UNITED STATES
                                    SECURITIES AND EXCHANGE COMMISSION
                                            Washington, DC 20549

                                                     FORM 10-Q

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

For the quarterly period ended December 31, 1998.

Commission File Number:                                       0-12661

Exact Name of Registrant as Specified in its Charter:         IMTEC, Inc.

State of Incorporation:                                       Delaware

I.R.S. Employer Identification Number:                        03-0283466

Address of Principal Executive Offices:                       One Imtec Lane
                                                              Bellows Falls, VT
                                                              05101

Registrant's Telephone Number:                                802-463-9502



         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 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. [X] 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.

         Common shares outstanding as of January 29, 1999;    1,587,313



<PAGE>



IMTEC, INC.

INDEX

                                                                          Page #
Part I            Financial Information

                  Condensed Balance Sheets -
                       December 31, 1998 and June 30, 1998                3 - 4

                  Condensed Statements of Income -
                       Three Months and Six Months Ended
                           December 31, 1998 and 1997                     5

                  Condensed Statements of Cash Flows
                       Three Months and Six Months Ended
                           December 31, 1998 and 1997                     6

                  Notes to Condensed Financial Statements                 7 - 8

                  Management's Discussion and Analysis of
                       Financial Condition and Results of Operations      9

Part II  Other Information

         Item 4   Submission of Matters to a Vote of
                  Security Holders                                        12

         Item 6   Exhibits and Reports on Form 8-K                        12

         Signatures                                                       13



<PAGE>

<TABLE>
<CAPTION>

                         PART I - FINANCIAL INFORMATION
                                   IMTEC, INC.
                            CONDENSED BALANCE SHEETS
                                   (Unaudited)
                                                                    December 31,            June 30
                                                                       1998                  1998 .
ASSETS

Current Assets:
<S>                                                               <C>                   <C>        
     Cash and cash equivalents                                    $    57,897           $    84,100
     Accounts receivable:
         Trade, less allowance for doubtful accounts:
              December 31, 1998 - $211,000
                  June 30, 1998 - $198,000                          1,904,271             2,259,107

     Inventories                                                    2,351,885             2,286,123
     Prepaid expenses and other                                        98,411                60,725
     Deferred income tax                                               85,941                85,941
                                                                   ----------            ----------

                  Total Current Assets                              4,498,405             4,775,996
                                                                  -----------           -----------

Plant and equipment - net                                           2,044,247             1,587,914

Other Assets:
     Deposits                                                          65,355                60,347
     Computer software - net                                           77,273                97,469
     Other intangibles - net                                        1,790,781             1,832,023
                                                                 ------------          ------------

                                                                 $  8,476,061          $  8,353,749
                                                                    =========             =========
</TABLE>


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



<PAGE>
<TABLE>
<CAPTION>


                         PART I - FINANCIAL INFORMATION
                                   IMTEC, INC.
                      CONDENSED BALANCE SHEETS (CONTINUED)
                                   (Unaudited)
                                                                    December 31,         June 30,
                                                                          1998            1998  .
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
<S>                                                                <C>               <C>            
     Notes payable - bank                                          $     135,676     $          0
     Current installments of long term debt                              235,567          235,567
     Accounts payable                                                    624,580          469,972
     Income tax payable                                                  144,053           33,323
     Accrued liabilities:
         Salaries and wages                                              159,530          486,555
         Commissions                                                      47,815           68,375
         Other                                                           273,908          432,165
                                                                    ------------     ------------

              Total Current Liabilities                                1,621,129        1,725,957

Long term debt less current installments                                 457,052          575,118

Stockholders' equity:
     Common stock - $.01 par value;
         authorized 5,000,000 shares, issued and outstanding:
         1,587,313 shares December 31, 1998
         1,585,713 shares June 30, 1998                                   15,873           15,857
     Additional paid-in capital                                        2,599,163        2,591,629
Retained Earnings                                                      3,782,844        3,445,188
                                                                     -----------      -----------

              Total Stockholders' Equity                               6,397,880        6,052,674
                                                                     -----------      -----------

                                                                    $  8,476,061     $  8,353,749
                                                                     ===========      ===========
</TABLE>



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



<PAGE>



IMTEC, INC.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>

                                              Six Months Ended                     Three Months Ended
                                                 December 31,                        December 31,
                                             1998             1997              1998             1997
                                             ----             ----              ----             ----

<S>                                     <C>                <C>              <C>               <C>       
Net Sales                               $6,212,386         $5,403,964       $3,363,003        $2,784,440
Cost of Sales                            3,627,650          2,820,221        1,969,587         1,441,709
                                       -----------        -----------      -----------       -----------

              Gross Profit               2,584,736          2,583,743        1,393,416         1,342,731

