FORM 10-Q

                      SECURITIES AND EXCHANGE COMMISSION

                            Washington, DC  20549


                  Quarterly Report Under Section 13 Or 15(d)
                    Of The Securities Exchange Act Of 1934



For the Quarter Ended:   July 4, 1998           Commission File No:   0-6933



                              CAMBEX CORPORATION

            (Exact name of registrant as specified in its charter)



       Massachusetts                             04-244-2959

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


                  360 Second Avenue, Waltham, Massachusetts

                   (Address of principal executive offices)


                                    02451

                                  (Zip Code)


Registrant's telephone number, including area code:  (781) 890-6000


       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

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                                             CAMBEX CORPORATION AND SUBSIDIARIES
      
                                                 CONSOLIDATED BALANCE SHEETS
                                              JULY 4, 1998 AND DECEMBER 31, 1997
                                                           (UNAUDITED) 
      
                                                            ASSETS
      
      
                                                                            JULY 4,              DECEMBER 31,
                                                                              1998                      1997
                                                                          -------------             -------------
      CURRENT ASSETS:
      
         CASH AND CASH EQUIVALENTS                                       $     454,623             $     476,246
      
      
         ACCOUNTS RECEIVABLE, LESS RESERVES OF
           $131,000 ON JULY 4, 1998 AND
           $131,000 ON DECEMBER 31, 1997                                       803,677                 1,200,343
      
         CURRENT PORTION OF INVESTMENT IN SALES-TYPE LEASES,
           NET OF UNEARNED INTEREST INCOME OF $2,000 ON
           JULY 4, 1998 AND $4,000 ON DECEMBER 31, 1997                         55,932                    59,299
      
         INVENTORIES                                                         1,013,472                 1,412,925
      
         PREPAID TAXES                                                          -                         -
      
         PREPAID EXPENSES                                                      133,849                   121,183
                                                                         --------------            --------------
            TOTAL CURRENT ASSETS                                         $   2,461,553             $   3,269,996
                                                                         --------------            --------------
      LONG-TERM INVESTMENT IN SALES-TYPE LEASES, NET
         OF UNEARNED INTEREST INCOME OF $1,000 ON
         ON DECEMBER 31, 1997                                            $      -                  $      25,820
      
      LEASED EQUIPMENT, AT COST, NET OF ACCUMULATED
         DEPRECIATION OF $217,000 ON JULY 4, 1998                         
         AND $183,000 ON DECEMBER 31, 1997                               $       3,836             $      37,886
      
      PROPERTY AND EQUIPMENT, AT COST:
      
         MACHINERY AND EQUIPMENT                                         $   3,040,449             $   3,036,699
         FURNITURE AND FIXTURES                                                247,173                   247,173
         LEASEHOLD IMPROVEMENTS                                                602,092                   620,949
                                                                         --------------            --------------
                                                                         $   3,889,714             $   3,904,821
      
         LESS - ACCUMULATED DEPRECIATION AND AMORTIZATION                    3,453,618                 3,347,941
                                                                         --------------            --------------
            NET PROPERTY AND EQUIPMENT                                   $     436,096             $     556,880
      
      OTHER ASSETS
            TECHNOLOGY LICENSE/MARKETING AGREEMENT, 
              NET OF ACCUMULATED AMORTIZATION OF $8,500,000
              ON JULY 4, 1998 AND ON DECEMBER 31, 1997                   $      -                  $      -
            OTHER                                                               37,830                    37,830
                                                                         --------------            --------------
        TOTAL ASSETS                                                     $   2,939,315             $   3,928,412
                                                                         ==============            ==============
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                                           CONSOLIDATED BALANCE SHEETS
                                       JULY 4, 1998 AND DECEMBER 31, 1997
                                                   (UNAUDITED)
      
