==============================================================================

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, DC. 20549
                            ---------------------

                                 FORM 10-QSB

(Mark One) 
[x]  Quarterly report pursuant to Section 13 or 15(d) of the Securities 
     Exchange Act of 1934 for the quarterly period ended June 30, 1998 

     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 0-23841
                       ------------------------------

                      INTEGRATED SENSOR SOLUTIONS, INC.
         (Exact name of registrant as specified in its charter)


           DELAWARE                                  77-0212047
(State or other jurisdiction of                  (I.R.S. Employer
Incorporation or organization)                   Identification No.)


            625 River Oaks Parkway, San Jose, California 95134
         (Address of principal executive offices)     (Zip code)
                             (408) 324-1044
           (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act:

      Title of each class         Name of Exchange on which registered
      -------------------         ------------------------------------

             None                               None 




         Securities registered pursuant to Section 12(g) of the Act:



                       Common Stock, $.001 par value
                              (Title of Class)
                        ----------------------------


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 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 [  ] 

Outstanding shares of registrant's common stock, $.001 par value, as of August 
7, 1998: 7,597,028

This Report on Form 10-QSB includes 21 pages with the Index to Exhibits 
located on page 18.


<PAGE>    1


                    INTEGRATED SENSOR SOLUTIONS, INC.

                         REPORT ON FORM 10-QSB
                     FOR QUARTER ENDED JUNE 30, 1998
                           TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                     Page
                                                                     ----
<S>                                                                 <C>
PART I.  FINANCIAL INFORMATION

   Item 1. Financial Statements:

           Condensed Consolidated Balance Sheets - June 30, 1998
             and March 31, 1998 ....................................   3

           Condensed Consolidated Statements of Operations - Three
             Months Ended June 30, 1998 and 1997 ...................   4

           Condensed Consolidated Statements of Cash Flows - Three 
             Months Ended June 30, 1998 and 1997 ...................   5

           Notes to Condensed Consolidated Financial Statements ....   6


   Item 2. Management's Discussion and Analysis of Financial
             Condition and Results of Operations ...................  10


PART II.  OTHER INFORMATION

   Item 1. Legal Proceedings .......................................  18

   Item 5. Other Information .......................................  18

   Item 6. Exhibits and Reports on Form 8-K ........................  18

           Signatures ..............................................  19

</TABLE>
                                       2


<PAGE>    2



ITEM 1.  FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                      INTEGRATED SENSOR SOLUTIONS, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                             (in thousands)


                                                     June 30,     March 31,
                                                       1998        1998 (1)
                                                    ----------   ---------
                                                   (Unaudited)
<S>                                                <C>           <C>

ASSETS

CURRENT ASSETS:

  Cash and cash equivalents                        $   6,954    $  17,610
  Short-term investments                               9,006           --
  Accounts receivable, net                             2,821        3,720
  Accounts receivable from related parties             1,719          802
  Inventories                                          3,638        3,120
  Prepaid expenses and other current assets              559          255
                                                   ---------    ---------
    Total current assets                              24,697       25,507

PROPERTY AND EQUIPMENT, NET                            2,612        2,254
                                                   ---------    ---------
TOTAL ASSETS                                       $  27,309    $  27,761
                                                   =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

  Line of credit                                   $    400     $     900
  Accounts payable-trade                              1,611         3,279
  Accounts payable to related parties                   557         1,144
  Current portion of capital lease obligations          365           358
  Other current liabilities                             643           659
                                                   --------     ---------
    Total current liabilities                         3,576         6,340

LONG-TERM PORTION OF CAPITAL LEASE OBLIGATIONS          152           108
MINORITY INTEREST IN SUBSIDIARY                          61            78

STOCKHOLDERS' EQUITY:

  Noncumulative convertible preferred stock              --            --
  Common stock                                            8             7
  Additional paid-in capital                         33,808        31,064
  Accumulated deficit                               (10,012)       (9,429)
  Cumulative translation adjustment                      55           (32)
  Deferred compensation                                (339)         (375)
                                                   --------     ---------
    Total stockholders' equity                       23,520        21,235
                                                   --------     ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $ 27,309     $  27,761
                                                   ========     =========


(1)  Derived from the March 31, 1998 audited balance sheet included in the
     1998 Annual Report on Form 10-KSB of Integrated Sensor Solutions, Inc.

