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

                                   FORM 10-Q
(Mark One)
[X]    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
       OF 1934

For the Quarter Ended December 31, 1995
                      ----------------------------------------------------

                                       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.: 0-18114
                     -----------------------------------------------------

LASERMASTER TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
               (Exact name of registrant as specified in charter)

Minnesota                                                        41-1612861
---------------------------------                            -------------------
(State or other jurisdiction                                    (IRS Employer
of incorporation or organization)                            Identification No.)

7156 Shady Oak Road, Eden Prairie, Minnesota      55344
--------------------------------------------      -----
(Address of principal executive offices)        (zip code)

                                 (612) 941-8687
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

--------------------------------------------------------------------------------
   (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 ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.  Yes _____     No _____

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

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

Class                                    Outstanding at 12/31/95
-----                                    -----------------------

Common Stock, $.01 par value                   11,314,633
<PAGE>
 
                         PART I. FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                LASERMASTER TECHNOLOGIES, INC. AND SUBSIDIARIES
                -----------------------------------------------
                    CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                    ---------------------------------------

                                     ASSETS
                                     ------
<TABLE>
<CAPTION>
                                                   December 31,   June 30,
                                                   ------------  -----------
                                                       1995         1995
                                                   ------------  -----------
<S>                                                <C>           <C>
CURRENT ASSETS:
  Cash and cash equivalents                         $   720,355  $   607,223
  Accounts receivable, less allowance for
    doubtful accounts and sales returns of
    $2,017,000 and $2,051,000, respectively          14,900,418   17,104,353
  Inventory                                          20,918,345   21,609,487
  Income tax receivable                                  67,232
  Other current assets                                3,054,421    2,452,766
  Deferred tax asset                                  2,868,000    2,868,000
                                                    -----------  -----------
       TOTAL CURRENT ASSETS                          42,528,771   44,641,829
 
PROPERTY AND EQUIPMENT, net                           6,202,448    6,323,749
 
CAPITALIZED SOFTWARE, less accumulated
  amortization of $4,798,267 and $3,465,724
  respectively                                        5,145,364    4,991,084
 
ACQUIRED TECHNOLOGY, PATENTS
AND LICENSES, less accumulated amortization
of $1,246,480 and $967,765, respectively              3,611,902    3,204,610
                                                    -----------  -----------
                                                    $57,488,485  $59,161,272
                                                    ===========  ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------
 
CURRENT LIABILITIES:
  Notes payable                                     $ 7,082,973  $ 6,462,901
  Notes payable-related parties                       1,765,000
  Accounts payable                                   14,842,523   18,204,869
  Accrued payroll and payroll taxes                   2,238,981    2,642,947
  Income taxes payable                                               201,768
  Other current liabilities                           3,025,337    2,410,949
  Current maturities of long-term debt                1,126,842    1,009,917
                                                    -----------  -----------
       TOTAL CURRENT LIABILITIES                     30,081,656   30,933,351
 
LONG-TERM DEBT, less current maturities               1,283,786    1,598,546
 
DEFERRED INCOME TAXES                                 1,336,000    1,336,000
 
COMMITMENTS AND CONTINGENCIES
 
STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value; authorized
    30,000,000 shares; 11,314,633 and 11,176,382
    shares issued and outstanding, respectively         113,146      111,764
  Preferred stock, $.01 par value; authorized
    5,000,000 shares; no shares issued or
    outstanding
  Additional paid-in capital                         16,960,516   16,626,953
  Retained earnings                                   7,713,381    8,554,658
                                                    -----------  -----------
       TOTAL STOCKHOLDERS' EQUITY                    24,787,043   25,293,375
                                                    -----------  -----------
                                                    $57,488,485  $59,161,272
                                                    ===========  ===========
</TABLE>

                See notes to consolidated financial statements.

