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  March 31, 1998
  
  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 March 31, 1998, Registrant had 16,290,361 shares of
  common stock, no par value per share, issued and
  outstanding after deducting shares held in the corporate
  treasury. 
  
 
  PART I    FINANCIAL INFORMATION
  
  Item I - Financial Statements
  
       The condensed financial statements included herein
  have been prepared by International Automated Systems, Inc.
  (the "Company" or the "Registrant"), 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 as
  of March 31, 1998, and the results of its operations from
  July 1, 1997, through March 31, 1998, and changes in its
  financial position from inception through March 31, 1998,
  have been made.  The results of its operations for such
  interim period are not necessarily indicative of the
  results to be expected for the entire year.  
  
       The Registrant 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)
  
                                ASSETS

                                               March 31,    June 30,
                                                 1998         1997
                                              -----------  -----------
  Current Assets
    Cash and cash equivalents                 $     5,085  $     7,758
    Receivable from sales representatives, 
     net of allowance for doubtful accounts
     of $40,783                                       -           -  
    Related party receivable                       66,565       11,073
    Prepaid expenses                                 -          14,813
    Inventory                                     108,092      108,092
                                              -----------  -----------
     Total Current Assets                         179,742      141,736
                                              -----------  -----------  
  Property and Equipment
    Computer and electronic equipment             145,695      137,162
    Furniture and fixtures                         20,982       20,982
    Automobiles                                    21,657       21,657
    Leasehold improvements                         18,238       18,238
                                              -----------  -----------
     Total Property and Equipment                 206,572      198,039
    Accumulated depreciation                     (100,608)     (74,288)
                                              -----------  -----------  
     Net Property and Equipment                   105,964      123,751
                                              -----------  -----------  
  Other Assets
    Patents, net of accumulated 
     amortization                                 215,441      211,500
    Franchises                                     10,000       10,000
                                              -----------  -----------  
        Total Other Assets                        225,441      221,500
                                              -----------  -----------  
  Total Assets                                $   511,147  $   486,987
                                              ===========  ===========  
  
                LIABILITIES AND STOCKHOLDERS' EQUITY 
  
  Current Liabilities
    Accounts payable                          $    67,308  $    30,426
    Current portion of notes payable                3,735        4,045
    Accrued liabilities                             6,169        6,541
                                              -----------  -----------  
        Total Current Liabilities                  77,212       41,012
    
  Notes Payable                                     3,524        6,221
                                              -----------  -----------
     Total Liabilities                             80,736       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, 16,290,361 shares 
     issued and outstanding                     3,681,889    2,839,727
    Deficit accumulated during the 
     development stage                         (3,544,264)  (2,692,759)
                                              -----------  -----------
        Total Stockholders' Equity                430,411      439,754
                                              -----------  -----------  
  Total Liabilities and Stockholders' 
    Equity                                    $   511,147  $   486,987
                                              ===========  ===========
  
  
                   INTERNATIONAL AUTOMATED SYSTEMS, INC.
                       (A Development Stage Company)
                     CONDENSED STATEMENTS OF OPERATIONS
                                (Unaudited)
<TABLE>
<CAPTION>
                                                                                For the Period
                                                                                From Inception  
                               For the Three Months       For the Nine Months   (September 26,  
                                  Ended March 31,            Ended March 31,    1996) Through 
                             ------------------------  ------------------------   March 31,
                                 1998        1997         1998         1997         1998
                             -----------  -----------  -----------  -----------  -----------
 <S>                       <C>           <C>          <C>          <C>          <C>
 Revenue            
 Sales                       $     9,870  $     3,513  $    11,751  $    29,441  $   119,716
 Equipment lease income 
  from related party                -            -            -            -          20,000
                             -----------  -----------  -----------  -----------  -----------
    Total Revenue                  9,870        3,513       11,751       29,441      139,716
                             -----------  -----------  -----------  -----------  -----------
 Cost of Sales                     9,046        2,109       10,099       14,209      185,214
                             -----------  -----------  -----------  -----------  -----------
Gross Profit (Loss)                  824        1,404        1,652       15,232      (45,498)
                             -----------  -----------  -----------  -----------  -----------
Operating Expenses
 General and administrative      131,122       75,095      457,662      305,719    1,740,303
 Research and development 
  expense                        174,026      187,523      386,720      642,874    1,722,721
 Amortization expense              3,551        3,070        8,737        6,350       35,484
                             -----------  -----------  -----------  -----------  -----------
  Total Operating Expenses       308,699      265,688      853,119      954,943    3,498,508
                             -----------  -----------  -----------  -----------  -----------
Other Income (Expense)
 Interest income                     189          371          577        6,884       18,923
 Interest expense                   (169)        (241)        (615)      (1,334)     (19,181)
                             -----------  -----------  -----------  -----------  -----------
  Net Other Income (Expense)          20          130          (38)       5,550         (258)     
                             -----------  -----------  -----------  -----------  -----------
Net Loss                     $  (307,855) $  (264,154) $  (851,505) $  (934,161) $(3,544,264)
                             ===========  ===========  ===========  ===========  ===========
Basic and Diluted Loss
 Per Common and Preferred 
 Share                       $     (0.02) $     (0.02) $     (0.05) $     (0.06) $     (0.24)
                             ===========  ===========  ===========  ===========  ===========
Weighted Shares Used in 
  Per Share Calculation       16,290,361   16,186,100   16,273,182   16,186,100   14,572,451
                             == ========  ===========  ===========  ===========  ===========
<FN>
See the accompanying notes to condensed financial statements.
</FN>
</TABLE>