</TABLE>

          See notes to condensed consolidated financial statements.


                                       3

<PAGE>    3

<TABLE>
<CAPTION>
                      INTEGRATED SENSOR SOLUTIONS, INC.

             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (in thousands, except per share amounts)


                                                     Three Months Ended
                                                           June 30,  
                                                  ------------------------
                                                     1998           1997  
                                                  ---------       --------
<S>                                               <C>            <C>

REVENUES:

  Product revenue                                  $  4,360       $  2,553
  Contract revenue                                      504            948
                                                   --------       --------
    Total revenues (related party revenues of
      $1,595, and $400 for 1998 and 1997,
       respectively)                                  4,864          3,501
                                                   --------       --------

COST OF REVENUES:

  Cost of product revenue                             3,353          1,848
  Cost of contract revenue                              592            689
                                                   --------       --------

    Total cost of revenues                            3,945          2,537
                                                   --------       --------

GROSS PROFIT                                            919            964
                                                   --------       --------

OPERATING EXPENSES:


  Research and development                           1,024             355
  Sales, general, and administrative                   631             438
                                                  --------        --------
  Total operating expenses                           1,655             793
                                                  --------        --------

    INCOME (LOSS) FROM OPERATIONS                     (736)            171

INTEREST EXPENSE                                       (45)            (54)
INTEREST INCOME                                        211               -
OTHER INCOME (EXPENSE)                                 (30)              4
MINORITY INTEREST IN NET (INCOME)
  LOSS OF CONSOLIDATED SUBSIDARY                        17             (30)
                                                  --------        -------- 

NET INCOME (LOSS)                                 $   (583)       $     91
                                                  ========        ======== 

Basic and diluted net income (loss) per share
  (pro forma for 1997)                            $  (0.08)       $   0.02 
                                                  ========        ======== 

Shares used in computing basic net income (loss)
  per share (pro forma for 1997)                     7,559           4,496 
                                                  ========        ======== 

Shares used in computing diluted net income (loss)
  per share (pro forma for 1997)                     7,559           4,802 
                                                  ========        ======== 
</TABLE>

         See notes to condensed consolidated financial statements.


                                       4

<PAGE>    4


<TABLE>
<CAPTION>

                       INTEGRATED SENSOR SOLUTIONS, INC.

               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Unaudited)
                                (in thousands)


                                                      Three Months Ended    
                                                            June 30,        
                                                  --------------------------
 
                                                      1998          1997    
                                                  ------------  ------------
<S>                                               <C>           <C>

Operating activities
Net loss                                            $    (583)    $      91
Adjustments to reconcile net loss to net cash
  used in operating activities:
    Depreciation and amortization                         280           206
    Amortization of deferred compensation                  36            26
    Minority interest in net income (loss) of
      Subsidiary                                           17           (30)
    Foreign currency (gains) losses                       (12)           (4)
    Gain on sale of interest in joint venture              --          (172)
    Changes in operating assets and liabilities:   
      Accounts receivable, net                            (18)         (513)
      Inventories                                        (518)         (262)
      Prepaid expenses                                   (304)          (37)
      Accounts payable                                 (2,255)         (562)
      Accrued payroll and related expenses                (14)           (8)
      Other accrued liabilities                            (2)          (85)
                                                    ---------     --------- 
Net cash used in operating activities                  (3,373)       (1,350)

Investing activities
Purchases of short-term investments                    (9,006)           --
Purchase of property and equipment                       (487)         (247)
                                                    ---------     ---------
Net cash provided by (used in) investing activities    (9,493)         (247)

Financing activities                                  
Payments on line of credit                               (500)           --
Payments of principal on notes payable                     --          (436)
Payments of principal on capital lease obligations        (35)          (27)
Issuance of convertible preferred stock, net of
  issuance costs                                           --           430
Net proceeds from issuance of common stock              2,745            --
                                                    ---------     ---------
Net cash provided by (used in) financing activities     2,210           (33)
                                                    ---------     ---------

Decrease in cash and cash equivalents                 (10,656)       (1,630)
Cash and cash equivalents at beginning of period       17,610         2,059
                                                    ---------     ---------
Cash and cash equivalents at end of period          $   6,954     $     429
                                                    =========     =========
Supplemental disclosure of cash flow information
Interest paid                                       $      45     $      54
                                                    =========     =========
Schedule of noncash financing activities
Equipment acquired under capital leases             $      86     $      23
                                                    =========     =========
Accounts payable converted to capital leases        $      79     $      --
                                                    =========     =========
Issuance of preferred stock for payment of notes
  payable                                           $      --     $     400
                                                    =========     =========