                                       2
<PAGE>
 
                LASERMASTER TECHNOLOGIES, INC. AND SUBSIDIARIES
                -----------------------------------------------
               CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
               -------------------------------------------------

<TABLE>
<CAPTION>
 
 
                                                             Three Months Ended             Six Months Ended
                                                                 December 31,                  December 31,
                                                          --------------------------    --------------------------
<S>                                                        <C>               <C>          <C>            <C>   
                                                              1995           1994           1995           1994
                                                          -----------    -----------    -----------     -----------
 
NET SALES                                                 $25,340,000    $28,484,651    $46,605,871     $58,747,374
 
COST OF GOODS SOLD                                         15,441,860     16,633,223     28,169,017      33,718,264
                                                          -----------    -----------    -----------     -----------
      GROSS PROFIT                                          9,898,140     11,851,428     18,436,854      25,029,110
 
OPERATING EXPENSES:
  Sales and Marketing                                       5,065,279      7,345,747     10,466,760      13,962,283
  Research and Development                                  1,624,430      1,512,651      2,921,081       2,799,553
  General and Administrative                                2,610,273      2,596,538      5,484,334       5,534,581
                                                          -----------    -----------    -----------     -----------
                                                            9,299,982     11,454,936     18,872,175      22,296,417
                                                          -----------    -----------    -----------     -----------
       OPERATING PROFIT (LOSS)                                598,158        396,492       (435,321)      2,732,693
 
OTHER INCOME (EXPENSE):
  Interest expense                                           (445,103)      (269,255)      (785,552)       (497,578)
  Interest income                                               4,428          6,118          8,907          15,311
  Other expense                                               (45,225)       (55,700)         9,689         (31,332)
                                                          -----------    -----------    -----------     -----------
                                                             (485,900)      (318,837)      (766,956)       (513,599)
                                                          -----------    -----------    -----------     -----------
 
EARNINGS (LOSS) BEFORE INCOME TAXES                           112,258         77,655     (1,202,277)      2,219,094
INCOME TAX (PROVISION) BENEFIT                                (33,000)       (24,000)       361,000        (666,000)
                                                          -----------    -----------    -----------     -----------
 
NET EARNINGS (LOSS)                                       $    79,258    $    53,655    $  (841,277)    $ 1,553,094
                                                          ===========    ===========    ===========     ===========
 
PER COMMON SHARE:
  Net Earnings (Loss)                                     $       .01    $       .00    $      (.07)    $       .12
 
Average common and common
equivalent shares outstanding                              12,181,825     12,472,940     12,133,851      12,518,292
 
</TABLE> 
 
                See notes to consolidated financial statements.

                                       3
<PAGE>
 
                LASERMASTER TECHNOLOGIES, INC. AND SUBSIDIARIES
                -----------------------------------------------
               CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
               --------------------------------------------------
<TABLE>
<CAPTION>
 
                                                              Six Months Ended
                                                                December 31,
                                                         --------------------------
                                                             1995          1994
                                                         ------------  ------------
<S>                                                      <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (Loss) Earnings                                     $  (841,277)  $ 1,553,094
  Adjustments to reconcile net (loss) earnings to net
    cash provided by operating activities:
     Depreciation and amortization                          2,860,056     2,996,664
     Amortization of deferred financing costs                  63,141        40,361
     Loss on sale of property and equipment                    46,915        11,935
  Change in current assets and current liabilities:
    (Increase) decrease in:
      Accounts receivable                                   2,203,935     1,000,867
      Inventory                                               691,142    (6,339,742)
      Other current assets                                  ( 664,797)     (332,164)
      Income tax receivable                                   (67,232)
     Increase (decrease) in:
      Accounts payable                                     (3,362,346)    1,671,754
      Accrued payroll and payroll taxes                      (403,966)       89,031
      Other current liabilities                               614,386       377,225
       Income taxes payable                                  (201,768)      188,845
                                                          -----------   -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES                     938,189     1,257,870
 
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment                     ( 1,048,992)   (1,380,346)
  Additions to capitalized software costs                  (1,486,823)   (1,882,618)
  Proceeds from sale of property and equipment                 26,988         3,083
  Additions to patents and other assets                      (686,007)   (1,215,265)
                                                          -----------   -----------
NET CASH USED IN INVESTING ACTIVITIES                      (3,194,834)   (4,475,146)
 
