FORM 10-QSB
     
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
     
     
           Quarterly Report Under Section 13 or 15(d)
             Of the Securities Exchange Act of 1934
     
     For Quarter Ended  September 30, 1997
                                
     Commission File Number  33-16531-D 
     
              INTERNATIONAL AUTOMATED SYSTEMS, INC.
     (Exact name of registrant as specified in its charter)
     
             UTAH                  87-0447580
     (State or other jurisdiction of    (IRS Employer
     incorporation or organization)    Identification No.)
     
                       512 South 860 East 
                    American Fork, Utah 84003
            (Address of principal executive offices)
     
     Registrant's telephone number
     including area code               (801)763-9965      
     
            Not Applicable            Former Address, if changed 
				      since last report
     
     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 proceeding 12 months (or 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 November 10, 1997, Registrant had 15,255,361
     shares of common stock, no par value per share, issued
     and outstanding after deducting shares held in the
     corporate treasury. 
     
   
                                
                                
     PART I
     ITEM I - FINANCIAL STATEMENTS
     
          The condensed financial statements included
     herein have been prepared by International Automated
     Systems, Inc. (the "Company"), without audit, pursuant
     to the rules and regulations of the Securities and
     Exchange Commission.  Certain information and footnote
     disclosures normally included in financial statements
     prepared in accordance with generally accepted
     accounting principles have been condensed or omitted
     pursuant to such rules and regulations, although the
     Company believes that the disclosures are adequate to
     make the information presented not misleading.
     
          In the opinion of the Company, all adjustments,
     consisting of only normal recurring adjustments,
     necessary to present fairly the financial position of
     the Company, the results of its operations and cash
     flows have been made. The results of its operations
     for such interim period is not necessarily indicative
     of the results to be expected for the entire year.  
     
          The Company is a development stage company. 
     Historically its primary activities have been research
     and development of high technology which can be
     applied to develop commercial products. Such
     development has significant risks.
     
     
                   INTERNATIONAL AUTOMATED SYSTEMS, INC.
                       (A Development Stage Company)
                         CONDENSED BALANCE SHEETS
                                (Unaudited)

                                     September 30,  June 30,
       					                              1997        1997
                            				      -----------  -----------   

                                  ASSETS
Current Assets
 Cash and cash equivalents            $     5,507  $     7,758
 Receivable from sales 
  representatives, net of 
     allowance for doubtful 
    accounts of $40,783                      -            -    
    Related party receivable                1,304       11,073
 Prepaid expenses                           9,740       14,813
 Inventory                                108,092      108,092
                     			              -----------  -----------
   Total Current Assets                   124,643      141,736
                            				      -----------  -----------
Property and Equipment
 Computer and electronic equipment        137,973      137,162
 Furniture and fixtures                    20,982       20,982
 Automobiles                               21,657       21,657
 Leasehold improvements                    18,238       18,238
                            				      -----------  -----------
   Total Property and Equipment           198,850      198,039
 Accumulated depreciation                 (82,906)     (74,288)
                            				      -----------  -----------
   Net Property and Equipment             115,944      123,751
                            				      -----------  -----------
Other Assets
 Patents, net of accumulated 
   amortization of $27,460 and 
   $24,867, respectfully                  212,762      211,500
 Franchises                                10,000       10,000
                            				      -----------  -----------
 Total Other Assets                       222,762      221,500 
                            				      -----------  -----------
Total Assets                          $   463,349  $   486,987
                            				      ===========  ===========

                   LIABILITIES AND STOCKHOLDERS' EQUITY 

Current Liabilities
 Accounts payable                     $    24,179  $    30,426
 Current portion of long-term 
   notes payable                            4,045	       4,045
 Accrued liabilities                        5,662	       6,541
 Advance from majority 
   shareholder                              8,000         -   
                            				      -----------   ----------
 Total Current Liabilities                 41,886       41,012

Notes Payable                               5,238        6,221
                            				      -----------  -----------
   Total Liabilities                       47,124       47,233
                            				      -----------  -----------
Stockholders' Equity 
 Preferred stock, Class A, 
   no par value, 5,000,000 
   shares authorized, 1,000,000 
   shares issued and outstanding          292,786      292,786
 Common stock, no par value, 
   45,000,000 shares authorized, 
   15,255,361 shares issued and 
   outstanding                          3,072,412    2,839,727
 Deficit accumulated during the 
   development stage                   (2,948,973)  (2,692,759)
                            				      -----------  -----------
    Total Stockholders' Equity            416,225      439,754
                            				      -----------  -----------
Total Liabilities and 
  Stockholders' Equity                $   463,349  $   486,987
                            				      ===========  ===========

