<PAGE>
                                          
                                   UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, DC. 20549
                                    FORM 10-QSB


(MARK ONE)

     [X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
          ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998 OR

     [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT FOR THE TRANSITION PERIOD FROM ________ TO ________.

                                          
                          COMMISSION FILE NUMBER:  0-24738
                                          
                                          
                         LORONIX INFORMATION SYSTEMS, INC.
         (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
                                          
                                          

           Nevada                                               33-0248747
(STATE OR OTHER JURISDICTION OF                               (IRS EMPLOYER
 INCORPORATION OR ORGANIZATION)                             IDENTIFICATION NO.)


                                          
                     820 AIRPORT ROAD, DURANGO, COLORADO 81301
                      (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                          
                     ISSUER'S TELEPHONE NUMBER:  (970) 259-6161



     CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PAST 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    
              ---     ---

     AS OF JULY 30, 1998 THERE WERE 4,646,836 SHARES OF THE ISSUER'S COMMON
STOCK OUTSTANDING.

<PAGE>

                         LORONIX INFORMATION SYSTEMS, INC.
                                          
                                       INDEX


<TABLE>
PART I.     FINANCIAL INFORMATION                                       PAGE NO.
            ---------------------                                       --------
<S>         <C>                                                          <C>
            Item 1. Financial Statements

                    Condensed Consolidated Balance Sheet                    1
                      as of June 30, 1998
  
                    Condensed Consolidated Statements                       3
                      of Operations for the three and six months 
                      ended June 30, 1998 and 1997

                    Condensed Consolidated Statements of                    4
                      Cash Flows for the six months ended 
                      June 30, 1998 and 1997

                    Notes to Condensed Consolidated Financial               6
                      Statements

            Item 2. Management's Discussion and Analysis of                 7
                    Financial Condition and Results of Operations


PART II.    OTHER INFORMATION
            -----------------
            Item 1. Legal Proceedings                                      12

            Item 4. Submission of Matters to a Vote of Security Holders    12
     
            Item 6. Exhibits and Reports on Form 8-K                       12


SIGNATURES.                                                                13
</TABLE>
<PAGE>

                         PART I - FINANCIAL INFORMATION

                       LORONIX INFORMATION SYSTEMS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET


                                     ASSETS
<TABLE>
                                                                      JUNE 30,
                                                                        1998
                                                                     -----------
                                                                     (UNAUDITED)
<S>                                                                  <C>
Current assets:                                          
     Cash and cash equivalents                                       $3,822,693 
     Accounts receivable:
        Trade, net of allowance for doubtful accounts
          of $138,533                                                 2,483,698 
        Officers and employees                                          140,494 
     Inventory, net                                                   1,962,652 
     Prepaid expenses and other assets                                  346,179 
     Note receivable                                                    107,734 

     Notes receivable, related parties                                   38,454 
                                                                    -----------
             Total current assets                                     8,901,904
 

     Property and equipment, net of accumulated
       depreciation of $2,101,721                                     3,519,921 
     Capitalized software costs, net of accumulated
       amortization of $1,054,013                                      819,847 

     Notes receivable, related parties                                   57,678 
     Deposits and other assets                                           42,671 
                                                                    -----------
             Total assets                                           $13,342,021 
                                                                    -----------
                                                                    -----------
</TABLE>
                                    (continued)

                                         1
<PAGE>

                       LORONIX INFORMATION SYSTEMS, INC.
                CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
                                                                     JUNE 30,
                                                                       1998
                                                                    -----------
                                                                    (UNAUDITED)
<S>                                                                 <C>
Current liabilities:
     Accounts payable                                               $   889,489 
     Accrued liabilities                                                226,837 
     Facility mortgage, current portion                                  22,516 
     Capital lease                                                       10,780 
     Customer deposits                                                1,834,885 
     Deferred maintenance revenue                                        45,808 
                                                                    -----------
          Total current liabilities                                   3,030,315 

     Facility mortgage, net of current portion                          658,003
     Capital lease                                                        3,593
                                                                    -----------
           Total liabilities                                          3,691,911 
                                                                    -----------
Stockholders' equity:
   Preferred stock, $.001 par value, 
     authorized 2,000,000 shares, no shares
     issued and outstanding                                                   -
   Common stock, $.001 par value, authorized
     20,000,000 shares, issued and outstanding,
     4,646,836 shares                                                     4,647
   Additional paid-in capital                                        15,199,175
   Notes receivable from stockholders                                  (147,883)
   Accumulated deficit                                               (5,405,829)
                                                                    -----------
          Total stockholders' equity                                  9,650,110 
                                                                    -----------
          Total liabilities and stockholders' equity                $13,342,021 
                                                                    -----------
                                                                    -----------
</TABLE>

                 See accompanying notes to financial statements.
 
