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, 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 March 31, 1997, Registrant had 15,186,100 shares of common stock, no par 
value per share, issued and outstanding after deducting shares held in the 
corporate treasury. 




<PAGE>
PART I
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, 1997, and the results of its operations from June 
30, 1996, through March 31, 1997, and from January 1, 1997, through March 31, 
1997, and changes in its financial position from inception through March 31, 
1997, 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.  

     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.

<PAGE>                 INTERNATIONAL AUTOMATED SYSTEMS, INC.
                       (A Development Stage Company)
                         CONDENSED BALANCE SHEETS
                                (Unaudited)             
            

                              March 31,        June 30,
                                   1997         1996

                                  ASSETS

Current Assets
Cash and cash equivalents      $  7,150       $545,847
Receivable from sales
 representatives, net of 
 allowance for doubtful 
 accounts of $1,590              43,575         30,279
Prepaid expenses                  8,675          7,259
Inventory                       216,816        231,914

Total Current Assets            275,586        815,299

Property and Equipment
Computer and electronic
 equipment                      133,487        121,263
Furniture and fixtures           20,982         18,880
Automobiles                      21,657         21,657
Leasehold improvements           18,238         10,965

Total Property and Equipment    194,364        172,765
     Accumulated depreciation   (65,773)       (41,189)

Net Property and Equipment       128,591       131,576

Patents, net of accumulated
 amortization                    194,375       152,283

Total Assets                  $  598,552    $1,099,158


                   LIABILITIES AND STOCKHOLDERS  EQUITY
Current Liabilities
Accounts payable                 $13,278      $ 42,081
Current portion of long-term
 debt                             3,735          3,735
Accrued liabilities               7,874          1,936
Advance from majority
 shareholder                     459,204       647,758

Total Current Liabilities        484,091       695,510  
  
Notes Payable                      7,494        10,278

Total Liabilities                491,585       705,788

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,
15,186,100 shares issued and 
outstanding                    1,886,317     1,238,559
Deficit accumulated during the
development stage             (2,072,136)   (1,137,975) 
  
Total Stockholders Equity        106,967      393,370

Total Liabilities and
Stockholders  Equity            $598,552   $ 1,099,158


The accompanying notes are an integral part of these
financial statements.<PAGE>
                  INTERNATIONAL AUTOMATED SYSTEMS, INC.
                         (A Development Stage Company)
                     CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                        
                                                For the
                                                Period  
                                                From    
                                              Inception 
                                             (September 
                                              26, 1986)
      For the Three Months For the Nine Months Through  
      Ended March 31,      Ended March 31,    March 31,              
1997        1996     1997   1996    1997    
   
Revenue             
Sales        $ 3,513  $44,700  $29,441 $64,221 $118,363
 Equipment
 lease income 
 from related
 party         -        1,500      -     4,500  20,000

Total Revenue  3,514   46,200   29,441  68,721 138,363  
   

Cost of Sales  2,109   24,987   14,209  38,420  65,506

Gross Profit   1,404   21,213   15,232  30,301  72,857

Operating
 Expenses
General and
administr-
ative         75,095   51,692  305,719   94,705 897,730
Research and
development 
expense      187,523  161,197 642,874 298,467 1,223,644
Amortization
expense        3,070    1,074   6,350   2,358    23,255

Total
Operating 
Expenses    265,688 213,963  954,943 395,530 2,144,629

Other Income
and (Expense)
Interest
 income        371    7,444    6,884     7,444  17,983
Interest 
expense      (241)     (310)  (1,334)    (981) (18,347)

Net Other
Income 
(Expense)     130     7,134    5,550     6,463    (364)

Net
Loss   $ (264,154) $(185,616)$(934,161)$(358,766)        
                                           $(2,072,136)

Net Loss
Per Share  $(0.02) $  (0.02) $ (0.06) $(0.04)  $ (0.13)

Common
shares 
used in
Per Share
Calcul-
ation   16,186,100 9,158,089 16,186,100 9,056,729       
                                             16,186,100



