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, 2000

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.)

                           326 North SR 198
                          Salem, Utah  84653
               (Address of principal executive offices)

Registrant's telephone number including area code (801) 423-8132

        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, 2000 Registrant had 16,251,361 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


                 INTERNATIONAL AUTOMATED SYSTEMS, INC.
                    (A DEVELOPMENT STAGE COMPANY)
                       CONDENSED BALANCE SHEETS




                                ASSETS
                                               September 30,        June 30,
                                                        2000            2000
                                                  ----------     -----------
                                                  (Unaudited)

CURRENT ASSETS
     Cash and cash equivalents                    $    3,724     $     8,915
     Net investment in direct financing leases -
        related party - current portion               23,814          27,118
                                                  ----------     -----------

      TOTAL CURRENT ASSETS                            27,538          36,033
                                                  ----------     -----------
PROPERTY AND EQUIPMENT
     Computer and electronic equipment               148,864         148,864
     Furniture and fixtures                           20,982          20,982
     Automobiles                                      21,657          21,657
     Mobile office                                    11,764          11,764
     Leasehold improvements                           18,238          18,238
                                                  ----------     -----------
      TOTAL PROPERTY AND EQUIPMENT                   221,505         221,505
     Accumulated depreciation                       (181,918)       (176,621)
                                                  ----------     -----------

      NET PROPERTY AND EQUIPMENT                      39,587          44,884
                                                  ----------     -----------

OTHER ASSETS
     Related party receivable                        957,241         819,050
     Net investment in direct financing
       leases - related party                         60,291          62,845
     Patents, net of accumulated
       amortization of $58,989                       288,583         291,230
     Prepaid Legal Fees                              844,371               -
     Deposits                                          6,000           6,000
                                                  ----------     ------------
      TOTAL OTHER ASSETS                           2,156,486        1,179,125
                                                  ----------     ------------

TOTAL ASSETS                                      $ 2,223,611    $  1,260,042
                                                  ===========    ============

See the accompanying notes to the condensed financial statements.

<PAGE>                             2


                INTERNATIONAL AUTOMATED SYSTEMS, INC.
                    (A DEVELOPMENT STAGE COMPANY)
                 CONDENSED BALANCE SHEETS (CONTINUED)

                                               September 30,        June 30,
                                                        2000            2000
                                                  ----------     -----------
                                                  (Unaudited)

                 LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                             $   56,446     $   120,987
     Current portion of long term debt                 3,023           4,424
     Accrued payroll expenses                         90,612          82,877
     Obligation under capital leases -
       current portion                                23,814          27,118
                                                  ----------     -----------

      TOTAL CURRENT LIABILITIES                      173,895         235,406
                                                  ----------     -----------
LONG TERM LIABILITIES
     Obligation under capital leases - long term      60,291          62,845
                                                  ----------     -----------

TOTAL LIABILITIES                                    234,186         298,251
                                                  ----------     -----------

STOCKHOLDERS' EQUITY
     Preferred stock, Class A, no par value,
       4,400,000 shares authorized, 3,300,000
       and 1,000,000 shares issued and
       outstanding, respectively                     294,786         292,786
     Preferred stock, Class B, no par value,
      600,000 shares authorized, 600,000
      shares issued and outstanding,
      respectively                                         -               -
     Common stock, no par value, 45,000,000
       shares authorized, 16,251,361 and
       15,596,361shares issued
       and outstanding , respectively              8,069,365       6,367,725
     Deficit accumulated during the
       development stage                          (6,374,726)     (5,698,720)
                                                  ----------     -----------

          TOTAL STOCKHOLDERS' EQUITY               1,989,425         961,791
                                                  ----------     -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $2,223,611     $1,260,042
                                                  ==========     ==========

See the accompanying notes to the condensed financial statements.

