FORM 10-K

                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549


(Mark One)

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

             For the fiscal year ended December 31, 1998

OR

[       ]TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR   15(d) OF
         THE   SECURITIES   EXCHANGE  ACT   OF   1934    (NO   FEE REQUIRED)

               For   the   transition   period                  to


             Commission file number 0-6933

                              CAMBEX CORPORATION
              (Exact  name  of  registrant  as  specified  in  its charter)


Massachusetts                                    04 244 2959
(State or other                                  (I.R.S. Employer
jurisdiction   of                                 Identification No.)
incorporation or
organization)

360 Second Avenue                                02451
Waltham, Massachusetts                           (Zip Code)
(Address of principal
executive offices)

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

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value

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

Indicate by check mark if disclosure of delinquent filers pursuant
to  Item  405 of Regulation S-K is not contained herein, and  will
not  be  contained,  to  the  best of registrant's  knowledge,  in
definitive   proxy  or  information  statements  incorporated   by
reference in Part III of this Form 10-K or any amendment  to  this
Form 10-K.   [     ]

An  Exhibit  Index  setting forth the exhibits filed  herewith  or
incorporated by reference herein is included herein at Page A-1.

The  aggregate  market  value of the voting  stock  held  by  non-
affiliates  of  Cambex  Corporation  as  of  March  29,  1999  was
$1,196,187 based on the closing price of the common stock on  that
date.

The   number  of  shares  of  Cambex  Corporation's  common  stock
outstanding as of March 29, 1999: 9,538,226.


















                                    - 2 -

                                    PART I

                              Item 1.  Business.


General

The  Company  develops,  manufactures  and  markets  data  storage
solutions   that  enhance  the  performance  and  reliability   of
enterprise  data  centers.  The Company's  products  and  services
include memories for mission-critical enterprise servers including
IBM's  CMOS  mainframes,disk  storage  arrays,  and  Storage  Area
Network  (SAN) solutions for UNIX and Windows NT operating  system
users. 

Products

The  Company's  memory  products include IBM compatible  mainframe
memory  for  IBM  9672  and Multiprise 2000  mainframe  enterprise
servers  and add-on memory for high-end open systems servers  from
IBM, Sun, and Hewlett-Packard. The Company also sells or leases
trade-in memory which it acquires from its customers when this
memory is replaced by new memory. In most transactions, when the
Company upgrades a computer system with its memory, the customer
pays the Company in whole or in part with memory already resident 
on the machine. On certain occasions, the memory already resident
on the customer's machine is more valuable than the Company's memory,
and in those cases, the Company pays the difference to the customer,
net of a customary gross profit for the Company.
 

The  Company is assembling a product portfolio that will allow the
Company to offer full service Storage Area Network (SAN) solutions
for  IBM  RS/6000  and Windows NT users. The Company  offers  both
internally developed SAN products as well as products developed by
other  companies  that the Company resells such as  Fibre  Channel
host  bus  adapters,  hubs, routers and management  software.  The
Company's  SAN products also include Fibre Channel disk arrays  to
provide   the   disk  storage  as  well  as  the   Fibre   Channel
infrastructure when implementing a SAN. For non-SAN  disk  storage
applications,  the Company offers disk arrays with  SCSI  and  SSA
storage  connectivity options. 

Customer Service

The  Company arranges for maintenance and service of its  products
at  the  time  of lease or sale on a monthly or lifetime  fee  per
system  basis.  It normally provides this maintenance through  its
own  maintenance  personnel  or through  third  party  maintenance
organizations supported by the Company's personnel.

Research and Development and New Products

The  Company maintains a research and development program directed
to the development of new products and systems, to the improvement
and  refinement  of its present products and systems  and  to  the
expansion  of  their  uses  and applications.   The  new  products
include add-on memory and Fibre Channel connectivity products. The
dollar  amount spent by the Company during each of its last  three
fiscal  years  on such activities was approximately $1,379,000  in
1998, $2,322,000 in 1997, and $3,433,000 in 1996.

                                    - 3 -


Manufacturing

The  production  of  the  Company's  products  involves  primarily
electronics assembly and testing.  These operations are  performed
primarily  at the Company's plant in Waltham, Massachusetts.   The
Company  also  subcontracts  some of its  assembly  operations  to
several  circuit board assembly companies.  Most of the electronic
components  used  in  the Company's products  are  purchased  from
outside  suppliers  and  are  either  standard  items  or   custom
manufactured  to the Company's design and specifications  and  are
generally available from several sources.

Sales & Marketing

The  Company markets its products through both direct and indirect
sales  and marketing channels. The direct sales force is chartered
with  selling  the  Company's products to  the  past  and  present
customer base as well as developing new large accounts that prefer
dealing  directly with the manufacturer. Cambex's indirect channel
consists  of  distributors,  systems integrators  and  value-added
resellers.

The  Company established European sales and marketing subsidiaries
in  the  Netherlands, the United Kingdom and Germany during fiscal
1991 and in France during fiscal 1993.


Competition

The  market for the Company's add-on memory products is  dominated
by  International  Business  Machines Corporation  (IBM).  In  the
Storage  Area  Network market, the Company's  current  competitors
include   several  large  companies  in  addition  to  IBM.    IBM
announcements   concerning  new  systems,   improved   performance
characteristics of existing systems and price reductions have  had
adverse effects on the markets for the Company's products  in  the
past.

The  Company  believes that its success in competing is  dependent
upon  its  ability  to  offer products with  substantially  better
cost/performance   characteristics  than  the   competition.    In
addition, the Company believes that other competitive factors  are
non-price factors such as product quality, reliability and product
features, as well as service and support capability.

Competition in the add-on memory and Storage Area Network  markets
is   intense.   The markets are  characterized   by   rapid
technological  advances resulting in the frequent introduction  of
new  products and services and by price reductions in  established
product  categories.  A number of other companies, some  of  which
are  substantially larger and have substantially greater resources
than the Company, are engaged in the manufacture and marketing  of
products  similar  to  those  manufactured  and  marketed  by  the
Company.


                                    - 4 -

Backlog

As  of December 31, 1998, the dollar amount of the Company's  firm
backlog  was  approximately $151,000.  On the  same  date  of  the
preceding  year, the comparable amount was approximately $144,000.
All  such backlog was deliverable within a year.  Such backlog has
no  material seasonal characteristics.  All equipment  ordered  by
customers is subject to acceptance and satisfactory performance as
well  as  the  Company's ability to meet delivery schedules.   The
Company  believes that backlog is not a meaningful  indication  of
future business.

Patents

Although  the  Company owns 26 patents, it does not  consider  its
patent position to be significant from a competitive standpoint.

Significant Customers

No  single  customer  accounted for 10% or more  of  sales  during
fiscal  1997.  During fiscal 1998 and 1996, sales to one  customer
accounted for 11% and 14% of the Company's sales.

Employees

On March 29, 1999, the Company employed 30 persons.



                             Item 2.  Properties

The Company leases approximately 68,000 square feet of floor space
in Waltham, Massachusetts, under a lease for a term ending May 31,
2003.  This facility consists of office, manufacturing and R  &  D
space.  The Company subleases approximately 20,000 square feet  of
this  space  (which  is approximately 30% of the  Company's  total
leased  space) for a term ending May 31, 2003.  On March 1,  1999,
the  Company entered into a sublease agreement pursuant  to  which
the  Company  sublet  approximately  14,000  square  feet  in  its
Waltham, Massachusetts facility (which is approximately 21% of the
Company's  total  leased  space).  The term  of  the  sublease  is
coterminous  with the primary lease and expires on May  31,  2003.
The  Company  also  leases additional sales  and  support  offices
in the United States and Europe.


                          Item 3.  Legal Proceedings


The  Company is involved in certain legal proceedings  arising  in
the  ordinary course of business, including those relating to pre-
petition  creditor claims.  The Company believes that the  outcome
of  these  proceedings will not have a material adverse effect  on
the Company's financial condition.


                                    - 5 -


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


None.













                                    - 6 -

                                   PART II


              Item 5.  Market for the Registrant's Common Equity
                       and Related Stockholder Matters.



The  Company's  common  stock is traded  over  the  counter.   The
approximate number of shareholders of record at March 29, 1999 was
582.   The  high and low sales prices for the Company's stock  for
each quarter during the years ended December 31, 1998 and December
31, 1997 are as follows:



                                       1998                  1997

                                 High          Low         High     Low

         First  Quarter            0.34         0.28       1.94     1.31
         Second  Quarter           0.71         0.28       1.56     0.97
         Third  Quarter            0.52         0.28       1.56     0.41
         Fourth  Quarter           0.35         0.15       0.41     0.13



The Company has not paid dividends on its common stock in the past
and does not expect to do so in the foreseeable future.



                      Item 6.  Selected Financial Data.

The   following  selected  financial  data  should  be   read   in
conjunction  with  the  financial  statements  and  related  notes
appearing elsewhere in this Form 10-K.




                                    - 7 -


                 Year        Year       Year      Four        Year    Year
                 Ended       Ended      Ended    Months      Ended    Ended
               December   December   December  December     August   August
                 1998        1997      1996       1995        1995    1994

                        (In thousands, except per share amounts)

Revenues        $ 3,749  $ 10,066    $ 22,917   $8,509     $35,152  $40,549
Net income(loss) (2,773)  ( 6,597)    ( 8,632) ( 2,855)   (  9,899)     590

Per share data:
Net income(loss) ( 0.30)  (  0.72)    (  0.96) (  0.32)   (   1.14)    0.07

Weighted Average
   Common and Common
   Equivalent Shares
    Outstanding     9,300    9,100       9,000    8,920      8,700    8,550
Total  assets    $  1,474 $  3,928    $ 13,033  $26,212    $32,027  $38,048

Long-term debt      1,064    -----      ------   ------     ------    3,900


            Item  7.   Management's  Discussion  and  Analysis  of Financial
                       Condition and Results of Operations.