Issuance of preferred stock for payment of interest
  on notes payable                                  $      --     $      29
                                                    =========     =========

</TABLE>

           See notes to condensed consolidated financial statements


                                       5

<PAGE>    5


                     INTEGRATED SENSOR SOLUTIONS, INC.
          NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                (Unaudited)


1.     SIGNIFICANT  ACCOUNTING  POLICIES 

Interim Financial Information

     The accompanying condensed consolidated financial statements of 
Integrated Sensor Solutions, Inc. and its majority-owned subsidiary ("ISS" or 
the "Company") as of June 30, 1998 and for the three months ended June 30, 
1998 and 1997 are unaudited. In the opinion of management, the condensed 
consolidated financial statements include all adjustments (consisting only of 
normal recurring accruals) that management considers necessary for a fair 
presentation of its financial position, operating results and cash flows for 
the interim periods presented. Operating results and cash flows for interim 
periods are not necessarily indicative of results for the entire year.

     The preparation of financial statements in conformity with generally 
accepted accounting principles requires management to make estimates and 
assumptions that affect the amounts reported in the financial statements and 
accompanying notes. Actual results could differ from those estimates. 

     This financial data should be read in conjunction with the audited 
consolidated financial statements and notes thereto included in the Company's 
Annual Report on Form 10-KSB for the year ended March 31, 1998.

Net Income (Loss) Per Share

     In 1997, the Financial Accounting Standards Board issued Statement No. 
128, Earnings Per Share. Statement No. 128 replaced the calculation of primary 
and fully diluted earnings per share with basic and diluted earnings per 
share. Unlike primary earnings per share, basic earnings per share excludes 
any dilutive effects of options, warrants and convertible securities. Diluted 
earnings per share is very similar to the previously reported fully diluted 
earnings per share. In February 1998 the Securities and Exchange Commission 
issued Staff Accounting Bulletin No. 98, Earnings Per Share. Staff Accounting 
Bulletin No. 98 affected the treatment of certain stock and warrants ("cheap 
stock") issued within a one-year period prior to an initial public offering. 
Earnings per share amounts presented have been restated to conform to 
requirements of Statement No. 128 and Staff Accounting Bulletin No. 98. 

Pro Forma Net Loss Per Share

     Pro forma net loss per share has been computed as described above and 
also gives effect even if antidilutive to the conversion of convertible 
preferred shares not included above that automatically converted upon 
completion of the Company's initial public offering (using the if-converted 
method) from the original date of issuance. 

Major Customers and Concentration of Credit Risks

     Many of the Company's customers are primarily involved in the automotive 
market. The Company performs ongoing credit evaluations of its customers and 
generally does not require collateral. The Company maintains reserves for 
potential credit losses, and such losses have been within management's 
expectations. 

     Significant customers accounted for the following percentages of revenues:
<TABLE>
<CAPTION>

                                                       Three Months
                                                       Ended June 30,
                                                --------------------------
                                                   1998            1997  
                                                -----------     ----------
<S>                                              <C>            <C>
     Robert Bosch GmbH                               35 %           37 %
     Nagano Keiki Co., Ltd.                          32 %           11 %
     Echlin Corporation                              17 %           -- %
     MascoTech                                       -- %           19 %
     EG&G/IC Sensors                                 -- %           13 %

</TABLE>
                                       6

<PAGE>    6


                     INTEGRATED SENSOR SOLUTIONS, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)

2. INVENTORIES

     Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>

                                                     June 30,     March 31, 
                                                       1998         1998    
                                                    -----------  -----------
        <S>                                         <C>           <C>
         Finished goods                              $    385      $    310
         Work-in-process                                1,089         1,166
         Raw materials                                  2,164         1,644
                                                     --------      --------
                                                     $  3,638      $  3,120
                                                     ========      ========
</TABLE>