<PAGE>                             3

                          INTERNATIONAL AUTOMATED SYSTEMS, INC.
                              (A DEVELOPMENT STAGE COMPANY)
                            CONDENSED STATEMENTS OF OPERATIONS
                                       (UNAUDITED)
                                                                 For the Period
                                                                 (September 26,
                                          For the Three Months            1986)
                                           Ended September 30,          Through
                                      --------------------------- September 30,
                                               2000           1999         2000
                                      ------------   ------------  ------------

      REVENUE
        Sales                          $         -    $         -   $   111,226
        Income from related party                -              -        32,348
                                       -----------    -----------   -----------

           TOTAL REVENUE                         -              -       143,574
                                       -----------    -----------   -----------

      COST OF SALES
          Cost of sales                          -          5,740        81,927
          Write down of carrying
            value of inventories of
            $108,093 during 1998 and
            1997                                 -              -       216,186
                                       -----------    -----------   -----------

      TOTAL COST OF SALES                        -          5,740       298,113
                                       -----------    -----------   -----------


      GROSS PROFIT (LOSS)                        -         (5,740)    (154,539)
                                       -----------    -----------   ----------
      OPERATING EXPENSES

          General and administrative       614,881         51,635     3,280,426
          Research and development
            expense                         58,211        124,291     2,707,533
          Amortization expense               2,647          1,184        60,869
          Stockholder class action
            settlement expense                   -              -       170,634
                                       -----------    -----------   -----------

           TOTAL OPERATING  EXPENSES       675,739        177,110     6,219,462
                                       -----------    -----------   -----------

      OTHER INCOME AND (EXPENSE)
          Other income                           -              -            -
          Interest income                        -             46       22,227
          Interest expense                    (267)          (323)     (22,952)
                                       -----------    -----------   ----------

           NET OTHER INCOME (EXPENSE)         (267)          (277)        (725)
                                       -----------    -----------  -----------
      NET LOSS                         $  (676,006)   $  (183,127) $(6,374,726)

      BASIC AND DILUTED LOSS PER SHARE $     (0.04)   $     (0.01) $     (0.43)
                                       ===========    ===========   ===========

      COMMON AND PREFERRED SHARES USED
        IN PER SHARE CALCULATION        18,729,658     16,546,361    14,955,651
                                       ===========    ===========   ===========
See the accompanying notes to the condensed financial statements.

<PAGE>                             4

                          INTERNATIONAL AUTOMATED SYSTEMS, INC.
                              (A DEVELOPMENT STAGE COMPANY)
                            CONDENSED STATEMENTS OF CASH FLOWS
                                       (UNAUDITED)

                                                                 For the Period
                                                                 (September 26,
                                          For the Three Months            1986)
                                           Ended September 30,         Through
                                      --------------------------- September 30,
                                               2000          1999         2000
                                      ------------   ------------  ------------



CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                             $  (676,006)   $  (183,127) $(6,374,726)
  Adjustments to reconcile net income
    to net cash provided by operating
    activities:
      Amortization                           2,647          1,184       60,869
      Depreciation                           5,297          8,221      181,918
      Stock based compensation             575,750              -      914,247
    Change in assets and liabilities:
      Prepaid expenses                           -           (400)           -
      Accounts payable                      (8,912)         7,575      112,075
      Accrued liabilities                     7,735        41,908       90,612
                                       ------------   -----------   ----------
      NET CASH USED BY OPERATING
        ACTIVITIES                          (93,489)     (124,639)  (5,015,005)
                                       ------------   -----------   ----------

      CASH FLOWS FROM INVESTING ACTIVITIES
        Purchase of property and
          equipment                               -        (3,114)    (196,384)
         Purchase of rights to
           technology                             -           400     (347,572)
         Organization costs                       -             -       (1,880)
         Net cash loaned to related party  (138,191)     (115,497)  (1,010,495)
         Proceeds from capital lease
           receivable                             -         3,082       44,220
         Repayment of cash loaned to related
           party                                  -             -       53,254
                                       ------------   -----------   ----------

          NET CASH USED BY INVESTING
            ACTIVITIES                     (138,191)     (115,129)  (1,458,857)