Fiscal 1998 as compared with Fiscal 1997

The Company's revenues were $3,749,000 and $10,066,000 in 1998 and
1997,  respectively. The Company's revenues for mainframe  storage
and client/server products declined significantly in 1998.

Cost  of sales as a percentage of revenues was 79% and 94% in 1998
and   1997,  respectively.  Inventory  write-downs  in  1997  were
approximately  $2,700,000.  Their effect  on  the  cost  of  sales
percentage was 28% in 1997.

Research and development expenses represented 37% ($1,379,000) and
23% ($2,322,000) in 1998 and 1997, respectively. Sales and general
and administrative expenses were $2,002,000 and $4,489,000 in 1998
and  1997, respectively. The reduction in expenses is due  to  the
cost  savings  achieved from putting in place  additional  expense
controls.

                                   8


Fiscal 1997 as compared with Fiscal 1996

The  Company's revenues were $10,066,000 and $22,917,000  in  1997
and  1996,  respectively. The Company's revenues for the mainframe
memory  products  for  the IBM ES/9021 declined  significantly  in
1997.  Historically, the Company's mainframe  revenues  have  been
cyclical, dependent on the technological changes initiated by IBM.
During 1997, IBM introduced a new CMOS mainframe processor, and as
a  result, customers reduced their purchases of incremental memory
for the ES/9021 machines. The demand for additional memory usually
lags  the introduction of new generations of mainframes by  twelve
to  eighteen months, but the Company is unable to predict  whether
or when the market will return to its former position. The Company
had planned to balance the decline in mainframe memory revenues by
selling mainframe and client/server disk storage products. Initial
shipments   of  the  Company's  mainframe  disk  storage   product
(Cascade)   experienced   operating   problems,   which   required
additional time to resolve. These problems were corrected  by  the
end of 1997.

The  Company has reduced its general level of expenses since  1994
as  a  result of decreasing annual revenues. The total  number  of
employees  has  decreased each year. These staff  reductions  have
impacted  all  functional  areas and  should  be  considered  when
analyzing comparative financial statements.

Cost  of sales as a percentage of revenues was 94% and 75% in 1997
and 1996, respectively. The major reason for the increased cost of
sales  is the decrease in total revenues and the resulting  effect
of  fixed  overhead costs. Inventory write-downs in 1997 and  1996
were  approximately $2,700,000 and $3,000,000, respectively. Their
effect on the cost of sales percentage was 28% and 13% in 1997 and
1996, respectively.

Research and development expenses represented 23% ($2,322,000) and
15% ($3,433,000) in 1997 and 1996, respectively. The reduction  in
total  expenses  is  due  mainly to reduced  staffing.  Sales  and
general and administrative expenses were $4,489,000 and $8,986,000
in  1997 and 1996, respectively. The reduction in expenses is  due
primarily to lower staffing levels.

The  Company recognized a net expense of $1,823,000 in 1996, which
was  entirely  due  to  amortization of a technology  license  and
marketing  agreement that was acquired in 1992.  The  amortization
was  over  a  five  year  period,  ending  in  1996.  The  Company
recognized   a  net  expense  of  $295,000  in  1997,   of   which
approximately $200,000 relates to accrued professional services in
conjunction  with  the Chapter 11 services. The  Company  recorded
$244,000  in  interest expense in 1996, which  was  related  to  a
revolving credit agreement with a bank. The entire balance of  the
outstanding loan was repaid in February 1997.

The Company recorded no income tax provision or credit in 1997 and
a net credit  of $200,000 in 1996.




                                 9

Inflation

The  Company  did not experience any material adverse  effects  in
1998, 1997 and 1996 due to general inflation.

Liquidity and Capital Resources

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

On  November 9, 1998, the Company entered into a loan and security
agreement with a lender company, hereafter referred to as "Lender"
which is owned by a relative of Joseph F. Kruy, Chairman and Chief
Executive  Officer  of the Company, under which  the  Company  may
borrow  up to a maximum of $500,000 being outstanding at  any  one
time.  Such  loan is fully secured by all assets of  the  Company.
The  Company pays all collections from accounts receivable to  the
Lender  not  less frequently than each week until the  outstanding
loan  amount plus related interest, which accrues at a 12%  annual
rate,  is  fully paid. Under the terms of the loan agreement,  the
Lender receives a warrant for the purchase of two shares of common
stock, at $0.21 per share, for each dollar loaned to the Company.

As discussed more fully in Note 1 to the financial statements, the
Company   has   suffered   recurring   losses   from   operations.
Consequently,  the  Company's  ability  to  continue  as  a  going
concern,  is  dependent  upon  several  factors,  including   the
Company's  ability  to raise additional capital.   The  additional
financing  will  be  used  to fund continuing  operations  of  the
Company, particularly in development, sales and marketing.

The  Company's  management believes it has taken  the  appropriate
corrective actions to reduce expenses through consolidation of the
workforce  and to increase revenue through new strategic alliances
and  selling products with improved gross margins.  There  are  no
assurances that such actions will increase revenues.

The  Company's  cash and marketable securities were  $211,000  and
$476,000 at December 31, 1998 and December 31, 1997, respectively.
Working  capital  was a negative $1,575,000 at December  31,  1998
compared  with $2,512,000 at December 31, 1997.  During 1998,  the
Company  expended  $8,000  for capital equipment  to  support  its
growth.   During fiscal 1999, the Company expects to acquire  less
than $100,000 of capital equipment.

                              - 10 -

Year 2000

The  Company  has  evaluated the impact of  changes  necessary  to
achieve  a  year 2000 date conversion.  Software failures  due  to
processing  errors arising from calculations using the  year  2000
date  are a known risk.  Major areas of potential impact have been
identified  and  it  is  management's opinion  that  the  software
currently in use, or that which will be in use at the time is year
2000 compliant.  Therefore, the Company does not expect a material
impact on future results due to conversion or noncompliance.

Forward-Looking Statements

The statements contained in "Management Discussion and Analysis of
Financial  Condition  and  Results of  Operations"  and  elsewhere
throughout this Annual Report on Form 10-K that are not historical
facts  are  "forward-looking statements"  within  the  meaning  of
Section 27A of the Securities Act of 1933 and Section 21E  of  the
Securities Exchange Act of 1934.  These forward-looking statements
are  subject to certain risks and uncertainties  which could cause
actual  results to differ materially from those reflected  in  the
forward-looking  statements.   These  forward-looking   statements
reflect  management's  analysis, judgment, belief  or  expectation
only  as of the date hereof.  The Company undertakes no obligation
to  publicly  revise these forward-looking statements  to  reflect
events  or  circumstances that arise after the date hereof  or  to
publicly  release  the results of any revisions to  such  forward-
looking  statements  that  may  be  made  to  reflect  events   or
circumstances  after  the  date  hereof.   In  addition   to   the
disclosure  contained herein, readers should carefully review  any
disclosure of risks and uncertainties contained in other documents
the  Company  files  or  has filed from  time  to  time  with  the
Securities  and  Exchange Commission pursuant  to  the  Securities
Exchange Act of 1934.


            Item 8.  Financial Statements and Supplementary Data.

See  financial  statements, beginning at  page  F-2,  incorporated
herein by reference.

Unaudited  quarterly financial data pertaining to the  results  of
operations for 1998 and 1997 are as follows:

                             Q1                Q2         Q3        Q4
                         (In thousands, except per share amounts)

December 31, 1998
Revenues               $    909      $   930       $    740      $1,170
Gross   Profit   (Loss)      46          172             13         551
Net  Income (Loss)       (  990)       ( 637)       (   941)       (205)
Earnings (Loss)
   Per  Share            ( 0.11)       (0.07)       (  0.10)      (0.02)

December 31, 1997
Revenues                $ 3,027       $ 4,376       $  1,225      $1,438
Gross   Profit   (Loss)   1,179         1,525            130      (2,269)
Net   Income   (Loss)    (1,212)       (  583)        (1,684)     (3,118)
Earnings (Loss)
  Per  Share             ( 0.13)       ( 0.06)        ( 0.18)      (0.35)

           Item 9.   Changes in and Disagreements with Accountants on
                     Accounting and Financial Disclosure.
                               None.
                                    - 11 -

                                   PART III


           Item  10.  Directors  and  Executive  Officers  of  the Registrant.

Directors and Executive Officers of the Company are as follows:

                        Positions and Offices with the Company:
Name                    Business Experience During Last Five Years

Joseph   F.   Kruy      President  and   a   Director   from incorporation in
Age:   67               1968  to  December, 1975 and from  June,  1976  to
                        date; Chairman of the Board of Directors from
                        December,  1975  to  date.  Treasurer   from June,1985
                        to  April, 1987 and January, 1988  to  April, 1988
                        and August, 1997 to date.

Philip C. Hankins       Director since 1979.  President, Charter
Age:  67                Information Corporation (Information
                        Processing).

C.   V.  Ramamoorthy        Director  since  1968.   Professor  of Electrical
Age:    72                  Engineering  and  Computer Sciences, University of
                            California at Berkeley.

Robert Spain            Director since 1995. President, CFC, Inc.
Age:  61                (Electronic Components Manufacturing)

Peter   J.  Kruy            Executive  Vice  President  and  Chief Financial
Age:    36                  Officer  from  August,  1998  to  date; President
                            and  Chief  Executive Officer of  Jupiter
                            Technology, Inc. from 1994 to 1998.



















                                    - 12 -

                      Item 11.  Executive Compensation.

The   following   table   provides  certain  summary   information
concerning compensation paid or accrued by the Company  to  or  on
behalf  of the Company's Chief Executive Officer and each  of  the
other executive officers of the Company (determined as of the  end
of  the last fiscal year) for the fiscal years ended December  31,
1998, December 31, 1997, and December 31, 1996.