3. LINE OF CREDIT/TERM LOAN

     The Company has a bank line of credit agreement that expires on August 
21, 1998.  The line, which is currently in the process of being renewed, 
allows the Company to borrow the lesser of $2,000,000 or 75% of eligible 
accounts receivable. Eligible accounts receivable are defined as those 
outstanding less than 90 days from date of invoice. Borrowings under the line 
of credit bear interest at the bank's prime rate plus 0.75% (9.25% at June 30, 
1998) and are secured by the assets of the Company. As of June 30 and March 
31, 1998, the Company had borrowings outstanding totaling $400,000 and 
$900,000, respectively, under the line of credit. The Company also has a 
$500,000 term loan facility for equipment that bears interest at the bank's 
prime rate plus 1.50% (10.0% at June 30, 1998). As of June 30, 1998, the 
Company had borrowings of approximately $296,000 on its term loan which are 
included with capital leases on the balance sheet. These agreements require 
the Company to maintain certain financial covenants on a quarterly basis. At 
June 30, 1998, the Company was out of compliance with its profitability 
covenant and has obtained a waiver through that date.


4. COMPREHENSIVE INCOME 

     Effective April 1, 1998, the Company adopted Statement of Financial 
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS 
No. 130 requires an enterprise to report, by major components and as a single 
total, the change in net assets during the period from non-owner sources. 
Comprehensive income includes all changes in equity during a period except 
those resulting from investments by and distributions to the Company's 
stockholders. For the three months ended June 30, 1998 and 1997, comprehensive 
income, which was comprised of the Company's net income (loss) for the periods 
and cumulative translation adjustment, was approximately ($496,000) and 
$251,000, respectively. 


5.     GEOGRAPHIC AND SEGMENT INFORMATION

     The Company operates in one business segment, which is to design, 
manufacture, and sell end-market specific integrated subsystems and perform 
nonrecurring engineering projects for the sensor control applications market. 
The following table summarizes the Company's operations in different 
geographic areas (in thousands):

<TABLE>
<CAPTION>
                                       Three Months ended June 30, 1998 
                            --------------------------------------------------
                                                    Adjustments/
                            United States  Germany  Eliminations  Consolidated
                            -------------  -------  ------------  ------------
<S>                          <C>         <C>         <C>         <C>
Revenues to unaffiliated 
  Customers                   $   2,774   $  2,090    $    --      $    4,864 
Transfers between geographic
  areas                             665        328         (993)           -- 
                              ---------   --------    ---------    ----------
Total revenues                $   3,439   $  2,418    $    (993)   $    4,864 
                              =========   ========    =========    ==========
Loss from operations          $    (713)  $    (22)   $      (1)   $     (736)
                              =========   ========    =========    ========== 
Identifiable assets           $  27,018   $  4,909    $  (4,618)   $   27,309
                              =========   ========    =========    ==========

</TABLE>
                                       7

<PAGE>    7


                       INTEGRATED SENSOR SOLUTIONS, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)

<TABLE>
<CAPTION>
                                    Three Months ended June 30, 1997 
                            --------------------------------------------------
                                                    Adjustments/
                            United States  Germany  Eliminations  Consolidated
                            -------------  -------  ------------  ------------
<S>                         <C>           <C>         <C>         <C>
Revenues to unaffiliated
  Customers                   $   2,510    $   991     $     --    $   3,501 
Transfers between geographic
  Areas                             241        179         (420)          --  
                              ---------    -------     --------    ---------
Total revenues                $   2,751    $ 1,170     $   (420)   $   3,501 
                              =========    =======     ========    =========
Income from operations        $      84    $    63     $     24    $     171 
                              =========    =======     ========    =========
Identifiable assets           $   8,385    $ 3,195     $ (3,072)   $   8,508 
                              =========    =======     ========    =========

</TABLE>

     Export revenues consisting of sales from the Company's U.S. operations to 
nonaffiliated customers were as follows (in thousands): 

<TABLE>
<CAPTION>

                                                       Three Months
                                                       Ended June 30,
                                                 ------------------------
                                                     1998         1997  
                                                 -----------  -----------
<S>                                               <C>          <C>
Canada                                             $    73      $   196 
Japan and Korea                                      1,625          458 
                                                   -------      -------
Total                                              $ 1,698      $   654 
                                                   =======      =======
</TABLE>


6.     STOCKHOLDERS' EQUITY
     On March 13, 1998, the Company completed its initial public offering of 
stock through the issuance of 2,500,000 shares of common stock at a price of 
$8.00 per share, resulting in net proceeds to the Company of $17,661,000. On 
April 8, 1998, the Company's underwriters exercised their over-allotment 
option in full by purchasing 375,000 shares at $8.00 per share resulting in 
net proceeds to the Company of $2,790,000. 