CASH FLOWS FROM FINANCING ACTIVITIES:
  Issuance of Common Stock                                    334,945       386,333
  Net borrowing under revolving credit lines                  620,072     3,229,649
  Net borrowing from related parties                        1,765,000
  Proceeds from long-term debt                                159,003       470,938
  Payments on long-term debt                                 (509,243)     (383,302)
                                                          -----------   -----------
NET CASH PROVIDED BY FINANCING
  ACTIVITIES                                                2,369,777     3,703,618
                                                          -----------   -----------
 
INCREASE IN CASH AND CASH EQUIVALENTS                         113,132       486,342
 
CASH AND CASH EQUIVALENTS AT BEGINNING
  OF PERIOD                                                   607,223     2,193,673
                                                          -----------   -----------
 
CASH AND CASH EQUIVALENTS AT END
  OF PERIOD                                               $   720,355   $ 2,680,015
                                                         ===========   ===========
</TABLE>
                See notes to consolidated financial statements.

                                       4
<PAGE>
 
                LASERMASTER TECHNOLOGIES, INC. AND SUBSIDIARIES
                -----------------------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------


1.  Basis of presentation -

    The accompanying unaudited consolidated financial statements have been
    prepared in accordance with generally accepted accounting principles for
    interim financial information and with the instructions to Form 10-Q and
    Rule 10-01 of Regulation S-X. They do not include all information and
    footnotes required by generally accepted accounting principles for complete
    financial statements. However, except as disclosed herein, there has been no
    material change in the information disclosed in the notes to consolidated
    financial statements included in the Annual Report on Form 10-K of
    LaserMaster Technologies, Inc. and subsidiaries (the "Company") for the year
    ended June 30, 1995. In the opinion of management, all adjustments
    (consisting of normal recurring accruals) considered necessary for a fair
    presentation have been included. Operating results for the three-month and
    six-month periods ended December 31, 1995 are not necessarily indicative of
    the results that may be expected for the year ending June 30, 1996.
 
2.  Inventory -
 
    Inventory consists of the following:

<TABLE> 
<CAPTION> 
                                          December 31,     June 30,
                                              1995           1995
                                          -----------    -----------
<S>                                        <C>             <C>  
 Raw materials
  Purchased printer engines               $ 1,606,353    $   796,940
  Completed subassemblies                   5,982,970      5,419,774
  Raw materials                             7,344,206      9,397,341
 Work in process                              711,460        987,009
 Finished goods                             5,273,356      5,008,423
                                          -----------    -----------
                                          $20,918,345    $21,609,487
                                          ===========    ===========
 
</TABLE>

3.  Short-term financing -

    On April 25, 1994 the Company's subsidiary, LaserMaster Corporation (LMC),
    established an operating line of credit with a commercial bank which allowed
    LMC to borrow up to $5,000,000 of eligible accounts receivable. On November
    11, 1994 and December 16, 1994, the agreement was amended to increase the
    line of credit from $5,000,000 to $9,250,000 of eligible accounts receivable
    and inventory. The amended agreement allowed LMC to borrow up to 70% of the
    net eligible accounts receivable and 40% of the net eligible inventory
    subject to a sublimit of $3,000,000. Borrowing was secured by eligible
    accounts receivable and inventory and carried interest at a defined bank
    Reference Rate (prime) plus 1.75% (10.25% at December 31, 1995) with a 0.5%
    unused line fee. At December 31, 1995 approximately $2,203,000 was unused
    under this credit line. The term of the agreement was to expire April 25,
    1996. The loan agreement required LMC to meet various covenants involving
    capital expenditure limitations, cash flow leverage, quarterly pre-tax
    profit and maintain a minimum net worth of $10,250,000. LMC was in violation
    of the quarterly pre-tax profit covenant at December 31, 1995.

    On January 17, 1996 LMC replaced the operating line of credit described
    above with a new credit agreement with a commercial finance company. The new
    agreement allows LMC to borrow up to $10,000,000 based on availability equal
    to 60% of the net eligible accounts receivable and 25% of the net eligible
    inventory. Borrowing is secured by inventory, accounts receivable, and
    general intangibles and bears interest at a defined bank Reference Rate
    (prime) plus 2.0% with a 0.5% unused line fee. The term of the agreement
    expires January 17, 1999. The agreement requires the borrower to meet
    various financial covenants involving capital expenditures, additions to
    capitalized software and intellectual property, minimum debt

                                       5
<PAGE>
 
    service coverage ratio, and maintenance of a minimum net worth of
    $13,000,000. The agreement also requires LMC to meet various non-financial
    covenants.