                                     LIABILITIES AND STOCKHOLDERS' INVESTMENT
      
                                                                                JULY 4,            DECEMBER 31,
                                                                                 1998                  1997
                                                                            -------------         --------------
      LIABILITIES NOT SUBJECT TO COMPROMISE:
      CURRENT LIABILITIES:
      
        ACCOUNTS PAYABLE                                                    $    189,679          $     296,419      
        OBLIGATIONS FOR TRADE-IN MEMORY                                             -                      -      
        ACCRUED EXPENSES                                                         272,184                461,725
                                                                            -------------         --------------
           TOTAL CURRENT LIABILITIES                                        $    461,863          $     758,144
                                                                            -------------         --------------
      
      NOTES PAYABLE                                                         $  1,063,730                   -

      DEFERRED REVENUE                                                            15,478                 15,478

      LIABILITIES SUBJECT TO COMPROMISE:
        ACCOUNTS PAYABLE AND ACCRUED EXPENSES                               $  6,040,646          $   6,325,273
      
      STOCKHOLDERS' INVESTMENT: 
      
        PREFERRED STOCK, $1.00 PAR VALUE PER SHARE
          AUTHORIZED - 3,000,000 SHARES
          ISSUED - NONE                                                               --                     --
      
        COMMON STOCK, $.10 PAR VALUE PER SHARE -
           AUTHORIZED -   25,000,000 SHARES
           ISSUED  -  10,872,265 SHARES ON JULY 4, 1998 AND
                      10,636,108 SHARES ON DECEMBER 31, 1997                $  1,087,227          $   1,063,611
                                                                              
        CAPITAL IN EXCESS OF PAR VALUE                                        15,886,499             15,814,783
      
        CUMULATIVE TRANSLATION ADJUSTMENT                                        120,441                 60,756
      
        RETAINED EARNINGS (DEFICIT)                                          (20,881,803)           (19,254,867)
      
        LESS - COST OF SHARES HELD IN TREASURY -  
               1,534,356 ON JULY 4, 1998 AND
               ON DECEMBER 31, 1997                                             (854,766)              (854,766)
                                                                            -------------         --------------
        TOTAL STOCKHOLDERS' INVESTMENT                                      $ (4,642,402)         $  (3,170,483)
                                                                            -------------         --------------
        TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT                      $  2,939,315          $   3,928,412
                                                                            =============         ==============
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                                      CAMBEX CORPORATION AND SUBSIDIARIES
  
                                       CONSOLIDATED STATEMENTS OF INCOME
                                  FOR THE SIX MONTHS ENDED JULY 4, 1998 AND JUNE 28, 1997
                                                      (UNAUDITED)
                                              
                                                      QUARTER ENDED                 SIX MONTHS ENDED           
  
                                                JULY 4,            JUNE 28,       JULY 4,       JUNE 28,         
                                                 1998                 1997         1998          1997
                                            ------------         ------------    -----------     ----------    
 
  REVENUES                                  $   930,127         $  4,375,902    $  1,839,135    $  7,402,635
  
  COST OF SALES                                 757,747            2,850,962       1,620,257       6,498,508 

            
                                           -------------        -------------   ------------    ------------
  GROSS PROFIT                              $   172,380         $  1,524,940    $    218,878    $  2,704,127  
  
  OPERATING EXPENSES:
                                                                  
    RESEARCH AND DEVELOPMENT                $   230,114         $    747,516    $    665,342    $  1,512,404
    SELLING                                     281,380            1,026,156         561,502       2,206,502
    GENERAL AND ADMINISTRATIVE                  212,881              314,383         420,615         712,493
                                            ------------        -------------   ------------    ------------
                                            $   724,375         $  2,088,055    $  1,647,459    $  4,431,399       
                                            ------------        -------------   ------------    ------------        
  
  OPERATING INCOME (LOSS)                   $(  551,995)        $ (  563,115)   $ (1,428,581)   $ (1,727,272)
  
