<PAGE>

                        UNITED STATES
             SECURITIES AND EXCHANGE COMMISSION
                  Washington, D.C.   20549
                              
                              
                              
                     -------------------
                          FORM 10-Q
                     -------------------
                              
                              
                              
                              
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934
                              
                              
         For the Quarter Ended:   September 30, 1996
                Commission File No.  0-11400
                              
                              
             IMEX MEDICAL SYSTEMS, INCORPORATED
   (Exact name of registrant as specified in its charter)
                              

     DELAWARE                             84-0712044
----------------------------        -----------------------
(State or other jurisdiction        (IRS Employer ID Number)
 of incorporation or organization)

6355 Joyce Drive, Golden, Colorado            80403
----------------------------------         ---------
(Address of principal executive offices)   (Zip Code)

                       (303) 431-9400
                      ----------------
                      Telephone Number
                              
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 preceding  12
months  (or for 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
                 -------                      -------

Indicate  the number of shares outstanding of  each  of  the
issuer's  classes  of  common  stock,  as   of  the   latest
practicable date.

          Class                   Outstanding as of 10/14/96
-----------------------------     --------------------------
Common Stock, $.001 Par Value                6,894,357

<PAGE>

PART 1     FINANCIAL INFORMATION

ITEM 1.    Financial Statements

IMEX MEDICAL SYSTEMS, INCORPORATED

CONSOLIDATED BALANCE SHEETS
September 30, 1996 (unaudited) and June 30, 1996


<TABLE>
                                                   September 30, 1996   June 30, 1996
                                                   ------------------   -------------
                                                      (unaudited)
<S>                                                   <C>                 <C>
ASSETS

CURRENT ASSETS:
Cash & cash equivalents                                $   39,837         $   68,771
Trade accounts receivable -  net of
 allowance for doubtful accounts:
 September 30, 1996,  $57,167;
 June 30, 1996,   $40,000                               1,782,799           2,247,332
Inventories                                             3,414,894           3,222,841
Prepaid expenses                                          157,996             154,541
Deferred income tax assets                                168,000             168,000
                                                       ----------         -----------

Total current assets                                    5,563,526           5,861,485

PROPERTY AND EQUIPMENT - At cost:
Machinery and equipment                                 2,081,424           2,048,747
Furniture and fixtures                                    307,967             307,967
Leasehold improvements                                    105,616              88,859
                                                       ----------         -----------
Total                                                   2,495,007           2,445,573
Accumulated depreciation and amortization              (2,008,891)         (1,956,440)
                                                       ----------         -----------

Property and equipment - net                              486,116             489,133
                                                       ----------         -----------
PRODUCT TECHNOLOGY, net of
 amortization:  September 30, 1996,
 $652,168;  June 30, 1996,  $612,880                      115,088             153,220
                                                       ----------         -----------
NONCOMPETE AGREEMENT, net of
 amortization:  September 30, 1996,
 $512,417;  June 30, 1996,  $483,200                       90,427             120,800
                                                       ----------         -----------
OTHER ASSETS                                               22,250              27,637
                                                       ----------         -----------
TOTAL                                                  $6,277,407          $6,652,275
                                                       ----------         -----------
                                                       ----------         -----------

LIABILITIES AND STOCKHOLDERS' EQUITY               September 30, 1996   June 30, 1996
                                                   ------------------   -------------
                                                      (unaudited)
CURRENT LIABILITIES:
Accounts Payable                                       $  603,071          $  920,405
Line of Credit                                            625,000             250,000
Wages, bonuses and commissions                            256,953             337,078
Other accrued expenses                                     98,332             247,944
Sales returns and warranty reserve                        101,316             122,576
Guaranteed payments                                       348,044             343,400
Capital lease obligations                                  55,601              54,135
                                                       ----------         -----------

Total current liabilities                               2,088,317           2,275,538

GUARANTEED PAYMENTS                                       217,434             287,462
                                                       ----------         -----------

CAPITAL LEASE OBLIGATION                                   86,757             101,076
                                                       ----------         -----------

DEFERRED INCOME TAX LIABILITIES                            38,000              38,000
                                                       ----------         -----------

STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 3,000,000
 shares authorized;  no shares issued or
 outstanding