    LaserMaster Europe, Ltd. (LME), a subsidiary of LMC, maintains a receivables
    financing arrangement with a Dutch commercial finance company whereby LME
    may borrow up to 70% of its eligible accounts receivable, with a maximum
    advance that was increased from $1,500,000 to $2,500,000 in July 1995. At
    December 31, 1995 approximately $325,000 was unused under this credit line.
    Borrowings are available in U.S. Dollars and Dutch Guilders. Borrowings in
    Dutch Guilders are due on demand and bear interest at the Promissory Note
    Discount Rate of the Dutch Central Bank plus 2.5% (5.75% at December 31,
    1995). Borrowings in U.S. Dollars are due on demand and bear interest at a
    rate that fluctuates with the market (no U.S. Dollars were borrowed at
    December 31, 1995). Other fees include a cash advance commission of 0.1% per
    month on the highest monthly loan balance and a commission equal to 0.1% of
    all accounts financed, with an annual minimum charge of $10,000.

    During September 1995, LaserMaster Corporation borrowed $1,565,000 under a
    demand note from TimeMasters, Inc., a corporation controlled by the
    Company's Chief Executive Officer. The note bears interest at a defined bank
    Reference Rate (prime) plus 1.75% (10.25% at December 31, 1995). As of
    October 11, 1995, an additional $200,000 was added to the existing note
    bringing the total amount owed to TMI to $1,765,000 plus accrued interest.
    Repayment of the note is restricted pursuant to the terms of a subordination
    and forbearance agreement between LMC, TMI and LMC's senior lender. In
    consideration for providing financing to LMC and executing the subordination
    and forbearance agreement, TMI was issued a warrant for the purchase of
    277,953 shares of the Company's common stock at an exercise price of $6.35
    per share, TMI has the right to convert up to $1.0 million dollars of the
    debt into shares of the Company's common stock at the lower of $5.875 per
    share or market price at the time of the conversion, and TMI was granted a
    second secured interest in receivables, inventory, and general intangibles
    of LMC.

    On November 29, 1995 LaserMaster Corporation converted $859,516 of accounts
    payable into a promissory note. The note is payable to a trading partner
    that supplies inventory to LMC and bears interest at 10%. Principal in the
    amount of $429,758 shall be due on March 29, 1996 with the final payment of
    the remaining principal and interest due on May 29, 1996. In addition, the
    trading partner was granted a warrant for the purchase of 68,596 shares of
    the Company's common stock at an exercise price of $5.875 per share.


4.  Long-term debt -

    LaserMaster Corporation maintains the following notes payable to a
    commercial finance company, each of which is secured by certain domestic
    fixed assets:
<TABLE>
<CAPTION>
 
                                                   December 31, 1995
                                              ---------------------------
                                              Interest Rate     Balance
                                              --------------  -----------
<S>                                           <C>             <C>
 
    Note with monthly payments through
    August 1997 of $59,427.                        8.53%       $1,104,278
 
    Note with monthly payments through
    January 1998 of $8,342. (1)                    9.81%       $  193,256
 
    Note with monthly payments through
    January 1998 of $6,404. (1)                    9.81%       $  145,454
 
    Note with monthly payments through
    September 1998 of $5,121. (1)                  9.81%       $  147,470
</TABLE>
       (1)  The interest rate is equal to the "One-Month" Commercial Paper rate
            plus 4.0%.

                                       6
<PAGE>
 
5.  Supplemental disclosure of cash flow information and non-cash financing
    activities -

    The Company paid and received cash for the following items:
<TABLE>
<CAPTION>
 
 
                                   Six months ended
                                      December 31,
                                  ------------------
                                    1995      1994
                                  --------  --------
<S>                                <C>       <C>
    Interest paid                 $877,845  $477,217
    Income tax (received) paid     (92,000)  477,156
    Interest received                8,665    17,415
 
</TABLE>
Capital lease obligations of $152,405 and $103,790 were incurred during the six
months ended December 31, 1995, and 1994, respectively.



