UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C.  20549
 
                               FORM 10-Q

(Mark One)

/X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES    
     EXCHANGE ACT OF 1934 

               For the quarterly period ended March 31, 1999

                                    or

/  /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES   
      EXCHANGE ACT OF 1934
                  For the transition period from ____ to ____

           Commission File Number:           0-26832

                            Lumisys Incorporated
            (Exact name of registrant as specified in its charter)

        Delaware                                            77-0133232
(State of incorporation)              (I.R.S. Employer Identification No.)

225 Humboldt Court, Sunnyvale, CA                                  94089
(Address of principal executive offices)                        (Zip Code)

                             (408) 733-6565
             (Registrant's telephone number, including area code)

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.

As of May 7, 1999, 9,509,894 shares of the registrant's Common Stock, $.001 
par value, were outstanding.










                             Lumisys Incorporated
                                     Index

                                                                        Page
Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements:

         Condensed Consolidated Balance Sheets at March 31, 1999
          and December 31, 1998                                            3
		
         Condensed Consolidated Statements of Income for the Three
          Months Ended March 31, 1999 and 1998                             4

         Condensed Consolidated Statements of Cash Flow for the Three
          Months Ended March 31, 1999 and 1998                             5

         Notes to Condensed Consolidated Financial Statements              6

Item 2.  Management's Discussion and Analysis of
          Financial Condition and Results of Operations                    8

Item 3.  Quantitative and Qualitative Disclosures About Market Risk       16

Part II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K                                 16

SIGNATURES                                                                17


































Part I  - FINANCIAL INFORMATION

Item 1. Financial Statements
                             Lumisys Incorporated
                   Condensed Consolidated Balance Sheets
                                 (Unaudited)
                               (In thousands)
                                                       March 31,  December 31,
                                                          1999       1998
                                                       --------- ----------
	
                                      ASSETS
Current assets:
  Cash and cash equivalents                            $ 13,598    $ 10,651
  Short-term investments                                  3,001       7,007
  Accounts receivable, net of allowances 
   of $682 and $717                                       4,718       4,206
  Inventories                                             4,599       4,046
  Deferred tax assets                                     1,453       1,453
  Other current assets                                      561         571
                                                       --------  ----------
    Total current assets                                 27,930      27,934
Property and equipment, net                                 817         753
Purchased software, net                                   1,793       1,919
                                                       --------  ----------
                                                       $ 30,540    $ 30,606
                                                       ========  ==========

                       LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                       $  1,842    $  1,601
Accrued expenses                                          2,307       2,791
Merger and related costs                                    881         900
                                                       --------  ----------
Total current liabilities                                 5,030       5,292
                                                       --------  ----------

Note payable to related party                               151         146

Commitments and contingencies

Stockholders' equity:
 Preferred stock, $0.001 par value; 5,000 shares 
  authorized; no shares issued and outstanding              ---         ---
 Common stock, $0.001 par value; 25,000 shares 
  authorized; 9,581 and 9,957 shares issued 
  and outstanding, respectively                              10          10
 Additional paid-in capital                              28,822      28,887
 Accumulated deficit                                     (3,473)     (3,725)
 Deferred compensation                                      ---          (4)
                                                       --------  ----------
    Total stockholders' equity                           25,359      25,168
                                                       --------  ----------
                                                       $ 30,540    $ 30,606
                                                       ========  ==========


  The accompanying notes are an integral part of these financial statements.





                          Lumisys Incorporated
              Condensed Consolidated Statements of Operations
                               (Unaudited)
                (n thousands, except per share amounts)


                                            Three Months Ended
                                         -------------------------
                                          March 31,      March 31,
                                            1999           1998
                                         -----------   -----------

Sales                                      $ 6,730       $ 6,472
Cost of sales                                3,521         2,884
                                           -------       -------
  Gross profit                               3,209         3,588
                                           -------       -------
Operating expenses:
  Sales and marketing                        1,060           914
  Research and development                     917         1,600
  General and administrative                   964           950
                                           -------       -------
    Total operating expenses                 2,941         3,464
                                           -------       -------
Income from operations                         268           124
Interest income                                143           261
                                           -------       -------
Income before income taxes                     411           385
Provision for income taxes                     159           148
                                           -------       -------
Net income                                 $   252       $   237
                                           =======       =======

Net income per share
  Basic                                    $  0.03       $  0.02
                                           =======       =======
  Diluted                                  $  0.03       $  0.02
                                           =======       =======

Weighted average shares used to
 compute net income per share:
  Basic         		                           9,593        10,223
                                           =======       =======
  Diluted                                    9,683        10,402
                                           =======       =======

 The accompanying notes are an integral part of these financial statements.

















                           Lumisys Incorporated
              Condensed Consolidated Statements of Cash Flow
                                (Unaudited)
                                (In thousands)

                                                     Three Months Ended
                                                  -------------------------
                                                   March 31,      March 31,
                                                      1999           1998
                                                  -----------   -----------

Cash flow from operating activities:
 Net income                                          $  252        $   237
 Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:
   Depreciation and amortization                        240             75
   Other                                                  5              5
   Changes in assets and liabilities:
   Accounts receivable                                 (512)         1,115
   Inventories                                         (553)          (394)
   Other assets                                          10            (17)
   Accounts payable                                     241            (16)
   Accrued expenses                                    (484)          (530)
   Merger and related costs                             (19)          (463)
                                                     ------          -----
Net cash provided by (used in) operating activities    (820)            12
                                                     ------          -----
Cash flows from investing activities:
 Sales (purchases) of short-term investments, net     4,006            (20)
 Purchases of property and equipment                   (174)          (164)
                                                     ------          -----
Net cash provided by (used in) investing activities   3,832           (184)
                                                     ------          -----
Cash flows from financing activities:	
	Proceeds from sale of common stock                  3             43
	Purchase of treasury stock                        (68)        (1,456)
                                                     ------          -----
Net cash used in financing activities                   (65)        (1,413)
                                                     ------          -----
Net increase (decrease) in cash and cash equivalents  2,947         (1,585)
Cash and cash equivalents at beginning of period     10,651          7,522
                                                     ------          -----
Cash and cash equivalents at end of period          $13,598        $ 5,937
                                                    =======        =======

  The accompanying notes are an integral part of these financial statements.

