                    Summary Compensation Table
                                 
                        Annual Compensation


                                                                  Commissions
                                        Salary        Salary     and Incentive
Name  and  Position            Year      Paid        Deferred(1)    Bonuses

Joseph F. Kruy                 1998    $200,000     $  -            $  -
Chairman, President and CEO    1997    $136,270     $63,730         $  -
                               1996    $200,000     $  -            $  -

Peter J. Kruy                  1998    $ 34,327     $  -            $  -
Executive Vice President and   1997    $   -        $  -            $  -
Chief Financial Officer        1996    $   -        $  -            $  -

                   Long Term Compensation Awards


                                                                   All Other
Name and Position                  Year         Options(#)     Compensation(2)

Joseph F. Kruy                     1998             -               $  -
Chairman, President and CEO        1997             -               $  -
                                   1996             -               $ 3,854

Peter J. Kruy                      1998             -               $  -
Executive Vice President and       1997             -               $  -
Chief Financial Officer            1996             -               $  -

(1)  Salary  Deferred is a prepetition obligation of the  Company. Under the
     terms  of  the Reorganization Plan, Mr. Kruy was entitled  to receive the
     salary deferral as an executory contract. Rather than receive the deferral
     in  cash, the entire amount was incorporated into Mr.  Kruy's loan to the
     Company in exchange for a 10% secured subordinated promissory note.

(2)  Company  contribution in Company Common  Stock  on  officer's behalf to
     the Company's 401(K) Plan.


Directors  who are not employed by the Company receive  an  annual
fee  of $10,000 and a fee of $1,000 for each meeting of the  Board
attended.


                                          13




Stock Options

No  options were granted to or exercised by the executive officers
named in the Summary Compensation Table.

Aggregate Fiscal Year End Option Value

                  Number of Options         Value of Unexercised In-the-money
                  at December 31, 1998       Options at December 31, 1998(1)
Name              Exercisable/Unexercisable     Exercisable/Unexercisable

Joseph F. Kruy               -                               -

Peter J. Kruy                -                               -

(1)  The  closing price of the Company's Common Stock on  December 31, 1998 
     was $0.20.   The  numbers  shown reflect  the  value  of  options
     accumulated over all years of employment.


Compensation Committee Interlocks and Insider Participation

The Compensation Committee is presently comprised of the Board  of
Directors.  Mr.  Kruy,  the  Company  Chairman  of  the  Board  of
Directors,  President and CEO, participates as  a  member  of  the
Board in compensation decisions, excluding decisions regarding his
own compensation.


Employment Contracts and Termination Agreements

Mr.  Kruy  is employed under an agreement which provides  for  his
full-time  employment  as  Chairman of  the  Board  of  Directors,
President  and  Chief  Executive  Officer  of  the  Company  until
December  31,  1998.  Pursuant to an  employment  agreement  dated
November 18, 1994, the Company has agreed to pay Mr. Kruy  minimum
base  compensation  of $200,000 per year and  an  incentive  bonus
pursuant to the Company's Incentive Bonus Plan in an amount  equal
to  4%  of the Company's pre-tax profit, as defined, beginning  in
fiscal 1995 for each fiscal year during the term of the agreement.
If  another person is given either the title or the powers of  the
Chief  Executive Officer, Mr. Kruy will be entitled to resign  and
continue to be paid his fixed and incentive compensation,  subject
to mitigation, through December 31, 1998.


Report on Executive Compensation

The  Company  has designed its compensation program to  compensate
employees,  including  its executives, in a consistent  manner  to
promote  a  cooperative  effort toward  common  goals  of  quality
performance.  Compensation  is set at  levels  which  the  Company
believes  will  attract, motivate, and retain  employees  who  can
achieve these goals.

Compensation for the Company's executive officers consists of base
salary,  bonus and stock options.  Base salaries and stock options
are approved by the

                                    14


Compensation  Committee  presently  comprised  of  the  Board   of
Directors  based  upon  a  review of the responsibilities  of  the
officer as well as a review of the base salaries and stock options
of  similar  positions  in  other  high  technology  companies  of
comparable revenues.

The  Company believes that a substantial portion of an  employee's
compensation  should be based on the performance of  the  Company.
Therefore, the Company has an Incentive Bonus Plan which  provides
for  annual  cash bonuses to certain key employees of the  Company
based  on  the Company's operating results for the year up  to  an
aggregate maximum of 15% of the Company's pre-tax income.   As  of
December  31,  1998, approximately 10 employees were  eligible  to
participate in this plan.  Of the executive officers, Mr. Kruy was
a participant in this plan in 1998.  The amount of each individual
bonus is determined at the discretion of the Board of Directors.

The  Company  also  has  the  Cambex  Corporation  Employee  Stock
Purchase Plan which is an equity purchase plan designed to attract
and retain employees who can make significant contributions to the
success of the Company.

                              BOARD OF DIRECTORS
                              Joseph F. Kruy
                              Philip C. Hankins
                              C.V. Ramamoorthy
                              Robert J. Spain


   Item  12.  Security Ownership of Certain Beneficial Owners  and Management.

                       (#)Shares of Common
                       Stock Beneficially Owned
Name                    as of December 31, 1998        Percent  of Class

Joseph F. Kruy                   1,334,152(1)              13.99%

Philip C. Hankins                  106,358                  1.12%

C.V. Ramamoorthy                    99,156                  1.04%

Robert Spain                          -                       -

Peter J. Kruy                       962,164(2)             10.09%

All directors and
executive officers
as a group (5 persons)            2,501,830(3)             26.23%

(1) Includes 56,250 shares owned by Mr. Kruy as co-trustee for his wife and
    children.
(2) Includes 960,164 shares held by CyberFin Corporation, which is
    owned by Peter Kruy.
(3)  Directors  and  officers have shared  investment  power  with
     respect to 56,250 shares and sole voting power with respect 
     to 2,445,580 shares.

                                    15


Solely  for the purpose of calculating the aggregate market  value
of voting stock held by non-affiliates of the Company as set forth
on  the  Cover  Page,  it  was assumed  that  only  directors  and
executive  officers on the calculation date together with  spouses
and dependent children of such persons constituted affiliates.

             Item   13.    Certain Relationships and Related Transactions.

During  the  third  quarter of 1996, the Company  entered  into  a
Manufacturing Agreement with Jupiter Technology, Inc. ("Jupiter"),
the  majority  of which is owned by Joseph F. Kruy,  Chairman  and
Chief  Executive Officer of Cambex Corporation, and his son, Peter
Kruy.   Under  the  terms  of  this Agreement,  Cambex  agreed  to
manufacture,  sell  and deliver products exclusively  to  Jupiter.
Cambex  agreed  to  purchase  approximately  $300,000  of  Jupiter
inventory  from  Jupiter and paid Jupiter  $100,000  towards  that
amount.   During 1996, the Company shipped and billed  to  Jupiter
$298,000 for Jupiter products plus $43,000 for expenses related to
a sublease agreement.  During 1997, the Company shipped and billed
to  Jupiter  $174,000  for  Jupiter  products  plus  $118,000  for
expenses  related  to a sublease agreement.  As  of  December  31,
1997,  Cambex  owed Jupiter $267,000 for inventory  purchases  and
Jupiter  owed Cambex $504,000 for revenue shipments plus expenses.
In  January,  1998,  substantially all of the  assets  of  Jupiter
Technology were purchased by an unrelated third party.  In  March,
1998, Jupiter paid the Company $230,000, which represented the net
amount due the Company.

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

On  November 9, 1998, the Company entered into a loan and security
agreement with a lender company, hereafter referred to as "Lender"
which is owned by a relative of Joseph F. Kruy, Chairman and Chief
Executive  Officer  of the Company, under which  the  Company  may
borrow  up to a maximum of $500,000 being outstanding at  any  one
time.  Such  loan is fully secured by all assets of  the  Company.
The  Company pays all collections from accounts receivable to  the
Lender  not  less frequently than each week until the  outstanding
loan  amount plus related interest, which accrues at a 12%  annual
rate,  is  fully paid. Under the terms of the loan agreement,  the
Lender receives a warrant for the purchase of two shares of common
stock, at $0.21 per share, for each dollar loaned to the Company.



                                    - 16 -


                                   PART IV


  Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

        (a)    The following documents are filed as part  of  this report:

             (1)   The financial statements listed in the index to
                   financial statements appearing at page F-1  of this
                   report,  which index is incorporated  in  this item by
                   reference.

              (2)  The financial statement schedules as set forth in the
                   above-mentioned index to financial statements.

             (3)   See the exhibit index following on page A-1.

        (b)    No  reports on Form 8-K were filed during the  last quarter
               of the period covered by this report.





























                                    - 17 -

                                EXHIBIT INDEX



The  following  exhibits  are filed herewith  or  incorporated  by
reference herein.

Exhibit

3.1        Articles  of  Organization of  Cambex  Corporation,  as amended
          (incorporated herein by reference to Exhibit 1.1 to Form 10-K
          for the fiscal year ended August 31, 1981).

3.1.1      Articles of Amendment to Articles of Organization filed with
           the  Massachusetts Secretary of State on  December  11, 1987
          (incorporated herein by reference to Exhibit 3.1.1 to
          Form 10-K for the fiscal year ended August 31, 1987).

3.1.2      Articles of Amendment to Articles of Organization filed with
          the Massachusetts Secretary of State on June 8, 1988
          (incorporated herein by reference to Exhibit 3.1.2 to
          Form 10-K for the fiscal year ended August 31, 1988).

3.1.3      Articles of Amendment to Articles of Organization filed with
          the Massachusetts Secretary of State on January 23, 1992
          (incorporated herein by reference to Exhibit 3.1.3 to
          Form 10-K for the fiscal year ended August 31, 1993).