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

SUMMARY

Net sales for the three months ended December 31, 1995 were $25.3 million
compared to $28.5 million for the same period one year ago.   Net income for the
three months ended December 31, 1995 was $79,000 or $0.01 per share compared to
$54,000 or $0.0 per share for the three months ended December 31, 1994.  Net
sales for the six months ended December 31, 1995 were $46.6 million compared to
$58.7 million for the same period one year ago.  Net loss for the six months
ended December 31, 1995 was $841,000 or $.07 per share compared to net income of
$1.6 million or $0.12 per share for the six months ended December 31, 1994.

The decrease in net sales for the three and six months was primarily
attributable to a decrease in sales of the Company's plain-paper typesetting and
WinPrint/OEM products which was partially offset by an increase in the sale of
PressMate products and the December 1995 introduction of a new product,
DisplayMaker Express (DME). DME, a 54-inch high-speed inkjet color printer, is
the Company's second print engine which it designed and manufactures on a
proprietary basis.  DME uses a phase-change inkjet technology which can be
applied to a variety of media.  DME has a suggested U.S. retail price of $74,000
($90,000 including the Company's ColorMark Pro 1600 print server).   Decreases
in sales of the Company's plain-paper typesetting products are a result of
competitive pressure and market changes.  During  the three months ended
December 31, 1995 the Company sold $4.8 million in proprietary consumables
compared to $2.6 million for the same period one year ago.

In January 1996, the Company's primary operating subsidiary, LaserMaster
Corporation (LMC), signed a new credit agreement with a commercial finance
company providing up to $10 million in revolving credit.  Loan availability
under the facility is based upon the Company's receivables and inventory and is
secured by various assets of the Company.  This agreement has a three-year term
and replaces an existing revolving line of credit with a commercial bank.

                                       7
<PAGE>
 
RESULTS OF OPERATIONS

The following table sets forth certain items from the Company's Consolidated
Statements of Operations expressed as a percentage of net sales:
<TABLE>
<CAPTION>
 
                                       Three months ended       Six months ended
                                       -------------------      -----------------
                                          December 31,            December 31,
                                       -------------------      ------------------
                                        1995         1994        1995        1994
                                       ------       ------      ------      ------
<S>                                    <C>           <C>         <C>         <C>
Net sales............................   100.0%       100.0%      100.0%      100.0%
Cost of goods sold...................    60.9         58.4        60.4        57.4
                                        -----        -----       -----       -----
 Gross profit........................    39.1         41.6        39.6        42.6
Operating expenses:
  Sales and marketing................    20.0         25.8        22.4        23.8
  Research and development...........     6.4          5.3         6.3         4.8
  General and administrative.........    10.3          9.1        11.8         9.4
                                        -----        -----       -----       -----
  Total operating expenses...........    36.7         40.2        40.5        38.0
                                        -----        -----       -----       -----
Operating profit (loss)..............     2.4          1.4        (0.9)        4.6
Other income (expense):
  Interest expense...................    (1.8)        (0.9)       (1.7)       (0.8)
  Interest income....................     0.0          0.0         0.0         0.0
  Other..............................    (0.2)        (0.2)       (0.0)       (0.1)
                                        -----        -----       -----       -----
Earnings (loss) before income taxes..     0.4          0.3        (2.6)        3.7
Income tax (provision) benefit.......    (0.1)        (0.1)        0.8        (1.1)
                                        -----        -----       -----       -----
Net earnings (loss)..................     0.3%         0.2%       (1.8)%       2.6%
                                        =====        =====       =====       =====
 
</TABLE>
Net Sales.  The following table sets forth net sales by product line expressed
in thousands and as a percentage of net sales:

<TABLE>
<CAPTION>
 
 
                                  Three months ended December 31,       Six months ended December 31,
                                 --------------------------------     ---------------------------------
                                      1995              1994               1995               1994
                                 --------------    --------------     --------------     --------------
<S>                               <C>      <C>     <C>      <C>        <C>      <C>       <C>       <C>
 Big Color...................... $12,749   50.3%   $11,362   39.9%    $24,105   51.7%    $22,984   39.1%
 DisplayMaker Express...........   1,030    4.1          0    0.0       1,030    2.2           0    0.0
 Plain-paper typesetting........   8,224   32.5     14,902   52.3      16,366   35.1      31,439   53.5
 PressMate......................   3,071   12.1        229    0.8       4,282    9.2         229    0.4
 WinPrint/OEM/Imaging...........     266    1.0      1,992    7.0         823    1.8       4,095    7.0
                                 -------   ----    -------   ----     -------   ----     -------   ----

