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

                                   FORM 10-QSB

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

                For the Quarterly Period Ended September 30, 1998

                       Commission file number 333-05826-A

[ ] TRANSITION REPORT UNDER SECTION 13 OR 16(d) OF THE SECURITIES EXCHANGE ACT 
    OF 1934

         For The Transition Period From ___________ To _______________.

                           ATLANTIC INTEGRATED HEALTH
                                  INCORPORATED
        (Exact name of small business issuer as specified in its charter)

             North Carolina                               56-1966823
             --------------                               ----------
        (State of Incorporation)               (IRS Employer Identification No.)


                        1315 S. Glenburnie Road, Suite A5
                         New Bern, North Carolina 28562
                         ------------------------------
                    (Address of principal executive offices)

                                 (252) 514-0057
                                 --------------
                         (Registrant's telephone number)

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 past 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. YES [X]  NO [ ]


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

                    Class                     Outstanding as of November 5, 1998
                    -----                     ----------------------------------

 Primary Class, $1.00 par value                            300,500
 Referral Class, $1.00 par value                           326,000
 Nonprofit Class, nonvoting, $1.00 par value                 2,500

Transitional Small Business Disclosure Format (check one):  Yes [ ]    No [X]



<PAGE>



                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                     ATLANTIC INTEGRATED HEALTH INCORPORATED

                           Consolidated Balance Sheets
<TABLE>
<CAPTION>

ASSETS                                                                                   September 30,   December 31,
                                                                                              1998            1997
                                                                                              ----            ----
                                                                                          (Unaudited)        (Note)
<S>                                                                                        <C>            <C>      
Cash ..................................................................................    $  66,495      $ 101,776
Accounts receivable, less allowance for
     uncollectible accounts of $5,000 in 1997 and 1998 ................................       63,089         30,505
Prepaid expenses ......................................................................        4,369          5,297
                                                                                           ---------      ---------
                       Total current assets ...........................................      133,953        137,578
Investment ............................................................................           --          1,000
Office equipment, net .................................................................        7,759          9,322
Deferred costs and other intangible assets ............................................       83,851         17,107
                                                                                           ---------      ---------
Total Assets ..........................................................................    $ 225,563      $ 165,007
                                                                                           =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities - Accounts payable ................................................    $  35,680      $  24,761
                                                                                           ---------      ---------
Long-term debt - Convertible debenture ................................................       90,000              0
                                                                                           ---------      ---------
Stockholders' equity:
     Common stock - $1 par value-
          Primary class, authorized 1,000,000 shares; 300,500 and 292,500 shares issued
              and outstanding in 1998 and 1997, respectively ..........................      300,500        292,500
          Referral class, authorized 1,800,000 shares; 326,000 and 262,000 shares
              issued and outstanding in 1998 and 1997, respectively ...................      326,000        262,000
          Nonprofit class, nonvoting, authorized 200,000 shares; 2,500 shares issued
              and outstanding in 1998 and 1997, respectively ..........................        2,500          2,500
     Additional paid-in capital .......................................................       74,000         74,000
     Syndication costs ................................................................     (105,000)       (95,000)
     Stock subscription and stockholder notes receivable ..............................      (31,650)       (49,885)
     Accumulated deficit ..............................................................     (466,467)      (345,869)
                                                                                           ---------      ---------
Total stockholders' equity ............................................................       99,883        140,246
                                                                                           ---------      ---------
Total liabilities and stockholders' equity ............................................    $ 225,563      $ 165,007
                                                                                           =========      =========


</TABLE>


Note:       The balance sheet as of December 31, 1997 has been derived from the
            audited financial statements at that date but does not include all
            of the information and footnotes required by generally accepted
            accounting principles.

          See accompanying notes to consolidated financial statements.