                INTERNATIONAL AUTOMATED SYSTEMS, INC.
                    (A Development Stage Company)
                 CONDENSED STATEMENTS OF CASH FLOWS
                             (Unaudited)
  
  
                                                         For the Period
                                                         From Inception  
                                                          (September 26,      
                                     For the Nine Months  1986) Through
                                       Ended March 31,      March 31, 
                                      1998        1997        1998       
                                   ----------  ----------  -----------
  Cash Flows From Operating 
   Activities
    Net loss                       $ (851,505) $ (934,161) $(3,544,264)
    Adjustments to reconcile 
     net income to net cash 
     provided by operating 
     activities:                 
     Allowance for doubtful 
      accounts                           -           -          40,783
     Amortization                       8,737       6,350       35,484
     Depreciation                      26,320      24,584      100,608
     Stock based compensation            -           -         331,747
    Change in assets and 
     liabilities:                
       Inventory                         -         15,728     (108,092)
       Sales representatives 
        receivable                       -        (13,296)     (40,783)
       Prepaid expenses                14,813      (1,416)        -
       Accounts payable                36,882     (28,803)       67,308
       Accrued liabilities               (372)      5,938        6,169
                                   ----------  ----------  -----------
     Net Cash Used By Operating 
        Activities                   (765,125)   (925,076)  (3,111,040)
                                   ----------  ----------  -----------    
  Cash Flows From Investing 
   Activities
    Purchase of property and 
     equipment                         (8,530)    (21,599)    (187,212)
    Purchase of rights to 
     technology                       (12,678)    (48,442)    (249,045)
    Organization costs                   -           -          (1,880)
    Purchase of franchise rights         -           -         (10,000)
    Proceeds to related party         (55,492)       -         (66,565)
                                   ----------  ----------  -----------
     Net Cash Used By Investing 
       Activities                     (76,700)    (70,041)    (514,702)
                                   ----------  ----------  -----------
  Cash Flows From Financing 
   Activities Proceeds from 
    issuance of common stock           50,000        -         962,346
    Proceeds from advance from 
      controlling shareholder         792,162        -       2,662,315
    Payments for treasury stock          -           -          (3,325)
    Payments for stock offering 
     costs                               -           -         (56,509)
    Proceeds from net borrowings 
     from related party                  -        459,204       78,101
    Payments on note payable           (3,010)     (2,784)     (12,101)
                                   ----------  ----------  -----------    
     Net Cash Provided By 
        Financing Activities          839,152     456,420    3,630,827
                                   ----------  ----------  -----------    
  Net Increase (Decrease) In 
   Cash and Cash Equivalents           (2,673)   (538,697)       5,085
    
  Cash and Cash Equivalents 
   at Beginning of Period               7,758     545,847         -   
                                   ----------  ----------  ------------    
  Cash and Cash Equivalents 
     at End of Period              $    5,085  $    7,150  $     5,085
                                   ==========  ==========  ===========  


                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. The financial position and results of
  operations presented in the accompanying financial
  statements are not necessarily indicative of the results
  that may be expected for the year ended June 30, 1998.
  
  NOTE 2--LOSS PER SHARE
  
       In the first quarter of 1998, the Company adopted
  Statement of Financial Accounting Standards (SFAS) No. 128,
  Earnings Per Share. Under SFAS 128, basic loss per share is
  computed by dividing net loss available to common and
  preferred stockholders by the weighted-average number of
  shares outstanding during the period. Any shares issued as
  part of a reorganization are considered outstanding since
  inception. Previously, the Company had computed loss per
  share based on the number of common and preferred shares
  outstanding. Prior periods have been restated to conform to
  the requirements of SFAS 128, with the only material
  adjustment being loss per share since inception. Loss per
  share since inception would have been $(0.22) under the
  prior method; under SFAS 128 loss per share since inception
  is $(0.24).
  