 Total net sales................ $25,340  100.0%   $28,485  100.0%    $46,606  100.0%    $58,747  100.0%
                                 =======  =====    =======  =====     =======  =====     =======  =====
 
</TABLE>

The Company sold $4.2 million in Big Color consumable products and $8.5 million
in Big Color hardware for a total of $12.7 of Big Color products for the three
months ended December 31, 1995. Three hundred seventeen DisplayMaker
Professional, 36-inch wide color printers were sold during the second quarter of
fiscal 1996. In the same period one year ago, the Company sold 265 DisplayMaker
Professionals along with $2.6 million in related consumables for a total of
$11.4 million in Big Color sales.

The Company released a new wide-format color printer in December 1995,
DisplayMaker Express (DME), selling 17 units during the month of December
together with $52,000 in consumables for a total of $1.0 million in DME sales.
DME is a 54-inch wide, color inkjet printer and is the second proprietary
printer designed and manufactured by the Company.  DME is capable of printing an
"E" size print in approximately six minutes by using a phase-change ink
technology which allows printing on a variety of media.  The DME has a suggested
U.S. retail price of $74,000 ($90,000 including the Company's ColorMark Pro 1600
print server).

                                       8
<PAGE>
 
Plain-paper typesetting sales for the three months ended December 31, 1995
decreased 45% from sales in the same period one year ago.  The decrease in sales
is primarily a result of increased competition in the form of low-priced plain-
paper devices as well as the increasing performance of laser printers marketed
by major manufacturers for the office automation market.  The Company expects
revenues from the sale of plain-paper typesetters to continue to decline.

During the three months ended December 31, 1995, the Company sold 200 PressMate
chemical-free filmsetters and accepted returns of 64 versions of earlier models
for net sales of 136 units.  PressMate uses thermal technology to image film
directly, in contrast to imaging onto plain-paper which then must be
photographed to transfer an image to film.  During the second quarter of fiscal
1995, $472,000 of PressMate-related consumables were sold.  PressMate is the
first proprietary printer designed and manufactured by the Company.  PressMate
was released late in the second quarter of fiscal 1995 with 14 units sold to
"technology partners" in that quarter.

International Sales.  Revenues from foreign sources during the three months
ended December 31, 1995 were comparable to the same period one year ago.  The
increases in revenues as a percent of net sales is a result of reductions in
overall revenues from U.S. sources.  The following table sets forth
international sales by region expressed in thousands and as a percentage of net
sales:
<TABLE>
<CAPTION>
 
 
                            Three months ended December 31,     Six months ended December 31,
                            -------------------------------     -----------------------------
                                 1995              1994              1995           1994
                            -------------     -------------     -------------  --------------
<S>                          <C>      <C>      <C>      <C>      <C>      <C>    <C>      <C>
Europe..................... $ 5,172  20.4%    $ 5,381  18.9%    $ 9,186  19.7% $10,401   17.7%
Japan, Asia, Pacific.......   3,093  12.2       3,067  10.8       5,724  12.3    6,878   11.7
Latin America..............   1,287   5.1       1,007   3.5       2,203   4.7    2,089    3.6
Canada.....................     849   3.4         635   2.2       1,603   3.4    1,264    2.1
                            -------  ----     -------  ----     -------  ----  -------   ----
Total international sales.. $10,401  41.1%    $10,090  35.4%    $18,716  40.1% $20,632   35.1%
                            =======  ====     =======  ====     =======  ====  =======   ====
 