The accompanying notes are an integral part of these
financial statements.<PAGE>
                 INTERNATIONAL AUTOMATED SYSTEMS, INC.
                    (A Development Stage Company)
                   CONDENSED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                                        
                                                For the
                                            Period From 
                                             Inception  
                                           (September   
                                               26,1986) 
          For the Nine Months Ended             Through 
                       March 31,            March 31, 
                       1997    1996            1997     
  
Cash Flows From 
Operating Activities
Net loss            $(934,161)  $(358,766) $(2,072,136)
Adjustments to
reconcile net income
to net cash provided 
by operating
activities:     
 Allowance for
 doubtful accounts        -            -         1,590
 Amortization            6,350      2,358       23,255
 Depreciation           24,584     13,190       65,773
 Stock based
 compensation             -          -         132,274
 Change in assets
 and liabilities:  
 Inventory               15,728   (189,650)   (216,186)
 Sales representatives
 receivable             (13,296)   (22,013)    (45,165)
 Prepaid expenses        (1,416)    (7,259)     (8,675)
 Accounts payable       (28,803)    (4,982)     13,278
 Accrued liabilities      5,938     21,862       7,874     
   
 Net Cash Used By 
 Operating Activities   (925,076) (545,260) (2,098,118)
   
Cash Flows From
Investing Activities      
 Purchase of property
 and equipment         (21,599)    (45,069)   (175,007)
 Increase in patents   (48,442)    (65,042)   (215,750)
 Organization costs       -          -          (1,880)
   
  Net Cash Used By
  Investing Activities (70,041)   (110,111)   (392,637)
   
Cash Flows From 
Financing Activities      
 Proceeds from issuance
 of common stock          -        706,000     912,346
 Proceeds for common
 stock as part of 
 reorganization           -           -      1,116,216
 Payments for treasury 
 stock                    -           -         (3,325)
 Payments for stock
 offering costs           -           -        (56,509)
 Proceeds from 
 borrowings from 
 related party         459,204     178,028    537,305
 Payments on note
 payable                (2,784)     (2,564)    (8,128)
   
  Net Cash Provided
   By Financing
   Activities           456,420     881,464  2,497,905
   
Net Increase 
(Decrease) In Cash and
Cash Equivalents       (538,697)    (3,116)    60,770
   
Cash and Cash
Equivalents at
Beginning of Period     545,847       10,049       -   
   
Cash and Cash
Cash Equivalents 
at End of Period       $  7,150    $ 236,142 $  7,150


The accompanying notes are an integral part of these
financial statements.<PAGE>            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, 1996.

NOTE 2--LOSS PER SHARE

The Company has computed loss per share based on the
number of common and preferred shares outstanding.
Commitments to issue common stock have been included by
using the treasury stock method.

NOTE 3--RELATED PARTY TRANSACTIONS

$647,758 advanced by Neldon Johnson, the controlling
shareholder, in June 1996 was a prepayment to be used
by the Company for future research and development to
be performed for Mr. Johnson. The research has been
performed as of December 31, 1996. The settlement of
the advance was accounted for as a conversion of the
advance to stockholders  equity as additional paid-in
capital. Repayment terms for the $459,204 advanced to
the Company by Mr. Johnson  as of March 31, 1997
have not been determined.

NOTE  4--CONTINGENCY

On July 2, 1996, the Company had a class action law
suit filed against them 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. This action is
in its preliminary stages. 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.
<PAGE>ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

     Liquidity and Capital Resources.  As of March 31, 1997, Registrant had 
cash of $7,150 compared to cash of $545,847 as of June 30, 1996.  Cash 
decreased because of the continuing losses from research and development and 
other activities.  Inventory decreased from $231,914 as of June 30, 1996, to 
$216,186 as of March 31, 1997. As of March 31, 1997, total current assets were 
$275,586 and total assets were $598,552 compared to total current assets 
$815,299 and total assets $1,099,158 as of June 30, 1996.