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


                  INTERNATIONAL AUTOMATED SYSTEMS, INC.
                       (A Development Stage Company)
                     CONDENSED STATEMENTS OF OPERATIONS
                                (Unaudited)
          
                                                     Cumulative   
                                                   For the Period     
                                                   From Inception       
                                                (September 26, 1986)  
                               For the Three Months    Through     
                                Ended September 30,  September 30, 
                                 1997        1996        1997     
                     			      ----------  ----------  -----------
Revenue             
 Sales                        $      400  $    9,885  $   108,365
 Equipment lease income 
    from related party              -           -          20,000
                     			      ----------  ----------  -----------
  Total Revenue                      400       9,885      128,365

Cost of Sales                        350       5,683      175,465
                     			      ----------  ----------  -----------
Gross Profit (Loss)          	      50       4,202      (47,100)
                   			      ----------  ----------  -----------
Operating Expenses
 General and administrative 
   expense                       135,477     114,542    1,418,118
 Research and development 
   expense                       118,106     205,408    1,454,107
 Amortization expense              2,593         462       29,340
                     			      ----------  ----------  -----------
  Total Operating Expenses       256,176     320,412    2,901,565
                     			      ----------  ----------  -----------
Loss From Operations            (256,126)   (316,210)  (2,948,665)

Other Income and (Expense)
 Interest income                     180       5,492       18,526
 Interest expense                   (268)       (274)     (18,834)
                     			      ----------  ----------  -----------
  Net Other Income (Expense)         (88)      5,218         (308)
                     			      ----------  ----------  -----------
Net Loss                      $ (256,214) $ (310,992) $(2,948,973)
                     			      ==========  ==========  ===========
Net Loss Per Share            $    (0.02) $    (0.02) $     (0.18)
                     			      ==========  ==========  ===========
Common and Common 
  Equivalent Shares Used 
  in Per Share Calculation    16,255,361  16,186,100   16,186,100         
                              ==========  ==========  ===========     

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


                   INTERNATIONAL AUTOMATED SYSTEMS, INC.
                       (A Development Stage Company)
                    CONDENSED STATEMENTS OF CASH FLOWS
                                (Unaudited)

                                                            Cumulative      
                                                          For the Period   
                                                          From Inception  
                                                        (September 26,1986)
                                     For the Three Month      Through     
                                      Ended September 30,   September 30, 
                                        1997        1996        1997        
                            				     ----------  ----------  -----------
Cash Flows From Operating 
 Activities
   Net loss                          $ (256,214) $ (310,992) $(2,948,973)
   Adjustments to reconcile net 
     income to net cash provided by 
     operating activities:          
    Allowance for doubtful accounts        -           -          40,783
    Amortization                          2,593         462       29,340
    Depreciation                          8,618       7,797       82,906
    Stock based compensation               -           -         331,747
   Change in assets and liabilities: 
    Inventory                              -         (4,430)    (108,092)
    Sales representatives receivable       -         (3,501)     (40,783)
    Prepaid expenses                      5,073      (5,618)      (9,740)
    Accounts payable                     (6,247)     (7,527)      24,179
    Accrued liabilities                    (879)       (274)       5,662
   				                              ----------  ----------  -----------
    Net Cash Used By Operating 
        Activities                     (247,056)   (324,083)  (2,592,971)
                            				     ----------  ----------  -----------
Cash Flows From Investing Activities 
   Purchase of property and equipment      (811)    (15,316)    (179,493)
   Purchase of rights to technology      (3,855)    (18,940)    (240,222)
   Organization costs                      -           -          (1,880)
   Purchase of franchise rights            -           -         (10,000)
   Proceeds to (payments from) 
     related party                        9,769        -          (1,304)
                            				     ----------  ----------  -----------
    Net Cash Provided By (Used By)
        Investing Activities              5,103     (34,256)    (432,899)
                            				     ----------  ----------  -----------
Cash Flows From Financing Activities 
   Proceeds from issuance of 
    common stock		                         -           -         912,346
   Proceeds from advance from 
    controlling shareholder             232,685        -       2,102,838
   Payments for treasury stock             -           -          (3,325)
   Payments for stock offering costs       -           -         (56,509)
   Proceeds from net borrowings 
     from related party                   8,000        -          86,101
   Payments on note payable                (983)       (906)     (10,074)
                            				     ----------  ----------  -----------
    Net Cash Provided By (Used By)
      Financing Activities              239,702	       (906)   3,031,377
                            				     ----------  ----------  -----------
Net Increase (Decrease) In Cash
  and Cash Equivalents                   (2,251)   (359,245)       5,507