</TABLE>

Gross Profit. The Company's gross profit margin for the three and six months
ended December 31, 1995 was 39.1% and 39.6%, respectively, compared to 41.6% and
42.6% for the same periods one year ago.  Gross margins of plain-paper
typesetters, expressed as a percent of net sales,  remained steady in the range
of 33% to 36% in the three months ended December 31, 1995.  Gross margins of Big
Color products in the second quarter of fiscal 1996 were approximately 45%,
decreasing from 54% in the preceding quarter.  The decrease in Big Color margins
is attributable to lower average selling prices experienced as a result of
increased competition.  DisplayMaker Express gross margins were approximately
45% for initial shipments since early units were shipped to participants in the
technology partner program at significant discounts.  Several of the units
replaced units which had been in the field for up to 6 months.  PressMate gross
margins were approximately 18% and were lower than previous quarters as a result
of special promotional programs executed during the quarter.   The Company's
consolidated gross margins for the quarter have been favorably impacted by sales
of high-margin Big Color and DisplayMaker Express products increasing as a
percent of overall net sales.

Expenses.  Sales and marketing expenses for the three months ended December 31,
1995 decreased $2.2 million to $5.1 million, compared to $7.3 million for the
same period one year ago.   Sales and marketing expense decreases included
reductions in sales related expenses of $1.0 million and marketing related
expenses of $1.2 million.  Research and development expenditures, including
amounts expensed and capitalized, were $2.4 million in the three months ended
December 31, 1995, a decrease of $100,000 in expenditures compared to the same
period one year ago.  Research and development expenditures capitalized for the
three months ended December 31, 1995 were $728,000 compared to $976,000 for the
three months ended December 31, 1994.  General and administrative expenses were
$2.6 million for the three months ended December 31, 1995 and 1994,
respectively. Overall operating expenses for the three months ended December 31,
1995 decreased to $9.3 million compared to $11.5 million for the same period one
year ago.

                                       9
<PAGE>
 
Interest expense was $445,000 and $786,000 for the three and six months ended
December 31, 1995, respectively, compared to $269,000 and $498,000 in the same
periods one year ago.  The increase in interest expense is attributable to an
overall increase in average debt levels.

The Company's effective income tax rate for the three and six months ended
December 31, 1995, was 30% compared to a rate of 31% and 30%, respectively,  for
the same periods one year ago.

Foreign Currency.  The Company purchases certain raw materials, primarily from
Japan, which are subject to currency fluctuations.  It also sells finished
goods, extends credit, and maintains accounts receivable and payable in five
major European denominations.  The impact of currency fluctuations on these
activities to date is immaterial to the financial statements taken as a whole.
The Company has some contractual protection against currency fluctuations
(primarily the Japanese yen) with regard to purchases of raw  printer engines
and memory. The Company does not consider its exposure with regard to European
currencies to be material and has not entered into any substantial currency
hedging transactions as they relate to these currencies.


LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities was $938,000 and $1.3 million for the
six months ended December 31, 1995 and 1994, respectively.  The Company
decreased accounts receivable, providing cash of $2.2 million and $1.0 million
for the six months ended December 31, 1995 and 1994, respectively.  During the
six months ended December 31, 1995 the Company decreased inventory providing
cash of $691,000 compared to increasing inventory and using cash of $6.3 million
in the same period one year ago.  The increase in inventory in fiscal 1995 was
primarily a result of entering the business of manufacturing print engines which
requires higher levels of raw material.  The Company decreased accounts payable,
using cash of $3.4 million in the six months ended December 31, 1995 compared to
increasing accounts payable, generating cash of $1.7 million, in the same period
one year ago.

Net cash used in investing activities was $3.2 million and $4.5 million for the
six months ended December 31, 1995 and 1994, respectively.  The Company added
fixed assets of $1.0 million in fiscal 1996, a decrease of $331,000 from $1.4
million in fiscal 1995.  During the six months ended December 31, 1995, the
Company invested $1.5 million in the development of software which was
capitalized, compared to $1.9 million for the same period one year ago.  The
Company invested $686,000 in intellectual property in the six months ended
December 31, 1995, a decrease of $529,000 from $1.2 million in the same period
one year ago.