                                     2
<PAGE>

              LORONIX INFORMATION SYSTEMS, INC.
       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
                                                        THREE MONTHS ENDED                     SIX MONTHS ENDED
                                                             JUNE 30,                              JUNE 30,
                                                      1998             1997                1998                 1997
                                                   ---------------------------          --------------------------------
                                                           (UNAUDITED)                             (UNAUDITED)
<S>                                                <C>              <C>                 <C>                  <C>
Systems, supplies and maintenance
  revenue                                          $1,984,676       $2,453,514          $ 3,888,545          $ 4,127,414
Operating costs and expenses:
  Cost of products sold                             1,065,930        1,453,690            2,069,493            2,261,758
  Operations and customer support                     313,383          406,007              661,307              812,990
  Selling, general and administrative               1,163,438          910,091            2,063,115            1,784,241
  Research and development                            339,763          328,448              679,659              705,082
                                                   ----------       ----------          -----------          -----------
       Total cost and expenses                      2,882,514        3,098,236            5,473,574            5,564,071

       Loss from operations                          (897,838)        (644,722)          (1,585,029)          (1,436,657)

Other income (expense):
  Interest income, net                                 18,098           30,617               33,118               90,163 
  Other expense                                        (8,429)          (8,537)              (4,053)             (17,584)
                                                   ----------       ----------          -----------          -----------
                                                        9,669           22,080               29,065               72,579 
       Loss before income taxes                      (888,169)        (622,642)          (1,555,964)          (1,364,078)
Income tax (expense) benefit                                -          187,062                 (800)             398,024 
                                                   ----------       ----------          -----------          -----------
       Net loss                                     ($888,169)       ($435,580)         ($1,556,764)           ($966,054)
                                                   ----------       ----------          -----------          -----------
                                                   ----------       ----------          -----------          -----------
Basic and diluted loss per share                       ($0.19)          ($0.09)              ($0.34)              ($0.21)
                                                   ----------       ----------          -----------          -----------
                                                   ----------       ----------          -----------          -----------
Weighted-average shares outstanding                 4,646,329        4,662,279            4,646,258            4,662,108
                                                   ----------       ----------          -----------          -----------
                                                   ----------       ----------          -----------          -----------
</TABLE>
                       See accompanying notes to financial statements.

                                              3
<PAGE>
                         LORONIX INFORMATION SYSTEMS, INC.
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
                                                                                 SIX MONTHS ENDED
                                                                                     JUNE 30,
                                                                             1998               1997
                                                                         -------------------------------
                                                                         (UNAUDITED)         (UNAUDITED)
<S>                                                                      <C>                 <C>
Cash flows from operating activities:
   Net loss                                                              $(1,556,764)        $  (966,054)
   Adjustments to reconcile net loss to net cash
     provided by/(used in) operating activities:
       Depreciation and amortization                                         594,292             480,400 
       Loss on disposal of capital equipment                                   6,857              12,466 
       (Gain) loss on foreign currency exchange                               (1,175)              5,118 
       Provision for deferred income taxes                                         -            (398,594)
       Changes in operating assets and liabilities:
          Increase in accounts receivable, net                               (24,566)         (1,810,112)
          Increase in inventory, net                                        (500,675)           (686,024)
          Decrease/(increase) in prepaid expenses and other assets           562,268            (116,497)
          Increase/(decrease) in accounts payable                             34,955             (20,175)
          Decrease in accrued liabilities                                    (54,967)            (60,327)
          Increase in customer deposits                                    1,691,473                   -
          (Decrease)/increase in deferred revenue                            (17,662)             18,934 
                                                                         -----------         -----------
                Net cash provided by/(used in) operating activities          734,036          (3,540,865)
                                                                         -----------         -----------
Cash flows from investing activities:
   Capital expenditures                                                     (102,829)           (561,322)
   Proceeds from disposal of capital equipment                                     -              15,000 
   Decrease in notes receivable                                               55,920              25,364 
   Decrease in deposits and other assets                                       2,844               2,370 
   Capitalized software                                                     (192,160)           (243,100)
                                                                         -----------         -----------
                Net cash used in investing activities                       (236,225)           (761,688)
                                                                         -----------         -----------
Cash flows from financing activities:
    Payments on facility mortgage                                            (11,056)                  -
    Proceeds from exercise of stock options                                    1,814               3,593 
                                                                         -----------         -----------
                Net cash (used in)/ provided by financing activities:         (9,242)              3,593 
Net increase/(decrease) in cash                                              488,569          (4,298,960)
Cash and cash equivalents, beginning of year                               3,334,124           6,126,484 
                                                                         -----------         -----------
Cash and cash equivalents, end of June                                   $ 3,822,693         $ 1,827,524 
</TABLE>
                                    (continued)
                                          
