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, 1997.

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 30, 1998,   1,577,713



<PAGE>



                                   IMTEC, INC.

                                      INDEX

                                                                      Page #
Part I            Financial Information

                  Condensed Balance Sheets -
                       December 31, 1997 and June 30, 1997             3 - 4

                  Condensed Statements of Income -
                       Three Months and Six Months Ended
                           December 31, 1997 and 1996                     5

                  Condensed Statements of Cash Flows
                       Three Months and Six Months Ended
                           December 31, 1997 and 1996                     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                                       11

         Item 6   Exhibits and Reports on Form 8-K                       11

         Signatures                                                      12



<PAGE>
<TABLE>
<CAPTION>


                         PART I - FINANCIAL INFORMATION
                                   IMTEC, INC.
                            CONDENSED BALANCE SHEETS
                                            (Unaudited)
                                                              December 31,              June 30
                                                                 1997                    1997 
ASSETS

Current Assets:
<S>                                                          <C>                     <C>         
     Cash                                                    $  191,987              $  1,352,562
     Marketable Securities                                       52,187                    92,999
     Accounts and notes receivable: Trade, 
          less allowance for doubtful accounts:
              December 31, 1997 - $196,000
                  June 30, 1997 - $175,000                    1,782,377                 1,499,283

     Inventories                                              2,079,721                 1,402,318
     Prepaid expenses and deferred charges                       81,614                    45,423
     Deferred income tax                                        159,508                   159,508
                                                             ----------                ----------

                  Total Current Assets                        4,347,394                 4,552,093
                                                                                     ------------

Plant and equipment - net                                     1,491,836                 1,234,488

Other Assets:
     Deposits                                                    46,791                    48,991
     Computer software - net                                     85,083                    94,759
     Goodwill - net                                           1,637,130
     Other intangibles - net                                    238,143                   222,032
                                                             ----------                ----------

                                                           $  7,846,377              $  6,152,363
                                                              =========                 =========


                         The  accompanying  notes are an integral  part of these
condensed financial statements.
</TABLE>



<PAGE>
<TABLE>
<CAPTION>


                         PART I - FINANCIAL INFORMATION
                                   IMTEC, INC.
                      CONDENSED BALANCE SHEETS (CONTINUED)
                                            (Unaudited)
                                                              December 31,              June 30,
                                                                 1997                    1997  .
LIABILITIES AND STOCKHOLDERS EQUITY

Current Liabilities
<S>                                                       <C>                       <C>          
     Notes payable - bank                                 $     143,524             $           0
     Current installments of long term debt                     185,051                         0
     Accounts payable                                           451,104                   324,651
     Income tax payable                                         297,307                   223,935
     Accrued liabilities
         Salaries and wages                                      76,395                   191,502
         Commissions                                            179,306                    95,229
         Other                                                  283,107                   351,275
                                                           ------------              ------------

                  Total Current Liabilities                   1,615,794                 1,186,592

Long term debt less current installments                        846,889                         -
                                                            -----------               -----------
                  Total Liabilities                           2,462,683                 1,186,592

Stockholders' equity:
     Common stock - $.01 par value;
         authorized 5,000,000 shares, issued and outstanding:
         1,553,088 shares December 31, 1997
         1,553,088 shares June 30, 1997                          15,531                    15,531
     Additional paid-in capital                               2,489,674                 2,489,674
Retained Earnings   2,878,489                                 2,460,566
                  -----------                               -----------

                  Total Stockholders' Equity                  5,383,694                 4,965,771
                                                            -----------               -----------

                                                           $  7,846,377              $  6,152,363
                                                               ========                  ========



                         The  accompanying  notes are an integral  part of these
condensed financial statements.
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                                   IMTEC, INC.
                         CONDENSED STATEMENTS OF INCOME
                                   (Unaudited)

                                               Six Months Ended                   Three Months Ended
                                                   December 31,                       December 31,
                                               1997           1996                 1997          1996
                                               ----           ----                 ----          ----

<S>                                       <C>            <C>                  <C>             <C>       
Net Sales                                 $5,403,964     $4,197,209           $2,784,440      $2,097,066
Cost of Sales                              2,820,221      2,217,389            1,441,709       1,178,594
                                         -----------    -----------          -----------     -----------

              Gross Profit                 2,583,743      1,979,820            1,342,731         918,472

Selling, general and
     administrative expenses               1,587,204      1,253,169              810,554         585,840
Research and development
     expenses         290,015                300,946        156,229              158,274
                  -----------            -----------    -----------          -----------

              Operating Profit               706,524        425,705              375,948         174,358

Other Income:
     Miscellaneous income
         and other expenses                   20,463         23,141                9,740          10,877
     Interest Expense                       (34,890)              0             (27,065)               0
                                         -----------  -------------          -----------    ------------

         Income Before
              Income Taxes                   692,097        448,846              358,623         185,235
                                           ---------      ---------            ---------        --------

Income Tax Expense                           274,171        177,118              142,083          72,164
                                           ---------      ---------           ----------        --------