During the six months ended December 31, 1995, LaserMaster Corporation (LMC)
borrowed $1.765 million from TimeMasters, Inc. (TMI), a related party, which
amount remains outstanding at December 31, 1995.  In January 1996, the amount
borrowed from TMI was converted from a demand note to a promissory note payable
on demand.  Repayment of the note is restricted pursuant to the terms of a
subordination and forebearance agreement between LMC, TMI and LMC's senior
lender.  In consideration for providing financing to LMC and executing the
subordination and forbearance agreement, TMI was issued a warrant for the
purchase of 277,953 shares of the Company's common stock at an exercise price of
$6.35 per share, TMI has the right to convert up to $1.0 million dollars of the
debt into shares of the Company's common stock at the lower of $5.875 per share
or market price at the time of conversion, and TMI was granted a second secured
interest in accounts receivable, inventory and general intangibles of LMC.

On January 17, 1996, LMC entered into a three-year agreement with a commercial
finance company providing up to $10 million of revolving credit replacing the
Company's existing credit facility with a commercial bank (see Note 3 to the
Financial Statements).  The agreement allows LMC to borrow up to 60% of eligible
accounts receivable and 25% of eligible inventory at an interest rate equal to
the prime lending rate plus two percent.  The agreement requires LMC to meet
various covenants.

On November 29, 1995, LMT signed a promissory note for $859,516 with a trading
partner who provided interim financing and logistical support to LMC in its
purchases of standard print engines used in the Company's plain-paper
typesetting product line.  In addition to a promissory note, LMT gave the
trading partner a warrant
   
                                       10
<PAGE>
 
for the purchase of  68,596 shares of LMT common stock at an exercise price of
$5.875 per share.  The promissory note is due in two installments of $430,000 on
March 29, 1996 and $430,000 plus accrued interest on May 29, 1996.

In December 1995, LMC executed a 15-year commercial lease at market rates with
Grandchildren's Realty Alternative Management Program I ("GRAMPI"), a Minnesota
limited partnership controlled by the Company's Chief Executive Officer for
space it currently occupies in Shady View I & II.  The Shady View space is
approximately 50% of all space leased by the Company.  GRAMPI purchased the real
estate in April 1995, after the Company's Board of Directors declined to do so.
The Company's Board of Directors retained services of an outside commercial real
estate brokerage firm and outside legal counsel to negotiate the lease with the
landlord's outside legal counsel.

The Company's business plan is contingent on continuing to obtain reasonably
priced sources of capital and  sales remaining uninterrupted.  If sales are less
than expected or sources of financing are unavailable, the Company will be
required to revise its business plans.  The Company does not believe that
inflation will have a material affect on the results from operations or its
financial condition in fiscal 1996.



                           PART II. OTHER INFORMATION

ITEM 1:  LEGAL PROCEEDINGS

Nothing to report.


ITEM 2:  CHANGES IN SECURITIES

Nothing to report.


ITEM 3:  DEFAULTS UPON SENIOR SECURITIES

Nothing to report


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

Nothing to report.


ITEM 5:  OTHER INFORMATION

Nothing to report.


ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K

(a)    Listing of Exhibits
       -------------------

       10.01     Credit Agreement dated January 17, 1996 between LaserMaster
                 Corporation and General Electric Capital Corporation.

                                       11
<PAGE>
 
       10.02     Repayment, Subordination and Intercreditor Agreement dated
                 January 17, 1996 among TimeMasters, Inc., LaserMaster
                 Corporation and General Electric Capital Corporation.
 
       10.03     Lease for property in Shady View I & II dated December, 1995
                 between LaserMaster Corporation and GRAMPI. 
 
       10.04     Promissory Note dated January 17, 1996 by LaserMaster
                 Corporation to TimeMasters, Inc.
 
       10.05     Note dated November 29, 1996 by LaserMaster Corporation to
                 Marubeni International Electronics Corporation.
 
       10.06     Warrants for the purchase of common stock of LaserMaster
                 Technologies, Inc. issued to TimeMasters, Inc. dated January
                 17, 1996.
 
(b)    Reports on Form 8-K
       -------------------

       None.

                                       12
<PAGE>
 
                                   SIGNATURES


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


LASERMASTER TECHNOLOGIES, INC.



/s/Melvin L. Masters
--------------------
Melvin L. Masters
Chief Executive Officer



/s/Randall L. Ruegg
-------------------
Randall L. Ruegg
Chief Financial Officer



Dated: February 12, 1996

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