                               Lumisys Incorporated
               Notes to Condensed Consolidated Financial Statements

Note 1 - Basis of Presentation

The condensed consolidated financial statements of Lumisys Incorporated (the 
"Company") presented herein have been prepared pursuant to the rules of the 
Securities and Exchange Commission for quarterly reports on Form 10-Q and do 
not include all of the information and note disclosures required by generally 
accepted accounting principles.  These statements should be read in 
conjunction with the consolidated financial statements and notes thereto for 
the year ended December 31, 1998, included in the Company's Annual Report on 
Form 10-K as filed with the Securities and Exchange Commission.  

The condensed consolidated balance sheet as of March 31, 1999, and the 
condensed consolidated statements of income and of cash flow for the three 
months ended March 31, 1999 and 1998 are unaudited but, in the opinion of 
management, include all adjustments (consisting of normal, recurring 
adjustments) necessary for a fair presentation of the results for these 
interim periods.

The results of operations for the three months ended March 31, 1999, are not 
necessarily indicative of the results to be expected for the entire fiscal 
year ending December 31, 1999 or any future period.

Note 2 - Net Income Per Share

Basic earnings per share is computed by dividing income available to common 
stockholders by the weighted-average common shares outstanding for the period.  
Diluted earnings per share reflects the weighted-average common shares 
outstanding plus the potential effect of dilutive securities which are 
convertible to common shares such as options, warrants, convertible debt and 
preferred stock.  

The following is a reconciliation between the components of the basic and 
diluted net income per share calculations for the periods presented below (in 
thousands):

                                                  Three Months Ended March 31,
                                                       1999          1998
                                                      ------        ------

      Net income                                     $  252         $  237
                                                     ======         ======

      Weighted average shares outstanding - basic     9,593         10,223
      Effect of dilutive securities:
       Potential common stock
       Stock options and warrants                        90            179
                                                     ------         ------
      Weighted average shares outstanding - diluted   9,683         10,402
                                                     ======         ======

For the period ending March 31 1999 and 1998, respectively, 1,667,087 and 
550,308 shares of potential common stock are considered anti-dilutive and are 
excluded from the calculation of dilutive net income per share.

Note 3 - Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive 
earnings such as unrealized gains or losses on available-for-sale short-term 
investments.  The Company's unrealized gains and losses on available-for-sale 
short-term investments have been insignificant for all periods presented.


Note 4 - Composition of Certain Financial Statement Amounts
                                                       March 31,  December 31,
                                                          1999        1998
                                                       ---------   ----------
                                                           (In thousands)
             Inventories:
                   Raw materials                        $ 4,360     $ 3,649
                   Work-in-process                          783       1,031
                   Finished goods                           584         457
                                                        -------     -------
                                                          5,727       5,137
                     Less:  inventory reserves           (1,128)     (1,091)
                                                        -------     -------
                                                        $ 4,599     $ 4,046
                                                        =======     =======
             Accrued expenses:
                   Payroll and related benefits         $   713     $ 1,066
                   Warranty                                 410         468
                   Professional fees                        100         129
                   Unearned revenue                         459         599
                   Income taxes                             561         354
                   Other                                     64         175
                                                        -------     -------
                                                        $ 2,307     $ 2,791
                                                        =======     =======

Note 5- Segment Information

The Company organizes its business into two reportable segments: the Lumisys 
Sunnyvale/Tucson ("Sunnyvale") division and the Imagraph division 
("Imagraph").  Sunnyvale manufactures and markets an integrated suite of 
hardware and software products for digitizing medical images. Imagraph 
manufactures and markets a full line of precision frame-grabber boards and a 
software package for machine vision and scientific applications.

The segments' accounting policies are the same as those described in the 
summary of significant accounting policies included in the notes to the 
financial statements for the year ended December 31, 1998, included in the 
Company's Annual Report on Form 10-K as filed with the Securities and Exchange 
Commission. The Company evaluates performance based on net income or loss 
before income taxes. Wholesale prices are used to report intersegment sales.  
Sunnyvale's total assets include the initial investment in Imagraph and 
amounts receivable from Imagraph, which are eliminated in consolidation.

The Company's reportable business segments are strategic business units that 
offer different products. Each segment is managed separately because they 
require different technologies and market to distinct classes of customers.