3.2        By-Laws of Cambex Corporation, as amended (incorporated herein
           by reference to Exhibit 1.2 to Form 10-K for the fiscal year
          ended August 31, 1981).

10.1      Employment Agreement between Joseph F. Kruy and Cambex
           Corporation,  dated as of April 22, 1987  (incorporated herein
           by  reference to Exhibit 10.1.1 to Form  10-K  for  the fiscal
           year ended August 31, 1987).

10.2       Incentive Bonus Plan (incorporated herein by  reference to
          Exhibit 10.3 to Form 10-K for the fiscal year ended
          August 31, 1983).

10.4       1985  Non-Qualified  Stock  Option  Plan  (incorporated herein by
           reference  to Exhibit 10.6 to Form 10-K for the  fiscal year
          ended August 31, 1985).

10.6       1987 Combination Stock Option Plan (incorporated herein by
           reference  to Exhibit 10.8 to Form 10-K for the  fiscal year
          ended August 31, 1987).

10.8       9021  Memory  Products Business  Acquisition  Agreement dated
          January 10, 1992 between the Company and EMC Corporation
          (incorporated herein by reference to Exhibit 1 to Form 8-K
          dated January 14, 1992).


                                    - 18 -


                          Exhibit Index - Continued



Exhibit - Continued



10.9        Cambex   Corporation  Employee  Stock  Purchase Plan (incorporated
            herein by reference to Exhibit 10.9 to Form 10-K for the
            fiscal year ended August 31, 1994).

10.10      Revolving Credit Agreement dated April 15, 1993 between the
           Company   and  the  First National  Bank  of Boston (incorporated
           herein by reference to Exhibit 10.10 to Form 10-K  for the
           fiscal year ended August 31, 1994).

10.11      Cambex  Corporation Reorganization  Plan  (incorporated herein by
           reference  to Exhibit 10.11 to Form 8-K for  April  23, 1998).

23.       Consent of Independent Public Accountants.




























                                    - 19 -

                     CAMBEX CORPORATION AND SUBSIDIARIES
                                 

                 (Information required by Part II, Item 8 and
                        Part IV, Item 14 of Form 10-K)


                             FINANCIAL STATEMENTS

                                                                  Page

Report of Independent Public Accountants                         F- 2

Consolidated Balance Sheets - December 31, 1998 and 1997         F- 3

Consolidated Statements of Operations for the Years
       Ended December 31, 1998, December 31, 1997 and
        December 31, 1996                                        F- 4

Consolidated Statements of Stockholders' Investment
       for the Years Ended December 31, 1998,
        December 31, 1997 and December 31, 1996                  F- 5

Consolidated Statements of Cash Flows for the
       Years Ended December 31, 1998, December 31, 1997
        and December 31, 1996                                    F- 6

Notes to Consolidated Financial Statements                       F- 7


                            SUPPLEMENTARY SCHEDULE

                   FOR THE YEARS ENDED DECEMBER 31, 1998,
                  DECEMBER 31, 1997 AND DECEMBER 31, 1996

Schedule Number


       II         Valuation and Qualifying Accounts             F-23


Schedules other than those referred to above have been omitted, as
they are not required or the information is included elsewhere  in
the financial statements or the notes thereto.


                                    - 20 -


                                                               F-1


               REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To The Stockholders of Cambex Corporation:


We  have  audited the accompanying consolidated balance sheets  of
Cambex  Corporation (a Massachusetts corporation) and subsidiaries
as  of  December  31, 1998 and 1997, and the related  consolidated
statements of operations, stockholders' investment and cash  flows
for  the  years  then  ended.  These financial statements  and  the
schedule referred to below are the responsibility of the Company's
management.  Our responsibility is to express an opinion on  these
financial statements based on our audits.  The financial statements
of  Cambex  Corporation and subsidiaries as of December  31,  1996
were  audited by other auditors whose report dated March 4,  1997,
on  those  statements included an explanatory paragraph describing
conditions  that  raised  substantial doubt  about  the  Company's
ability to continue as a going concern discussed in Note 1 to  the
financial statements.

We have conducted our audits in accordance with generally accepted
auditing  standards.  Those standards require  that  we  plan  and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An  audit
includes  examining,  on  a test basis,  evidence  supporting  the
amounts  and  disclosures in the financial statements.   An  audit
also  includes  assessing  the  accounting  principles  used   and
significant  estimates made by management, as well  as  evaluating
the  overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the 1998 and 1997 financial statements referred to
above  present  fairly,  in all material respects,  the  financial
position of Cambex Corporation and subsidiaries as of December 31,
1998  and 1997 and the results of their operations and their  cash
flows  for  the  years  then  ended in  conformity  with  generally
accepted accounting principles.

The  accompanying financial statements have been prepared assuming
that  the  Company will continue as a going concern.  As discussed
in  Note  1 to the financial statements, the Company has  suffered
recurring  losses  from operations that raises  substantial  doubt
about  its  ability to continue as a going concern.   Management's
plans  in  regard to these matters are also described in  Note  1.
The  financial statements do not include any adjustments  relating
to the recoverability and classification of asset carrying amounts
or  the amount and classification of liabilities that might result
should the Company be unable to continue as a going concern.

Our  audit was made for the purpose of forming an opinion  on  the
basic  financial statements taken as a whole.  The schedule listed
in  the  index  of the financial statements is presented  for  the
purpose of complying with the

Report of Independent Public Accounts
Page - 2 -



Securities and Exchange Commission's rules and is not part of  the
basic  financial statements.  This schedule has been subjected  to
the  auditing  procedures  applied  in  our  audit  of  the  basic
financial  statements and, in our opinion, fairly states,  in  all
material  respects, the financial data required to  be  set  forth
therein in relation to the basic financial statements taken  as  a
whole.


                                 BELANGER & COMPANY, P.C.
                                 CERTIFIED PUBLIC ACCOUNTANTS


























Chelmsford, Massachusetts
March 31, 1999

                                    F-2

                                  - 22 -

<TABLE>
<S>    <C>
                             CAMBEX CORPORATION AND SUBSIDIARIES
                                CONSOLIDATED BALANCE SHEETS
                                  DECEMBER 31, 1998 AND 1997
                                                                                   
                                                                                     
        ASSETS
                                                                                  
                                                   1998              1997                                           
         CURRENT ASSETS:                         ---------        ---------
                                                                                     
      Cash and cash equivalents             $     211,452    $      476,246                                       
      Accounts receivable,less reserves
      of $100,000 in 1998 and $131,000
      in 1997                                     514,335         1,200,343                         
                                                                                     
      Current portion of investment in sales-type
       leases, net of unearned interest income of
       $400 in 1998 and $4,000 in 1997             25,820            59,299                                       

      Inventories                                 303,720         1,412,925                                       

      Prepaid expenses                             72,852           121,183                                       

         Total current assets               $   1,128,179    $    3,269,996                                       
                                                                                     
                                                                                   
                                                                                 
                                                                                 
     LONG-TERM INVESTMENT IN SALES-TYPE
       LEASES, net of unearned interest
       income of $1,000 in 1997             $      -         $       25,820      
                                                                                 
     LEASED EQUIPMENT, at cost, net of
       accumulated depreciation of $208,000
       in 1998 and $138,000 in 1997         $      -         $       37,886                                       
                                                                                                             
                                                                                  
    PROPERTY AND EQUIPMENT, at cost
     Machinery and equipment                $   3,044,199    $    3,036,699                                       
     Furniture and fixtures                       247,173           247,173                                       
     Leasehold improvements                       602,092           620,949                                       
                                            $   3,893,464    $    3,904,821                                       
                                                                                   
         Less- Accumulated depreciation 
               and amortization                 3,585,441         3,347,941                                       

                                            $     308,023    $      556,880                                       

OTHER ASSETS                                                                    
    Technology License/Marketing Agreement,
        net of accumulated amortization
        of $8,500,000 in 1998 and 1997       $      -         $      -                                             
    Other                                          37,830            37,830                                       
                                                                                 
    Total Assets                             $   1,474,032    $    3,928,412                                       



                              LIABILITIES AND STOCKHOLDERS' INVESTMENT

                                                      1998             1997                                               
LIABILITIES NOT SUBJECT TO COMPROMISE:
       CURRENT LIABILITIES:
        Loan Agreement                           $     393,424    $      -                                             
                                                                                
        Accounts payable                               408,841           296,419                                       
        Obligations for trade-in memory                360,250           -                                             
        Prepetition liabilities-short term portion   1,146,168           -                                             
        Accrued expenses-
         Payroll and related                           136,349            96,713                                       
         Income and other taxes                         83,869            12,143                                       
         Other                                         173,821           352,869                                       
                                                                                   
         Total current liabilities               $           0    $      758,144                                       

                                                                                 
        LONG TERM DEBT                            $   1,063,730    $      -                                             

        PREPETITION LIABILITIES-LONG TERM PORTION $   3,173,007    $      -                                             

        DEFERRED  REVENUE                         $     255,366    $      15,478                                       

 LIABILITIES SUBJECT TO COMPROMISE -
      Accounts payable and accrued expenses       $      -         $   6,325,273                                       

    Total liabilities                             $   4,492,103    $   7,098,895                                       
                                                                                   
   COMMITMENTS AND CONTINGENCIES
                                                                                
 STOCKHOLDERS' INVESTMENT
     Preferred Stock, $1.00 par value per share -
      Authorized--3,000,000 shares
      Issued--None                                 $                $                                                    

     Common Stock, $.10 par value per share -
     Authorized--25,000,000 shares
     Issued- 11,072,582 shares in 1998
             and 10,636,108 shares in 1997           1,107,258         1,063,611  
     Capital in excess of par value                 15,966,625        15,814,783                                       
     Accumulated other comprehensive income             88,134            60,756                                       
     Retained earnings(deficit)                    (22,028,044)      (19,254,867)                                       
     Less - Cost of shares held in treasury--
            1,534,356 shares in 1998 and 1997         (854,766)         (854,766)                                       
                                                                               