                                       2
<PAGE>




                     ATLANTIC INTEGRATED HEALTH INCORPORATED

                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>

                             
                                                                               Three Months Ended          Nine Months Ended
                                                                                   September 30,             September 30,
                                                                                   -------------             -------------
                                                                                 1998          1997         1998          1997
                                                                                 ----          ----         ----          ----

<S>                                                                          <C>           <C>           <C>           <C>      
Revenue .................................................................    $  56,315     $  43,856     $ 200,975     $ 245,480
                                                                             ---------     ---------     ---------     ---------
Expenses:
     Consulting fees ....................................................       16,488        25,444        23,885        98,826
     Salaries and wages .................................................       57,160        62,587       214,733       192,191
     Recruiting and education ...........................................        1,980           380        16,235         5,009
     Office expense and other ...........................................       17,712        11,355        53,076        32,113
     Rent ...............................................................        3,470         1,441         7,420         3,900
     Depreciation and amortization ......................................        2,095         1,756         6,224         5,063
                                                                             ---------     ---------     ---------     ---------
                       Total expenses ...................................       98,905       102,963       321,573       337,102
                                                                             ---------     ---------     ---------     ---------
Net loss ................................................................    $ (42,590)    $ (59,107)    $(120,598)    $ (91,622)
                                                                             =========     =========     =========     ========= 

Net loss per basic common share .........................................         (.07)         (.11)         (.20)         (.24)
                                                                             ---------     ---------     ---------     ---------
Basic average common shares outstanding .................................      622,333       517,000       609,222       375,694
                                                                             =========     =========     =========     ========= 
</TABLE>


          See accompanying notes to consolidated financial statements.




                                       3
<PAGE>




                     ATLANTIC INTEGRATED HEALTH INCORPORATED

                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                   Nine Months Ended
                                                                                     September 30,
                                                                                  1998           1997
                                                                                  ----           ----
<S>                                                                             <C>            <C>     
Cash flows from operating activities:
Net loss ..................................................................     (120,598)      (91,622)

Adjustments to reconcile net loss to net cash used in operating activities-
              Depreciation and amortization ...............................        6,225         5,063
              Increase in accounts receivable .............................      (32,584)      (43,190)
              Decrease (increase) in prepaid expenses .....................          928        (8,183)
              Increase (decrease) in accounts payable .....................       10,919       (69,818)
                                                                               ---------     ---------
                       Net cash used in operating activities ..............     (135,110)     (207,750)
                                                                               ---------     ---------
Cash flows from investing activities:
     Purchase of office equipment .........................................       (1,240)       (9,206)
     Purchase of investment, net of cash acquired .........................       20,834        (1,000)
                                                                               ---------     ---------
                       Net cash provided by (used in) investing activities        19,594       (10,206)
                                                                               ---------     ---------
Cash flows provided by financing activities:
     Proceeds from issuance of common stock ...............................       80,235       261,410
     Collection of stock subscription receivable ..........................           --        12,375
                                                                               ---------     ---------
                       Net cash provided by financing activities ..........       80,235       273,785
                                                                               ---------     ---------

Net (decrease) increase in cash ...........................................      (35,281)       55,829
Cash, beginning of period .................................................      101,776        51,208
                                                                               ---------     ---------
Cash, end of period .......................................................    $  66,495     $ 107,037
                                                                               =========     =========
Supplemental disclosure:
     Syndication costs financed through accounts payable ..................    $      --     $  20,000
     Write-off of subscriptions receivable ................................           --         6,000
     Common stock issued in exchange for notes ............................       18,235        70,590
     Acquisition of The Beacon Company:                                                             --
             Fair market value of development costs acquired ..............       70,166            --
             Assumption of subordinated convertible debenture .............       90,000            --
                                                                               =========     =========

</TABLE>

          See accompanying notes to consolidated financial statements.




                                       4
<PAGE>




                     ATLANTIC INTEGRATED HEALTH INCORPORATED

                                   FORM 10-QSB
                               SEPTEMBER 30, 1998

             Notes to Consolidated Financial Statements (Unaudited)

1.          INTERIM FINANCIAL INFORMATION

            In the opinion of management, the accompanying unaudited
consolidated financial statements contain all necessary adjustments, which are
of a normal recurring nature, to present fairly the financial position of
Atlantic Integrated Health Incorporated and its wholly-owned subsidiary, The
Beacon Company, as of September 30, 1998 and 1997, the results of operations for
the three and nine months ended September 30, 1998 and 1997, and the cash flows
for the nine months ended September 30, 1998 and 1997, in conformity with
generally accepted accounting principles. Operating results for the three and
nine month periods ended September 30, 1998 are not necessarily indicative of
the results that may be expected for the year ended December 31, 1998.

            These unaudited interim consolidated financial statements should be
read in conjunction with the financial statements and related notes contained in
the Company's Annual Report on Form 10-KSB dated December 31, 1997.