Common stock, $.001 par value, 10,000,000
 shares authorized; shares issued:
    September 30, 1996, 7,097,445; June 30, 1996,
    7,092,445; shares outstanding: September 30, 1996,
    6,892,208; June 30, 1996, 6,890,208                     7,098               7,092
Additional paid-in capital                              2,738,232           2,733,550
Retained earnings                                       1,440,664           1,543,965
                                                       ----------         -----------
Total                                                   4,185,994           4,284,607
Treasury stock, at cost: September 30, 1996,
 205,237 shares; June 30, 202,237 shares                 (339,095)           (334,408)
                                                       ----------         -----------

Total stockholders' equity                              3,846,899           3,950,199
                                                       ----------         -----------

TOTAL                                                  $6,277,407          $6,652,275
                                                       ----------         -----------
                                                       ----------         -----------
</TABLE>

See notes to unaudited consolidated financial statement

<PAGE>

IMEX MEDICAL SYSTEMS, INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
For the Three Months Ended September 30, 1996 and 1995



                                                Three Months Ended September 30

                                                    1996                1995
                                                    ----                ----

NET SALES                                        $2,144,395          $2,054,261

COST OF SALES                                     1,107,302           1,059,992
                                                 ----------          ----------

GROSS PROFIT                                      1,037,093             994,269

RESEARCH AND DEVELOPMENT                            188,656             191,239

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES        996,070             980,633
                                                 ----------          ----------

OPERATING LOSS                                     (147,633)           (177,603)
                                                 ----------          ----------

OTHER INCOME (EXPENSE):
 Interest Income                                      1,173               1,405
 Interest Expense                                   (19,841)            (17,090)
                                                 ----------          ----------

 Total other expense - net                          (18,668)            (15,685)
                                                 ----------          ----------

LOSS BEFORE INCOME
 TAX BENEFIT                                       (166,301)           (193,288)

INCOME TAX BENEFIT                                 (63,000)             (73,500)
                                                 ----------          ----------

NET LOSS                                          (103,301)            (119,788)
                                                 ----------          ----------

NET LOSS PER COMMON SHARE                        $   (0.01)           $   (0.02)
                                                 ----------          ----------

WEIGHTED AVERAGE NUMBER OF COMMON SHARES         6,891,541            6,863,039
                                                 ----------          ----------
                                                 ----------          ----------

See notes to unaudited consolidatd financial statements

<PAGE>

IMEX MEDICAL SYSTEMS, INCORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
For the Three Months Ended September 30, 1996 and 1995


<TABLE>
                                                             Three Months Ended September 30
                                                             -------------------------------
                                                                 1996               1995
                                                                 ----               ----
<S>                                                           <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss                                                      $ (103,301)        $ (119,788)
Adjustments to reconcile net loss
  to net cash provided by (used in) operating activities:
    Depreciation and amortization                                120,956            130,922
    Imputed interest                                               9,616             13,951
    Common shares issued for service                                   0              1,750
    Deferred income tax benefit                                        0             (7,000)
    Net changes in operating assets and liabilities:
      Accounts receivable                                        464,533            794,542
      Income tax receivable                                            0            (68,450)
      Inventories                                               (192,053)           (93,969)
      Prepaid expenses                                             1,932            (14,825)
      Accounts payable                                          (317,334)               125
      Wages, bonuses and commissions                             (80,125)           (49,855)
      Other accrued expenses                                    (149,612)            14,961
      Sales returns and warranty reserve                         (21,260)           (16,434)
                                                              ----------         ----------

Net cash provided by (used in) operating activities:            (266,648)           585,930
                                                              ----------         ----------
CASH FLOWS FROM INVESTING ACTIVITIES -
  Cash used in purchase of property and equipment                (49,434)           (27,706)
                                                              ----------         ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayments) borrowings under line of credit                     375,000           (425,000)
Payments for acquisition of product line                         (75,000)           (75,000)
Principal payments on capital lease obligations                  (12,853)           (11,734)
Proceeds from issuance of common stock                             4,688              2,056
Payments for purchase of treasury stock                           (4,687)            (2,056)
                                                              ----------         ----------
Net cash provided by (used in) financing activities              287,148           (511,734)
                                                              ----------         ----------
NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                           (28,934)            46,490

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                    68,771             71,511
                                                              ----------         ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                      $   39,837         $  118,001
                                                              ----------         ----------
                                                              ----------         ----------
</TABLE>


See notes to unaudited consolidated financial statements


<PAGE>

IMEX MEDICAL SYSTEMS, INCORPORATED

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE
THREE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND 1995.