                                                                                 
                                                                                 
         Total Stockholders' Investment           $ (5,720,793)    $  (3,170,483)                                       

         Total Liabilities and Stockholders'                                                                
         Investment                               $ (1,228,690)    $    3,928,412                                       
                                                  =============    ==============                                       
                                                                                  
 The accompanying notes are an integral part of these consolidated financial statements.
                                                                                  
                               -23-                            F-3

</TABLE>
                                                          
                                                                              
               

<TABLE>
<S>    <C>

                            CAMBEX CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED STATEMENTS OF OPERATIONS


                         Year Ended               Year Ended    Year Ended
                        December 31,             December 31,  December 31,
                           1998                     1997           1996

REVENUES
  Product sales               $ 1,600,644     $ 6,667,693      $  17,741,399
  Services                      2,148,289       3,398,699          5,083,624
  License fees                          -              -              91,667

          Total revenues      $ 3,748,933     $10,066,392     $   22,916,690

COST OF SALES                   2,967,406       9,501,543         17,355,948

          Gross profit        $   781,527     $   564,849     $    5,560,742


OPERATING EXPENSES:
  Research and development    $ 1,379,094     $  2,321,925    $    3,432,772
  Selling                       1,241,385        3,193,271         6,839,807
  General and administrative      760,578        1,295,465         2,146,060
                              $ 3,381,057     $  6,810,661    $   12,418,639

OPERATING INCOME (LOSS)       $(2,599,530)    $ (6,245,812)   $   (6,857,897)

OTHER INCOME (EXPENSE):
  Interest expense                (70,000)         (74,477)         (243,694)
  Interest income                   3,641           17,674            92,361
  Other income (expense)         (107,288)         (84,861)       (1,822,873)

INCOME (LOSS) BEFORE REORGANIZATION               
ITEMS AND INCOME TAXES        $(2,773,177)    $ (6,387,476)   $   (8,832,103)
  Professional fees                -              (210,000)             -

INCOME (LOSS) BEFORE 
INCOME TAXES                  $(2,773,177)    $ (6,597,476)   $   (8,832,103)

  Credit (Provision) for income taxes  -                -            200,000

NET INCOME (LOSS)             $(2,773,177)    $ (6,597,476)   $   (8,632,103)

OTHER COMPREHENSIVE INCOME,
NET OF TAX:
   Foreign Currency Translation
   Adjustments                     27,378         (122,599)         (104,408)

OTHER COMPREHENSIVE INCOME         27,378         (122,599)         (104,408)

TOTAL COMPREHENSIVE INCOME    $(2,745,799)    $ (6,720,075)   $   (8,736,511)

TOTAL COMPREHENSIVE INCOME (LOSS)
PER COMMON SHARE                   $(0.30)          $(0.74)           $(0.97)

Weighted Average Common and
Common Equivalent Shares Outstanding 9,300,000    9,100,000           9,000,000

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

               -24-     F-4
</TABLE>


<TABLE>
<S>    <C>

          CAMBEX CORPORATION AND SUBSIDIARIES
                                                                                           
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
                                                                                           
                                                                                           
                                  Common Stock   Capital in     Accumulated       Retained     Cost of
                                    $.10          Excess of  Other Comprehensive  Earnings    Shares Held
                                   Par Value      Par Value        Income        (Deficit)    in Treasury
                                                                                                     
                                                                                           
                                                                                          
 BALANCE AT DECEMBER 31, 1995    $ 1,045,299  $   15,446,004  $    287,763  $ (4,025,288) $(854,766)
                                                                                             
ADD:                                                                                       
   Net loss                      $       -     $       -      $     -       $ (8,632,103) $    -
   Exercise of employee stock options  7,627          53,864        -              -           -
   401(k) Employer match               3,482         100,990        -              -           -
   Stock Purchase Plan shares          5,006         191,247        -              -           -
   Purchase Plan
   Translation adjustment                -              -         (104,408)        -           -

BALANCE AT DECEMBER 31, 1996     $ 1,061,414    $  15,792,105  $   183,355   $(12,657,391) $(854,766)
                                                                                              
ADD:                                                                                      
   Net loss                      $       -      $       -      $     -       $ (6,597,476) $   -
   Exercise of employee stock options     90              135        -             -           -
   Stock Purchase Plan Shares          2,107           22,543        -             -           -
   Translation Adjustment                -              -         (122,599)        -           -

BALANCE AT DECEMBER 31, 1997     $ 1,063,611    $  15,814,783  $    60,756   $(19,254,867)  $(854,766)
                                                                                            
ADD:                                                                                       
   Net loss                      $       -      $       -      $     -        $ (2,773,177) $  -
   Exercise of employee stock options    600              120        -             -           -
   Stock Purchase Plan Shares          5,386            1,077        -             -           -
   Issuance of shares pursuant
   to reorganization plan             37,661          150,645        -             -           -                              
   Translation adjustment                -               -          27,378         -           -

BALANCE AT DECEMBER 31, 1998     $ 1,107,258     $  15,966,625  $   88,134    $(22,028,044)  $(854,766)
                                                                                         
             -25-                   F-5                                                                                           
                                                                                           
</TABLE>

<TABLE>
<S>    <C>                        

                        CAMBEX CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                       YEAR ENDED     YEAR ENDED    YEAR ENDED
                                                       DECEMBER 31,   DECEMBER 31,  DECEMBER 31,
                                                            1998         1997           1996


Net income (loss)                                    $  (2,773,177)  $ (6,597,476)   $  (8,632,103)             
Adjustments to reconcile net income to net                                                                       
  cash provided by (used in) operating activities:                                                              
  Depreciation                                       $     283,243   $    569,207    $     658,191             
  Amortization                                                -              -           1,841,671             
  Provision for losses on accounts receivable                 -              -                -                  
  Provision for losses on inventory                           -         2,300,000        2,800,000             
  Amortization of prepaid expenses                          24,892         28,990           14,074             
  Common stock/warrants issued in lieu of cash             194,769           -             104,472             
  Change in assets and liabilities:                                                                                
     Decrease (increase) in accounts receivable            686,008        734,365          694,070             
     Decrease (increase) in inventory                    1,109,205      2,487,108        3,030,291             
     Decrease (increase) in investment in sales-type leases 59,299        501,072          170,085             
     Decrease (increase) in prepaid taxes                     -         2,335,295        4,053,364             
     Decrease (increase) in prepaid expenses                23,439        (14,452)          29,196             
     Decrease in other assets                                 -              -                  45             
     Increase (decrease) in accounts payable               112,422     (4,033,219)        (209,214)             
     Increase (decrease) in obligations for trade-in memory360,250     (1,036,235)        (903,422)             
     Increase (decrease) in accrued liabilities            (67,686)      (857,512)      (2,398,454)             
     Increase (decrease) in deferred revenue               239,888     (1,007,273)         105,664             
     Increase in prepetition liabilities                 4,319,175           -                -                  
     Increase in liabilities subject to compromise      (6,325,273)     6,325,273             -                  

       Total adjustments                              $  1,019,631   $  8,332,619      $ 9,990,033             

  Net cash provided by (used in) operating activities $ (1,753,546)  $  1,735,143      $ 1,357,930             
  CASH FLOWS FROM INVESTING ACTIVITIES:                                                                           
     Purchases of equipment, net                      $      3,500   $     22,878      $   (83,639)             

      Net cash used in investing activities           $      3,500   $     22,878      $   (83,639)             
  CASH FLOWS FROM FINANCING ACTIVITIES:                                                                            
      Increase (decrease) in notes payable            $  1,063,730   $        -        $       -                  
      Proceeds from sale of common stock                       720         24,875          257,744             
      Net borrowings (repayments) under loan agreement     393,424            -                -                  
      Net borrowings (repayments) under revolving credit agreement -   (1,800,000)      (1,400,000)             

Net cash provided by (used in) financing activities   $  1,457,874   $ (1,775,125)  $   (1,142,256)             
   Effect of exchange rate changes on cash                  27,378       (122,599)        (104,408)             

  Net increase (decrease) in cash and cash equivalents$   (264,794)  $   (139,703)  $       27,627             
  Cash and cash equivalents at beginning of year           476,246        615,949          588,322             

  Cash and cash equivalents at end of year            $    211,452   $    476,246   $      615,949             

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                               
  Cash paid during the year for:  Interest            $        -     $     43,477   $      269,364             
                                  Income Taxes                 -             -              13,613             
  Refunds received from the Internal Revenue Service           -        2,335,295        2,189,984             
  Reorganization professional fees                         195,766        210,000            -                  
                                                                                                               
  The accompanying notes are an integral part of these consolidated financial statements.
                                                                                                             
                                                -26-                                                                       
                                                               F-6

</TABLE>

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

(1)   Liquidity

     
     As   further  described  in  Note  12,  the  Company   raised
     $1,060,000  in  cash  from the issuance of  10%  Subordinated
     Convertible Promissory Notes, of which $700,000 was  used  to
     pay   pre-petition  debt  and  legal  and  professional  fees
     resulting  from the Company filing a voluntary  petition  for
     relief under Chapter 11 of the bankruptcy code on October 10,
     1997  with  the  United States Bankruptcy  Court  in  Boston,
     Massachusetts.    The  Company's  reorganization   plan   was
     confirmed  by  the  Court in April, 1998.  Subsequently,  the
     Company  emerged  from  Chapter 11 on  April  23,  1998.   As
     described in the Company's Plan, the success of the  Plan  is
     dependent  upon  several  factors,  including  the  Company's
     ability   to   raise  additional  capital.   The   additional
     financing will be used to fund continuing operations  of  the
     Company,  particularly in development, sales and  marketing..
     The  Company  also  has a loan and security  agreement  under
     which  the  Company may borrow up to $500,000 outstanding  at
     any one time.
     