  OTHER INCOME (EXPENSE):
    INTEREST EXPENSE                        $      -            $     (9,876)   $       -       $    (43,454)
    INTEREST INCOME                               1,027                4,042           2,282          19,318               
    OTHER INCOME (EXPENSE)                      (86,250)             (14,281)       (200,637)        (43,910)          
                                            ------------        -------------   ------------    ------------         
   INCOME (LOSS) BEFORE INCOME TAXES        $(  637,218)        $   (583,230)   $ (1,626,936)   $ (1,795,318)

    PROVISION FOR INCOME TAXES              $         0         $          0               0               0
                                            ------------        -------------   ------------    ------------
  NET INCOME (LOSS)                         $(  637,218)        $   (583,230)   $ (1,626,936)   $ (1,795,318)
                                            ============        =============   ============    ============ 
  
  NET INCOME (LOSS) PER COMMON SHARE        $    (0.07)         $      (0.06)   $      (0.18)   $      (0.20)   
                                            ============        =============   =============   ============   
  WEIGHTED AVERAGE COMMON AND COMMON                              
  EQUIVALENT SHARES OUTSTANDING               9,200,000            9,080,000       9,150,000       9,080,000    
  
 
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                                           CAMBEX CORPORATION AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 FOR THE SIX MONTHS ENDED JULY 4, 1998 AND JUNE 28, 1997
  
                                                                                 FOR THE SIX MONTHS ENDED
                                                                                  JULY 4,         JUNE 29,
                                                                                    1998             1997
                                                                               ----------       ----------
  CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Income (Loss)                                                            $ (1,626,936)    $ (1,795,318)
  Adjustments to reconcile net income to net
    cash provided by (used in) operating activities:
    Depreciation and amortization                                              $    147,584     $    397,664
    Amortization of prepaid expenses                                                 24,892           28,990
    Common stock issued in lieu of cash                                              88,148             -
    Change in assets and liabilities:
      Decrease (increase) in accounts receivable                                    396,666          169,260    
      Decrease in inventory                                                         399,453          800,923
      Decrease in investment in sales-type leases                                    29,187          344,116
      Decrease in prepaid taxes                                                        -           2,335,295
      Decrease (increase) in prepaid expenses                                       (37,558)         (10,430) 
      Decrease in other assets                                                         -                -
      Increase (decrease) in accounts payable                                      (106,740)         133,936
      Decrease in obligations for trade-in memory                                      -            (134,463)
      Increase (decrease) in accrued liabilities                                   (189,541)          99,050
      Increase (decrease) in deferred revenue                                          -            (530,758) 
      Increase (decrease) in liabilities subject to compromise                     (284,627)            - 
                                                                                 
                                                                               -------------     ------------
        Total adjustments                                                      $    467,464     $  3,633,583
                                                                               -------------     ------------
        Net cash provided by (used in) operating activities                    $ (1,159,472)    $  1,838,265
  
  CASH FLOWS FROM INVESTING ACTIVITIES:
    Sales (purchases) of Equipment                                             $      7,250     $    (13,339)
                                                                                ------------     ------------
        Net cash provided by (used in) investing activities                    $      7,250     $    (13,339)
  
  CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from sale of common stock                                         $     7,184     $        225
    Proceeds from notes payable                                                   1,063,730             -
    Repayments under revolving credit agreement                                        -          (1,800,000)
                                                                               -------------     ------------
      Net cash provided by (used in) financing activities                      $  1,070,914     $ (1,799,775)
  
    Effect of exchange rate changes on cash                                          59,685          (89,944)
                                                                                ------------     ------------
  Net decrease in cash and cash equivalents                                    $    (21,623)    $    (64,793)
  
  Cash and cash equivalents at beginning of period                             $    476,246     $    615,949
                                                                               -------------     ------------
  Cash and cash equivalents at end of period                                   $    454,623     $    551,156
                                                                               =============     ============
  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid during the period for:
      Interest                                                                 $       -        $     43,454
      Income Taxes                                                                     -                -
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<PAGE>
                                  FORM 10-Q

                     CAMBEX CORPORATION AND SUBSIDIARIES


For The Quarter Ended: July 4, 1998             Commission File No:   0-6933

Notes & Comments:

       (1)Significant Accounting Policies

       The accompanying consolidated financial statements include the accounts 
       of the Company and its wholly-owned subsidiaries.  All material 
       intercompany transactions and balances have been eliminated in 
       consolidation.