2.          INVESTMENT

            In January 1997, the Company and Kanawha Insurance Company
("Kanawha"), formed The Beacon Company ("Beacon"). The Company and Kanawha each
contributed $1,000 of capital to Beacon; and as a result, each owned 50% of
Beacon. Beacon plans to market and sell health care services and related
employee benefit products, primarily in Eastern North Carolina.

            On June 24, 1998, the Company purchased all of the shares of common
stock of Beacon held by Kanawha in exchange for $1,000 cash and the issuance by
Beacon of a convertible, subordinated debenture in the principal amount of
$90,000 (the "Debenture"). The Debenture is due and payable on June 30, 2003 and
bears interest at the rate of 6% per annum. Interest on the Debenture is payable
semi-annually on December 1 and June 1 of each year, commencing December 1,
1998. The Debenture is convertible into 4% of Beacon's outstanding common stock
if Beacon completes a public offering of its common stock. Beacon does not have
any right to redeem the Debenture prior to maturity. Upon the occurrence of an
"Event of Default," as defined under the Debenture, the entire unpaid principal
and accrued interest will become immediately due and payable.

            As a result, Beacon has been consolidated with the Company as of
September 30, 1998 and for the period from June 24, 1998 through September 30,
1998.

3.          NET LOSS PER SHARE

            Net loss per share is computed by dividing the net loss for the
period by the weighted average number of shares of common stock outstanding
during the period.

4.          EXTENSION OF STOCK OFFERING

            On June 24, 1998, the Company filed a Post-Effective Amendment No. 3
to its Registration Statement on Form SB-2 to extend its stock offering which
terminated on April 28, 1998. On August 7, 1998, the Company filed a
Post-Effective Amendment No. 4 to its Registration Statement in response to
comments received from the Securities and Exchange Commission. The Securities
and Exchange Commission declared the Post-Effective Amendment No. 4 effective on
August 12, 1998. Since such 




                                       5
<PAGE>

date, Atlantic has sold an aggregate of 2,000 Primary Class Common Shares and
8,000 Referral Class Common Shares. During the initial offering period from
December 30, 1996 through July 28, 1997, the Company sold an aggregate of
116,000 Primary Class Common Shares and 216,000 Referral Class Common Shares.
During the second offering period from September 30, 1997 to April 28, 1998, the
Company sold an aggregate of 26,000 Primary Class Common Shares, 76,000 Referral
Class Common Shares and no Nonprofit Class Nonvoting Common Shares.

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

            THIS FORM 10-QSB CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS. FOR
THIS PURPOSE, ANY STATEMENTS CONTAINED IN THIS FORM 10-QSB THAT ARE NOT
STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS.
WITHOUT LIMITING THE FOREGOING, WORDS SUCH AS "MAY," "WILL," "EXPECT," BELIEVE,"
"ANTICIPATE," "ESTIMATE" OR "CONTINUE" OR THE NEGATIVE OR OTHER VARIATIONS
THEREOF OR COMPARABLE TERMINOLOGY ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. THESE STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL RISKS AND
UNCERTAINTIES, AND ACTUAL RESULTS MAY DIFFER MATERIALLY DEPENDING ON A VARIETY
OF FACTORS, INCLUDING THOSE DESCRIBED UNDER THE CAPTION "RISK FACTORS" CONTAINED
IN THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED DECEMBER
31, 1997.

            The following discussion of the results of the operations and
financial condition of the Company should be read in conjunction with the
Company's Consolidated Financial Statements and the related notes thereto.

OVERVIEW

            Atlantic is an independent, physician-owned and governed, integrated
medical practice group network. Since its inception, Atlantic has focused its
efforts on providing administrative services to participating physicians and
medical practice groups and on developing a community-based, integrated health
care delivery system to provide quality, cost-effective health care to the
citizens of Eastern North Carolina.

            Atlantic is in the process of integrating, economically and
clinically, physicians practicing primarily in single-specialty medical practice
groups into a larger multi-specialty network of physicians and medical practice
groups. Physicians participating in Atlantic's network provide primary and
referral specialty heath care services to managed care health plan enrollees and
other patients. Atlantic continues to develop strategic alliances with payors of
health care services and other health care providers to achieve greater
coordination of the delivery of and payment of health care services.