      CASH FLOWS FROM FINANCING ACTIVITIES
         Proceeds from issuance of
           common stock                           -             -    1,362,346
         Cash from controlling shareholder  227,890       261,400    5,169,291
         Payments for treasury stock              -             -       (3,325)
         Payments for stock offering costs        -             -      (56,509)
         Increase (decrease) in bank
           overdraft                              -        (7,084)           -
         Proceeds from net borrowings
           from related party                     -             -       78,101
         Payments on note payable and
           obligations under capital
           lease                             (1,401)       (5,537)     (72,318)
                                       ------------   -----------   ----------

          NET CASH PROVIDED BY
            FINANCING ACTIVITIES            226,489       248,779    6,477,586
                                       ------------   -----------   ----------



NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                       (5,191)        9,011        3,724

CASH AND CASH EQUIVALENTS AT BEGINNING
  OF PERIOD                                   8,915             -            -
                                       ------------   ------------  -----------

CASH AND CASH EQUIVALENTS AT END OF
  PERIOD                               $      3,724   $      9,011  $     3,724
                                       ============   ============  ===========

SUPPLEMENTAL CASH FLOW INFORMATION

  Cash Paid for Interest               $        267   $        232  $    22,952

  Value of common stock issued
  for current and future legal fees    $    900,000   $          -  $         -


See the accompanying notes to the condensed financial statements.

<PAGE>                             5


                   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 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, 2000. The financial position
      and results of operations of the interim periods
      presented are not necessarily indicative of the results
      to be expected for the year ended June 30, 2001.

      NOTE 2--RELATED PARTY TRANSACTIONS

             For the three months ending September 30, 2000
      and 1999, the controlling shareholder, Neldon Johnson,
      contributed $227,890 and $205,000 for research as
      additional paid-in capital, respectively. No additional
      preferred or common stock was issued.

              As of June 30, 2000, the Company loaned U-Check,
      Inc. (U-Check), a corporation solely owned by Mr.
      Johnson, $819,000.  For the three months ended September
      30, 2000, the Company has advanced this same corporation
      an additional $138,191, resulting in a balance due of
      $957,241. These receivables consist of construction and
      labor costs paid for by the Company on behalf of
      U-Check.  No terms for repayment have been established.



      NOTE 3--CONTINGENCIES

             On September 23, 1998, the Company was notified
      by the U.S. Securities and Exchange Commission (SEC) of
      formal action against the Company, its president, and
      members of his family for possible securities
      violations. The action stems from alleged material
      misrepresentations by the company regarding new
      technology developed by the Company. The SEC is seeking
      disgorgement of the proceeds from the sale of stock by
      the company and its principles that occurred between
      June 1995 and June 1996. This figure is believed to be
      in excess of $3,000,000. The SEC is also seeking the
      imposition of fines and attorney's fees. The ultimate
      outcome of the action cannot presently be determined.
      Accordingly, no provision for any liability that may
      result has been made in the accompanying financial
      statements, and the possible effect that action will
      have on future financial statements is unknown.

<PAGE>                             6

      NOTE 4--BUSINESS CONDITION

             The accompanying financial statements have been
      prepared on a going concern basis, which contemplates
      the realization of assets and the satisfaction of
      liabilities in the normal course of business. During the
      three month periods ended September 30, 2000 and 1999,
      the Company incurred net losses of $676,006 and
      $183,127, respectively. As of September 30, 2000, the
      Company's losses accumulated from inception totaled
      $6,374,726. These factors, among others, indicate that
      the Company may be unable to continue as a going concern
      for a reasonable period of time. The financial
      statements do not include any adjustments relating to
      the recoverability and classification of recorded asset
      amounts or the amount and classification of liabilities
      that might be necessary should the Company be unable to
      continue as a going concern. The Company's ability to
      continue as a going concern is dependent upon its
      ability to generate sufficient cash flow to meet its
      obligations on a timely basis, to obtain additional
      financing as may be required, and ultimately to attain
      successful operations. Management is in the process of
      negotiating various sales agreements and is hopeful
      these sales will generate sufficient cash flow for the
      Company to continue as a going concern.