                                         4
<PAGE>

                         LORONIX INFORMATION SYSTEMS, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                           
<TABLE>
                                                                                   SIX MONTHS ENDED
                                                                                      June 30,
                                                                                  1998          1997
                                                                               -------------------------
                                                                               (unaudited)   (unaudited)
<S>                                                                              <C>           <C>
Supplemental cash flow information:
   Interest paid                                                                 $33,515             -  
                                                                                 -------       -------
                                                                                 -------       -------
   Income taxes paid                                                             $   800             -  
                                                                                 -------       -------
                                                                                 -------       -------
Noncash investing activities:
   In 1998 the Company transferred inventory valued at $49,071 to property and
     equipment.
   In 1997 the Company transferred inventory valued at $224,871 to property and
     equipment.
</TABLE>

                                          
                  See accompanying notes to financial statements.
                                          
                                          5
<PAGE>
                                       
                        LORONIX INFORMATION SYSTEMS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                           (JUNE 30, 1998 - UNAUDITED)


NOTE 1:  BASIS OF PRESENTATION

     The accompanying condensed consolidated financial statements have been 
prepared in accordance with Securities and Exchange Commission requirements 
for interim financial statements.  Therefore, they do not include all of the 
information and footnotes required by generally accepted accounting 
principles for complete financial statements.  The financial statements 
should be read in conjunction with the Form 10-KSB for the year ended 
December 31, 1997 of Loronix Information Systems, Inc. (the "Company").

     The results of operations for the interim periods shown in this report 
are not necessarily indicative of results to be expected for the full year.  
In the opinion of management, the information contained herein reflects all 
adjustments necessary to make the results of operations for the interim 
periods a fair statement of such operations.  All such adjustments are of a 
normal recurring nature.

NOTE 2:  REPORTING COMPREHENSIVE INCOME

     Effective January 1, 1998, the Company adopted the Financial Accounting 
Standards Board SFAS No. 130, REPORTING COMPREHENSIVE INCOME. This Statement 
established standards for reporting and display of comprehensive income and 
its components (revenue, expenses, gains and losses) in a full set of 
general-purpose financial statements.  Reclassification of financial 
statements for earlier periods provided for comparative purposes is required. 
The adoption of this statement had no material impact to the Company's 
financial condition or results of operation as of June 30, 1998 and for the 
three and six month periods ended June 30, 1998 and 1997 as comprehensive 
income did not differ from the Company's net loss.

NOTE 3:  NET LOSS PER SHARE

     The Company presents net loss per share in accordance with SFAS No. 128, 
"Earnings per Share."  As required by SFAS No. 128,  the Company must present 
basic and diluted net loss per share as defined.  Basic net loss per common 
share is computed using the weighted average number of common shares 
outstanding during the period.  Diluted net loss per common share is computed 
to incorporate the incremental dilutive shares issuable upon the assumed 
exercise of stock options.  All prior period net loss per common share 
information are presented in accordance with SFAS No. 128.
     
     Stock options and warrants totaling 1,329,898 shares and 1,282,008 
shares for the three and six months ended June 30, 1998 and 1997, 
respectively, were not included in computing the diluted loss per share 
because the effect would have been antidilutive.

NOTE 4:  LEGAL PROCEEDINGS

     On October 17, 1997, the Company received notice that it had been named 
as a defendant in a patent infringement lawsuit brought by a competitor, 
Prima Facie, Inc. ("PFI") in the U.S. District Court for the District of 
Maryland. The lawsuit alleged that the Company's CCTVware Transit product 
infringed certain claims of two patents held by PFI and that the Company has 
interfered with PFI's business relationships.  The claim has recently been 
amended to allege infringement by the Company's other CCTVware products.  The 
suit seeks injunctive relief against further infringement and damages.  The 
lawsuit also names one of the Company's domestic distributors as a 
codefendant.  The Company believes these claims are without merit and is 
defending itself vigorously.