            As of November 5, 1998, Atlantic had entered into Medical Services
Provider Agreements covering approximately 400 physicians located in 19 counties
of Eastern North Carolina. The Medical Services Provider Agreements require
participating physicians to comply with key operating policies and procedures
established by Atlantic's physician Board of Directors. Additionally, as of
November 5, 1998, Atlantic through its subsidiary, The Beacon Company, had
entered into Facility Participation Agreements with five hospitals in Eastern
North Carolina. The Facility Participation Agreements allow Atlantic to work
with local hospitals on joint contracting opportunities.

            Atlantic derives its revenues from three main sources. The first is
fees paid by employers, managed care health plans, such as HMOs, and other
third-party payors to access its integrated provider network and the other
administrative and consulting services. The second is administrative service
fees. The third is fees generated from providing group purchasing and other
services to participating physicians.

            Atlantic plans to continue to provide administrative, group
purchasing and other services to participating physicians and to collect fees
for performing such services during 1998. Management, 




                                       6
<PAGE>

however, believes that Atlantic's long term success will result from its
continued ability to generate revenues from managed care plans, HMOs, insurance
carriers, employers and other buyers of health care services for obtaining
access to Atlantic's network and health plan management services.

            Atlantic continues to meet directly with the management of major
regional employers and their employee benefits consultants to discuss Atlantic's
network and health plan management services. Although no assurance can be given,
Atlantic believes that it will continue to generate income from access and
management fees paid by buyers of health care services in 1998. As of November
5, 1998, Atlantic had agreements with employers covering over 3,200 lives.

            In January 1997, Atlantic entered into a business development
agreement with Kanawha Insurance Company ("Kanawha") to develop a variety of
health plans to be marketed to small and large employers in Atlantic's target
markets. The parties intend to market the health plans under the name,
"Lighthouse Health Plans." In connection with these agreements, Atlantic and
Kanawha formed a joint venture corporation named The Beacon Company ("Beacon").
In February 1998, Kanawha HealthCare Solutions, Inc. ("Kanawha HealthCare"), a
subsidiary of Kanawha Insurance Company, and Beacon entered into several
agreements, including a Master Contract, Managed Care Agreement and
Administrative Services Agreement. Under the Master Contract, Kanawha HealthCare
and Beacon have agreed to develop and market health maintenance organization,
preferred provider organization and third party administrator health plan
products. Beacon will function as a general agent for the sale of the health
plan products, and Beacon will be the exclusive agent of Kanawha for the sale of
fully insured Lighthouse Plans and other fully insured managed care products.
Beacon and Kanawha jointly are to use their best efforts to offer and sell
Lighthouse Health Plans and related services to self-funded employers. Under the
Managed Care Agreement, Beacon shall establish and manage a regional preferred
provider network of physicians, hospitals and other providers. Under the
Administrative Services Agreement, Kanawha is to provide a management
information system and provide administrative services required for enrollees
and providers. Beacon is to provide a Medical Director and physicians for the
Medical Management Committee that is to oversee the delivery of health care
services.

            Initially, Atlantic and Kanawha each purchased 1,000 shares of
common stock of Beacon. However, on June 24, 1998, Atlantic purchased all of the
1,000 shares of common stock owned by Kanawha in exchange for $1,000 cash and
the issuance by Beacon of a convertible, subordinated debenture in the principal
amount of $90,000 (the "Debenture"). The Debenture is due and payable on June
30, 2003 and bears interest at the rate of 6% per annum. Interest on the
Debenture is payable semi-annually on December 1 and June 1 of each year,
commencing December 1, 1998. The Debenture is convertible into 4% of Beacon's
outstanding common stock if Beacon completes a public offering of its common
stock. Beacon does not have any right to redeem the Debenture prior to maturity.
Upon the occurrence of an "Event of Default," as defined under the Debenture,
the entire unpaid principal and accrued interest will become immediately due and
payable.

            Although the management of Atlantic finds it difficult to forecast
when exactly its operations will become profitable, management believes that
Atlantic's profitability is largely dependent upon several factors, including
(i) the number of physicians participating in Atlantic's network; and (ii) the
number of contracts and long-term relationships between Atlantic and managed
care health plans, insurance carriers, employers and other buyers of health care
services.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1997

            Revenue increased from $43,856 for the three months ended September
30, 1997 to $56,315 for the three months ended September 30, 1998, an increase
of $12,459, or 28%. This increase was due to a strong growth in group purchasing
contract revenue and network access fees offset by a drop in administrative
revenues.