     As of March 31, 1997, Registrant had total liabilities of $491,585 and 
shareholders' equity of $106,967 compared to total current liabilities of 
$705,788 and shareholders' equity of $393,370.  The decrease in liabilities is 
attributable to a decrease in the advance from the majority shareholder in the 
amount of $188,554.  The deficit accumulated during the development stage was 
$2,072,136 as of March 31, 1997, compared to $(1,137,975) as of June 30, 
1996.  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 March 31, 1997, the ratio of current assets to current 
liabilities was approximately .57 to one. 

     
     Results of Operation.  For the quarter ended March 31, 1997, Registrant 
had total revenues of $3,513 compared to total revenues of $44,700 for the 
same period a year earlier. For the quarter ended March 31, 1997, Registrant 
had total operating expenses of $265,688 compared to expenses of $213,963 
during the same quarter a year earlier.  The decrease in income reflects a 
lack of sales.  As of March 31, 1997, cost of sales was  $2,109 compared to 
$24,987 a year earlier and gross profit was $1,404 compared to $21,213 a year 
earlier.  For the quarter Registrant had a net loss of $(264,154) compared to 
a net loss of $(185,616) for the same quarter a year earlier. The increase in 
net loss is attributable to the increase in general and administrative 
expenses and research and development expenses.  For the quarter the net loss 
per share was $(0.02) compared to $(0.02).  For the quarter ended March 31, 
1997, general and administrative expenses were $75,095 compared to $51,692 and 
research and development expenses were $187,523 compared to $161,197 a year 
earlier.  The Company has only minimal revenues, but its level of operations 
requires additional funds.

     For the nine period ended March 31, 1997, Registrant had total revenues 
$29,441 compared total revenues of $64,221 for the same period a year 
earlier.  Revenues decreased because of lack of sales.  For the period cost of 
sales was $14,209 compared to $38,420 and gross profit was $15,232 compared to 
$30,301.  Total operating expenses for nine month period ended March 31, 1997, 
were $954,943 compared to $395,530.  General and administrative expenses were 
$305,719 compared to $94,705 and research and development expenses were 
$642,874 compared to $298,467.  The Company incurred substantial research and 
development costs in its efforts to develop its technology and products.  For 
the nine month period ended March 31, 1997, the net loss was $ (934,161) 
compared to $(358,766) for the same period a year earlier.  The loss for the 
ninth month period was primarily attributable to the Company's increased 
research and development expenses.  Net loss per share was $(0.06) compared to 
$(0.04).  

     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.
<PAGE>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 Registrant.  Also, 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 
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.
     During the quarter the Company entered into an agreement titled by the 
parties as General Affiliation Agreement Letter with Utah Valley State College 
("UVSC") in Orem, Utah.

     Under the agreement the parties will share information and explore the 
feasibility of future joint cooperative agreements.  The Company's technology 
involved will be the Automatic Fingerprint Identification Machine, the Digital 
Wave Modulation ("DWM") and Identification Information Depository ("IID").  
The strategy is to implement telecommunications both software and hardware.  
The ultimate goal is to develop or enhance  telecommunications software and 
hardware and the Internet for interactive distance learning curricula.  The 
agreement provides that on a project by project basis the parties will enter 
into separate addenda to the agreement addressing such matters and 
considerations as costs and royalties.  Other provisions of the agreement 
pertain to confidentiality, distribution rights and defining the respective 
roles of the parties.

     The parties have entered into Addendum A to the agreement which provides 
for collaboration on testing, proving, and demonstrating the Company's 
technology.  Specifically the Company's technology will be tested in the K-12 
Wireless and Native American Community College Internet Connection Grant 
Projects.  Also, UVSC and an affiliated non-profit educational foundation, 
known as New Vista International Foundation, have agreed to test applications 
of IAS technology including beta site testing in the educational setting.  IAS 
has agreed to pay royalties when certain events happen. The royalties will be 
either 5%, 10% or 25% depending on the revenue source to IAS. A copy of the 
agreement with Addendum A is an exhibit to this report.  This summary of the 
agreement is subject to the agreement itself and if there is any variance the 
entire agreement takes precedence.

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.

<PAGE>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   5-14-97   

International Automated Systems, Inc.


By   Neldon Johnson   
President and Chief Executive Officer

By   Neldon Johnson  
Chief Financial Officer