     On July 6, 1998, the Company filed counterclaims against PFI.  These 
counterclaims include a Declaratory Judgment of Patent Invalidity and six 
other counterclaims.  The Company and PFI have agreed to separate the patent 
infringement claims from all other claims and resolve the patent infringement 
issues first.  To date there has been no trial scheduled.
                                       


                                       6
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS

     The following discussion and analysis should be read in conjunction with 
the Company's condensed consolidated financial statements and the notes 
related thereto included herein.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THREE MONTHS ENDED JUNE 30, 1997

     REVENUE
     
     The Company's revenue is derived from sales of systems and supplies and 
from maintenance services.  Historically, systems and supplies have accounted 
for greater than 90% of total revenue, with systems accounting for a 
substantial majority of total revenue.  The Company expects this trend to 
continue for the foreseeable future.  Revenue decreased from $2.45 million in 
the second quarter of 1997 to $1.98 million in the second quarter of 1998, 
representing a 19% decrease.  Revenue in the second quarters of 1997 and 1998 
included approximately $1.68 million, or 69% of total revenue, and 
approximately $1.39 million, or 70% of total revenue, of digital recording 
related products ("CCTVware-Registered Trademark- Products"), respectively.  
The Company ended the second quarter of 1998 with a backlog of approximately 
$4.0 million which the Company expects to ship in the third and fourth 
quarters of 1998.

     COSTS AND EXPENSES

     COST OF PRODUCTS SOLD.  The cost of products sold, consisting 
principally of the costs of hardware components and supplies as well as 
software amortization, decreased from $1.45 million in the second quarter of 
1997 to $1.07 million in the second quarter of 1998, and represented 59% and 
54% of revenue, respectively.  The decrease in the cost of products sold as a 
percentage of revenue was primarily attributable to general industry cost 
reductions related to CCTVware Product components.

     OPERATIONS AND CUSTOMER SUPPORT.  Operations and customer support 
expenses decreased from $406,000 in the second quarter of 1997 to $313,400 in 
the second quarter of 1998, and represented 17% and 16% of revenue, 
respectively. The decrease in such expenses resulted primarily from 
compensation decreases and decreases in telecommunication expenses.

     SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and 
administrative expenses increased from $910,100 in the second quarter of 1997 
to $1.16 million in the second quarter of 1998, and represented 37% and 59% 
of revenue, respectively. The increase in such expenses resulted primarily 
from an increase in legal fees associated with the Company's patent 
litigation with PFI.

     RESEARCH AND DEVELOPMENT.  Research and development expenses, net of 
capitalized software costs, increased from $328,400 in the second quarter of 
1997 to $339,800 in the second  quarter of 1998, and represented 13% and 17% 
of revenue, respectively.  The actual research and development expenses did 
not increase materially in the second quarter of 1998, and the difference in 
percentage terms is the result of lower revenue in the second quarter of 1998.

     INTEREST INCOME, NET.  Net interest income decreased from $30,600 in the 
second quarter of 1997 to $18,100 in the second quarter of 1998.  This 
decrease was due to a reduction in the average cash available for investment.

     INCOME TAX EXPENSE/BENEFIT.  An income tax benefit of $187,100 for the 
second quarter of 1997 was estimated at 30% of the pretax loss.  In the 
second quarter of 1998, any tax benefit from the operating loss was offset by 
an increase in the valuation allowance for deferred tax assets.
                                       


                                       7
<PAGE>

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997

REVENUE
     
     Revenue decreased from $4.13 million in the first six months of 1997 to 
$3.89 million in the first six months of 1998, representing a 6% decrease. 
Revenue in the first six months of 1997 and 1998 included approximately $2.40 
million, or 58% of total revenue, and approximately $2.91 million, or 75% of 
total revenue, of CCTVware Products, respectively.

     COSTS AND EXPENSES

     COST OF PRODUCTS SOLD.  The cost of products sold decreased from $2.26 
million in the first six months of 1997 to $2.07 million in the first six 
months of 1998, and represented 55% and 53% of revenue, respectively.  The 
decrease in the cost of products sold as a percentage of revenue was 
primarily attributable to general industry cost reductions related to 
CCTVware components.

     OPERATIONS AND CUSTOMER SUPPORT.  Operations and customer support 
expenses decreased from $813,000 in the first six months of 1997 to $661,300 
in the first six months of 1998, and represented 20% and 17% of revenue, 
respectively. The decrease in such expenses resulted primarily from headcount 
and compensation-related decreases and decreases in travel and 
telecommunication expenses.