                                       7
<PAGE>

            Operating expenses decreased from $102,963 for the three months
ended September 30, 1997 to $98,905 for the three months ended September 30,
1998. This decrease was primarily attributable to a drop in consulting fees and
officer compensation which was partially offset by increases in office and rent
expense.

            Office and other expenses increased from $11,355 in the three months
ended September 30, 1997 to $17,712 in the three months ended September 30,
1998, an increase of $6,357. This increase was primarily due to the Company's
growth and related increases in communications expenses, office supply expenses
and credentialing fees. Depreciation and amortization expense was $2,095 in the
three months ended September 30, 1997 compared to $1,756 in the three months
ended September 30, 1998. This increase was primarily due to the acquisition of
communications equipment and other depreciable office equipment. Consulting fees
decreased from $25,444 for the three months ended September 30, 1997 to $16,488
for the three months ended September 30, 1998, a decrease of $8,956 and salaries
and wages decreased from $62,587 for the three months ended September 30, 1997
to $57,160 for the three months ended September 30, 1998.

            Atlantic incurred a net loss of $59,107 in the three months ended
September 30, 1997 compared with a net loss of $42,590 in the three months ended
September 30, 1998. This decrease in net loss was due to the increase in
revenues and a reduction of consulting fees and salaries and wages.
Atlantic's management anticipates that its operating losses may continue for the
next two years.

LIQUIDITY AND CAPITAL RESOURCES

            To date, Atlantic has financed its operations primarily through the
sale of equity securities and the collection of administrative, group purchasing
and network development and access fees.

            On October 19, 1996, Atlantic filed a Registration Statement on Form
SB-2 with the Securities and Exchange Commission (the "Commission"), pursuant to
which Atlantic registered for offer and sale under the federal securities laws
(i) 700,000 Primary Class Common Shares; (ii) 1,400000 Referral Class Common
Shares; and (iii) 150,000 Nonprofit Class Nonvoting Common Shares. The
Commission declared Atlantic's Registration Statement effective on December 30,
1996, and certain officers and directors of Atlantic commenced sale of
Atlantic's shares shortly thereafter. During the initial offering period which
closed on July 28, 1997, Atlantic sold 116,000 Primary Class Common Shares,
216,000 Referral Class Common Shares and no Nonprofit Class Nonvoting Common
Shares. On September 22, 1997, Atlantic filed a Post-Effective Amendment No. 2
to the Registration Statement. The Commission declared the Post-Effective
Amendment No. 2 effective on September 30, 1997. During the second offering
period which closed on April 28, 1998, Atlantic sold 26,000 Primary Class Common
Shares, 76,000 Referral Class Common Shares and no Nonprofit Class Nonvoting
Common Shares. On June 24, 1998, the Company filed a Post-Effective Amendment
No. 3 to its Registration Statement on Form SB-2 to extend its stock offering
which terminated on April 28, 1998. On August 7, 1998, the Company filed a
Post-Effective Amendment No. 4 to its Registration Statement in response to
comments received from the Securities and Exchange Commission. The Securities
and Exchange Commission declared the Post-Effective Amendment No. 4 effective on
August 12, 1998. Since such date, Atlantic has sold 2,000 Primary Class Common
Shares and 8,000 Referral Class Common Shares. Atlantic has sold an aggregate of
144,000 Primary Class Common Shares, 300,000 Referral Class Common Shares and no
Nonprofit Class Nonvoting Common Shares since the Registration Statement was
first declared effective on December 30, 1996. Atlantic plans to conduct
additional offerings of shares of its capital stock as it adds additional
physicians to the Atlantic network.

            The net proceeds from Atlantic's offering have been and will
continue to be used for working capital. Up to $500,000 of the net proceeds of
the offering may be used, as determined at the sole discretion of the Board of
Directors, to explore the desirability and feasibility of organizing, licensing
and operating an affiliate health maintenance organization or other health plan.
No assurance can be 




                                       8
<PAGE>

provided, however, that the Board of Directors will determine to undertake any
such study or to proceed with any such organization or affiliate company
organization and operation.

            Atlantic had $93,904 and $121,792 in working capital at September
30, 1998 and 1997, respectively. Atlantic's cash and cash equivalents were
$66,495 and $107,037 at September 30, 1998 and 1997, respectively. The decrease
in Atlantic's working capital is primarily due to its continued losses.
Depending upon the number of new shareholders that Atlantic obtains and the
amount of revenue derived from its operations, Atlantic believes that sufficient
liquidity is available to satisfy its working capital through December 1999. In
the event that Atlantic's future stock sales and revenues are lower than
projected, the Company anticipates that it may charge its shareholders
assessments or decrease compensation paid to its officers.