                                                        Elimination
                                 Sunnyvale  Imagraph  of intercompany   Total
Three months ended March 31, 1998:
  Sales                             $ 5,162  $ 1,310      $   ---     $ 6,472
  Income (loss) before taxes        $   544  $  (159)	    $   ---     $   385
  Total assets at December 31, 1998 $30,716  $ 5,001      $(5,111)    $30,606

Three months ended March 31, 1999:
  Sales                             $ 5,901  $   842       $  (13)    $ 6,730
  Income (loss) before taxes        $ 1,121  $  (710)      $  ---     $   411
  Total assets at March 31, 1999    $31,718  $ 4,992      $(6,170)    $30,540


Item 2.  Management's Discussion and Analysis of Financial Condition and 
Results of Operations

Except for the historical information contained herein, the following 
discussion contains forward-looking statements within the meaning of section 
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange 
Act of 1934. As such, they are subject to a number of uncertainties that could 
cause actual results to differ materially from the statements.  The words 
"expect," "believe," "anticipate," "intend" and words of similar import are 
intended to identify these statements as forward-looking statements. Factors 
that could cause or contribute to such differences include, but are not 
limited to, those discussed in this section, as well as those discussed in the 
Company's 1998 Annual Report on Form 10-K and other documents filed by the 
Company with the Securities and Exchange Commission. The Company does not 
undertake any obligation to update forward-looking statements.

Overview

Lumisys Incorporated ("Lumisys" or the "Company") designs, manufactures and 
markets computed radiography ("CR") systems that scan medical or industrial 
images from a reusable phosphor plate and a family of precision digitizers 
that convert medical images on film or video into digital format.  Once in 
digital form, the medical images can be stored, transmitted, viewed, enhanced, 
manipulated and printed within a medical imaging network.  The Company 
currently offers a comprehensive family of products for digitizing medical 
images under the Lumiscan label and video images under the Imascan label.  
These CR and film digitizers process images from all commercially available 
medical imaging modalities, including x-ray, computed tomography ("CT"), 
magnetic resonance imaging ("MRI"), ultrasound and nuclear medicine.  The 
Company is the leading supplier of laser-based film digitizers, with sales of 
approximately 5,000 Lumiscan units since its first product was introduced in 
1990.  The Company also offers high quality board-level digitization and 
compression products for the capture of video images, which have applications 
in medical imaging as well as in scientific, industrial inspection and 
multimedia imaging.  

In December 1998, the Company introduced a CR system for use in the medical 
market, the ACR-2000 DeskTopCR.  The medical CR system utilizes many of the 
design features of the CR system the Company developed for use in the 
industrial inspection market in 1996.  The CR system reads medical or 
industrial images from reusable phosphor plates, replacing the need for film 
and film processing.  The Company's CR system is a low cost, small system and 
is particularly suited for low volume environments.  Since its introduction 
in December 1998, the Company has sold over 100 ACR-2000 DeskTopCR systems.

Lumisys intends to maintain and enhance its market leadership by leveraging 
its reputation for high quality, reliable and cost-effective products, 
broadening its product lines through internal product development, acquiring 
complementary businesses or technologies and penetrating new geographic 
markets.  The Company sells its products primarily to original equipment 
manufacturers ("OEMs") and value added resellers ("VARs"), who then integrate 
the Company's products into teleradiology and Picture Archiving and 
Communication Systems ("PACS") and mini-PACS networks.  Lumisys has 
established close working relationships with leading suppliers of these 
systems including Access Radiology, Agfa, GE, Kodak and Philips.

In November 1997, Lumisys merged with CompuRAD, a leading provider of software 
that enables healthcare clinicians to access medical images and clinical 
information at any point of care.  CompuRAD pioneered the use of personal 
computer software in the point-to-point, on call teleradiology market, with 
the introduction of its PC Teleradiology product.

As part of a restructuring of the software group, the Company no longer sells 
through a direct sales force. The Company currently sells its software 
products exclusively to its existing OEM and VAR customers. In 1998, the 
Company began bundling digitizer software with its family of laser and CCD 
film digitizers and CR software with its new ACR-2000 product

Results of Operations

Total sales for the first quarter of 1999 increased 4.0% to $6.7 million from 
$6.5 million for the first quarter of 1998.  The increase was due to the first 
full quarter of sales of the ACR-2000 which was introduced in December 1998.  
Sales of the Company's digitizer products in the U.S. continued to decline, 
while international sales were consistent with the same quarter in the prior 
year. Sales by the Company's Imagraph division decreased by 36.1% from the 
prior year due to consolidation of distributors and changes in technology 
needs.

Gross profit for the first quarter of 1999 decreased 10.6% to $3.2 million 
from $3.6 million for the corresponding period of 1998.  Gross margin 
decreased to 47.7% in the first quarter of 1998 from 55.4% in the first 
quarter of 1998, primarily due to the transfer of the manufacturing 
engineering function from research and development to manufacturing overhead 
in late 1998, upon the completion of the ACR-2000.  In addition, material 
costs increased due to the current product mix.  If sales volume of the ACR-
2000 increases and as the sheet metal versions of the digitizer are phased 
out, the Company believes margins should improve.

Sales and marketing expenses increased 16.0% in the first quarter of 1999 to 
$1.1 million from $914,000 in the first quarter of 1998.  The increase was 
primarily due to the introduction of the ACR-2000 and the expansion of the 
international sales force.  The Company expects its sales and marketing 
expenses to increase to further develop and support the CR distribution 
channel. As a percentage of sales, these expenses increased to 15.8% in the 
first quarter of 1999 from 14.1% in the first quarter of 1998.

Research and development expenses decreased 42.7% in the first quarter of 1999 
to $917,000 from $1.6 million in the same quarter of 1998, primarily due to 
restructuring following the acquisition of CompuRAD. In addition, the ACR-2000 
project was completed in 1998 and transferred to manufacturing. As a 
percentage of sales, research and development expenses also decreased to 13.6% 
in the first quarter of 1999 from 24.7% in the same quarter of 1998. The 
Company expects its research and development expenditures to decrease as a 
percent of revenue since the initial CR and video film digitizer developments 
are near completion and follow on development efforts will be less 
comprehensive than the initial development projects.  The development of a new 
product will require additional research and development resources and 
therefore the research and development expenses will increase if and when the 
next new product is identified.