7.     NET INCOME (LOSS) PER SHARE
     The following table sets forth the computation of basic and diluted net 
income (loss) per share (in thousands, except per share data): 

<TABLE>
<CAPTION>

                                               Three Months Ended June 30,
                                               ---------------------------
                                                   1998           1997 
                                               ------------   ------------
<S>                                            <C>             <C>
Numerator for basic and diluted:
  Net income (loss)                             $    (583)      $      91
                                                =========       =========
Denominator:
  Weighted average common shares outstanding        7,559           3,090
  Conversion of weighted average preferred
    stock outstanding (pro forma)                      --           1,406
                                                ---------       ---------
Denominator for basic net income (loss) per
  share (pro forma for 1997)                        7,559           4,496
                                                =========       =========

Effective dilutive securities:
  Employee stock options                               --             306
                                                =========       =========
Denominator for diluted net income (loss)
  per share                                     $   7,559       $   4,802
                                                =========       =========

Basic and diluted net income (loss) per share
  (pro forma for 1997)                          $   (0.08)      $    0.02
                                                =========       =========
</TABLE>


                                       8

<PAGE>    8




                      INTEGRATED SENSOR SOLUTIONS, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)


     Options to purchase 549,710 shares of common stock at prices ranging from 
$1.125 to $8.313 were outstanding as of June 30, 1998, but were not included 
in the computation of diluted earnings (loss) per share for the three months 
ended June 30, 1998 because to do so would have been anti-dilutive.  
Securities (including options and warrants) that could potentially dilute 
basic EPS in the future were not included in the computation of diluted EPS 
for the three months ended June 30, 1998 because to do so would have been 
antidilutive for the period presented. 

     Pro forma net loss per share has been computed as described in Note 1 
above and also gives effect even if antidilutive to the conversion of 
convertible preferred shares not included above that automatically converted 
upon completion of the Company's initial public offering (using the if-
converted method) from the original date of issuance. 


                                       9


<PAGE>    9



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

     This Management's Discussion and Analysis includes a number of forward-
looking statements which reflect the Company's current views with respect to 
future events and financial performance. These forward-looking statements are 
subject to certain risks and uncertainties, including those discussed in the 
Risk Factors section of this Item 2 and elsewhere in this Form 10-QSB that 
could cause actual results to differ materially from historical results or 
those anticipated. In this report, the words "anticipates," "believes," 
"expects," "future," "intends," and similar expressions identify forward-
looking statements. Readers are cautioned not to place undue reliance on these 
forward-looking statements, which speak only as of the date hereof.

Overview 

     ISS designs, manufactures and markets high performance, intelligent 
sensor products that are used in electronic control systems by customers in 
the automotive and industrial markets. The Company was incorporated in March 
1989 and was principally engaged in research and development through fiscal 
1993. In fiscal 1991, the Company shipped its first product; an application 
specific integrated circuit ("ASIC") designed for use with a very low-pressure 
sensor used in industrial flow measurements. In fiscal 1992, the Company 
introduced its first integrated sensor device ("ISD"), an aftermarket product 
for manifold absolute pressure ("MAP") sensor applications for General Motors 
automobile engines. The Company subsequently developed and introduced a 
variety of other ASICs and ISDs. Principally as a result of an increase in 
product sales, the Company's total revenues have increased to $4.9 million for 
the three months ended June 30, 1998 from approximately $3.5 million for the 
comparable period in 1997. The Company has experienced operating losses in 
each year since its inception and had an accumulated deficit of $10.0 million 
as of June 30, 1998. 