Cash and Cash Equivalents at     
  Beginning of Period                     7,758     545,847         -   
                            				     ----------  ----------  -----------
Cash and Cash Equivalents 
  at End of Period                   $    5,507  $  186,602  $     5,507
                     			             ==========  ==========  ===========

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



                INTERNATIONAL AUTOMATED SYSTEMS, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS 


NOTE 1--INTERIM FINANCIAL STATEMENTS 

     The accompanying financial statements have been prepared by
     the Company, and are unaudited. In the opinion of management,
     the accompanying unaudited financial statements contain all
     necessary adjustments for fair presentation, consisting of
     normal recurring adjustments except as disclosed herein. The
     results of operations of the interim periods presented are not
     necessarily indicative of the results to be expected for the
     entire year.

     The accompanying unaudited interim financial statements have
     been condensed pursuant to the rules and regulations of the
     Securities and Exchange Commission; therefore, certain
     information and disclosures generally included in financial
     statements have been condensed or omitted. These financial
     statements should be read in connection with the Company's
     annual financial statements included in the Company's annual
     report on Form 10-KSB as of June 30, 1997.

NOTE 2--LOSS PER SHARE

     The Company has computed loss per share based on the number of
     common and preferred shares outstanding as of September 30,
     1997 and 1996 under the treasury stock method.

NOTE 3--RELATED PARTY TRANSACTIONS

     During the year ended June 30, 1997, the company advanced a
     corporation controlled by the Company's majority shareholder
     $11,073; this advance was paid off in August 1997.
     Subsequently, the Company has advanced this same corporation
     an additional $1,304, no terms for repayment have been
     established.

     For quarter ending September 30, 1997 $232,684 was advanced 
     by Neldon Johnson for research as additional paid-in-capital.
     In addition to these advances from Mr. Johnson, he has also
     loaned the Company $8,000, no terms for repayment have been
     established.

NOTE  4--CONTINGENCIES

     On July 2, 1996, the Company had a class action law suit filed
     against it by shareholders for securities violations. The
     class action has been brought on behalf of  all persons and
     entities who purchased shares of common stock from May 13,
     1996 to June 27, 1996. The suit is seeking damages incurred
     based on the decrease in the Company's stock price because of
     alleged material misrepresentations by the Company regarding
     new technology developed by the Company. The ultimate outcome
     of the litigation cannot presently be determined. Accordingly,
     no provision for any liability that may result upon
     adjudication has been made in the accompanying financial
     statements and the possible effect it will have on future
     financial statements is unknown. 

     On August 13, 1996 the Company was served a formal order of
     private investigation by the U.S. Securities and Exchange
     Commission (SEC). To date, the SEC has issued a subpoena
     requiring the production of certain documents. The SEC staff
     has advised that its inquiry should not be construed as an
     indication by the SEC or its staff that any violations of law
     have occurred.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

     Liquidity and Capital Resources.  As of September 30, 1997,
Registrant had cash of $5,507 compared to cash of $7,758 as of June
30, 1997. Cash decreased because of the continuing losses from
research and development and other activities.  Inventory did not
change from  June 30, 1997. As of September 30, 1997, total current
assets were $124,643 and total assets were $463,349 compared to
total current assets $141,736 and total assets $486,987 as of June
30, 1997.

     As of September 30, 1997, Registrant had total liabilities of
$47,124 and shareholders' equity of $416,225 compared to total
current liabilities of $47,233 and shareholders' equity of
$439,754. The deficit accumulated during the development stage was
$2,948,973 as of September 30, 1997, compared to $2,692,759 as of
June 30, 1997.  For the near term the Company's ability to continue
it operations and activities is dependent upon the Company's major
shareholder providing funds to the Company.  At this time the
Company is not generating sufficient funds to sustain its
operations. The decrease in shareholders' equity is attributable
primarily to the continued research and development activities.
These activities have significant risks involving the development
of technology and the development of products that may be
commercially acceptable and profitable. As of September 30, 1997,
the ratio of current assets to current liabilities was
approximately 2.98 to one. 