     SELLING, GENERAL AND ADMINISTRATIVE.  Selling, general and 
administrative expenses increased from $1.78 million in the first six months 
of 1997 to $2.06 million in the first six months of 1998, and represented 43% 
and 53% of revenue, respectively. The increase in such expenses resulted 
primarily from an increase in legal fees associated with the Company's patent 
litigation with Prima Facie, Inc. and increases in travel expenses.

     RESEARCH AND DEVELOPMENT.  Research and development expenses, net of 
capitalized software costs, decreased from $705,100 in the first six months 
of 1997 to $679,700 in the first six months of 1998, and represented 17% of 
revenue in both periods.

     INTEREST INCOME, NET.  Net interest income decreased from $90,200 in the 
first six months of 1997 to $33,100 in the first six months of 1998.  This 
decrease was due to a reduction in the average cash available for investment.

     INCOME TAX EXPENSE/BENEFIT.  An income tax benefit of $398,000 for the 
first six months of 1997 was estimated at 29% of the pretax loss.  In the 
first six months of 1998, any tax benefit from the operating loss was offset 
by an increase in the valuation allowance for deferred tax assets.

YEAR 2000 CONVERSION

     Many computer systems experience problems handling dates beyond the year 
1999.  Therefore, some computer hardware and software will need to be 
modified prior to the year 2000 in order to remain functional.  The Company 
has assessed the readiness and compliance of its internal computer-based 
systems and of its computer-based products sold to customers and expects to 
implement successfully the system and programming changes necessary to 
address year 2000 issues by mid 1999.  The Company does not believe that the 
cost of such actions will have a material effect on the Company's results of 
operations or financial condition. There can be no assurance, however, that 
there will not be a delay in, or increased costs associated with, the 
implementation of such changes, and the Company's inability to implement such 
changes on a timely basis could have an adverse effect on future results of 
operations.

     The Company is also assessing the possible effects on the Company's 
operations of the year 2000 compliance of its key suppliers.  The Company is 
contacting certain key suppliers to determine whether their products supplied 
to the Company are year 2000 compliant and is in the process of evaluating 
information to determine the impact products that are not Year 2000 compliant 
may have on the operations of the Company.  The Company's reliance on 
suppliers, and, therefore, on the proper functioning of their products, which 
are incorporated into the Company's products, means that their failure to 
address year 2000 issues could have a material impact on the Company's sales, 
operations and financial results, however, the potential impact and related 
costs are not known at this time. 
                                       


                                       8
<PAGE>

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

     During the six months ended June 30, 1997 and 1998, the Company financed 
its operations primarily from working capital.

     The Company's principal uses of cash during the six months ended June 
30, 1997 and 1998 were to (i) acquire property and equipment;  (ii) invest in 
the development of software; and (iii) in 1997, to fund operating activities.

     During the first six months of 1997, the Company's cash and cash 
equivalents decreased from $6,126,500 at December 31, 1996 to $1,827,500 at 
June 30, 1997.  Net cash used in operating activities of $3.5 million 
consisted primarily of a net loss of $966,100, increases in deferred income 
tax assets, accounts receivable, inventory, prepaid expenses and other assets 
and decreases in accounts payable and accrued liabilities offset by 
depreciation and amortization and an increase in deferred revenue.  Net cash 
used in investing activities of $761,700 consisted primarily of $561,300 of 
capital expenditures and $243,100 of capitalized software.

     During the first six  months of 1998, the Company's cash and cash 
equivalents increased from $3,334,100 at December 31, 1997 to $3,822,700 at 
June 30, 1998.  Net cash provided by operating activities of $734,000 
consisted primarily of a net loss of $1.6 million, increases in accounts 
receivable and inventory and decreases in accrued liabilities and deferred 
revenue offset by depreciation and amortization and a decrease in prepaid 
expenses and other assets and increases in accounts payable and customer 
deposits.  Customer deposits increased by $1.7 million representing a partial 
pre-payment by one customer for orders to be delivered in the third and 
fourth quarters of 1998. Net cash used in investing activities of $236,200 
consisted primarily of capital expenditures of $102,800 and $192,200 of 
capitalized software.