General and administrative expenses increased slightly by 1.5% in the first 
quarter of 1999 to $964,000 from $950,000 in the first quarter of 1998.  
Economies achieved by the restructuring following the acquisition of CompuRAD 
were offset by amortization expense related to the purchased software. As a 
percentage of sales, general and administrative expenses remained almost 
constant at 14.3% in the first quarter of 1999 compared to 14.7% in the first 
quarter of 1998.

The Company recognized a provision for income taxes in the first quarter of 
1999 of $159,000 compared with a provision of $148,000 in the corresponding 
period of 1998.  The Company has provided a partial valuation allowance 
against the balance of the deferred tax assets remaining as of March 31, 1999.  
The Company expects to continue to be subject to an effective tax rate of 
approximately 39% for the remainder of 1999.  

Liquidity and Capital Resources

At March 31, 1999, the Company's working capital was $22.9 million.  The 
Company had cash, cash equivalents and short-term investments of approximately 
$16.6 million at March 31, 1999, compared with $17.7 million at December 31, 
1998.  The decrease is primarily due to $820,000 used in operating activities 
in the first quarter 1999, and to a lesser extent, $174,000 of expenditures 
for capital property and equipment, primarily related to the upgrades to the 
manufacturing facility for production of the ACR-2000.  In addition, the 
Company repurchased 20,000 shares of the Company's common stock for a total of 
$68,000 under it's stock repurchase plan.

The Company believes that its existing cash, cash equivalents, short-term 
investments and funds to be generated by operations will satisfy the Company's 
cash flow requirements through at least 1999.  Thereafter, if cash generated 
from operations is insufficient to satisfy the Company's projected 
requirements, the Company may be required to sell additional equity or debt 
securities or obtain bank or other credit facilities.  There can be no 
assurance that the Company will be able to sell such securities or obtain such 
credit facilities on acceptable terms in the future, if at all.  The sale of 
additional equity or debt securities could result in additional dilution to 
the Company's stockholders.

Impact of the Year 2000

The rapid approach of Year 2000 presents significant issues for many computer 
systems, since much of the software in use today may not accurately process 
data beyond 1999.  The Company has recently implemented new information 
systems and accordingly does not anticipate any internal Year 2000 issue from 
its own information systems, databases or programs.  However, the Company 
could be adversely impacted by Year 2000 issues faced by major distributors, 
suppliers, customers, vendors and financial service organizations with which 
the Company interacts.  The Company is currently taking steps to address the 
impact, if any, of the Year 2000 issue on the operations of the Company.  
There can be no assurances that such a review will detect all potential 
failures of the Company's and/or third-party's computer systems.  A 
significant failure of the Company's or a third-party's computer system could 
have a material adverse effect on the Company's business, financial condition 
and results of operations.  

Certain software products currently installed at customer sites will require 
upgrade or other remediation to become Year 2000 compliant.  The Company 
believes that it is not legally responsible for costs incurred by its 
customers to achieve their Year 2000 compliance.  However, the Company is 
taking steps to identify affected customers, raise customer awareness related 
to noncompliance of the Company's older products, and assist the customer base 
to assess their risks.  The Company may see increasing customer satisfaction 
costs related to these actions over the next few years.  The potential impact 
on the Company's business, financial condition and results of operations is 
not known at this time.

Risk Factors

Significant Fluctuations in Operating Results.  There can be no assurance that 
the Company will be profitable on a quarterly or annual basis in the future.  
The Company has experienced quarterly fluctuations in operating results caused 
by various factors, including the timing of orders by major customers, 
customer inventory levels, mergers and acquisitions by the Company's 
customers, shifts in product mix, the incurrence of acquisition-related costs 
by the Company and general conditions in the healthcare industry which have 
reduced capital equipment budgets and delayed or reduced the adoption of 
teleradiology, Picture Archiving and Communications Systems ("PACS") and mini-
PACS.  The Company expects that these fluctuations will continue.  

The Company typically does not obtain long-term volume purchase contracts from 
its customers, and a substantial portion of the Company's backlog is scheduled 
for delivery within 90 days or less.  Customers may cancel orders and change 
volume levels or delivery times without penalty.  Quarterly sales and 
operating results therefore depend on the volume and timing of the backlog as 
well as bookings received during the quarter.  A significant portion of the 
Company's operating expenses are fixed, and planned expenditures are based 
primarily on sales forecasts and product development programs.  If sales do 
not meet the Company's expectations in any given period, the materially 
adverse impact on operating results may be magnified by the Company's 
inability to adjust operating expenses sufficiently or quickly enough to 
compensate for such a shortfall.  Furthermore, the Company's gross margins may 
decrease in the future due to increasing sales of lower margin products and 
volume discounts.  Results of operations in any period should not be 
considered indicative of the results to be expected for any future period.  
Fluctuations in operating results may also result in fluctuations in the price 
of the Company's Common Stock.  