     
     Results of Operation.  For the quarter ended September 30,
1997, Registrant had total revenues of $400 compared to total
revenues of $9,885 for the same period a year earlier. For the
quarter ended September 30, 1997, Registrant had total operating
expenses of $256,176 compared to expenses of $320,412 during the
same quarter a year earlier. The decrease in income reflects a lack
of sales and increased operating expenses. As of September 30,
1997, cost of sales was  $350 compared to $5,683 a year earlier and
gross profit was $50 compared to $4,202 a year earlier.  For the
current quarter Registrant had a net loss of $256,214 compared to
a net loss of $310,992 for the same quarter a year earlier. The
decrease in net loss is attributable to the decrease in research
and development expenses due to downsizing to meet the Company's
current financial position.  For the current quarter the net loss
per share was $(0.02) compared to $(0.02) for the same quarter a 
year earlier. For the quarter ended September 30, 1997, general 
and administrative expenses were $135,477 compared to $114,542 
and research and development expenses were $118,106 compared to
$205,408 a year earlier.  The Company has only minimal revenues,
but its level of operations requires additional funds.

     The Company's ability to continue its activities is dependent
on it receiving funds either as loans, advances or sales of equity. 
Previously the major shareholder has provided funds, but there is
no formal agreement between the Company and the majority
shareholder to continue providing funds in the future.  If the
Company had to seek funds from another source there is no assurance
that funds would be available at all or on terms acceptable to the
Company.

Part II.
Item 1. Legal Proceedings.
     
     On July 2, 1996, the Company and its president were named as 
defendants in a proposed class action lawsuit filed on behalf of
certain shareholders seeking damages for violations of the federal
securities laws.  The Complaint was claims to be brought on behalf
of all persons and entities who purchased shares of common stock of
the Company during the period of May 13, 1996, to June 27, 1996. 
The suit seeks damages based on the decrease in the Company's stock
price in the trading market because the Company made allegedly
material misrepresentations concerning new technology being
developed. On August 8, 1996, an amended complaint was filed which
increased the number of plaintiffs, added and modified certain
allegations, and changed the proposed period from April 3, 1996, to
June 27, 1996. At this time the final outcome of the litigation
cannot be determined.  The Company intends to defend vigorously the
litigation. No provision for any liability that may result from any
adverse adjudication has been made in the accompanying financial
statements and any effect on future financial statements is
unknown.  The lawsuit is captioned Edouard Serfaty, David D. Baker,
Michael Berry, Margaret Moskes, Craig Swapp, Linda M. Baker, Robert
H. Baker, Kourosh Khalili and Ariel Tzadik, v. International
Automated Systems, Inc., and Neldon P. Johnson, Civil No. 2:96 CV
0583 C, filed in the United States District Court for the District
of Utah, Central Division.

     In August 1996, the Company learned that the U.S. Securities
and Exchange Commission issued a formal order of private
investigation on or about August 13, 1996, to investigate whether
violations of the federal securities laws have occurred.  The SEC
staff subpoenaed documents from entities and individuals including
the Company. Also, the Company is aware that the SEC issued
subpoenas to take the testimony under oath and on the records of
individuals including persons associated with the Company.
Routinely the Staff advised that its inquiry should not be
construed as any indication that any violations of law have
occurred.

     In April 1997 a complaint was filed against the Company for
breach of contract seeking damages of $60,000 plus interest and
attorney's fees. The litigation was filed in the state court in
Utah and is captioned Alarm Control Company v. International
Automated Systems, Incorporated. The Company believes the suit
lacks merit and intends to defend it vigorously.

Item 2. Changes in Securities.
     None. 

Item 3. Defaults upon Senior Securities.
     None.

Item 4. Matters Submitted to a Vote of the Company's Shareholders.
     None.

Item 5. Other Information.
            None.

     

     

Item 6. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K.

     A. Exhibits.
          Ex.27     Financial Data Summary. 
               
     B. Reports on Form 8-K.
                None.



Signatures

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

Date  11-14-97   

International Automated Systems, Inc.


By /S/   Neldon Johnson   
President and Chief Executive Officer

By /S/  Neldon Johnson  
Chief Financial Officer