     The  Company  has  suffered recurring losses from  operations
     that  raises substantial doubt about its ability to  continue
     as a going concern.  The Company's management believes it has
     taken  the appropriate corrective actions to reduce  expenses
     through  consolidation  of  the  workforce  and  to  increase
     revenue  through  the  sale of new  products,  new  strategic
     alliances  and selling products with improved gross  margins.
     These  consolidated financial statements do not  include  any
     adjustments relating to the recoverability and classification
     of asset carrying amounts or the amount and classification of
     liabilities that might result should the company be unable to
     continue as a going concern.

(2)   Summary of Significant Accounting Policies

     Principles of Consolidation

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

     Revenue Recognition

     The   Company  manufactures  equipment  for  sale  or  lease.
     Revenue  from  product sales is recognized at  the  time  the
     hardware  and  software  are shipped.   The  Company  accepts
     memory   in   trade  as  consideration  in  certain   revenue
     transactions.  Revenue is recorded at the net cash  received.
     When the memory is subsequently sold, the amount received  is
     recorded   as  revenue.   Service  and  other  revenues   are
     recognized  ratably over the contractual  period  or  as  the
     services are provided.  Under certain equipment leases  which
     qualify as sales type leases, the present value of
                                    - 27 -
                                                       F-7

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)


(2)   Summary of Significant Accounting Policies - Continued
     
     noncancelable payments is currently included in  revenues  as
     sales, and all related costs, exclusive of the residual value
     of  the  equipment, are currently included in cost of  sales.
     The  unearned  interest is recognized over the  noncancelable
     term   of  the  lease.   The  Company  has  deferred  revenue
     associated with the sale of certain products that have future
     performance   obligations.   For   equipment   leased   under
     operating  lease agreements, revenue is recognized  over  the
     lease  term  and  the  equipment  is  depreciated  over   its
     estimated useful life.


     License  fees  are  amortized over the  useful  life  of  the
     technologies being licensed.

     Inventories

     Inventories, which include materials, labor and manufacturing
     overhead,  are stated at the lower of cost (first-in,  first-
     out) or market and consist of the following:
                                     December 31,     December 31,
                                         1998            1997

       Raw  materials               $    228,524         $ 987,920
       Work-in-process                    51,215           255,377
       Finished goods                     23,981           169,628

                                   $     303,720         $1,412,925

      Property and Equipment

     The  Company provides for depreciation and amortization on  a
     straight-  line  basis to amortize the cost of  property  and
     equipment over their estimated useful lives as follows:

             Leasehold improvements          2-10 Years
             Machinery and equipment         3- 8 Years
             Furniture and fixtures          3- 8 Years
             Leased equipment                3- 5 Years

     Maintenance  and  repair items are charged  to  expense  when
     incurred; renewals or betterments are capitalized.

                                  - 28 -

                                                              F-8

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)


(2)   Summary of Significant Accounting Policies - Continued
     
     If  property is sold or otherwise disposed of, the  Company's
     policy   is  to  remove  the  related  cost  and  accumulated
     depreciation  from the accounts and to include any  resulting
     gain or loss in income.

     Depreciation expense of $283,243, $569,207, and $658,191, was
     recorded  for  the periods ended December 31, 1998,  December
     31, 1997, and December 31, 1996, respectively.


     Net Income (Loss) Per Common Share

     On   January  1,  1997,  the  Company  adopted  Statement  of
     Financial Accounting Standards (SFAS) No. 128, "Earnings  Per
     Share".  SFAS  No. 128 replaces the presentation  of  primary
     income  (loss)  per share with a dual presentation  of  basic
     income  (loss) per share and diluted income (loss) per  share
     for  each  year  for  which  a  statement  of  operations  is
     presented.
     
     Basic  income  (loss)  per share amounts  are  based  on  the
     weighted  average number of common shares outstanding  during
     each  year. Diluted income (loss) per share amounts are based
     on  the  weighted average number of common shares and  common
     share  equivalents outstanding during each year to the extent
     such  equivalents have a dilutive effect on the income (loss)
     per share.
     
     For  the years ended December 31, 1998, 1997 and 1996, common
     share  equivalents were not included in diluted income (loss)
     per  share because the Company incurred a loss for each year.
     The  inclusion of the common stock equivalents would have had
     an  antidilutive effect on the computation of diluted  income
     (loss) per share

     Cash and Cash Equivalents

     Cash   and  cash  equivalents  are  recorded  at  cost  which
     approximates   market   value.   Cash   equivalents   include
     certificates  of  deposit, government  securities  and  money
     market  instruments purchased with maturities  of  less  than
     three months.

                                  - 29 -
                                                              F-9

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)

(2)   Summary of Significant Accounting Policies - Continued

      Stock Options and Employee Stock Purchase Plan

     Proceeds  from  the sale of newly issued stock  to  employees
     under  the  Company's stock option plans and  Employee  Stock
     Purchase  Plan are credited to common stock to the extent  of
     par  value and the excess to capital in excess of par  value.
     Income  tax  benefits  attributable  to  stock  options   are
     credited to capital in excess of par value.

      Disclosures about the Fair Value of Financial Instruments

     The  Company's financial instruments consist mainly of  cash,
     cash  equivalents, accounts receivable, investment in  sales-
     type  leases, property held for sale, accounts payable, notes
     payable,  and  a  revolving credit agreement.   The  carrying
     amounts of these financial instruments approximate their fair
     value  due  to  the  short-term nature of these  instruments,
     except  for  the  following.  Under the  reorganization  plan
     described  in  Note 1 to the financial statements,  accounts
     payable subject to compromise of approximately $4,300,000 are
     expected to be paid over a 30 month period which commenced in
     October 1998, without interest.  Accordingly, the net present
     value  of  these payments approximate $3,800,000 at December 31,
     1998 assuming an interest rate of 7.44% and $4,000,000 at
     December 31, 1997 assuming an interest rate of 9%.

      Use of Estimates

     The  preparation  of financial statements in conformity  with
     generally  accepted accounting principles requires management
     to  make  estimates and assumptions that affect the  reported
     amounts   of  assets  and  liabilities  and  disclosures   of
     contingent  assets  and liabilities as of  the  date  of  the
     financial statements, and the reported amounts of income  and
     expenses during the reporting periods.  Actual results  could
     differ from those estimates.

     Accounting for Impairment of Long-Lived Assets and for  Long-
     Lived Assets To Be Disposed Of

     On   January  1,  1996,  the  Company  adopted  Statement  of
     Financial  Accounting Standards (SFAS) No.  121,  "Accounting
     for  the  Impairment of Long-Lived Assets and for  Long-Lived
     Assets To Be Disposed Of".  SFAS No. 121 requires that  long-
     lived assets and certain identifiable intangibles to be  held
     and  used  by  an entity be reviewed for impairment  whenever
     events or changes in circumstances indicate that the carrying
     amount of an asset

                                    - 30 -

                                                             F-10

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998
                                 (Continued)

(2)   Summary of Significant Accounting Policies - Continued

     may  not  be  recoverable.  The statement also requires  that
     certain long-lived assets and identifiable intangibles to  be
     disposed  of be reported at the lower of the carrying  amount
     or  fair  value less cost to sell.  Based on its review,  the
     Company does not believe that any material impairment of  its
     long-lived  assets  has occurred.  The Company's  review  was
     based on the assumption that the Company continues as a going
     concern.   The  financial  statements  do  not  include   any
     adjustments relating to the recoverability and classification
     of asset carrying amounts or the amount and classification of
     liabilities that might result should the company be unable to
     continue as a going concern.

     Comprehensive Income

     On January 1, 1998, the Company adopted SFAS No. 130, "Reporting
     Comprehensive Income." This statement requires that changes in
     stockholders' equity from transactions and events other than
     those resulting from investments by and distributions to stockholders
     be reflected in comprehensive income or loss. All prior year 
     financial statements have been reclassified to comply with this
     statement.

     Segment Reporting

     SFAS No. 131, "Disclosure about Segments of an Enterprise and
     Related Information," became effective for periods beginning
     after December 15, 1997. This statement requires the presentment
     of information about the identifiable components comprising an
     enterprise's business activities.

     The Company has determined that there are no separately reportable
     operating segments and, therefore, does not present separate
     reporting segments in its financial statements.

     Stock-Based Compensation

     SFAS  No.  123,  "Accounting  for Stock-Based  Compensation",
     encourages   but  does  not  require  companies   to   record
     compensation cost for stock-based employee compensation plans
     at fair value.  The Company has chosen to continue to account
     for such plans using the intrinsic value method prescribed in
     Accounting  Principles Board Opinion  No.  25.   Accordingly,
     compensation  cost  for  stock options  is  measured  as  the
     excess,  if any, of the quoted market price of the  Company's
     stock  at  the date of grant over the exercise price  of  the
     stock (See Note 9).



                                    - 31 -
                                                             F-11


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)

(3)   Business, Operations and Segment Information

     The   Company   is   in  the  business  of   developing   and
     manufacturing hardware and software for use with a variety of
     IBM  computer  systems.   The  Company's  principal  products
     include  memory storage systems for large-scale IBM mainframe
     computers  and  storage subsystems for open systems  computer
     platforms.

     The  Company  sells its equipment to both end  users  and  to
     distributors. The Company's principal customers operate in  a
     wide  variety of industries and in a broad geographical area.
     No  single customer or distributor accounted for 10% or  more
     of  total  sales in fiscal year 1997.  During years 1998  and
     1996,  one  customer  accounted for  11%  and  14%  of  total
     revenues.  Foreign sales were 23% in 1997, 20%  in  1996  and
     less than 10% of total revenues in fiscal 1998.

(4)   Income Taxes

     In  accordance  with  SFAS No. 109,  "Accounting  For  Income
     Taxes",  deferred tax assets and liabilities  are  determined
     based  on the difference between the financial statement  and
     tax  basis of assets and liabilities using enacted tax  rates
     in  effect for the year in which the differences are expected
     to reverse.