New Product Development in Hardware and Software Products; Uncertainty of 
Market Acceptance. The Company's success is dependent on market acceptance of 
its new and existing products.  There can be no assurance that sales of new 
products will achieve significant market acceptance in the future.  The market 
for PACS and teleradiology software is uncertain.  Current and future 
competitors are likely to introduce competing hardware and software, making it 
difficult to predict the rate at which the market will grow, if at all, or the 
rate at which new or increased competition will result in market saturation. 
If the market for such software and hardware fails to grow or grows more 
slowly than anticipated, the Company's business, financial condition and 
results of operations would be materially adversely affected.  The Company 
expects that the sales cycle for PACS and teleradiology software and new 
computed radiography ("CR") hardware through the OEM and System Integrator 
sales channels will be longer than that for its other existing hardware 
products.  Accordingly, the Company's quarterly revenues and operating results 
may be subject to greater fluctuation as the Company begins to market and sell 
PACS and teleradiology software and CR hardware through these new channels.  
Additionally, the Company has limited experience in marketing, installing and 
supporting its software and CR hardware through these sales channels, and 
there can be no assurance that the Company can obtain the necessary resources 
to market, install and support its PACS and teleradiology software and CR 
hardware in an efficient, cost-effective and competitive manner.  The failure 
of PACS and teleradiology software to achieve market acceptance for any reason 
could have a material adverse effect on the Company's business, financial 
condition and results of operations.

Significant Risks Associated with Acquisitions. The integration of any 
acquisitions will require special attention from management, which may 
temporarily distract its attention from the day-to-day business of the 
Company.  Any acquisitions will also require integration of the companies' 
product offerings and coordination of research and development and sales and 
marketing activities.  Furthermore, as a result of acquisitions, the Company 
may enter markets in which it has no or little direct prior experience.  There 
can also be no assurance that the Company will be able to retain key technical 
personnel of an acquired company or recruit new management personnel for the 
acquired businesses, or that the Company will, or may in the future, realize 
any benefits as a result of such acquisitions.  Acquisitions by the Company 
may result in potentially dilutive issuances of equity securities, the 
incurrence of debt, one-time acquisition charges and amortization expenses 
related to goodwill and intangible assets, each of which could be significant 
and could materially adversely affect the Company's financial condition and 
results of operations.  In addition, the Company believes that it may be 
required to expand and enhance its financial and management controls, 
reporting systems and procedures as it integrates acquisitions.  There can be 
no assurance that the Company will be able to do so effectively, and failure 
to do so when necessary would have a material adverse effect upon the 
Company's business and results of operations.  

New Product Development; Rapid Technological Change; Risk in Delays of Product 
Development. The market for the Company's products is characterized by rapid 
technological advances, changes in customer requirements and frequent new 
product introductions and enhancements.  The Company's future success will 
depend upon its ability to enhance its current products, to develop and 
introduce new products that keep pace with technological developments and to 
respond to evolving customer requirements.  Any failure by the Company to 
anticipate or respond adequately to technological developments by its 
competitors or to changes in customer requirements, or any significant delays 
in product development or introduction, could result in a loss of 
competitiveness or revenues.  In the past, the Company has experienced delays 
in the development and introduction of new products and product enhancements, 
and there can be no assurance that the Company will not experience such delays 
in the future.  In addition, new product introductions or enhancements by the 
Company's competitors or the use of other technologies that do not depend on 
film digitization, computed radiography or video frame grabbers could cause a 
decline in sales or loss of market acceptance of the Company's products.  In 
particular, several companies have announced developments leveraging the 
technology used in flat panel displays to produce high-resolution, two 
dimensional image sensor arrays that make it possible for x-ray images to be 
captured digitally without film or chemical processing.  While this emerging 
technology, known as digital radiography ("DR"), is expensive, there can be no 
assurance that future advances in this technology or other technologies will 
not produce systems better positioned for the marketplace that will therefore 
reduce the digitizer  and CR market to the then installed base of imaging 
systems.  There can be no assurance that the Company will be successful in 
developing and marketing new products or product enhancements on a timely or 
cost-effective basis, and such failure could have a material adverse effect on 
the Company's business and results of operations.  

Risks Associated With Software Products.  Software and systems as complex as 
those offered by the Company frequently contain undetected errors or failures 
when first introduced or when new versions are released.  The Company has in 
the past discovered bugs and system errors in certain of its software 
enhancements, both before and after initial shipment.  There can be no 
assurance that, despite testing by the Company, errors will not occur in the 
Company's products resulting in loss of, or delay in, the Company's business, 
financial condition and results of operations.  Peripherals and hardware from 
third party manufacturers also may contain defects and incompatibilities which 
could adversely affect market acceptance of the Company's software products.  

Long Sales Cycles. The OEM and System Integrator sales cycle for the Company's 
products is lengthy.  The sales cycle of the Company's products is subject to 
delays associated with changes or the anticipation of changes in the 
regulatory environment affecting healthcare enterprises, changes in the 
customer's strategic system initiatives, competing information systems 
projects within the customer organization such as, but not limited to, the 
year 2000 compliance issues, consolidation in the healthcare industry in 
general, the highly sophisticated nature of the Company's software and 
competition in the PACS and teleradiology markets in general.  The time 
required from initial contact to purchase order typically ranges from one to 
six months, and the time from purchase order to delivery and recognition of 
revenue typically ranges from one to six months.  During the sales process, 
the Company expends substantial time, effort and funds preparing a contract 
proposal, demonstrating the software and negotiating the purchase order.  For 
these and other reasons, the Company cannot predict when or if the sales 
process with a prospective customer will result in a purchase order.