     At June 30, 1998, the Company had $5.9 million in working capital, 
including $2.48 million of trade accounts receivable and $1.96 million of 
inventory. Of the $2.48 million of trade accounts receivable, approximately 
$862,000 was recorded in conjunction with June 1998 sales.  Days sales 
outstanding, calculated using an average accounts receivable balance, were 
approximately 103 days as of June 30, 1998, compared to 102 days for the same 
period a year ago.  The days sales outstanding is consistent with prior 
periods. The Company has provided and may continue to provide extended 
payment terms to certain of its customer from time-to-time.  As of June 30, 
1998 the Company had extended payments equal to approximately $775,000.  The 
Company has historically collected its outstanding receivables and believes 
it will be successful in the collection of its receivable balance as of June 
30, 1998. 

     The Company's inventory balance at June 30, 1998 and 1997 was $1.96 
million and $1.45 million, respectively.  Annualized inventory turns, 
calculated using an average inventory balance, were 2.2 and 3.0 as of June 
30, 1998 and 1997, respectively.  The decrease in the inventory turns is 
primarily attributable to inventory purchases in June 1998 in support of the 
Company's $4.0 million backlog position as of June 30, 1998.

     The Company's principal sources of liquidity are its cash and cash 
equivalents and cash generated from operating activities, if any.  The 
Company also has available up to a $1.0 million line of credit based on a 
percentage of the Company's eligible accounts receivable.  The line of credit 
facility expires in May 1999.  The line of credit has not been used to date.  
The Company anticipates capital expenditures for the remainder of 1998 of 
approximately $300,000.  The Company believes that, based on its current 
financial projections, it has sufficient working capital to meet its capital 
requirements and fund operations for at least the next twelve months.

CERTAIN FACTORS BEARING ON FUTURE RESULTS

     The statements in the third and last sentences under the caption 
"Revenue" on page 7, the last sentence of the fifth paragraph and the last 
two sentences of the seventh paragraph under the caption "Financial 
Condition, Liquidity and Capital Resources", and the first sentence under the 
caption "Capital Requirements" on page 11 are forward-looking statements.  In 
addition, the Company may from time to time make oral forward-looking 
statements.  The following are important factors that could cause results to 
differ materially from those projected in any such forward-looking statements.
                                       


                                       9
<PAGE>

     DISTRIBUTION RELATIONSHIPS.  The Company believes its success in 
penetrating markets for its identification products ("ID Products") and 
CCTVware Products depends in part on its ability to maintain distribution 
relationships with manufacturing representatives, dealers, systems 
integrators and distributors and to cultivate additional, similar 
relationships.  There can be no assurance that the Company will be successful 
in maintaining or expanding its distribution relationships.  The loss of 
certain distribution relationships could adversely affect the Company's 
business, operating results and financial condition.  Further, there can be 
no assurance that the businesses with which the Company has developed or is 
seeking to develop such relationships, some of whom have significantly 
greater financial and marketing resources than the Company, will not develop 
and market products in competition with the Company's products or will not 
otherwise discontinue their relationships with the Company. 

     INTERNATIONAL SALES.  The Company is seeking to expand its international 
presence by developing new distribution channels in certain foreign countries 
where it has not previously had a presence.  International sales are subject 
to a number of risks, including political and economic instability, 
unexpected changes in regulatory requirements, tariffs and other trade 
barriers, fluctuating exchange rates and the possibility of greater 
difficulty in accounts receivable collection.  There can be no assurance that 
these and other factors will not have a material adverse effect on the 
Company's future international sales, if any, and, consequently, the 
Company's business, operating results and financial condition.

     COMPETITION.  Certain of the Company's current and prospective 
competitors have substantially greater technical, financial and marketing 
resources than the Company.  In addition, there can be no assurance that any 
of the Company's products will be competitive in the face of advances in 
product technology developed by the Company's current or future competitors.  
Moreover, while the Company believes that the price/performance 
characteristics of its products are currently competitive, increased 
competition has created, and will continue to create, pricing pressures which 
could materially and adversely affect the Company's business, operating 
results and financial condition.

     PROPRIETARY RIGHTS. The Company is not aware that its products, 
trademarks or other proprietary rights infringe on the proprietary rights of 
any other third parties, except that a claim of infringement has been 
asserted against the Company by PFI.  Although the Company believes this 
claim is without merit, an adverse result in this litigation with PFI could 
have a negative impact on the financial position and results of operations of 
the Company.  There can be no assurance that other third parties will not 
assert infringement claims against the Company in the future with respect to 
current or future products.  As the number of software products in the 
industry increases and the functionality of these products further overlaps, 
the Company believes that software developers may become increasingly subject 
to infringement claims.  Any such claims against the Company, with or without 
merit, could result in costly litigation or might require the Company to 
enter into royalty or licensing agreements.  Such royalty and licensing 
agreements, if required, may not be available on terms acceptable to the 
Company.

