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  December 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 December 31, 1997, 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
     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 December 31, 1997, and the results of its operations from
     June 30, 1997, through December 31, 1997, and changes in its
     financial position from inception through December 31, 1997,
     have been made. The results of its operations for such
     interim periods 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.
     
     
                INTERNATIONAL AUTOMATED SYSTEMS, INC.
                    (A Development Stage Company)
                       CONDENSED BALANCE SHEETS
                             (Unaudited)

                                           December 31, June 30,
                                               1997       1997
                                            ----------  ----------
                                ASSETS
     Current Assets
          Cash and cash equivalents         $   13,684  $    7,758
          Receivable from sales 
           representatives, net of 
           allowance for doubtful accounts 
           of $40,783                              -          -    
        Related party receivable                 8,600      11,073
          Prepaid expenses                         -        14,813
          Inventory                            108,092     108,092
                                            ----------  ----------
            Total Current Assets               130,376     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             (91,523)    (74,288)
                                            ----------  ----------
            Net Property and Equipment         107,327     123,751
                                            ----------  ----------
     Other Assets
          Patents, net of accumulated 
           amortization                        215,594     211,500
          Franchises                            10,000      10,000
                                            ----------  ----------
     Total Other Assets                        225,594     221,500
                                            ----------  ----------
     Total Assets                           $  463,297  $  486,987
                                            ==========  ==========
     
                LIABILITIES AND STOCKHOLDERS' EQUITY 
     
     Current Liabilities
          Accounts payable                  $   56,196  $   30,426
          Current portion of notes payable       4,045       4,045
          Accrued liabilities                    5,595       6,541
          Advance from majority 
           shareholder                             -           -   
                                            ----------  ----------
          Total Current Liabilities             65,836      41,012
                                            ----------  ----------
     Notes Payable                               4,236       6,221
                                            ----------  ----------
            Total Liabilities                   70,072      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                       3,336,848   2,839,727
          Deficit accumulated during the 
           development stage                (3,236,409) (2,692,759)
                                            ----------  ----------
            Total Stockholders' Equity         393,225     439,754
                                            ----------  ----------
     Total Liabilities and Stockholders' 
      Equity                                $  463,297  $  486,987
                                            ==========  ==========
     
        See the accompanying notes to the condensed financial
     statements.


  <TABLE>
                   INTERNATIONAL AUTOMATED SYSTEMS, INC.
                       (A Development Stage Company)
                     CONDENSED STATEMENTS OF OPERATIONS
                              (Unaudited)
  <CAPTION>                                                               
                                                                        For the Period
                           For the Three            For the Six         From Inception
                            Months Ended            Months Ended    (September 26, 1986)
                             December 31,            December 31,           Through
                         ----------------------  ----------------------  December 31,
                            1997        1996        1997        1996         1997         
                         ----------  ----------  ----------  ----------  -----------
<S>                     <C>         <C>         <C>         <C>         <C>
Revenue             
 Sales                   $    1,481  $   16,043  $    1,881  $   25,928  $   109,846
 Equipment lease income 
    from related party          -           -           -           -         20,000
                         ----------  ----------  ----------  ----------  -----------    
  Total Revenue               1,481      16,043       1,881      25,928      129,846 
                         ----------  ----------  ----------  ----------  -----------
Cost of Sales                   703       6,417       1,053      12,100      176,168
                         ----------  ----------  ----------  ----------  -----------
Gross Profit/(Loss)             778       9,626         828      13,828      (46,322)
                         ----------  ----------  ----------  ----------  -----------
Operating Expenses
  General and adminis-
  trative                   191,063     116,082     326,540     230,624    1,609,181
 Research and develop-
  ment expense               94,588     249,943     212,694     455,351    1,548,695
 Amortization expense         2,593       2,818       5,186       3,280       31,933
                         ----------  ----------  ----------  ----------  -----------
  Total Operating 
   Expenses                 288,244     368,843     544,420     689,255    3,189,809
                         ----------  ----------  ----------  ----------  -----------
Loss from Operations       (287,466)   (359,217)   (543,592)   (675,427)  (3,236,131)