Selling, general and
     administrative expenses             1,740,273          1,587,204          877,372           810,554
Research and development
     expenses                              243,417            290,015          121,146           156,229
                                       -----------        -----------      -----------       -----------

              Operating Profit             601,046            706,524          394,898           375,948

Other Income:
     Miscellaneous income
              and other expenses             2,918             20,463            2,093             9,740
     Interest Expense                      (39,236)           (34,890)         (21,758)          (27,065)
                                        -----------        -----------      -----------       -----------

Income Before Income Taxes                 564,728            692,097          375,233           358,623
Income Tax Expense                         227,054            274,171          151,989           142,083
                                         ---------          ---------        ---------        ----------

     Net Income                         $  337,674         $  417,926       $  223,244        $  216,540
                                           =======            =======          =======           =======

Earnings per share - Basic              $      .21         $      .27       $      .14        $      .14
                                            ======             ======           ======            ======

Earnings per share - Diluted            $      .20         $      .25       $      .14        $      .13
                                            ======             ======           ======            ======
</TABLE>

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


<PAGE>


IMTEC, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>

                                                                     Six Months Ended
                                                                        December 31,
                                                                   1998              1997
                                                                   ----               ----

Cash flows from operating activities:
<S>                                                            <C>                   <C>     
   Net Income                                                  $337,674              $417,926
   Adjust, to reconcile net income to,
   net cash provided by operating activities:
     Depreciation & amortization                                287,998               300,137
Increase (decrease) in cash from:
   Accounts receivable                                          349,810              (280,894)
   Inventory                                                    (65,762)             (677,403)
   Marketable securities                                              0                40,812
   Prepaid expenses and other assets                            (37,686)              (36,191)
   Accounts payable                                             154,608               126,453
   Income tax payable                                           110,730                73,372
   Accrued liabilities                                         (505,842)              (99,201)
                                                               ---------             ---------
   Net cash provided by (used in )
     operating activities                                       631,530              (134,989)
                                                               --------              ---------
Cash flows from investment activities -
   Expenditures for property & equipment,
     computer software and other
     intangible assets                                         (682,896)             (301,050)
   Acquisition of Customark                                           0            (1,900,000)
                                                               --------             ----------
   Net cash used in investment activities                      (682,896)           (2,201,050)

Cash flows from financing activities:
   Net borrowing under line of credit                           135,676               143,524
   Proceeds from new long term debt                                   0             1,200,000
   Principal payments on long term debt                        (118,066)             (168,060)
   Proceeds from issuance of stock                                7,553                     0
                                                               --------             ---------
   Net cash provided by (used in) finance
     activities                                                  25,163             1,175,464
                                                               --------             ---------
Net increase (decrease) in cash                                 (26,203)           (1,160,575)
Cash and cash equlivants at the beginning of period              84,100             1,352,562
                                                               --------             ---------
Cash and cash equlivants at the end of period                  $ 57,897             $ 191,987
                                                               ========             =========
Supplemental Information Disclosures:
     Interest paid                                             $ 39,236              $ 34.890
     Income tax paid                                           $116,334              $200,800
                                                               --------              --------
</TABLE>

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


<PAGE>



IMTEC, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)

1 -      Basis of Presentation

         The financial  information included herein is unaudited:  however, such
information  reflects all  adjustments  (consisting  solely of normal  recurring
adjustments)  which are,  in the  opinion of  management,  necessary  for a fair
statement of results for the interim periods.

         The results of operations  for the six-month  period ended December 31,
1998 are not  necessarily  indicative of the results to be expected for the full
year.


2 -      Inventories
<TABLE>
<CAPTION>

         Inventories consist of:
                                                         December 31,                June 30,
                                                             1998                    1998
                                                             ----                    ----

<S>                                                         <C>                  <C>        
         Finished Products                                  $    33,055          $   158,907
         Work in Process                                        364,377              190,122
         Purchased Components                                 2,054,453            1,937,094
                                                            -----------          -----------
                                                            $ 2,351,885          $ 2,286,123
                                                            ===========          ===========
</TABLE>

         Inventory  cost  consisted  of the  cost of  purchased  components  and
supplies, manufacturing labor and manufacturing overhead.


3 -      Liability for Estimated Product Warranty

         On December  31,  1998 and June 30,  1998,  the  Company  had  provided
$114,899 and $124,570  respectively,  against future product warranties based on
its experience with customer claims. Warranty expenses amounted to approximately
$19,000 for the  six-month  period  ended  December 31, 1998 and $36,000 for the
six-month period ended December 31, 1997.



<PAGE>



4 -      Earnings per Share

         Basic  earnings per share were computed by dividing net earnings by the
weighted average number of shares of common stock outstanding during the year.

         The diluted  computation  is  performed  by dividing  net income by the
weighted  average number of shares of common stock and common stock  equivalents
outstanding  during the year,  if  dilutive.  Common  stock  equivalents  (stock
options and warrants)  are assumed to be exercised  when they are issued and the
proceeds used to repurchase  outstanding shares of the Company's common stock at
the average price during the period.

