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 March 31, 1998.

Commission File Number:                                       0-12661

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

State of Incorporation:                                       Delaware

IRS 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  filled 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  shorted  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 May 11, 1998,   1,585,713




<PAGE>



                                   IMTEC, INC.

                                      INDEX

                                                                       Page #
Part I            Financial Information

                  Condensed Balance Sheets -
                       March 31, 1998 and June 30, 1997                3 - 4

                  Condensed Statements of Income -
                       Three Months and Nine Months Ended
                           March 31, 1998 and 1997                        5

                  Condensed Statements of Cash Flows
                       Three Months and Nine Months Ended
                           March 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)

                                                              March 31,                 June 30,
                                                                 1998                    1997  .
ASSETS

Current Assets:
<S>                                                          <C>                     <C>         
     Cash                                                    $  105,878              $  1,352,562
     Marketable Securities                                       52,000                    92,999
     Accounts receivable
         Trade, less allowance for doubtful accounts:
              March 31, 1998 - $200,000
                  June 30, 1997 - $175,000                    1,805,437                 1,499,283

     Inventories                                              2,265,556                 1,402,318
     Prepaid expenses and deferred charges                       95,556                    45,423
     Deferred income tax                                        159,508                   159,508
                                                             ----------               -----------

                  Total Current Assets                        4,483,935                 4,552,093
                                                              ---------                ----------

Plant and equipment - net                                     1,537,869                 1,234,488

Other assets:
     Deposits                                                    54,897                    48,991
     Computer software - net                                     79,776                    94,759
     Goodwill - net                                           1,624,561                         -
     Other intangibles - net                                    229,085                   222,032
                                                             ----------               -----------

                                                            $ 8,010,123               $ 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 (Unaudited) (CONTINUED)

                                                              March 31,                 June 30,
                                                                 1998                    1997  .
LIABILITIES AND STOCKHOLDERS EQUITY

Current liabilities:
<S>                                                          <C>                   <C>           
     Current installments of long term debt                  $  185,051            $            -
     Accounts payable                                           398,005                   324,651
     Income tax payable                                         301,647                   223,935
     Accrued liabilities
         Salaries and wages                                     100,604                   191,502
         Commissions                                            189,306                    92,229
         Other                                                  324,974                   351,275
                                                             ----------                 ---------

                  Total Current Liabilities                   1,499,587                 1,186,592
                                                              ---------                 ---------

Long term debt less current installments                        793,071                         -
                                                             ----------           ---------------

Stockholders' equity:
     Common stock - $.01 par value;
         authorized 5,000,000 shares, issued and outstanding:
         1,585,713 shares March 31, 1998
         1,553,088 shares June 30, 1997                          15,857                    15,531
     Additional paid-in capital                               2,591,629                 2,489,674
     Retained earnings                                        3,109,979                 2,460,566
                                                              ---------                ----------

                  Total Stockholders' Equity                  5,717,465                 4,965,771
                                                              ---------                ----------

                                                            $ 8,010,123               $ 6,152,363
                                                               ========                  ========

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



<PAGE>
<TABLE>
<CAPTION>


                                   IMTEC, INC.
                         CONDENSED STATEMENTS OF INCOME
                                   (Unaudited)

                                               Nine Months Ended                  Three Months Ended
                                                   March 31,                          March 31,
                                                1998          1997                 1998          1997
                                                ----          ----                 ----          ----

<S>                                       <C>           <C>                 <C>           <C>        
Net sales                                 $8,588,595    $6,421,867          $ 3,184,630   $ 2,224,656
Cost of sales                              4,528,000     3,480,482            1,707,777     1,263,093
                                         -----------   -----------          -----------   -----------

              Gross Profit                 4,060,595     2,941,385            1,476,853       961,563

Selling, general and
     administrative expenses               2,520,861     1,890,315              929,142       641,636
Research and development
     expenses                                439,561       445,311              149,548       144,361
                                          ----------    ----------           ----------    ----------

              Operating profit             1,100,173       605,759              398,163       175,566

Other Income (Expense)
     Other income 31,936                      25,066         6,953                6,425
     Interest expense                        (56,807)            -              (21,917)            -
                                          -----------  -----------           -----------   ----------

Income before income taxes                 1,075,302       630,825              383,199       181,991

Income tax expense                           425,886       249,870              151,715        72,752
                                          ----------     ---------            ---------      --------

     Net income                           $  649,416    $  380,955           $  231,484    $  109,239
                                             =======       =======              =======       =======

Earnings per share - Basic                $     0.42   $      0.27           $      0.15   $     0.07
                                             =======       =======              =======       =======

Earnings per share - Diluted              $     0.40   $      0.24           $      0.14   $     0.07
                                              ======        ======              =======        ======
</TABLE>
                         The  accompanying  notes are an integral  part of these
condensed financial statements.