     The  following table presents the components of income (loss)
     before income taxes:


                Year ended        Year ended          Year ended
                December 31,      December 31,        December 31,
                   1998             1997                 1996


Domestic        $(2,549,000)      $(5,689,000)        $(6,506,000)

Foreign          (  224,000)       (  908,000)         (2,326,000)

                $(2,773,000)      $(6,597,000)        $(8,832,000)



                                  - 32 -

                                                      F-12

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)


(4)   Income Taxes - Continued

The  following  table  presents  a  reconciliation  between  taxes
provided  at the statutory federal income tax rate and the  actual
tax provision recorded for the following periods:



                              Year ended      Year ended      Year ended
                               December        December       December
                                 1998            1997           1996

Provision (credit) at
federal statutory rate       $(  943,000)      $(2,243,000)   $(3,003,000)

State tax provision
(credit), net of federal
tax benefit                   (  160,000)         (358,000)     (380,000)

Foreign and other losses
for which no benefits have
been recorded                     76,000           309,000       853,000

Change in valuation
allowances                     1,047,000         2,007,000     2,711,000

Other                         (   20,000)          285,000      (381,000)
                             $     -0-         $     -0-       $(200,000)


The  1996 tax benefit recognized is primarily for current  federal
and foreign tax refunds receivable.



                                  - 33 -

                                                           F-13

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)


(4)   Income Taxes - Continued

     Refundable income taxes as of December 31, 1996 consisted  of
     approximately  $2,335,000,  of federal  and  foreign  incomes
     taxes  refundable  as  a  result of taxable  losses  incurred
     during fiscal 1995, 1994 and 1993.
     
     The   Company  has  federal  net  operating  loss  carryovers
     totalling $15,780,000 which expire through the year ended 
     December  31, 2013.

     The  tax effects of the significant items which comprise  the
     deferred tax liability and tax asset, as of fiscal 1998, 1997
     and 1996 are as follows:

                                   December       December    December
                                     1998           1997       1996

Assets
Reserves not currently deductible
 for tax purposes                $ 1,920,000     $ 1,874,000     $1,186,000
State tax net operating loss
 carryforward                      1,565,000       1,335,000      1,223,000
Federal net operating loss
 carryforward                      4,859,000       4,114,000      2,965,000
Employee benefits                     47,000          96,000        112,000
Other                                154,000          76,000         75,000

 Total deferred tax assets       $ 8,545,000     $ 7,495,000     $5,561,000

Liabilities
Fixed asset basis difference     $         0     $         0    $(   67,000)
Other                                (45,000)        (42,000)    (   48,000)

 Total deferred tax liabilities  $   (45,000)    $   (42,000)   $(  115,000)

Net deferred tax asset           $ 8,500,000      $ 7,453,000     $5,446,000
Valuation allowance               (8,500,000)      (7,453,000)    (5,446,000)
Tax asset                                 0                0              0

Tax refunds receivable                    0                0      2,335,000

Total tax asset                           0                0     $2,335,000



                                  - 34 -

                                                   F-14

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998


                                 (Continued)


(4)   Income Taxes - Continued

     Due  to  the uncertainty of the realizability of the deferred
     tax assets, the Company has established a valuation allowance
     for the net deferred tax assets.


(5)   Technology/Marketing Agreement

     During  the  second  quarter  of  fiscal  1992,  the  Company
     acquired  from EMC Corporation technology rights,  inventory,
     and  other assets associated with EMC's IBM 3090 and ES/9000,
     Model 9021 compatible mainframe memory products. The purchase
     price  of $11,500,000 was paid in fiscal 1992 and 1993.   The
     use of the technology was exclusive to Cambex for five years.
     The  financial  statement impact included  the  recording  of
     inventory  in the amount of $3,000,000, a marketing agreement
     in   the  amount  of  $7,500,000  and  a  technology  license
     amounting   to  $1,000,000.   The  marketing  agreement   and
     technology  license were amortized over a  five-year  period,
     ending December 31, 1996.  Amortization of $1,842,000 related
     to   the  technology  license  and  marketing  agreement  was
     recognized  as other expense for the year ended December  31,
     1996.

(6)   Revolving Credit Agreement

     During  1993,  the Company obtained a $10 million  unsecured,
     revolving line of bank credit, bearing interest at the  prime
     rate plus one-half percent with a commitment fee of 3/8 of 1%
     per year on the unused portion.  The Company was required  to
     repay  any  borrowings under this revolving  credit  line  on
     March 29, 1996.




                                    - 35 -
                                                             F-15

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)



(6)   Revolving Credit Agreement - Continued

     During  the  second quarter of 1996, the Company agreed  with
     its bank to extend and modify its Revolving Credit Agreement.
     Under   the   terms  of  the  Modification   Agreement,   the
     outstanding balance at that time, $3,020,000 would be repaid,
     after an initial payment of $320,000, over a period of twenty
     four (24) months at $120,000 per month, with interest at  the
     prime rate plus one percent.  The Company granted to its bank
     a  security  interest  in the Company's accounts  receivable,
     inventory and general intangibles.  In addition, the  Company
     agreed  to  apply  its anticipated refund from  the  Internal
     Revenue   Service  of  not  less  than  $1,900,000   to   the
     outstanding balance upon receipt.

     As  of  December  31,  1996, $1,800,000 remained  outstanding
     under this Agreement.  Subsequent to the end of the year, the
     Company received its refund from the Internal Revenue Service
     and repaid its bank in full and the agreement was terminated.
     Consequently, the bank released its security interest in  the
     Company's   accounts   receivable,  inventory   and   general
     intangibles.





                                    - 36 -
                                                             F-16

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)


(7)   Earnings Per Share

     Options  to  purchase 143,851, 259,305 and  415,715  weighted
     average  shares  of  common  stock  during  the  years  ended
     December  31,  1998,  1997 and 1996, respectively,  were  not
     included in the computation of diluted loss per share because
     to  do  so  would  have  had an antidilutive  effect  on  the
     computation of loss per share.
     
     As  more  fully  described in Note  9,  options  to  purchase
     94,970,   187,420   and  368,820  shares  of   common   stock
     outstanding   at   December  31,   1998   ,1997   and   1996,
     respectively,  could potentially dilute basic  income  (loss)
     per share in the future.

(8)   Commitments and Contingencies

     At   December  31,  1998,  the  Company  had  minimum  rental
     commitments  under long-term, noncancelable operating  leases
     for facilities and other equipment as follows:

            Due during Fiscal Year

                  1999              $  381,924
                  2000              $  381,924
                  2001              $  381,924
                  2002              $  381,924
                  2003              $  159,134
                                    $1,686,831

     Total  rental  expense,  including  the  cost  of  short-term
     equipment leases, real estate taxes and insurance paid to the
     landlord and charged to operations approximated $260,000  for
     the  year  ended December 31, 1998, $1,160,000 for  the  year
     ended  December 31, 1997, and $1,691,000 for the  year  ended
     August  31,  1996.  During 1997, 1998 and 1999,  the  Company
     entered  into agreements to sublet portions of its facilities
     to unrelated parties.

     In  the  ordinary course of business, the Company is involved
     in  legal proceedings.  The Company believes that the outcome
     of  these proceedings will not have a material adverse effect
     on   the   Company's  financial  condition  or   results   of
     operations.




                                    - 37 -

                                                   F-17

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)



(9)   Stock Options and Warrants

     On  March  7,  1997, the Company established the  1997  Stock
     Option  Plan  (subject to stockholder  approval).   The  1997
     Stock  Option  Plan  provides  for  the  issuance  of  up  to
     1,000,000 shares in the aggregate and up to 300,000 shares to
     any  one employee.  At December 31, 1998, the Company had two
     stock  option plans for officers and certain employees  under
     which   1,094,970  shares  were  reserved  and  options   for
     1,000,000  shares were available for future grants.   Options
     are  granted at not less than 85%, or in certain  cases,  not
     less  than 100%, of the fair market value of the common stock
     on the date of grant.  Options outstanding have a term of ten
     years and become exercisable in installments as determined by
     the  Board of Directors. The plan's options vest between  one
     through  six years and all expire between July 28,  1999  and
     November 11, 2006.

     Stock option activity for the three years ended December  31,
     1998 was as follows:


     Option Shares                        Number            Option
     Price

      Outstanding at December 31, 1995    471,458           .25  -16.15

      Granted                             217,000          2.23  -5.95
      Exercised, cancelled or
          expired                        (319,638)         3.19  -11.69
      Outstanding at December 31, 1996    368,820           .25  -16.15

      Granted                                -                   -
      Exercised, cancelled or
          expired                        (181,400)          .25  -10.41
      Outstanding at December 31, 1997    187,420           .35  -16.15

      Granted                                -                   -
      Exercised, cancelled or
          expired                        ( 92,450)          .12  -16.15
      Outstanding at December 31, 1998     94,970           .12



     As  of  December  31, 1998 and 1997, options for  27,970  and
     35,100 shares were exercisable at aggregate option prices  of
     $3,356 and $250,655, respectively.


                                    - 38 -
                                                             F-18

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)


(9)   Stock Options and Warrants - Continued

     Had   compensation  cost  for  these  plans  been  determined
     consistent with SFAS No. 123, the Company's net loss and loss
     per  share  would  have been increased to the  following  pro
     forma amounts:

                                    Year  ended     Year  ended   Year ended
                                    December 31,   December  31,  December 31,
                                        1998            1997         1996

Net  Income  (Loss): As Reported (000's)  (2,773)        (6,597)    (8,632)
                     Pro  Forma           (2,773)        (6,597)    (9,456)

Basic  and  Diluted EPS:As Reported        ( 0.30)        (   .72)  (  .96)
                       Pro  Forma          ( 0.30)        (   .72)  ( 1.05)

     The  fair value of each option grant is estimated on the date
     of  the  grant  using the Black-Scholes option pricing  model
     with  the  following weighted average assumptions and  values
     for grants in the periods presented.