     PRODUCT OBSOLESCENCE.  The Company's current products and products under 
development are limited in number and concentrated primarily in the markets 
for identification and surveillance products.  The life cycles of the 
Company's products are difficult to estimate due in large measure to changing 
and developing technology as well as the unknown future effect of products 
introduced by the Company's competition.  Price reductions or declines in 
demand for the Company's products, whether as a result of competition, 
technological change or otherwise, would have a materially adverse effect on 
the Company's results of operations or financial position.

     DEPENDENCE ON NEW PRODUCTS.  The market for the Company's products is 
characterized by ongoing technological development and evolving industry 
standards.  The Company's success will depend upon its ability to enhance its 
current products and to introduce new products which address technological 
and market developments and satisfy the increasingly sophisticated needs of 
customers.  For instance, the Company has released several products based on 
its CCTVware technology and has recently announced that it expects to 
release, in the near future, additional products based on new technology.  
There can be no assurance that the Company will be successful in developing, 
marketing and selling sufficient volumes of its new CCTVware products or 
developing and marketing on a timely basis any other fully functional product 
enhancements or new products that respond to the technological advances by 
others.  For instance, the Company expected to introduce its Solo Remote 
product in the second quarter of 1998, but because of resource allocations 
and customer requested product enhancements the Company has delayed the 
introduction of the Solo Remote product until the third quarter of 1998.  
There also can be no assurance that the Company's new products will be 
accepted by customers.
                                       


                                       10
<PAGE>

     VARIABILITY OF OPERATING RESULTS.  The Company's revenue and operating 
results have fluctuated significantly from quarter to quarter, and may 
continue to fluctuate, due to a combination of factors.  These factors 
include relatively long sales cycles for certain products, the timing or 
cancellation of orders from major customers, the timing of new product 
introductions by the Company or its competitors, the Company's use of 
third-party distribution channels, the fulfillment of large one-time orders 
to particular customers and general economic conditions and other factors 
affecting capital spending.  For example, a longer than expected sales cycle 
for the CCTVware Products has delayed anticipated revenue, and the conclusion 
of the Aramco Contract has led to a sharp decrease in the Company's ID 
Product revenue.  Additionally, the Company generally ships orders in the 
quarter in which such orders are received, and accordingly, revenue in any 
quarter is substantially dependent on the orders booked and shipped in that 
quarter.  The Company has typically recognized a substantial portion of its 
revenue in the last month of the quarter, with much of this revenue 
concentrated in the last two weeks of the quarter.  Because the Company's 
operating expense levels are relatively fixed and based, to some extent, on 
anticipated revenue levels, a small variation in revenue can cause 
significant variations in operating results from quarter to quarter and may 
result in losses.  Due to all of the foregoing, the Company believes that 
period-to-period comparisons of its results of operations are not necessarily 
meaningful and should not be relied upon as indications of future performance.

     LEGAL PROCEEDINGS.  On October 17, 1997, the Company received notice 
that it had been named as a defendant in a patent infringement lawsuit 
brought by a competitor, PFI, in the U.S. District Court for the District of 
Maryland.  The lawsuit alleged that the Company's CCTVware Transit product 
infringed certain claims of two patents held by PFI and that the Company has 
interfered with PFI's business relationships.  The claim has recently been 
amended to allege infringement by the Company's other CCTVware products.  The 
suit seeks injunctive relief against further infringement and damages.  The 
lawsuit also names one of the Company's domestic distributors as a 
codefendant.  Although the Company believes these claims are without merit 
and is defending itself vigorously, an adverse result in the litigation could 
have a negative impact on the financial position and the results of 
operations of the Company.

     MANAGEMENT AND EMPLOYEES.  The Company's future success depends in 
significant part upon the continued service of its key technical and senior 
management personnel and its continued ability to attract and retain highly 
qualified technical and managerial personnel in the future.  The Company has 
in the past encountered some difficulties in fulfilling its hiring needs in 
the Durango, Colorado employment market, and there can be no assurance that 
the Company will be successful in hiring and retaining qualified employees in 
the future.