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

                                               Nine Months Ended                  Three Months Ended
                                                   March 31,                          March 31,
                                                   1998             1997            1998            1997
                                                   ----             ----            ----            ----
Cash flows from operating activities:
<S>                                          <C>              <C>             <C>               <C>     
     Net income                              $  649,416       $  380,955      $  231,484        $109,239
     Adjustments to reconcile net income to
     net cash provided by operating activities:
     Depreciation & amortization                402,257          466,266         102,120         155,423
Increase ( decrease) in cash from:
     Accounts receivable                       (312,060)        (315,009)        (31,166)       (395,514)
     Income tax refundable                            -           87,086               -               -
     Marketable securities                       40,999                -             187               -
     Inventory                                 (863,238)         (73,782)       (185,835)         17,530
     Prepaid expenses and other assets          (50,133)         171,651         (13,942)         20,441
     Accounts payable                            73,354         (230,954)        (53,099)         47,039
     Income tax payable                          77,712          194,155           4,340          53,052
     Accrued liabilities                        (23,122)          15,221          76,076           2,899
                                              ----------       ---------       ---------       ---------
     Net cash provided by (used in)
         operating activities                    (4,815)         695,589         130,165          10,109
Cash flows from investment activities:
     Expenditures for property & equipment,
         computer software and other
         intangible assets                   (2,322,269)        (655,550)       (121,213)        (84,401)
                                             -----------       ----------      ----------      ----------

Cash flows from financing activities:
     Net borrowing under line of credit               -                -        (143,524)              -
     Proceeds from long term debt             1,200,000                -               -               -
     Principal payments on long term debt      (221,878)               -         (53,818)              -
     Proceeds from issuance of stock            102,281           20,844         102,278          20,844
                                               --------        ---------        --------       ---------
     Net cash provided by (used in) finance
         activities                           1,080,400           20,844         (95,061)         20,844
                                              ---------        ---------       ----------      ---------

Net increase (decrease) in cash              (1,246,684)          60,883         (86,109)        (53,448)
Cash at the beginning of period               1,352,562          806,633         191,987         920,964
                                              ---------        ---------       ---------       ---------
Cash at the end of period                    $  105,878       $  867,516      $  105,878      $  867,516
                                                =======          =======         =======         =======
Supplemental Information Disclosures:
         Interest paid                         $ 56,807                -        $ 21,917               -
         Income taxes paid                    $ 548,175         $ 52,212       $ 147,375        $ 19,700
                                                =======          =======         =======         =======

                         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 nine month  period  ended March 31,
1998 may not  necessarily  be  indicative  of the results to be expected for the
full year.


2 -      Inventories

         Inventories consist of:
                                                    March 31,          June 30,
                                                     1998                 1997

         Finished Products                     $     89,453         $    78,263
         Work in Process                            273,623             145,391
         Purchased Components                     1,902,480           1,178,664
                                                -----------         -----------

                                               $  2,265,556         $ 1,402,318
                                                ===========         ===========



3 -      Liability for Estimated Product Warranty

         On March  31,  1998  and  June  30,  1997,  the  Company  had  provided
approximately  $118,000  and  $149,000  respectively,   against  future  product
warranties  based on its  experience  with customer  claims.  Warranty  expenses
amounted to approximately $58,000 for the nine month period ended March 31, 1998
and $62,000 for the nine month period ended March 31, 1997.



<PAGE>


4 -      Earnings per Common Share

         In February 1997,  the Financial  Accounting  Standards  Board ("FASB")
issued  SFAS No. 128  "Earnings  per Share,"  which  establishes  standards  for
computing  and  presenting  earnings  per share and  applies  to  entities  with
publicly held common stock or potential common stock. Prior to 1997, the Company
computed  income per common  share  using the  methods  outlined  in  Accounting
Principles  Board  ("APB")  Opinion  No.  15,  "Earnings  per  Share,"  and  its
interpretations.  The  Company  adopted  SFAS No. 128 in 1997 and  restated  its
earnings per share for the first quarter of 1997. Previously reported income per
common  share for the three  months and nine months ended March 31, 1997 did not
differ from that computed using SFAS 128.

         Basic  earnings  per share was computed by dividing net earnings by the
weighted average number of shares of common stock  outstanding  during the year.
Dilutive  earnings per share  reflect the effects of the  Company's  outstanding
options (using the treasury stock method at the average price during the period)
except where such items would be antidilutive.

         A  reconcilatrion  of  weighted  average  shares  used  for  the  basic
calculation and that used for the diluted calculation was as follows:

                                                    Nine months ended March 31,
                                                      1998                1997

Weighted average shares - basic                   1,560,998           1,546,427
Dilutive effect of options                           82,128              55,989
                                                 ----------          ----------
Weighted average shares - diluted                 1,643,126           1,602,416
                                                 ==========          ==========

                                                   Three months ended March 31,
                                                       1998                1997

Weighted average shares - basic                   1,577,171           1,549,166
Dilutive effect of options                           75,456              56,634
                                                 ----------          ----------
Weighted average shares - diluted                 1,652,627           1,605,800
                                                 ==========          ==========


5 -      Pro Forma Information

         On August 12, 1997,  IMTEC  acquired the  Customark  division of Markem
Crop. The following pro froma information reflects operations had Customark been
a part of IMTEC since July 1, 1996.