Competition. Competition in the CR market is well established and includes 
Fuji, Agfa and Kodak.  Furthermore, other healthcare and non-healthcare 
equipment companies not presently offering competing products may enter the CR 
market.  Increased competition could result in price reduction, reduced gross 
margins and loss of market share, any of which could materially adversely 
effect the Company's business, financial condition and results of operations.  
In addition, many of the Company's competitors and potential competitors have 
significantly greater financial, technical, product development, marketing and 
other resources and market recognition than the Company in the CR area.  Many 
of the Company's competitors also currently have, or may develop or acquire, 
substantial installed customer bases in the healthcare industry.  As a result 
of these factors, the Company's competitors may be able to respond more 
quickly to new or emerging technologies and changes in customer requirements 
or to devote greater resources to the development, promotion and sale of their 
products than the Company.  There can be no assurances that the Company will 
be able to compete successfully against current and future competitors or that 
competitive pressures faced by the Company will not have a materially adverse 
effect on its business, financial condition or results of operations.  

Competition in the United States laser-based film digitizer market has not 
been significant.  In 1996, CLS entered the market with a product similar to 
the laser-based film digitizers offered by Lumisys and in 1998, General 
Scanning introduced a laser-based film digitizer. To date, the Company is 
unaware of any sales made by CLS or General Scanning. In addition, several 
Japanese competitors such as Konica, Nishimoto Sangyo and Abe Sekkei offer 
competitive products on an international basis and may decide in the future to 
devote additional resources to marketing competitive products in the United 
States.  The markets for medical film digitizers incorporating CCD's are 
highly competitive.  Lumisys faces competition from companies such as Vidar 
Systems Inc., Canon Inc., Hell Linotype and Howtek in the CCD-based film 
digitizer market.  There can be no assurance that Lumisys' competitors will 
not develop enhancements to, or future generations of, competitive products 
that will offer superior price or performance features that render Lumisys' 
products less competitive or obsolete. 

In addition, large companies, such as Kodak, Sterling, Fuji, GE, Siemens, 
Philips and Agfa, have the technical and financial ability to design and 
market CR and digitizer products competitive with Lumisys' products, and some 
of them have in the past produced and marketed such products.  While many of 
these companies currently purchase products from Lumisys, Lumisys believes 
that it will be required to continue to improve the price and performance 
characteristics of its products to retain their business especially in view of 
the fact that these customers are not contractually required to purchase their 
CR and digitizers exclusively or at all from Lumisys.  All of these companies 
have significantly greater financial, marketing and manufacturing resources 
than Lumisys and would be significant competitors if they decided to enter 
this market.

The markets for medical video image digitizers are also highly competitive. 
Competitors in the video digitizer market are Precision Digital Images Corp., 
Epix, Inc. and Matrox Electronic Systems Ltd. 

Competition in the markets for PACS and teleradiology software products and 
services is intense and is expected to increase. The Company's software 
products support the Company's CR and film digitizers and do not generate 
significant income as stand-alone products.  By bundling software with the CR 
and film digitizers the Company allows its OEM and VAR customers to utilize 
either the Company's software or at their discretion, their own or competing 
software.  The principal providers of  software in the PACS and teleradiology 
market are ISG, Applicare Medical Imaging B.V., Mitra Imaging Inc., and Access 
Radiology Corporation. The success of the Company's software does not have a 
direct impact on the Company's financial condition or results of operations 
but rather adds additional value to the Company's CR and digitizer products.  
There can be no assurances that the Company will be able to compete 
successfully against current and future competitors or that competitive 
pressures faced by the Company will not have a materially adverse effect on 
its business, financial condition or results of operations.

Competition in the machine vision and scientific markets for frame grabbers 
and software is well established and includes Matrox, Imaging Technologies and 
Integral Technologies.  Many of the Company's competitors and potential 
competitors have significantly greater financial, technical, product 
development, marketing and other resources and market recognition than the 
Company in the machine vision and scientific imaging areas.  Many of the 
Company's competitors also currently have, or may develop or acquire, 
substantial installed customer bases in the healthcare industry.  As a result 
of these factors, the Company's competitors may be able to respond more 
quickly to new or emerging technologies and changes in customer requirements 
or to devote greater resources to the development, promotion and sale of their 
products than the Company.  There can be no assurances that the Company will 
be able to compete successfully against current and future competitors or that 
competitive pressures faced by the Company will not have a materially adverse 
effect on its business, financial condition or results of operations.  

Proprietary Rights.  The Company relies on a combination of trade secrets, 
copyright and trademark laws, nondisclosure and other contractual provisions 
to protect its proprietary rights.  The Company currently has no blocking 
patents covering its technology and it has not registered any of its 
trademarks.  There can be no assurance that measures taken by the Company to 
protect its intellectual property will be adequate or that the Company's 
competitors will not independently develop systems and services that are 
substantially equivalent or superior to those of the Company.  Substantial 
litigation regarding intellectual property rights exists in the industry, and 
the Company expects that its products may be increasingly subject to third-
party infringement claims as the number of competitors in the Company's 
industry segment grows and the functionality of systems overlap.  Although the 
Company believes that its systems and applications do not infringe upon the 
proprietary rights of third-parties, there can be no assurance that third-
parties will not assert infringement claims against the Company in the future, 
that the Company would prevail in any such dispute or that a license or 
similar agreement will be available on reasonable terms in the event of an 
unfavorable ruling on any such claim.  In addition, any such claim may require 
the Company to incur substantial litigation expenses or subject the Company to 
significant liabilities and could have a material adverse effect on the 
Company's business, financial condition and results of operations.

Customer Concentration; Reliance on OEMs.  For the first quarter of 1999, two 
customers represented 14% and 10%, respectively, of the Company's total sales.  
Large customers also accounted for a significant portion of the Company's 
backlog at March 31, 1999.  The Company expects to continue to depend upon its 
principal customers for a significant portion of its sales, although there can 
be no assurance that the Company's principal customers will continue to 
purchase products and services from the Company at current levels, if at all.  
The loss of one or more major customers or a change in their buying patterns 
could have a material adverse effect on the Company's business and results of 
operations.