      NOTE 5 -EQUITY


              SERIES A  PREFERRED STOCK- In July 2000, the
      Company issued to certain Employees /Directors 2,000,000
      shares of preferred stock in leu of a $2,000 bonus.  The
      preferred shares have equal dividend rights to the
      common shares, are not convertible into common shares,
      have no dividend requirements, and have no liquidation
      preferences to the common shares. Each preferred share
      is entitled to the voting rights of ten common shares.

             In August 2000, the Company entered into
      employment agreements with certain employees. In
      connection with these agreements, the Company issued
      300,000 shares of preferred stock. The preferred shares
      have equal dividend rights to the common shares, are not
      convertible into common shares, have no dividend
      requirements, and have no liquidation preferences to the
      common shares. Each preferred share is entitled to the
      voting rights of ten common shares.  Due to the shares
      having only voting rights, the shares are deemed to have
      been issued with no value.;

             SERIES B PREFERRED STOCK-  In connection with the
      employment agreements, the Company issued 300,000 shares
      of convertible preferred stock.  Each preferred share
      has equal dividend rights to the common shares,  has no
      dividend requirements, has no liquidation preferences to
      the common shares, and is entitled to the voting rights
      of ten common shares. Each share of the convertible
      preferred stock is exchangeable into two options to
      purchase common stock at $3.00 per share, exercisable
      immediately and the options expire ten years from the
      date the preferred stock is exchanged.  The Company is
      accounting for these shares as though they were an
      issuance of a stock option. See below for the Company's
      accounting policy for the issuance of stock options.

             COMMON STOCK - In August 2000, the Company issued
      400,000 shares of common stock to an attorney for prior
      fees of $55,629 and $844,371 as a retainer against
      future services.  The Common shares had a fair value of
      $900,000 or $2.25 per share on the date of issuance.

             In August 2000, the Company entered into
      employment agreements with certain employees.  In
      connection with these agreements, the Company issued;
      250,000 shares of common stock valued at $562,500 or
      $2.25 per share.

<PAGE>                             7

             In August 2000, the Company issued 5,000 shares
      of common stock for services rendered valued at $11,250
      or $2.25 per share.

             OPTIONS - In August 2000, as part of employment
      agreements, the Company issued options to purchase
      1,000,000 shares of common stock.  These options are
      exercisable at $3.00 per share, vest 100,000 shares per
      year over a ten year period and expire ten years from
      the date of issuance.  The exercise price of $3.00 per
      share was greater than the market value of the shares on
      the date of issuance.  Accordingly, no compensation
      expense will be recognized for the options.

             The Company accounts for its stock issued to
      directors, officers and employees under Accounting
      Principles Board Opinion No. 25 and related
      interpretations ("APB 25"). Under APB 25, compensation
      expense is recognized if an option's exercise price on
      the measurement date is below the fair value of the
      Company's common stock. The Company accounts for options
      and warrants issued to non-employees in accordance with
      SFAS No. 123, Accounting for Stock-Based Compensation"
      (SFAS 123) which requires these options and warrants to
      be accounted for at their fair value.  There will be no
      compensation expense recognized for the options under
      APB 25.

<PAGE>                             8

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

Liquidity and Capital Resources. As of September 30, 2000,
Registrant had cash of $3,724 compared to cash of $8,915 as of June
30, 2000. Cash decreased because of continued financial obligations
by the Company. As of September, 2000, total current assets were
$27,538 and total assets were $2,223,611 compared to total current
assets $36,033 and total assets $1,260,042 as of June 30, 2000.

As of September 30, 2000, Registrant had total liabilities of
$234,186 and shareholders' equity of $1,989,425 as compared to total
liabilities of $298,251 and shareholders' equity of $961,791 as of
June 30, 2000. The deficit accumulated during the development stage
was $6,374,726 as of September 30, 2000, compared to $5,698,720 as
of June 30, 2000. 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. 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,
2000, the ratio of current assets to current liabilities was
approximately .16 to one.