Results of Operations 

     The following table sets forth for the periods indicated selected 
consolidated statements of operations data as a percentage of total revenues: 

<TABLE>
<CAPTION>
                                                       Three Months Ended
                                                            June 30,                  
                                                    ------------------------
                                                        1998        1997    
                                                    -----------  ----------- 
<S>                                                <C>          <C>
Revenues:
  Product revenues                                      89.6%        72.9%
  Contract revenues                                     10.4         27.1
                                                     -------      -------
    Total revenues                                     100.0        100.0
                                                     -------      -------
Cost of revenues: 
  Cost of product revenue                               68.9         52.8
  Cost of contract revenue                              12.2         19.7
                                                     -------      -------
    Total cost of revenues                              81.1         72.5
                                                     -------      -------
  Gross profit                                          18.9         27.5
                                                     -------      -------
Operating expenses: 
  Research and development                              21.0         10.1
  Sales, general and administration                     13.0         12.5
                                                     -------      -------
    Total operating expenses                            34.0         22.6
                                                     -------      -------
Income (loss) from operations                          (15.1)         4.9
Interest expense                                        (0.9)        (1.5) 
Interest income                                          4.3           --
Other Income (expense)                                  (0.6)         0.1
Minority interest in net (income) loss of ISS-Nagano     0.3        ( 0.9)
                                                     -------      -------
Net income (loss)                                      (12.0)%        2.6%
                                                     =======      =======
</TABLE>

                                       10

<PAGE>    10



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS (continued)

Comparison of Three Months Ended June 30, 1998 and 1997
     
Revenues

     The Company derives its revenues from sales of ASICs and ISDs and from 
fees earned under product development contracts.  The Company recognizes 
revenues from product sales upon shipment.  Contract revenues are recognized 
only when applicable customer milestones, including deliverables, have been 
met, but not in excess of the amount that would be recognized using the 
percentage of completion method.

     Product Revenues:  Product revenues were $4.4 million for the three 
months ended June 30, 1998, an increase of $1.8 million or 70.8%  over the 
$2.6 million for three months ended June 30, 1997. This increase reflects 
growth in the Company's product offerings.   The Company's two product lines, 
ASICs and ISDs, grew with increased shipments of the Company's SCA2095 ASIC, 
primarily used in the gasoline direct injection system, the SCA2235 ASIC, used 
in the industrial gas metering system, and the HVP ISD produced at the 
Company's German operations for use in the common rail diesel fuel injections 
system. 

     Contract Revenues:  Contract revenue decreased to $504,000 for the three 
months ended June 30, 1998 from $948,000 for the comparable period in 1997 
primarily due to the fewer number of milestones completed during the three 
months ended June 30, 1988 compared to the same period in 1997.  Contract 
revenues as a percentage of total revenue decrease from 27.1% to 10.4%.  The 
Company expects contract revenues will continue to decrease as a percentage of 
total revenues. 

     International revenues (export revenues and revenues of the Company's 
majority-owned subsidiary, ISS-Nagano GmbH, ("ISS-Nagano")) for the three 
months ended June 30, 1998 were $3.8 million, an increase of $2.1 million or 
130% growth over the three months ended June 30, 1997.  As a percentage of 
total revenues, international sales increased from 47.0% to 77.9% for the 
three months ended June 30, 1998.  This increase was primarily the result of 
increased sales of media compatible ISDs in Germany.   All of the Company's 
sales in Europe are denominated in Deutsche Marks.  Accordingly, a portion of 
the Company's international revenues is subject to foreign currency 
fluctuation risks.  

Cost of Revenues

     Cost of Product Revenue:  The Company's product gross margin decreased 
4.5% to 23.1% for the three months ended June 30, 1998 from 27.6% for three 
months ended June 30, 1997. The Company experienced yield problems associated 
with the production ramp of its HVP media-compatible ISDs, which materially 
affected gross margin and operating results during the quarter ended June 30, 
1998.    

     Cost of Contract Revenue:  Cost of contract revenue was $592,000 for the 
three months ended June 30, 1998.  This represents a $97,000 decrease from the 
three months ended June 30, 1997.  This decrease was primarily a result of 
lower contract costs associated with fewer contracts in the three month period 
ending June 30, 1998 compared to the three months ended June 30, 1997.  
Expenses related to contracts are recorded as incurred, while recognition of 
revenues occurs when contractual milestones are reached.  The Company does not 
anticipate that gross margin on contract revenues will grow or even remain 
positive in future periods.


Operating Expenses

     Research and Development:  Research and development expense consists 
primarily of personnel expenses, including salary and benefits, and other 
product development related engineering expenses not associated with contract 
revenue.  Research and development expenses were $1.0 million and $355,000 for 
the three months ended June 30, 1998 and 1997, respectively.  This higher 
level of expenses reflects an overall increase in resources at the Company's 
German operations and in its ASIC product test development department to 
support future production.  Research and development expenses as a percentage 
of revenues increased 10.9% to 21.1% for the three months ended June 30, 1998.  
The Company expects research and development expenses to increase in absolute 
dollars but decrease as a percentage of increasing revenue. 