Single-Source Suppliers.  The Company purchases industry-standard parts and 
components for the assembly of its products, generally from multiple vendors.  
Although the Company relies on single-source suppliers for certain components, 
such as lasers, photomultiplier tubes and certain electronic components 
primarily to control price and quality, the Company believes that alternate 
sources of supply are available from other vendors for such components and has 
qualified second source suppliers for some, but not all, single-sourced parts.  
The Company maintains good relationships with its vendors and, to date, has 
not experienced any material supply problems.  While the Company seeks to 
maintain an adequate inventory of single-sourced components, there can be no 
assurance that such inventories will be sufficient or that delays in part or 
component deliveries will not occur in the future, which could result in 
delays or reductions in product shipments.  Furthermore, even if currently 
single-sourced components could be replaced by other qualified parts, product 
redesign and testing could be costly and time consuming.  These factors could 
have a material adverse effect on the Company's business, financial condition 
and results of operations.

Government Regulation.  The manufacturing and marketing of the Company's 
digitizer, CR product, video board, and software products are subject to 
extensive government regulation in the United States and in other countries, 
and the process of obtaining and maintaining required regulatory approvals is 
lengthy, expensive and uncertain.  If a medical device manufacturer can 
establish that a newly developed device is "substantially equivalent" to a 
device that was legally marketed prior to May 1976, the date on which the 
Medical Device Amendments of 1976 were enacted, or to a device the FDA found 
to be substantially equivalent to a legally marketed pre-1976 device, the 
manufacturer may seek marketing clearance from the FDA to market the device by 
filing a 510(k) premarket notification.  The 510(k) premarket notification 
must be supported by appropriate data establishing the claim of substantial 
equivalence to the satisfaction of the FDA.  Receipt of 510(k) clearance 
normally takes at least three months, but may take much longer and may require 
the submission of clinical safety and efficacy data to the FDA.  All of the 
Company's laser-based film digitizers, the CCD-based film digitizer, CR 
product and software products that are commercially available have received 
510(k) clearance.  There can be no assurance that 510(k) clearance for any 
future product or any modification of an existing product will be granted, or 
that the process will not be unduly lengthy.  In the future, the FDA may 
require manufacturers of certain medical devices to engage in a more thorough 
and time consuming approval process than the 510(k) process, which could have 
a material adverse effect on the Company's business and results of operations.

The Company is also required to register as a Class II medical device 
manufacturer with the FDA and state agencies, such as the California 
Department of Health Services ("CDHS").  As such, the Company may be inspected 
on a routine basis by both the FDA and the CDHS for compliance with the FDA's 
Good Manufacturing Practices ("GMP"), Quality Standard Regulations ("QSR") and 
other applicable regulations.  These regulations require that the Company 
manufacture its products and maintain its documents in a prescribed manner 
with respect to manufacturing, reporting of product malfunctions and other 
matters.  If the FDA believes that a company is not in compliance with federal 
regulatory requirements, it can institute proceedings to detain or seize 
products, issue a recall, prohibit marketing and sales of the company's 
products and assess civil and criminal penalties against the company, its 
officers or its employees.  Failure to comply with the regulatory requirements 
could have a material adverse effect on the Company's business and results of 
operations.  The Sunnyvale facility of the Company was inspected by the CDHS 
and the FDA in 1996 and was found to be compliant with both the CDHS's and 
FDA's GMP regulations.  In the second quarter of 1998 the Tucson facility of 
the Company was inspected by the FDA and was found to have some items not in 
compliance with the FDA's GMP regulations.  The Company took corrective action 
on the FDA's observations and was re-inspected at the Tucson facility in the 
first quarter of 1999 and found to be in compliance with the FDA's GMP 
regulations. 

Sales of the Company's products outside the United States are subject to 
foreign regulatory requirements that vary from country to country. Additional 
approvals from foreign regulatory authorities may be required, and there can 
be no assurance that the Company will be able to obtain foreign approvals on a 
timely basis or at all, or that it will not be required to incur significant 
costs in obtaining or maintaining its foreign regulatory approvals.  Starting 
in mid 1998, the Company has been required to obtain certifications necessary 
to enable the "CE" mark to be affixed to the Company's products to continue 
commercial sales in member countries of the European Union.  The CE mark is an 
international symbol of quality and complies with applicable European 
information device equipment directives.  The Company has obtained this CE 
certification.  Failure to comply with foreign regulatory requirements could 
have a material adverse effect on the Company's business, financial condition 
and results of operations.

Litigation.  On July 9, 1997 and July 10, 1997 two securities class action 
lawsuits were filed in the Superior Court of the State of California, County 
of Santa Clara, and the United States District Court for the Northern District 
of California against the Company, several of its current and former officers 
and directors, and its underwriters.  The complaints are brought on behalf of 
all persons who purchased the Company's common stock between November 15, 1995 
and July 11, 1996.  The complaints allege that defendants made material false 
statements and omitted to disclose material information concerning the 
Company's actual and expected performance, causing the price of the Company's 
stock to be artificially inflated.  The federal complaint alleges claims under 
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934; the state 
complaint alleges claims under California's securities statutes.  Neither 
complaint specifies the amount of damages sought.  The Company and the other 
defendants deny all allegations of wrongdoing.  On January 9, 1998, the court 
dismissed the state court complaint with leave to amend.  On March 31, 1998, 
the court dismissed the federal complaint with leave to amend.  On May 26, 
1998, the state court dismissed plaintiff's first amended complaint with leave 
to amend.  Plaintiffs have filed a first amended complaint in the federal 
action, and a second amended complaint in the state action.  Defendants have 
filed motions to dismiss both of these complaints.  There can be no assurance 
that the Company will prevail in this action or that the plaintiffs will not 
recover damages.