<TABLE>
<CAPTION>
                                         Nine Months Ended                        Three Months Ended
                                            March 31,                                 March 31,
                                      1998             1997                   1998              1997
                                      ----             ----                   ----              ----
<S>                                <C>               <C>                    <C>               <C>       
Revenues                           $8,783,199        $7,920,727             $3,184,630        $2,702,444
Net Income                           $660,487          $533,643               $231,484          $158,942
Diluted Earnings per Share              $0.40             $0.33                  $0.14             $0.10
</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 Nine Months Ended March 31, 1998
as compared to Three Months and Nine Months Ended March 31, 1997

         Revenues  for the three  months and nine  months  ended  March 31, 1998
increased  approximately  43.2% and 33.7%  respectively  over the  corresponding
periods in 1997.

         Revenues  from  labels  and  printing   supplies  were  $2,278,074  and
$6,302,998  for the three  month and nine month  periods  ended  March 31,  1998
compared to $1,637,863  and  $4,637,884  respectively  for the same periods last
year. Labels and printing supplies  represented 71.5% and 73.4% of total revenue
for the three month and nine month  periods  ended  March 31,  1998  compared to
73.6% and 72.2% respectively for the same periods last year. Management believes
that the increase in sales of labels and printing supplies is attributable to an
increase in the product line, the sales force and production  capacity,  as well
as the the above mentioned  acquistion which represents  approximately  $501,000
and $1,252,000 of the increase for the respective periods.

         Revenues  from the sales of  Industrial  Equipment  were  $906,556  and
$2,285,597 for the three and nine month periods ended March 31, 1998 compared to
$586,793 and $1,783,983 for the same periods in 1997. Industrial Equipment sales
represented  28.5% and 26.6% of total revenue for the three month and nine month
periods  ended March 31, 1998 compared to 26.4% and 27.8%  respectively  for the
same  periods  last year.  Management  believes  that this  trend in  Industrial
Equipment  sales will continue for the proximate  future due to new products and
an increase in the number of resellers  of the product  line and the  geographic
coverage.  Equipment backlog was $620,000 at March 31, 1998 compared to $266,000
at March 31, 1997.

         Total backlog, for all products, as of March 31, 1998 was approximately
$2,414,000,,  of which  approximately  $1,800,000  is shipable by June 30, 1998,
compared to $1,354,000 as of March 31, 1997, about half of which was shipable by
June 30, 1997.

         Cost of sales for the three months and nine months ended March 31, 1998
were  53.6% and  52.7%  respectively,  compared  to 56.8% and 54.2% for the same
periods in 1997.  The  decrease in the cost of goods is related to the spread of
the overhead over a larger sales base and the mix of product.

         Selling,   general  and  administrative   expenses  were  approximately
$929,000 for the three months ended March 31, 1998 and approximately  $2,521,000
for the nine months ended March 31, 1998, as compared to approximately  $642,000
and approximately  $1,890,000,  respectively for the corresponding periods ended
March 31, 1997. The increase for the 1998 periods is primarily  attributed to an
increase in marketing & sales  activity and the addition of sales staff from the
above mentioned acquistion.

         Research and development  expenses for the three months and nine months
ended  March  31,  1998  were   approximately   $150,000  (4.7%  of  sales)  and
approximately  $440,000 (5.2% of sales) compared to approximately $144,000 (6.5%
of sales) and approximately $445,000 (6.9% 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 nine  months  ended March 31, 1998
was  $231,484 and  $649,416,  respectively,  compared to $109,239 and  $380,955,
respectively, for the same periods ended March 31, 1997.


LIQUIDITY AND CAPITAL RESOURCES:

         As of March 31, 1998,  the  Company's  principal  available  sources of
liquidity were, respectively,  operations, a $1,000,000 bank line of credit, all
of which  was  available  as of March  31,  1998 and a five  year  term loan for
$1,200,000,  with a remaining balance of $978,122 at March 31, 1998. 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 by $306,154,  from $1,499,283 at June 30,
1997 to  $1,805,437  at March 31, 1998, a direct result of the increase in sales
revenues

         Inventories increased by $863,238,  from $1,402,318 at June 30, 1997 to
$2,265,556 at March 31, 1998,  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 or
results of operations.



<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 of Matters to a Vote of Security Holders
         None

Item 5 - Other Information
         None

Item 6 - Exhibits and Reports on Form 8-K
(a)       Exhibits on Form 8-K
         Exhibit 27 - Financial Data Schedule

(b)       Reports on Form 8-K
         None



<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.

May 14, 1998




                                      BY:_______/s/ Richard L. Kalich___________
                                                  Richard L. Kalich
                                           President & Chief Executive Officer






                                       BY:______/s/ George S. Norfleet III______
                                                 George S. Norfleet III
                                                  Secretary / Treasurer