         The  average  number  of  common  share and  common  share  equivalents
entering  into the  calculation  of basic and diluted  earnings per share are as
follows:
<TABLE>
<CAPTION>

                                                      Six months ended December 31,
                                                         1998                   1997

<S>                                                  <C>                        <C>      
Weighted average shares - Basic                      1,586,966                  1,553,088
Dilutive effect of options                              66,525                     84,919
                                                     ---------                  ---------
Weighted average shares - diluted                    1,653,491                  1,638,007
                                                     =========                  =========

                                                      Three months ended December 31,
                                                          1998                  1997

Weighted average shares - Basic                      1,587,220                  1,553,088
Dilutive effect of options                              53,473                     96,932
                                                     ---------                  ---------
Weighted average shares - diluted                    1,640,693                  1,650,020
                                                     =========                  =========
</TABLE>

5 -      Pro Forma Information

         On August 12, 1997,  IMTEC  acquired the  Customark  division of Markem
Crop. The following pro froma  reflects  operations had Customark been a part of
IMTEC since July 1, 1997.
<TABLE>
<CAPTION>

                                                  Six Months Ended                   Three Months Ended
                                                     December 31,                      December 31,
                                            1998              1997              1998             1997
                                            ----              ----              ----             ----
<S>                                      <C>               <C>              <C>                <C>       
Revenues                                 $6,212,386        $5,598,568       $3,363,003         $2,784,440
Net Income                                  337,674           428,997          223,244            216,540
Diluted Income per Share                      $0.20             $0.26            $0.14              $0.13
</TABLE>

         The unaudited pro forma results are not  necessarily  indicative of the
actual  results  of  operations  that would have  occurred  had the  acquisition
actually been made at the beginning of fiscal 1997.



<PAGE>


                                   IMTEC, INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995

         The statements contained in the following  Management's  Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations  which  are not
historical are "forward looking statements" within the meaning of Section 27A of
the  Securities  Act of 1933,  as amended,  and  Section  31E of the  Securities
Exchange Act of 1934, as amended. These forward looking statements represent the
Company's present expectations or beliefs concerning future events,  however the
Company cautions that such statements are qualified by important  factors.  Such
factors, could cause actual results to differ materially from those indicated in
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations.

RESULTS OF OPERATIONS

Three Months and Six Months Ended December 31, 1998
as compared to Three Months and Six Months Ended December 31, 1997

         Revenues for the three  months and six months  ended  December 31, 1998
increased  approximately 20.8% and approximately 15.0%,  respectively,  over the
corresponding periods in 1997.

         Revenues from Bar Code labels and printing supplies were $2,341,428 and
$4,429,879  for the three month and six month  periods  ended  December 31, 1998
compared to $2,164,062 and $4,024,923,  respectively,  for the same periods last
year. Bar Code labels and printing supplies represented 69.6% and 71.3% of total
revenue  for the three  month and six month  periods  ended  December  31,  1998
compared to 77.7% and 74.5%, respectively, for the same periods last year.

         Revenues  from  the  sales  of  Industrial   Bar  Code  Equipment  were
$1,021,585 and $1,782,507 for the three and six month periods ended December 31,
1998  compared  to  $620,317  and  $1,379,041  for the  same  periods  in  1997.
Industrial Bar Code Equipment sales represented 30.4% and 28.7% of total revenue
for the three month and six month  periods  ended  December 31, 1998 compared to
22.3% and  25.5%,  respectively,  for the same  periods  last  year.  Management
believes that the trend in Industrial Bar Code Equipment  sales will continue to
move upward due to  expanded  partnering  and  distribution  relationships,  new
product offerings and expanded use of technology.

         Total   backlog  for  all   products  as  of  December   31,  1998  was
approximately $3,621,253, the majority of which is scheduled to ship by June 30,
1999, compared to approximately $2,048,580 as of December 31, 1997.

         Cost of sales for the three  months and six months  ended  December 31,
1998 were 58.6% and 58.4% respectively, compared to 51.8% and 52.2% for the same
periods  in 1997.  The  increase  from the prior  year is  related  to two major
factors.  The  first is  product  mix  particularly  caused by the  increase  in
Equipment  sales noted  above.  The second is an  increase  in factory  overhead
caused by the startup of another Media production facility.
<PAGE>

         Selling,  general and  administrative  expenses  were  $877,372 for the
quarter ended December 31, 1998 and $1,740,273 for the six months ended December
31,  1998,  as  compared  to  $810,554  and  $1,587,204,  respectively,  for the
corresponding  periods ended  December 31, 1997.  This increase is the result of
increased Sales and Marketing activity.