1.   In   the   opinion  of  management,  the   accompanying
     unaudited consolidated financial statements contain all
     adjustments,   consisting  only  of  normal   recurring
     adjustments, necessary to present fairly the  Company's
     financial  position as of September 30,  1996  and  the
     results  of its operations and its cash flows  for  the
     three months ended September 30, 1996 and 1995.

2.   The  significant  accounting policies followed  by  the
     Company  are  set  forth in Note  1  to  the  Company's
     financial statements in the Company's Annual Report  on
     Form 10-K for the year ended June 30, 1996.

3.   Inventories  consist of the following as  of  September
     30, 1996 and June 30, 1996:

                                   September 30    June 30
                                   ------------   ----------
     Raw materials                 $1,526,487     $1,430,991
     Work-in-process                  335,050        427,100
     Finished goods                 1,148,626      1,065,320
     Demonstrator                     404,731        299,430
                                   ----------     ----------
     Total inventories             $3,414,894     $3,222,841
                                   ----------     ----------
                                   ----------     ----------

4.   The  Company  paid  $19,841 and  $17,074  for  interest
     during  the three months ended September 30,  1996  and
     1995, respectively.


<PAGE>

Item  2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
           RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

As an aid to understanding the Company's operating results, the following 
table indicates relationships of income and expense items to net sales for 
line items included in the Consolidated Statements of Income for the three 
months ended September 30, 1996 and 1995, and the percentage changes in those 
items for the three months ended September 30, 1996 from the comparable 
periods in 1995.

<TABLE>
                                                           Percentage Change From
                              As a Percentage of Total     Prior Year's Comparable
                                      Revenues                     Periods
                              ------------------------     -----------------------
                                    Three Months                 Three Months
                                Ended September 30,           Ended September 30,
                              ------------------------     -----------------------
<S>                             <C>            <C>                  <C>
Income and Expense Items         1996           1995                 1996  
------------------------         ----           ----                 ----  
Net Sales                       100.0 %        100.0 %                4.4 %
                                                                           
Cost of Sales                    51.6           51.6                  4.5 %
                                -----          -----                 ----  
                                                                           
Gross Profit                     48.4           48.4                  4.3 %
                                                                           
Research and Development          8.8            9.3                 (1.4)%
                                                                           
Selling, General and                                                       
Administrative Expenses          46.4           47.7                  1.6 %
                                -----          -----                 ----  
                                                                           
Operating Loss                   (6.8)          (8.6)                16.9 %
                                                                           
Other Income (Expense)            (.9)           (.8)               (19.0)%
                                -----          -----                 ----  
                                                                           
Loss Before                                                                
Income Tax Benefit               (7.7)          (9.4)                13.7 %
                                                                           
Income Tax Benefit               (2.9)          (3.6)                14.3 %
                                -----          -----                 ----  
                                                                           
Net Loss                         (4.8)%         (5.8)%               13.8 %
                                -----          -----                 ----  
                                -----          -----                 ----  
</TABLE>

<PAGE>

Any  forward  looking statements contained in this  document
reflect  management's current intentions  and  expectations.
Actual  future results could vary materially depending  upon
certain  risks and uncertainties, including such factors  as
the  development  of  new  products,  market  acceptance  of
existing  and future products, the timing of product  sales,
changes in the governmental regulatory climate, health  care
reform,   risks  associated  with  foreign  sales  including
currency  fluctuations  and  economic  instability  and  the
results of the Company's cost containment revenues.

RESULTS OF OPERATIONS:

Net  loss  decreased from  $119,788 for  the  first  quarter
ended  September 30, 1995 to  $103,301 for the  same  period
ended September 30, 1996.