     CAPITAL REQUIREMENTS.  The Company believes that, based on its current 
projections, it has sufficient working capital to meet its requirements for 
at least the next 12  months.  However, to the extent that the Company 
experiences growth generally, or the Company's CCTVware line of products 
generates high demand, or the Company receives extraordinary large orders for 
certain CCTVware products from large business, institutional or government 
buyers, the Company's capital requirements may exceed the Company's available 
capital resources. Additionally, the Company has suffered losses in each of 
the past six quarters, and such losses, which may continue in the foreseeable 
future, will diminish the Company's cash and cash equivalents.  There can be 
no assurance that the Company will be able to raise equity or debt financing 
on favorable terms, or at all. If the Company fails in such circumstances to 
raise additional capital as needed, the Company would likely be required to 
reduce the scope of its product development, selling and marketing activities 
and other operations, which would have a material adverse effect on the 
Company's business, financial condition and results of operation.

     VOLATILITY OF STOCK PRICE.  The market price of the Company's Common 
Stock has experienced significant volatility, and is likely to continue to be 
significantly affected by factors such as actual or anticipated fluctuations 
in the Company's operating results, the Company's failure to meet or exceed 
published earnings estimates, changes in earnings estimates or 
recommendations by securities analysts, announcements of technological 
innovations, new products or new contracts by the Company or its existing or 
potential competitors, developments with respect to patents, copyrights or 
proprietary rights, adoption of new accounting standards affecting the 
software industry, general market conditions and other factors.  In addition, 
the stock market has from time to time experienced significant price and 
volume fluctuations that have particularly affected the market prices for the 
common stock of technology companies which have often been unrelated to the 
operating performance of such companies.  These broad market fluctuations may 
materially adversely affect the market price of the Company's common stock.  
There can be no assurance that the trading price of the Company's Common 
Stock will not experience substantial volatility in the future. 
                                       


                                       11
<PAGE>

PART II.  OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS

     On October 17, 1997, the Company received notice that it had been named 
as a defendant in a patent infringement lawsuit brought by a competitor, PFI, 
in the U.S. District Court for the District of Maryland.  The lawsuit alleged 
that the Company's CCTVware Transit product infringed certain claims of two 
patents held by PFI and that the Company has interfered with PFI's business 
relationships.  The claim has recently been amended to allege infringement by 
the Company's other CCTVware products.  The suit seeks injunctive relief 
against further infringement and damages.  The lawsuit also names one of the 
Company's domestic distributors as a codefendant.  (see Legal Proceedings 
under the caption "Certain Risks Bearing on Future Results").

     On July 6, 1998 the Company filed counterclaims against PFI.  These 
counterclaims include a Declaratory Judgment of Patent Invalidity and six 
other counterclaims.  The Company and Prima Facie, Inc. have agreed to 
separate the patent infringement claims from all other claims and resolve the 
patent infringement issues first.  To date there has been no trial scheduled.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Matters submitted for a vote by security holders at the Company's May 
27, 1998 annual meeting of stockholders included:

     (a)  approval of the minutes of the 1997 annual meeting of stockholders;
     (b)  election of directors; and
     (c)  ratification of the appointment of KPMG Peat Marwick LLP as
          independent auditors of the Company for the fiscal year ending
          December 31, 1998.

     The results of the stockholder votes were as follows:

     (a)  the minutes of the prior year's annual meeting of stockholders were
          approved.

<TABLE>
<CAPTION>
                                          Votes          Votes          Votes
                                           For          Against       Abstained
                                        ---------       --------      ---------
     <S>                                <C>             <C>           <C>
     (b)  Election of Directors
          Edward Jankowski              4,108,023       103,985
          George M. Duffy               4,108,023       103,985
          C. Rodney Wilger              4,108,023       103,985
          Don W. Stevens                4,108,023       103,985
          Louis E. Colonna              4,108,023       103,985

     (c)  Appointment of KPMG           4,196,608        11,000         4,400
          Peat Marwick LLP
</TABLE>

Item 6.   Exhibits and Reports on Form 8-K

     (a)  27    Financial Data Schedule 

     (b)  No reports on Form 8-K were filed by the Company during the quarter 
          ended June 30, 1998.



                                      12
<PAGE>

                                       
                                   SIGNATURES
                                       
                                          
     In accordance with the requirements of the Securities Exchange Act of 
1934, the registrant has duly caused this report to be signed on its behalf 
by the undersigned, thereunto duly authorized.

                                       Loronix Information Systems, Inc.

August 10, 1998                        /s/ Jonathan C. Lupia
---------------                        ---------------------------
     Date                              Jonathan C. Lupia,
                                       Chief Operating Officer and 
                                       Chief Financial Officer





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