Results of Operations. For the quarter ended September 30, 2000
registrant had total revenues of $0 compared to total revenues to $0
for the same period a year earlier. For the quarter ended September
30, 2000, registrant had total operating expenses of $675,739
compared to expenses of $177,110 during the same quarter of a year
earlier. As of September 30, 2000, cost of sales was $0 as compared
to cost of sales of $5,740 during the same quarter a year earlier.
For the quarter registrant had a net loss of $676,006 compared to a
net loss of $183,127 for the same quarter a year earlier. The
increase in net loss is attributable to the increase in general and
administrative expenses. For the quarter, the net loss per share was
$(0.04) compared to $(0.01) for the same quarter a year earlier. For
the quarter ended September 30, 2000, general and administrative
expenses were $614,881 compared to $51,635 and research and
development expenses were $58,211 compared to $124,291 a year
earlier.


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 88.


Part II
Item 1. Legal Proceedings

On September 23, 1998, the Company was notified by the U.S.
Securities and Exchange Commission (SEC) of formal action against
the Company, its president and members of his family for possible
securities violations. The action stems from alleged material
misrepresentations by the Company regarding new technology developed
by the Company.  The SEC is seeking disgorgement of the proceeds
from the sale of stock by the Company and its principles that
occurred between June 1995 and June 1996.  This figure is believed
to be in excess of $3,000,000.  The SEC is also seeking the
imposition of fines and attorney's fees. Though the Company and the
principles named in the complaint deny any wrong doing and intend on
vigorously defending the lawsuit, the ultimate outcome of the
action cannot presently be determined. Accordingly, no provision for
any liability that may result has been made in the accompanying
financial statements, and the possible effect the action will have
on future financial statements is unknown.

The Company has filed a civil action complaint in the United States
District Court for the District of Utah Central Division against
Optimal Robotics Corp. and PSC, Inc. alleging patent infringement
arising under the patent laws of the United States, and more
specifically, under Title 35,U.S.C. Sections 271, 281, 283, 284 and
285. Discovery is presently in progress.

The Company has filed a civil action complaint in the United States
District Court for the district of Utah Central division against The
Kroger Company alleging patent infringement arising under the patent
infringement arising under the patent laws of the United States, and
more specifically, under Title 35, U.S.C., section 271, 281, 283,
284, and 285.

Item 2. Changes in Securities

Common Stock- In August 2000, the Company issued 400,000 shares of
common stock to an attorney for prior fees and as a retainer against
future services.

In August 2000, the Company entered into employment agreements with
certain key employees.  In connection with these agreements, the Company
issued 250,000 shares.

In August 2000, the Company issued 5,000 shares of common stock for
services rendered.

Preferred Stock- In July 2000, the Company issued to key Employees/
Directors 2,000,000 shares of preferred stock in leu of a bonus. The
preferred shares have equal dividend rights to the common shares,
are not convertible into common shares, have no dividend
requirements, and have no  liquidation preferences to the common
shares. Each preferred share is entitled
 to the voting rights of ten common shares.

In August 2000, the Company issued 300,000 shares of preferred
stock, which has no value, as part of an employee agreement with
certain employees. The preferred shares have equal dividend rights
to the common shares, are not convertible into common shares, have
no dividend requirements, and have no liquidation preferences to the
common shares. Each preferred share is
 entitled to the voting rights of ten common shares.

In August 2000, the Company issued 300,000 shares of convertible
preferred shares to certain key employees as part of an employee
agreement. Each preferred share has equal dividend rights to the
common shares, have no  dividend requirements, and have no
liquidation preferences to the common shares, and is entitled to the
voting rights of ten common shares. Each share  can be converted to
two options to purchase common stock at $3.00 per share.

Options - In August 2000, the Company issued options to purchase
1,000,000 shares of restricted common stock over a ten year period
at $3.00 per share  as part of employment agreements. This report
contains forward looking statements regarding the Company's plans,
objectives, expectations and intentions.  All forward looking
statements are subject to risks and uncertainties that could cause
the Company's actual results and experience to differ materially
from such projections.  Such risks include delays in product
development, the development of marketing and distribution channels,
and market acceptance of its products. Other risks may be beyond the
control of the Company.

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:  November 13, 2000

                                     International Automated
Systems, Inc.

                                     By: \s\ Neldon Johnson
                                     ----------------------------


                                     Neldon Johnson
                                     President and Chief Executive
                                       Officer