Other Income and (Expense)
 Interest income                208       1,021         388       6,513       18,734
 Interest expense              (178)       (819)       (446)     (1,093)     (19,012)
                         ----------  ----------  ----------  ----------  -----------
  Net Other Income 
    (Expense)                    30         202         (58)      5,420         (278)  
                         ----------  ----------  ----------  ----------  -----------     
    Net Loss             $ (287,436) $ (359,015) $ (543,650) $ (670,007) $(3,236,409)
                         ==========  ==========  ==========  ==========  ===========
Net Loss Per Share       $    (0.02) $    (0.02) $    (0.03) $    (0.04) $     (0.20)
                         ==========  ==========  ==========  ==========  ===========    
Common shares used in Per 
 Share Calculation       16,290,361  16,186,100  16,290,361  16,186,100   16,290,361
                         ==========  ==========  ==========  ==========  ===========
<FN>
See the accompanying notes to the 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, 1986)
                                    For the Six Months Ended   Through 
                                          December 31,       December 31,
                                       1997         1996          1997         
                                    -----------  -----------  ------------
Cash Flows From Operating 
 Activities
   Net loss                         $  (543,650) $  (670,007) $ (3,236,409)
   Adjustments to reconcile 
    net income to net cash 
    provided by operating 
    activities:                   
    Allowance for doubtful 
       accounts                             -            -          40,783
    Amortization                          5,186        3,280        31,933
    Depreciation                         17,235       16,190        91,523
    Stock based compensation                -            -         331,747
   Change in assets and liabilities:      
    Inventory                               -         32,154      (108,092)
    Sales representatives 
       receivable                           -        (16,651)      (40,783)
    Prepaid expenses                     14,813        2,395           -   
    Accounts payable                     25,770      (10,868)       56,196
       Accrued liabilities                 (946)      (1,426)        5,595
                                    -----------  -----------   -----------
    Net Cash Used By Operating 
       Activities                      (481,592)    (644,933)   (2,827,507)
                                    -----------  -----------   -----------
Cash Flows From Investing 
 Activities                       
   Purchase of property and 
    equipment                              (811)     (21,599)     (179,493)
   Purchase of rights to technology      (9,280)     (25,830)     (245,647)
   Organization costs                       -            -          (1,880)
   Purchase of franchise rights             -            -         (10,000)
   Proceeds to related party              2,473          -          (8,600)
                                    -----------  -----------  ------------
    Net Cash Used By Investing 
       Activities                        (7,618)     (47,429)     (445,620)
                                    -----------  -----------  ------------
Cash Flows From Financing 
 Activities                       
   Proceeds from issuance of 
    common stock                         50,000          -         962,346
   Proceeds from advance from 
    controlling shareholder             447,121          -       2,317,274
   Payments for treasury stock              -            -          (3,325)
   Payments for stock offering 
    costs                                   -            -         (56,509)
   Proceeds from net borrowings 
    from related party                      -        209,128        78,101
   Payments on note payable              (1,985)      (1,843)      (11,076)
                                    -----------  -----------   -----------
    Net Cash Provided By 
       Financing Activities             495,136      207,285     3,286,811
                                    -----------  -----------   -----------
Net Increase (Decrease) In 
 Cash and Cash Equivalents                5,926     (485,077)       13,684
                                    -----------  -----------   -----------
Cash and Cash Equivalents at 
 Beginning of Period                      7,758      545,847           -   
                                    -----------  -----------   -----------
Cash and Cash Equivalents 
 at End of Period                   $    13,684  $    60,770   $    13,684
                                    ===========  ===========   ===========

     See the accompanying notes to the condensed financial statements.
                

                
                INTERNATIONAL AUTOMATED SYSTEMS, INC.
               NOTES TO CONDENSED FINANCIAL STATEMENTS 
                             (UNAUDITED)


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. Commitments to issue common stock have
     been included by using 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 $8,600, no  terms for repayment have
     been established.

     For the six months and quarter ending December 31, 1997 $447,121 and 
     $214,436 was advanced  by Neldon Johnson, the controlling shareholder, 
     for research as additional paid-in-capital. No additional preferred or
     common stock was issued.

NOTE 4--COMMON STOCK TRANSACTIONS

     On November 12, 1997, 35,000 shares of common stock were sold at $1.50
     per share for $50,000.

NOTE 5--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 December 31, 1997, Registrant
had cash of $13,684 compared to cash of $7,758 as of June 30, 1997.  Cash
increased because of paid in capital from a majority shareholder. Inventory
did not change from  June 30, 1997. As of December 31, 1997, total current 
assets were $130,376 and total assets were $463,297 compared to total current 
assets $141,736 and total assets $486,987 as of June 30, 1997.

     As of December 31, 1997, Registrant had total liabilities of $70,072 and
shareholders' equity of $393,225 compared to total current liabilities of
$47,233 and shareholders' equity of $439,754. The deficit accumulated during
the development stage was $3,236,409 as of December 31, 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 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 December 31, 1997, the ratio of current assets to
current liabilities was approximately 1.98 to one. 
     
     RESULTS OF OPERATION.  For the quarter ended December 31, 1997,
Registrant had total revenues of $1,481 compared to total revenues of $16,043
for the same period a year earlier. For the quarter ended December 31, 1997,
Registrant had total operating expenses of $288,244 compared to expenses of
$368,843 during the same quarter a year earlier.  The decrease in income
reflects a lack of sales and increased operating expenses.  As of December 31,
1997, cost of sales was  $703 compared to $6,417 a year earlier and gross
profit was $778 compared to $9,626 a year earlier.  For the quarter Registrant
had a net loss of $287,436 compared to a net loss of $ 359,015  for the same
quarter a year earlier. The decrease in net loss is attributable to the
decrease in general and administrative expenses and research and development
expenses due to downsizing to meet the Company's current financial position. 
For the quarter the net loss per share was $(0.02) compared to $(0.02) for the
same quarter a year earlier. For the quarter ended December 31, 1997, general
and administrative expenses were $191,063 compared to $116,082 and research
and development expenses were $94,588 compared to $249,943 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 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.

     On November 12, 1997, 35,000 shares of common restricted stock were sold
to an outside source for $50,000 which equates to a $1.50 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 the 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. Three of the seven payments will be paid in 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  11-7-97   

International Automated Systems, Inc.


By /S/ Neldon Johnson                   
President and Chief Executive Officer

By /S/ Neldon Johnson                   
Chief Financial Officer