     Net Income                           $  417,926     $  271,728           $  216,540      $  113,071
                                             =======        =======              =======         =======

Earnings per share - Basic                $      .27     $      .17           $      .14     $       .08
                                              ======         ======               ======          ======

Earnings per share - Diluted              $      .25     $      .17           $      .13     $       .07
                                              ======         ======               ======          ======

                         The  accompanying  notes are an integral  part of these
condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                   IMTEC, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                               Six Months Ended                   Three Months Ended
                                                   December 31,                       December 31,
                                               1997           1996                  1997         1996
                                               ----           ----                  ----         ----
Cash flows from operating activities:
<S>                                            <C>             <C>              <C>             <C>     
     Net Income                                $417,926        $271,728         $216,540        $113,071
     Adjust, to reconcile net income to,
     net cash provided by operating activities:
         Depreciation & amortization            300,137         310,843          135,423         155,420
Increase (decrease) in cash from:
     Accounts receivable                       (280,894)         80,505          109,150         (35,586)
     Income tax refundable                                       87,086
     Inventory                                 (677,403)        (91,312)        (264,920)        (32,192)
     Marketable securities                       40,812                           40,403
     Prepaid expenses and other assets          (36,191)        151,210            9,040          23,286
     Accounts payable                           126,453        (277,993)        (224,281)        (60,747)
     Income tax payable                          73,372         141,103          142,083         123,561
     Accrued liabilities                        (99,201)         12,310          (40,170)        (27,217)
                                               ---------       --------        ----------      ----------
     Net cash provided by (used in )
         operating activities                  (134,989)        685,480          123,268         259,596
Cash flows from investment activities -
     Expenditures for property & equipment,
         computer software and other
         intangible assets                   (2,201,050)       (571,149)        (185,819)       (121,165)
                                             -----------      ----------       ----------      ----------
Cash flows from financing activities:
     Net borrowing under line of credit         143,524                            43,602
     Proceeds from new long term debt         1,200,000
     Principal payments on long term debt      (168,060)                         (51,265)
     Proceeds from issuance of stock                  0               0                0               0
                                             ----------     -----------        ---------    ------------
     Net cash provided by (used in) finance
         activities                           1,175,464               0           (7,663)              0
Net increase (decrease) in cash              (1,160,575)        114,331          (70,214)         138,431
Cash at the beginning of period               1,352,562         806,633          262,199         782,533
                                              ---------        --------         --------        --------
Cash at the end of period                     $ 191,987       $ 920,964        $ 191,987       $ 920,964
                                                =======         =======          =======         =======
Supplemental Information Disclosures:
         Interest paid                         $ 34.890                         $ 27,065
         Income tax paid                       $200,800       $  32,512                        $  32,512
                                               --------       ---------                        ---------

                         The  accompanying  notes are an integral  part of these
condensed financial statements.
</TABLE>
<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,
1997 are not  necessarily  indicative of the results to be expected for the full
year.


2 -      Inventories

         Inventories consist of:
                                              December 31,          June 30,
                                                  1997                 1997

Finished Products                             $    6,456          $   78,263
Work in Process                                  273,252             145,391
Purchased Components                           1,800,013           1,178,664
                                             -----------         -----------
                                             $ 2,079,721         $ 1,402,318
                                             ===========         ===========

         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,  1997 and June 30,  1997,  the  Company  had  provided
$114,000 and $149,000  respectively,  against future product warranties based on
its  experience  with  customer  claims.  Warranty  expenses  charged  to income
amounted to  approximately  $36,000 for the six month period ended  December 31,
1997 and $46,000 for the six-month period ended December 31, 1996.



<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:

                                               Six months ended December 31,
                                                    1997                1996

Weighted average shares - Basic                1,553,088           1,545,088
Options                                           84,919              55,666
Warrants                                               0                   0
                                               ---------           ---------
Weighted average shares - diluted              1,638,007           1,600,754
                                               =========           =========

                         Three months ended December 31,
                                    1997 1996

Weighted average shares - Basic                1,553,088           1,545,088
Options                                           96,932              57,475
Warrants                                               0                   0
                                               ---------           ---------
Weighted average shares - diluted              1,650,020           1,602,563
                                               =========           =========

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 7/1/96.
<TABLE>
<CAPTION>
                                               Six Months Ended                   Three Months Ended
                                                   December 31,                       December 31,
                                               1997           1996               1997            1996
                                               ----           ----               ----            ----
<S>                                          <C>             <C>              <C>             <C>       
Revenues                                     $5,598,568      $5,218,281       $2,784,440      $2,621,347
Net Income                                      428,997         329,929          216,540         142,955
Earnings per Share                                $0.26           $0.21            $0.13           $0.09
</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 1996.



<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, 1997
as compared to Three Months and Six Months Ended December 31, 1996

         Revenues for the three  months and six months  ended  December 31, 1997
increased  approximately 32.8% and approximately 28.8%,  respectively,  over the
corresponding periods in 1996.