This  decrease in net loss from the first quarter of  FY1996
to  the  first quarter of FY1997, is a direct result of  net
sales   increasing  4.4%.   Cost  of  goods  sold  increased
approximately the same rate as sales, or 4.5%.   Sales  were
lower  in the diagnostic systems area (DSG) due to the usual
summer   slowdowns   in  customer  purchasing   of   capital
equipment.  Sales were higher in the small products area due
to   increased  cross  distribution  by  DSG  sales  people.
Overall,  the sales mix and modest increase from  the  first
quarter   of   FY1996   are   in  line   with   management's
expectations.

The  Company's primary customer base continues to shift,  as
the nation's delivery of health care continues to evolve  by
its  own  efforts.   This  gradual shift  from  the  private
physician to large groups and hospital settings, has  caused
the  Company  to  re-evaluate its  distribution,  and  shift
resources  to  areas  where it can be  most  effective.   We
anticipate  improved  sales as a result  of  this  shift  in
resources.  The Company will continue to capitalize  on  its
strong   distribution  system  in  these   evolving   market
segments.

The  Company's outlook remains positive, especially  in  the
hospital  and managed care markets.  Our equipment  is  cost
effective,  and  we  enjoy strong market  share  and  market
presence.  Domestic sales in the small doppler products  are
strong,  and  higher  than  the  first  quarter  of  FY1996.
Domestic sales of diagnostic systems are off slightly,  from
the  first  quarter of FY1996.  International sales  are  up
significantly when compared to the first quarter of FY1996.

Research  and  development expenses have decreased  slightly
due to minor decreases in outside engineering expenses.  The
Company  foresees significant potential for new products  in
its  market niche, and has several projects underway to take
advantage  of  its  unique  position   Sales,  General   and
Administrative  expenses have increased  slightly  from  the

<PAGE>

prior  years'  first quarter.  Management anticipates  these
expenses  to continue to be flat if not decline slightly  in
future periods.

LIQUIDITY AND CAPITAL RESOURCES

The   Company's  overall  financial  condition  is   strong.
Inventories  have increased $192,053, primarily  due  to  an
increase   in  raw  materials.   Accounts  receivable   have
decreased  $464,533 in  the first quarter of FY1997    as  a
direct   result  of  increased  collection  efforts.    Cash
decreased $28,934 during the first quarter of FY1997 and was
used  along with additional borrowings on the line of credit
of $375,000 to meet current obligations of accounts payable,
and   year-end  sales  commissions,  payable  in  the  first
quarter.  Accounts payable have decreased $317,334;   wages,
bonuses  and  commissions  are down  by  $80,125  and  other
accrued expenses are down by $149,612.  Capital expenditures
have been modest, totaling $49,434.

Stockholders'  equity for the three months  ended  September
30, 1996 decreased, primarily as a result of the net loss of
$103,301.

Working  capital has decreased $110,738 from June  30,  1996
($3,585,947)  to  September  30,  1996  ($3,475,209).    The
current  ratio, however, has increased from 2.58 to  1.0  at
June  30,  1996,  to  2.66 to 1.00 at  September  30,  1996.
Management  anticipates that cash on hand will  be  utilized
in  the  second  quarter, with borrowings mostly  repaid  by
December  31, 1996.  The line of credit, which  will  expire
on  October 31, 1996, is in the process of being renewed  at
rates    and   covenants   similar   to   the   past   year.

<PAGE>

PART II.  OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS

          None

Item 2.   CHANGES IN SECURITIES

          None

Item 3.   DEFAULTS UPON SENIOR SECURITIES

          None

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None

Item 5.   OTHER INFORMATION

          On  August  2, 1996 David Mabe resigned as  Senior
          Vice-President.

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K.

          (a)  Exhibits: None

          (b)   Registrant was not required to file any
                reports on Form 8-K during the quarter ended
                September 30, 1996.

<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.


                         IMEX MEDICAL SYSTEMS, INCORPORATED

                              Registrant


                              Dennis R. Newman
                              ------------------------------
October 23, 1996              Dennis R. Newman, Chairman  of
                              the Board
                              (Principal Executive Officer)



                              Ernest S. Malachowski
                              ------------------------------
October 23, 1996              Ernest S. Malachowski
                              President
                              (Principal Financial and
                              Chief Accounting Officer)