ITEM 2 -- CHANGES IN SECURITIES

     None

ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES

     None

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

     None

ITEM 5 -- OTHER INFORMATION

     None

ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K

     Exhibit 27 - Financial Data Schedule (for SEC use only)

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<PAGE>


                                   SIGNATURES

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


           PRECISION SYSTEMS, INC.


           By:    /S/ KENNETH M. CLINEBELL
                  -------------------------
                  Kenneth M. Clinebell
                  President and Chief Financial Officer

October 9, 1998

     Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on October 9, 1998.


                Signature                                Title
                ---------                                -----


        /s/ KENNETH M. CLINEBELL           President and Chief Financial Officer
        ------------------------           (Principal Financial Officer)
          Kenneth M. Clinebell            

          /s/ CARLA K. NEWSOME             Controller
        ------------------------           (Principal Accounting Officer)
            Carla K. Newsome               



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