            Atlantic did not have any material commitments for capital
expenditures as of September 30, 1998.





                                       9
<PAGE>




                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

            None.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

            During the three months ended September 30, 1998, the Company has
            not issued or sold any securities that were not registered under the
            Securities Act of 1933, as amended.

            On October 19, 1996, the Company filed a Registration Statement on
            Form SB-2 (File No. 333-05826) with the Securities and Exchange
            Commission (the "Commission"), pursuant to which the Company
            registered for offer and sale under the federal securities laws (i)
            700,000 Primary Class Common Shares; (ii) 1,400000 Referral Class
            Common Shares; and (iii) 150,000 Nonprofit Class Nonvoting Common
            Shares, at a purchase price of $1.00 per share. The Commission
            declared the Company's Registration Statement effective on December
            30, 1996, and certain officers and directors of the Company
            commenced sale of its shares shortly thereafter. During the initial
            offering period which closed on July 28, 1997, the Company sold
            116,000 Primary Class Common Shares, 216,000 Referral Class Common
            Shares and no Nonprofit Class Nonvoting Common Shares. On September
            22, 1997, the Company filed a Post-Effective Amendment No. 2 to the
            Registration Statement. The Commission declared the Post-Effective
            Amendment No. 2 effective on September 30, 1997. During the second
            offering period which closed on April 28, 1998, the Company sold
            26,000 Primary Class Common Shares, 76,000 Referral Class Common
            Shares and no Nonprofit Class Nonvoting Common Shares. On June 24,
            1998, the Company filed a Post-Effective Amendment No. 3 to the
            Registration Statement. On August 7, 1998, the Company filed a
            Post-Effective Amendment No. 4 to the Registration Statement in
            response to a comment letter received from the Commission. The
            Commission declared the Post-Effective Amendment No. 4 effective on
            August 12, 1998. Since such date, the Company has sold 2,000 Primary
            Class Common Shares and 8,000 Referral Class Common Shares. The
            Company has sold an aggregate of 144,000 Primary Class Common
            Shares, 300,000 Referral Class Common Shares and no Nonprofit Class
            Nonvoting Common Shares since the Registration Statement was first
            declared effective on December 30, 1996. The Company plans to
            conduct additional offerings of shares of its capital stock as it
            adds additional physicians to its network.

            Since the Registration Statement was first declared effective on
            December 30, 1996, the Company has received $444,000 in gross
            proceeds, $105,000 of which the Company estimates has been used for
            offering expenses and the balance of which has been used for working
            capital. Of the $339,000 used for working capital, approximately
            $319,000 were paid to directors and officers of the Company in
            consideration of services rendered. Except for the foregoing, no
            payments have been made by the Company to any directors, officers,
            any persons owning 10% or more of any equity security of the Company
            or any affiliate of the Company. The Company anticipates that the
            net proceeds from its current offering will continue to be used for
            working capital. Up to $500,000 of the net proceeds of the offering
            may be used, as determined at the sole discretion of the Company's
            Board of Directors, to explore the desirability and feasibility of
            organizing, licensing and operating an affiliate health maintenance
            organization or other health plan.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

            Not applicable.



                                       10
<PAGE>


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

            (a)  Exhibits.

                 Exhibit
                 Number                        Description
                 ------                        -----------

                  27.1                         Financial Data Schedule

            (b)  Reports on Form 8-K

                 No reports on Form 8-K were filed during the quarter ending 
                 September 30, 1998.




                                       11
<PAGE>




                                   SIGNATURES

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

                        ATLANTIC INTEGRATED HEALTH
November 10, 1998       INCORPORATED


                        By: /s/ J. Philip Mahaney Jr., M.D.
                            ----------------------------------------------
                                J. Philip Mahaney, Jr., M.D.
                                President and Chief Executive Officer
                                (principal executive officer)


                        By: /s/ Stephen W. Nuckolls
                            ----------------------------------------------
                                Stephen W. Nuckolls
                                Chief Financial Officer
                                (principal financial and accounting officer)







                                       12
<PAGE>




                                  EXHIBIT INDEX


 Exhibit Number            Description                       Location
 --------------            -----------                       --------

     27.1            Financial Data Schedule       Filed herewith electronically




                                       13