                                       Year  ended     Year  ended  Year ended
                                      December  31,  December  31, December 31,
                                            1998              1997     1996

Assumptions:
        Risk   free  interest  rate         N/A                N/A      6.35%
        Expected   dividend   yield         N/A                N/A         0%
        Expected   life  in  years          N/A                N/A        10
        Expected   volatility               N/A                N/A     65.56%

Values:
      Weighted average fair
           value   of  options  granted       0                  0      4.35

        Weighted   average  exercise  price 0.12              1.94      4.58

     Because  the SFAS No. 123 method of accounting has  not  been
     applied  to options granted prior to September 1,  1994,  the
     resulting   pro   forma  compensation   cost   may   not   be
     representative of that to be expected in future years.
     
As of December 31, 1998, warrants to purchase 1,063,730 shares of
common stock at $0.50 per share were outstanding and an equal
number of shares were reserved for issuance.


                                    - 39 -
                                                      F-19

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)


(10)   Incentive  Bonus Plan and 401(k) Profit Sharing  Retirement Plan

     The  Company has an incentive bonus plan under which  certain
     key  employees as a group are entitled to receive  additional
     compensation up to a maximum of 15% of the Company's  pre-tax
     income, as defined.  There was no provision in 1998 or  1997.
     The  provision  for incentive bonus amounted to approximately
     $35,000 in fiscal year 1996.

     On  September  1,  1988, the Company established  the  Cambex
     Corporation 401(k) Profit Sharing Retirement Plan (the Plan).
     Under  the  Plan,  employees  are  allowed  to  make  pre-tax
     retirement  contributions.   In  addition,  the  Company  may
     provide matching contributions based on pre-established rates
     as  determined  by  the  Board  of  Directors.   The  Company
     provided  approximately  $400,000 in  fiscal  year  1994  for
     matching  contributions. In fiscal 1995, the Company recorded
     a  net  reversal of prior accruals of approximately $200,000.
     The  Company's contributions have been in the form of  Cambex
     common stock since fiscal 1994.

     The  Company  offers no post-retirement benefits  other  than
     those provided under the Plan.

(11)  Employee Stock Purchase Plan

     On  December  20,  1993, the Company established  the  Cambex
     Corporation  Employee Stock Purchase Plan (the  Plan),  which
     was  approved by the shareholders.  Under the Plan, employees
     may  elect  to  have a specified percentage  of  their  wages
     withheld through payroll deduction and purchase common  stock
     shares at 85% of the lower of the fair market value of Common
     Stock  on  the  first or last trading day  of  each  Purchase
     Period.  There are two (2) Purchase Periods each year  -  the
     first  six  months and the last six months of  each  calendar
     year.  During fiscal 1998, fiscal 1997 and fiscal 1996, there
     were 53,862, 21,069, and 50,060 shares issued under the Plan,
     respectively.   On  August 31, 1998, the Board  of  Directors
     voted,  subject  to  shareholder approval,  to  increase  the
     number  of  shares  to cover the number of  shares  purchased
     under the Plan during the period January 1, 1998 to June  30,
     1998  and to terminate the Plan.  At December 31, 1998, there
     were 160,708 shares reserved for issuance under the Plan.




                                    - 40 -

                                                           F-20

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)



(12)  Related Party Transactions

     During the third quarter of 1996, the Company entered into  a
     Manufacturing   Agreement  with  Jupiter   Technology,   Inc.
     ("Jupiter"),  the  majority of which is owned  by  Joseph  F.
     Kruy,   Chairman  and  Chief  Executive  Officer  of   Cambex
     Corporation, and members of his family. Jupiter is a supplier
     of  multiprotocol  frame  relay access  devices  (FRADs)  and
     network   integration  systems.  Under  the  terms  of   this
     Agreement,  Cambex agreed to manufacture,  sell  and  deliver
     products  exclusively to Jupiter.  Cambex agreed to  purchase
     approximately $300,000 of Jupiter inventory from Jupiter  and
     paid Jupiter $100,000 towards that amount.  During 1997,  the
     Company  shipped and billed to Jupiter $174,000  for  Jupiter
     products  plus  $118,000  ,000  for  expenses  related  to  a
     sublease  agreement.   During 1996, the Company  shipped  and
     billed  to Jupiter $298,000 for Jupiter products plus $43,000
     for expenses related to a sublease agreement.  As of December
     31,   1997,   Cambex  owed  Jupiter  $267,000  for  inventory
     purchases  and  Jupiter  owed  Cambex  $504,000  for  revenue
     shipments plus expenses.  In January, 1998, substantially all
     of  the  assets  of Jupiter Technology were purchased  by  an
     unrelated  third  party.  In March, 1998,  Jupiter  paid  the
     Company  $230,000, which represented the net amount  due  the
     Company.

     On June 1, 1998, the Company raised approximately $1,060,000,
     including  approximately  $460,000  from  Joseph   F.   Kruy,
     Chairman,  President  and  Chief  Executive  Officer  of  the
     Company,  in  cash  from  the issuance  of  10%  Subordinated
     Convertible Promissory Notes.  Under the terms of the  Notes,
     which are due on April 30, 2003, the holders may convert  the
     notes  into shares of common stock at a conversion  price  of
     $0.22  per  share. In addition to the Note, each  holder  was
     issued  a Stock Purchase Warrant, the exercise of which  will
     allow  the  warrant holder to purchase one  share  of  common
     stock,  at $0.50 per share, for each dollar invested  through
     the issuance of the Notes.
     
     On  November  9, 1998, the Company entered into  a  loan  and
     security  agreement with a lender company, hereafter referred
     to  as  "Lender" which is owned by a relative  of  Joseph  F.
     Kruy,  Chairman and Chief Executive Officer of  the  Company,
     under  which  the  Company may borrow  up  to  a  maximum  of
     $500,000  being  outstanding at any one time.  Such  loan  is
     fully secured by all assets of the Company.  The Company pays
     all  collections from accounts receivable to the  Lender  not
     less  frequently  than each week until the  outstanding  loan
     amount  plus related interest, which accrues at a 12%  annual
     rate,  is  fully paid. Under the terms of the loan agreement,
     the  Lender receives a warrant for the purchase of two shares
     of  common stock, at $0.21 per share, for each dollar  loaned
     to the Company.
     
                                    - 41 -
                                                           F-21

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              December 31, 1998

                                 (Continued)




(13)    Events  (Unaudited)  Subsequent  to  date  of  Report   of
Independent
      Public Accountants

     On  March  1,  1999,  the  Company entered  into  a  Sublease
     Agreement  with a third party pursuant to which  the  Company
     sublet  approximately  14,000 square  feet  in  its  Waltham,
     Massachusetts  facility (which is approximately  21%  of  the
     Company's  total leased space).  The term of the sublease  is
     coterminous  with the primary lease and expires  on  May  31,
     2003.


(14)  Credit Risk

     The Company maintains cash balances at financial institutions
     located  in Massachusetts.  Accounts at each institution  are
     insured  by the Federal Deposit Insurance Corporation  up  to
     $100,000.  At December 31, 1998, the Company's uninsured cash
     balances total $72,520.
     
     The  Company's subsidiaries maintain cash balances at several
     financial institutions located throughout Europe.  These cash
     balances    are   subject   to   normal   currency   exchange
     fluctuations.  At  December 31, 1998, the Company's  overseas
     cash balances total $78,936.















                                    - 42 -

                                                             F-22






                                    CAMBEX CORPORATION AND SUBSIDIARIES
                          SCHEDULE  II - VALUATION AND  QUALIFYING ACCOUNTS


                                           Additions
                                           Charged To
                                Balance at (Recovered               Balance
                                Beginning      From)   Writeoffs/    at End
                                 of  Year     Income   Deductions   of Year


YEAR ENDED DECEMBER 31, 1996:

Reserve  for doubtful accounts $  136,000  $    -      $   (5,000)  $131,000




YEAR ENDED DECEMBER 31, 1997:

Reserve  for  doubtful  accounts  $   131,000   $    -      $    -  $131,000




YEAR ENDED DECEMBER 31, 1998:

Reserve  for doubtful accounts $  131,000  $   -      $   (31,000)  $100,000




                                         -43-


                                                                F-23



                                  SIGNATURES



Pursuant  to  the  requirements of Section 13  of  the  Securities
Exchange  Act of 1934, the Company has duly caused this report  to
be  signed  on  its  behalf  by  the undersigned,  thereunto  duly
authorized.


CAMBEX CORPORATION


By:   /s/Joseph F. Kruy
          Joseph F. Kruy, President                          March 31, 1999



Pursuant  to  the requirements of the Securities Exchange  Act  of
1934,  this report has been signed below by the following  persons
on  behalf  of the Company and in the capacities indicated  as  of
March 31, 1999.


By:   /s/   Joseph F. Kruy
            Joseph F. Kruy, Chairman of the Board, President and Treasurer
            (Principal Executive Officer)


By:   /s/   Peter J. Kruy
            Peter J. Kruy, Executive Vice President
            (Principal Financial and Accounting Officer)


By:   /s/   Robert J. Spain
            Robert J. Spain, Director


By:   /s/   Philip C. Hankins
            Philip C. Hankins, Director


By:   /s/   C. V. Ramamoorthy
            C. V. Ramamoorthy, Director





                                    - 44 -

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As  independent  public  accountants, we  hereby  consent  to  the
incorporation of our report included in this Form 10-K,  into  the
Company's  previously filed Registration Statements  on  Form  S-8
(File Nos. 2-77667 and 33-18072).


Chelmsford, Massachusetts
March 31, 1999




























                                    - 45 -