                                       11

<PAGE>    11



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS (continued)

     Sales, General and Administrative:  Sales, general and administrative  
expense consists primarily of personnel expenses, including salary and 
benefits, and professional fees.  Sales, general and administrative expenses 
were $631,000 and $438,000 for the three months ended June 30, 1998 and 1997 
respectively.  This higher level of expense reflects an increase in personnel 
and professional fees necessary to manage the financial, legal and 
administrative aspects of operating as a public company.  Sales, general and 
administrative expense as a percentage of revenue increased to 13.0% for the 
three months ended June 30, 1998 from 12.5% in the year earlier period as a 
result of the increased expenditure level.  The Company expects sales, general 
and administrative expenses to increase in dollars amount, reflecting growth 
in operations and costs associated with being a public entity, but to decline 
as a percentage of revenue.   

Interest Expense

     Interest expense decreased from $54,000 for the three months ended June 
30, 1997 to $45,000 for the three months ended June 30, 1998 due to lower 
average borrowings resulting from the conversion and repayment of debt.  

Interest Income

     Interest income was $211,000 for the three months ended June 30, 1998.  
This was primarily the result of higher cash balances resulting from the 
Company's initial public offering in March of 1998.  There was no interest 
income during the three months ended June 30, 1997.

Other Income (Expense)

     Other income (expense) decreased from $4,000 income for the three months 
ended June 30, 1997 to $30,000 expense for the three months ended June 30, 
1998.   

Minority Interest in Net (Income) Loss of ISS-Nagano

     Minority interest in net loss of ISS-Nagano for the three months ended 
June 30, 1998 was $17,000 compared to  $30,000 of minority interest in net 
income of ISS-Nagano for three months ended June 30, 1998 due to the net loss 
of ISS-Nagano for the quarter ended June 30, 1998.    


Liquidity and Capital Resources

     Since inception, the Company has financed its operations principally 
through sales of equity securities, product revenues and contract revenues. At 
June 30, 1998, the Company had cash, cash equivalents and short-term 
investments of $17.6 million and working capital of $21.1 million.  The 
Company also had available a $2.0 million bank line of credit agreement 
secured by the assets of the Company that permits borrowings of the lesser of 
$2.0 million or 75% of eligible accounts receivable for each of these periods. 
Eligible accounts receivable are defined as those outstanding less than 90 
days from date of invoice. Borrowings under the line of credit bear interest 
at the bank's prime rate plus 0.75%. At June 30, 1998, the Company also had 
available a $500,000 term loan facility for capital equipment that bears 
interest at the bank's prime rate plus 1.5%.  The bank line of credit agreement
and term loan facility have an expiration date of August 21, 1998 and are 
currently in the process of being renewed. At June 30, 1998, the Company had 
outstanding borrowings of $400,000 under the line of credit agreement and 
$517,057 under various capital equipment lease financing arrangements.  At 
June 30, 1998, the Company was out of compliance with its profitability 
covenant and obtained a waiver through that date.


     Net cash used in operating activities was $3.4 million and $1.4 million 
in three months ended June 30, 1998 and 1997, respectively. For the three 
months ended June 30, 1998, net cash used in operations was primarily 
attributable to a decrease in accounts payable, an increase in inventory 
levels in anticipation of higher sales demand and the

                                       12

<PAGE>    12


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS (continued)


Company's net loss. For three months ended June 30, 1997, net cash used in 
operations was primarily attributable to an increase in accounts receivable 
and an increase in inventory levels.

     Net cash used in investing activities was $9.5 million, and $247,000 in 
three months ended June 30, 1998 and 1997, respectively. Cash used in 
investing activities for the three months ended June 30, 1998 was primarily 
related to the Company's purchase of $9.0 million in short-term investments. 
Cash used in investing activities for the three months ended June 30, 1997 was 
entirely due to the purchase of equipment.

     Net cash provided by financing activities was $2.2 million for the three 
months ended June 30, 1998.  Cash provided by financing activities was 
primarily due to the sale of common stock upon exercise of the over allotment 
option held by the underwriters of the Company's initial public offering.  The 
Company also repaid $500,000 outstanding under its line of credit during the
three months ended June 30, 1998.  For the three months ended June 30, 1997 the 
Company repaid $436,000 in notes payable and converted $429,000 to convertible 
preferred stock. 