       The Company has deferred revenue associated with the sale of certain 
       products which have future performance obligations, relating 
       to reinstallation of IBM memory and maintenance.

       The condensed financial statements 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.  The information furnished 
       includes all adjustments and accruals consisting only of normal 
       recurring accrual adjustments which are, in the opinion of management, 
       necessary for a fair presentation of results for the interim period.  It 
       is suggested that these condensed financial statements be read in 
       conjunction with the financial statements and the notes thereto included 
       in the Company's latest annual report on Form 10-K.

       Inventories, which include raw materials, labor and manufacturing 
       overhead are stated at the lower of cost (first-in, first-out) or market 
       and consist of the following:

                                    July 4,             December 31, 
                                    1998                    1997       
 
       Raw materials              $  708,622            $   987,920
       Work-in-process               183,178                255,377
       Finished goods                121,672                169,628
       Trade-in memory                 -                       -

                                  $1,013,472            $ 1,412,925


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<PAGE>
                                  FORM 10-Q

                     CAMBEX CORPORATION AND SUBSIDIARIES


For The Quarter Ended:   July 4, 1998               Commission File:  0-6933



Notes & Comments (Continued):


       (2)    Income and Dividends Per Share

              Per share amounts are based on the weighted average number of 
              shares outstanding during each year plus applicable common stock 
              equivalents.  There were no material differences for per share 
              amounts assuming full dilution in either year.

       (3)    Management's Discussion and Analysis of Financial Condition and 
              Results of Operations

              Revenues for the second quarter ended July 4, 1998 decreased
              79% from the comparable three months of the prior year due 
              to decreased sales of the Company's mainframe storage and 
              client/server storage products. 

              The gross profit of 19% for the second quarter of 1998 was lower 
              than the 35% achieved in 1997 due primarily to the 
              relative amount of fixed costs in relation to lower revenues.

              Operating expenses for the three months ended July 4, 1998 
              decreased 65% from the comparable three months of the prior year 
              due principally to the cost savings achieved through a work force 
              reduction and other expense controls put in place. 



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                                  FORM 10-Q

                     CAMBEX CORPORATION AND SUBSIDIARIES


For The Quarter Ended:   July 4, 1998           Commission File:      0-6933


Notes & Comments (Continued):


              On June 1, 1998, the Company raised approximately $1,060,000, 
              including approximatley $460,000 from Joseph F. Kruy, Chairman,
              President and Chief Executive Officer of the Company, in cash 
              from the issuance of 10% Subordinated Convertible Promissory 
              Notes (the "Notes"). Under the terms of the Notes, which are 
              due on April 30, 2003, the holders may convert the notes into 
              shares of common stock at a conversion price of $0.22 per share.
              In addition to the Note, each holder was issued a Stock Purchase 
              Warrant (the "Warrant"), the exercise of which will allow the
              warrant holder to purchase one share of common stock, at $0.50 
              per share, for each dollar invested through issuance of the Notes.


              







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<PAGE>
                                  FORM 10-Q

                     CAMBEX CORPORATION AND SUBSIDIARIES


For The Quarter Ended:  July 4, 1998                Commission File:  0-6933



                                  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.


CAMBEX CORPORATION


By:    /s/    Joseph F. Kruy
       
              Joseph F. Kruy
              President




By:    /s/    Peter J. Kruy
                    
              Peter J. Kruy
              Chief Financial Officer




Dated:        September 4, 1998










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