         Development  and  engineering  expenses  for the three  months  and six
months ended  December 31, 1998 were $121,146 (3.6% of sales) and $243,417 (3.9%
of sales)  compared to $156,229  (5.6% of sales) and  $290,015  (5.4% of sales),
respectively,  for the same periods last year. The Company  anticipates that the
level of the dollars spent for development and engineering will remain constant.

         The Company's  effective tax rate was approximately 40% for all periods
presented,  and is based on the Company's  estimated  effective tax rate for the
full year.


LIQUIDITY AND CAPITAL RESOURCES:

         As of December 31, 1998, the Company's  principal  available sources of
liquidity  were,  respectively,  from  operations and a $1,000,000  bank line of
credit, of which $864,324 was available as of December 31, 1998.

         Accounts  receivable  decreased  from  $2,259,107  at June 30,  1998 to
$1,904,271  at December  31, 1998,  as a direct  result of the decrease in sales
revenues  from the fourth  quarter  of Fiscal  1998  ($3,921,961)  to the second
quarter of Fiscal 1999 ($3,363,003).

         Inventories increased from $2,286,123 at June 30, 1998 to $2,351,885 at
December 31, 1998.  This increase is  the result of the anticipated  increase in
sales activity.

         The Company's capital commitments for fiscal 1999 are expected to be at
approximately the same level as fiscal 1998.

         The  Company  believes  that it will be able to offset  the  effects of
inflation by selected price  increases in its products,  although it can give no
assurances in this regard.

         The Company anticipates that cash flows from operations,  together with
current cash and funds  available  under the Company's  line of credit,  will be
sufficient  to  meet  the  Company's   working  capital  and  capital  equipment
expenditure requirements for the foreseeable future.




<PAGE>


Recent Accounting Pronouncements

         SFAS No.  130,  "Reporting  Comprehensive  Income,"  was adopted by the
Company  during  the  first  quarter  and it had no  effect  upon the  Company's
financial position,  results of operation or financial statement  disclosures as
it does not have any element of comprehensive income. SFAS No. 131, "Disclosures
about  Segments of an Enterprise and Related  Information,"  will be adopted for
the Company's fiscal 1999 annual financial statements.  The Company is currently
evaluating  the effect that the new  standard  will have on  disclosures  in its
annual financial statements.

         In June 1998, The Financial  Accounting and Standards Board issued SFAS
No. 133,  "Accounting for Derivatives  Instruments and Hedging Activities." SFAS
No.  133   establishes   accounting  and  reporting   standards  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts and for hedging  activities.  It requires that an entity recognize all
derivatives  as either  assets or  liabilities  in the balance sheet and measure
those  instruments  at fair  value.  SAFS No.  133 is  effective  for all fiscal
quarters of fiscal  years that begin after June 15,  1999.  The Company does not
anticipate  the  adoption  of this  statement  to have a material  effect on its
financial statements.

Year 2000

         The  Company  has  reviewed  the  issue  of  Year  2000.   All  of  its
manufacturing  and  accounting   software  has  been  brought  into  compliance,
effective June 16,1998.  There are neither internal clocks nor dating mechanisms
within the  Company's  products  that would be affected by changing  dates.  The
Company is confident that its products and services will continue  uninterrupted
into the new millennium.  No material  additional  costs are anticipated at this
time.

         The Company's  contingency  plan in the event other  parties  should be
unable to  provide  Year 2000  compliant  electronic  data is to revert to paper
documentation from these parties. However, to the extent that customers, vendors
or other  entities  with which the Company  has  material  relationships  do not
adequately  address  Year 2000  issues,  the Company  could  experience  payment
delays.


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company's outstanding long-term and short-term debt at December 31,
1998 bears  interest at variable  rates;  therefore,  the  Company's  results of
operations would be affected by interest rate changes to the extent of the notes
outstanding.  Due to the  short-term  nature  and  insignificant  amount  of the
Company's  notes payable and the  decreasing  amounts of its long-term  debt, an
immediate 10 percent change in interest  rates would not have a material  effect
on the Company's results of operations over the next fiscal year.



<PAGE>


PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
         None
Item 2 - Changes in Securities
         Not applicable
Item 3 - Defaults upon Senior Securities
         None
Item 4 - Submission of Matters to a Vote of Security Holders
         A.       October 26, 1998 - Annual Meeting of Stockholders
         B.       Election of Directors - all nominees elected

Item 5 - Other Information
         None
Item 6 - Exhibits and Reports on Form 8-K
         Exhibit 27 - Financial Data Schedule
         The Company filed no reports on form 8-K during the quarter




<PAGE>


SIGNATURES


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

                           IMTEC, INC.






                  BY:_____/s/ Richard L. Kalich__________
                           Richard L. Kalich
                           President & Chief Executive Officer






                  BY:____/s/ George S. Norfleet III________
                           George S. Norfleet III
                           Secretary / Treasurer