Third-Party Reimbursement.  Third-party payers, such as governmental programs 
and private insurance plans, can indirectly affect the pricing or the relative 
attractiveness of the Company's products by regulating the maximum amount of 
reimbursement that they will provide for the taking, storing and 
interpretation of medical images.  In recent years, healthcare costs have 
risen substantially, and third-party payers have come under increasing 
pressure to reduce such costs.  In this regard, extensive studies undertaken 
by the Clinton Administration, even though not successfully translated into 
regulatory action, have stimulated widespread analysis and reaction in the 
private sector focused on healthcare cost reductions, which may involve 
reductions in reimbursement rates in radiology.  A decrease in the 
reimbursement amounts for radiological procedures may decrease the amount 
which physicians, clinics and hospitals are able to charge patients for such 
services.  As a result, adoption of teleradiology, PACS and mini-PACS may slow 
as capital investment budgets Are reduced, and the demand for the Company's 
products could be significantly reduced.

Product Liability and Insurance.  The manufacture and sale of medical products 
entails significant risk of product liability claims.  While the Company 
believes that its current insurance coverage is appropriate, there can be no 
assurance that such coverage is adequate to protect the Company from any 
liabilities it might incur in connection with the sale of the Company's 
products.  In addition, the Company may require increased product liability 
coverage as additional products are commercialized.  Such insurance is 
expensive and in the future may not be available on acceptable terms, if at 
all.  A successful product liability claim or series of claims brought against 
the Company in excess of its insurance coverage could have a material adverse 
effect on the Company's business and results of operations.

Volatility of Stock Prices.  The market price of the Company's Common Stock 
has been and may continue to be volatile.  This volatility may result from a 
number of factors, including fluctuations in the Company's quarterly revenues 
and net income, announcements of technical innovations or new commercial 
products by the Company or its competitors, and conditions in the market for 
medical image digitizers and the teleradiology and health care industry and 
for PACS and teleradiology products and healthcare information systems and 
services.  Also, the stock market has experienced and continues to experience 
extreme price and volume fluctuations which have affected the market prices of 
securities, particularly those of medical technology companies, and which 
often have been unrelated to the operating performance of the companies. These 
broad market fluctuations, as well as general economic and political 
conditions, may adversely affect the market price of the Company's Common 
Stock in future periods.

Impact of the Year 2000

The rapid approach of Year 2000 presents significant issues for many computer 
systems, since much of the software in use today may not accurately process 
data beyond 1999.  The Company has recently implemented new information 
systems and accordingly does not anticipate any internal Year 2000 issue from 
its own information systems, databases or programs.  However, the Company 
could be adversely impacted by Year 2000 issues faced by major distributors, 
suppliers, customers, vendors and financial service organizations with which 
the Company interacts.  The Company is currently taking steps to address the 
impact, if any, of the Year 2000 issue on the operations of the Company.  
There can be no assurances that such a review will detect all potential 
failures of the Company's and/or third-party's computer systems.  A 
significant failure of the Company's or a third-party's computer system could 
have a material adverse effect on the Company's business, financial condition 
and results of operations.  

Certain software products currently installed at customer sites will require 
upgrade or other remediation to become Year 2000 compliant.  The Company 
believes that it is not legally responsible for costs incurred by its 
customers to achieve their Year 2000 compliance.  However, the Company is 
taking steps to identify affected customers, raise customer awareness related 
to noncompliance of the Company's older products, and assist the customer base 
to assess their risks.  The Company may see increasing customer satisfaction 
costs related to these actions over the next few years.  The potential impact 
on the Company's business, financial condition and results of operations is 
not known at this time.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Lumisys has an investment portfolio of fixed income securities that are 
classified as "available-for-sale securities."  These securities, like all 
fixed income instruments, are subject to interest rate risk and will fall in 
value if market interest rates increase.  Lumisys attempts to limit this 
exposure by investing primarily in short-term securities.

From time to time, Lumisys makes certain capital equipment or other purchases 
denominated in foreign currencies.  As a result, Lumisys' cash flows and 
earnings are exposed to fluctuations in interest rates and foreign currency 
exchange rates.  Lumisys attempts to limit these exposures through operational 
strategies and generally has not hedged currency exposures.

Part 2 - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

Exhibits furnished:
	
Exhibit
Number           Description of Document
-----------      --------------------------------
                 Financial Data Schedule
 
(b).  Reports on Form 8-K:  The Company filed no Current Reports on Form 8-K 
                            in the three months ended March 31, 1999.



                                 SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Act of 
1934, the Registrant has duly caused this report to be signed on its behalf by 
the undersigned, thereunto duly authorized in Sunnyvale, California, on  May 
14, 1999:

                                                     LUMISYS INCORPORATED


Dated:  May 13, 1999                               By:  /s/ Phillip Berman
                                                       ----------------------  
                                                       Phillip Berman, M.D.
                                                       Chief Executive Officer
	
                                                        /s/ Dean MacIntosh
                                                        ----------------------
                                                        Dean MacIntosh
                                                        Vice President and 
                                                        Chief Financial  
                                                        Officer (Principal  
                                                        Financial and
                                                        Accounting  Officer)




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