         Revenues from Bar Code labels and printing supplies were $2,164,062 and
$4,024,923  for the three month and six month  periods  ended  December 31, 1997
compared to $1,497,482 and $3,000,021,  respectively,  for the same periods last
year. Bar Code labels and printing supplies represented 77.7% and 74.5% of total
revenue  for the three  month and six month  periods  ended  December  31,  1997
compared to 71.4% and 71.5%, respectively, for the same periods last year.

         Revenues from the sales of Industrial  Bar Code Equipment were $620,317
and  $1,379,041  for the three and six month  periods  ended  December  31, 1997
compared to $599,584 and $1,197,188 for the same periods in 1996. Industrial Bar
Code Equipment sales  represented 22.3% and 25.5% of total revenue for the three
month and six month periods ended  December 31, 1997 compared to 28.6% and 28.5%
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 as of December 31, 1997 was  $2,048,580,  all of that is
shippable by June 30, 1997, compared to approximately  $1,482,170 as of December
31, 1996.

         Cost of sales for the three  months and six months  ended  December 31,
1997 were 51.8% and 52.2% respectively, compared to 56.2% and 52.8% for the same
periods  in 1996.  The  decrease  from the prior  year is  primarily  related to
product mix.

         Selling,  general and  administrative  expenses  were  $810,554 for the
quarter ended December 31, 1997 and $1,587,204 for the six months ended December
31,  1997,  as  compared  to  $585,840  and  $1,253,169   respectively  for  the
corresponding periods ended December 31, 1996.

         Development  and  engineering  expenses  for the three  months  and six
months ended  December 31, 1997 were $156,229 (5.6% of sales) and $290,015 (5.4%
of sales)  compared  to were  $158,274  (7.5% of sales)  and  $300,946  (7.2% of
sales), respectively, for the same periods last year.

         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.

         Net income for the three months and six months ended  December 31, 1997
was  $216,540 and  $417,926,  respectively,  compared to $113,071 and  $271,728,
respectively, for the same periods ended December 31, 1996. The major reason for
this increase is the increased margins on the increase in revenues


LIQUIDITY AND CAPITAL RESOURCES:

         As of December 31, 1997, the Company's  principal  available sources of
liquidity  were,  respectively,  from  operations and a $1,000,000  bank line of
credit, of which $856,476 was available as of December 31, 1997, and a five year
term loan for $1,200,000, with a remaining balance of $1,031,940 at December 31,
1997. The purpose of the term loan was the  acquisition of Customark,  discussed
in the Company's 8-K filing on August 26, 1997.

         Accounts  receivable  increased  from  $1,499,283  at June 30,  1997 to
$1,932,442  at  December  31,  1997,  a direct  result of the  increase in sales
revenues.

         Inventories increased by $677,403,  from $1,402,318 at June 30, 1997 to
$2,079,721 at December 31, 1997, as a result of increasing levels of business in
the sales of labels and printing supplies.

         The Company's capital commitments for fiscal 1998 are expected to be at
the same level as fiscal 1997.

         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 marketable  securities  balances 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.

 Recent Accounting Pronouncements

         In June 1997,  the FASB issued SFAS No. 130,  "Reporting  Comprehensive
Income," and SFAS No. 131,  "Disclosures  about  Segments of an  Enterprise  and
Related  Information."  SFAS No. 130  establishes  standards  for  reporting and
display of comprehensive income and its components  (revenues,  expenses,  gains
and losses) in a full set of general-purpose financial statements.  SFAS No. 131
establishes  standards  for the way  that  public  business  enterprises  report
information about operating segments in annual financial statements and requires
that those enterprises  report selected  information about operating segments in
interim financial reports. It also establishes standards for related disclosures
about  products  and  services,  geographic  areas  and  major  customers.  Both
standards will be adopted by the Company during the first quarter of fiscal 1999
and are not  expected  to have a  material  effect  on its  financial  position,
results of operations or financial statement disclosures.



<PAGE>



                           PART II - OTHER INFORMATION


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 if Matters to a Vote of Security Holders
         A.       October 27, 1997 - Annual Meeting of Stockholders

         B. Election of Directors - all nominees elected

         C.        Proposal  to adopt  the  Company's  1997  Stock  Option  Plan
                   Results of vote; for,  916,198;  against,  6,805;  abstained,
                   2,622; unvoted, 525,914.

Item 5 - Other Information
         None
Item 6 - Exhibits and Reports on Form 8-K
         Exhibit 27 - Financial Data Schedule
         8-K,  filed  August  26,  1997;  Items  2 and 7;  Financial  Statements
         included  in  Item  7:  Financial   Statements,   Pro  Forma  Financial
         Statements and Exhibits:

(a)       Financial Statements

Attached audited Statements of Income for years ended December 31, 1996 and 1995
and for the six-month period ended June 30, 1997

(b)      Pro Forma Financial Information

(i)  Unaudited  pro forma  condensed  balance sheet of Registrant as of June 30,
1997, giving effect to the acquisition of Customark.

(ii)  Unaudited  pro forma  consolidated  statement of income for the year ended
June 30, 1997, giving effect to the acquisition of Customark.

(c)       Exhibits

Inapplicable

<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