  NOTE 3--RELATED PARTY TRANSACTIONS
  
       During the year ended June 30, 1997, the Company
  advanced $11,073 to a corporation controlled by the
  Company's majority shareholder. This advance was paid off
  in August 1997. Subsequently, the Company has advanced this
  same corporation an additional $66,565. No terms for
  repayment have been established.
  
       For the nine months ending March 31, 1998, the
  controlling shareholder,  Neldon Johnson, contributed 
  $792,162 for research. The contribution was accounted for
  as additional paid-in capital with no additional preferred
  or common stock issued.
  
  NOTE 4--COMMON STOCK TRANSACTIONS
  
       On November 12, 1997, 35,000 shares of common stock
  were sold at $1.43 per share for  $50,000.
  
  NOTE  5--CONTINGENCIES
  
       On July 2, 1996, shareholders filed a class action
  lawsuit against the Company for securities violations. The
  class action has been commenced on behalf of  all persons
  and entities who purchased shares of common stock from May
  13, 1996 to June 27, 1996. The shareholders are seeking
  damages incurred based on the decrease in the Company's
  stock price because of alleged material misrepresentations
  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 U.S. Securities and Exchange
  Commission (SEC) served the Company a formal order of
  private investigation. 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 March 31,
  1998, Registrant had cash of $5,085 compared to cash of
  $7,758 as of June 30, 1997.  Inventory did not change from 
  June 30, 1997.  As of March 31, 1998, total current assets
  were $179,742 and total assets were $511,147 compared to
  total current assets of $141,736 and total assets of
  $486,987 as of June 30, 1997.
  
       As of March 31, 1998, Registrant had total liabilities
  of $80,736 and shareholders' equity of $430,411 compared to
  total liabilities of $47,233 and shareholders' equity of
  $439,754.    The deficit accumulated during the development
  stage was $3,544,264 as of March 31, 1998, 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 continuing operating losses.   The Company's 
  activities have significant risks involving the development
  of technology and the development of products that may be
  commercially acceptable and profitable.  As of March 31,
  1998, the ratio of current assets to current liabilities
  was approximately 2.33 to one. 
  
       Results of Operation.  For the quarter ended March 31,
  1998, Registrant had total revenues of $9,870 compared to
  total revenues of $3,513 for the same period a year
  earlier. For the quarter ended March 31, 1998, the
  Registrant had total operating expenses of $308,699
  compared to expenses of $265,688 during the same quarter a
  year earlier.  As of March 31, 1998, cost of sales was 
  $9,046 compared to $2,109 for the same period a year
  earlier. Gross profit was $824 compared to $1,404 for the
  same period  a year earlier.  For the current quarter the
  Registrant had a net loss of $ 307,855  compared to a net
  loss of $ 264,154  for the same quarter a year earlier. The
  increase in net loss is attributable to the increase in
  general and administrative expenses The Registrant has
  incurred more in legal fees because of its involvement with
  the below stated "Legal Proceedings". For the current
  quarter the net loss per share was $(0.02) compared to
  $(0.02) for the same period a year earlier. For the quarter
  ended March 31, 1998, general and administrative expenses
  were $131,122 compared to $75,095, and research and
  development expenses were $174,026 compared to $187,523 for
  the same period a year earlier. The Company's  level of
  operations requires additional funds, but it has only
  minimal revenues.
  
       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   OTHER INFORMATION
  
  Item I - 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
  indicated 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 condensed 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 Registrant. 
  Also, the Registrant is aware that the SEC issued subpoenas
  to take the testimony under oath and on the records of
  individuals including persons associated with the
  Registrant.  Routinely, the SEC 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

       On November 12, 1997, 35,000 shares of common
  restricted stock were sold to an outside source for $50,000
  which equates to a $1.43 per share.
  
  Item 3. Defaults upon Senior Securities.
       None.
  
  Item 4. Matters Submitted to a Vote of the Company's
  Shareholders.
       None.
  
  Item 5. Other Information

              The Company entered into a relationship with
  the Communications Satellite Planning Center  of Stanford
  University to conduct a study designed to verify the DWM
  technology. This study is being funded by an unrestricted
  grant from IAS to the Center under which the Center is free
  to conduct independent testing of the technology and to
  publish its conclusions in normal academic channels. The
  Company committed to pay seven $5,000 payments in the form
  of grants. The final payment was made on March 16, 1998.
  
  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  05-15-98   
  
  International Automated Systems, Inc.
  
  
  
  By   /S/ Neldon Johnson       
         President and Chief Executive Officer
  
  
  
  By   /S/ Neldon Johnson       
        Chief Financial Officer