     In June 1998, the Company committed approximately $3.6 million to the set 
up of a manufacturing line for ISDs related to the vehicle chassis control 
systems at ISS-Nagano. 

     To date, the Company has not invested in derivative securities or any 
other financial instruments that involve a high degree of risk. The Company 
expects that, in the future, cash in excess of current requirements will be 
invested in short-term, investment grade, interest-bearing securities.

     The Company plans to finance its working capital and other capital 
resource needs with its current cash and cash equivalents, and cash generated 
from future operations, if any. The Company believes that these resources will 
be sufficient to satisfy its working capital and other capital needs for at 
least the next 24 months. 


Factors That May Affect Operating Results

     The statements contained in this Report on Form 10-QSB that are not 
purely historical are 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, including statements regarding the Company's expectations, hopes, 
intentions or strategies regarding the future. Forward-looking statements 
include but are not limited to: statements regarding future products or 
product development; statements regarding future research and development 
spending and the Company's product development strategy;  statements regarding 
the levels of international sales; and statements regarding future 
expenditures. All forward-looking statements included in this document are 
based on information available to the Company on the date hereof, and the 
Company assumes no obligation to update any such forward-looking statements. 
It is important to note that the Company's actual results could differ 
materially from those in such forward-looking statements. Some of the factors 
that could cause actual results to differ materially are set forth below.  In 
addition to the other information in this Form 10-QSB, the following factors 
should be considered carefully in evaluating the Company and its business.

     Limited Profitability; History of Operating Losses.  The Company was 
founded in 1989 and commenced shipments of its initial product in 1990. The 
Company did not achieve profitability on a quarterly basis until the quarter 
ended June 30, 1997 and has never achieved profitability on an annual basis. 
There can be no assurance that the Company will be profitable in the future on 
a quarterly basis or that it will achieve profitability on an annual basis. As 
of June 30, 1998, the Company had an accumulated deficit of approximately 
$10.0 million. 

     Dependence on Customer Specific Products; Lengthy Sales and Development 
Cycle.  A substantial portion of the Company's products is designed to address 
the specific needs of individual customers. As a result, the sales and 
development cycle for these products can be lengthy, with the development 
cycle alone ranging up to thirty months for new products in new applications 
in the automotive industry and up to eighteen months for new products in new 
applications in the industrial market. Because customer specific products are 
developed for particular customers' applications, some of the Company's 
current and future customer specific products may never be produced in high 
volume, or at all, due to the Company's inability to introduce custom products 
in a timely manner, delays in the


                                       13

<PAGE>    13


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS (continued)


introduction of the Company's customers' products, the failure of the 
Company's customers' products to achieve and sustain commercial success or the 
discontinuation of a customer's product line. Any of these occurrences could 
have a material adverse effect on the Company's business, financial condition 
or operating results. 

     Fluctuations in Operating Results.  The Company's revenues and operating 
results have varied on a quarterly and an annual basis in the past and may 
vary significantly in the future. The Company's revenues and operating results 
are difficult to forecast and could be materially adversely affected by many 
factors, some of which are outside the control of the Company, including, 
among others, fluctuations in yields, the relatively long sales and 
development cycle for the Company's products, the ability to obtain product 
development contracts and the amount and timing of recognition of product 
development contract revenue and expense associated with such contracts, the 
Company's ability to introduce new products and technologies on a timely 
basis, market acceptance of the Company's and its customers' products, the 
timing, deferral or cancellation of customer orders and related shipments, 
competitive pressures on selling prices, availability of foundry capacity, 
availability of raw materials, changes in product mix, changes in the lead 
time required to ship products after receipt of an order, introduction of 
products and technologies by the Company's competitors and customers, quality 
control of products sold, personnel changes and difficulties in attracting and 
retaining qualified technical personnel, foreign currency exchange rates and 
economic conditions generally and in the automotive and industrial markets. 

      Variability of Manufacturing Yields.  Manufacturing yields of the 
Company's ASICs and ISDs may vary significantly depending on a variety of 
factors. ASIC yields can be adversely affected by the level of contaminants in 
the manufacturing environment, impurities in the materials used and the 
performance of fabrication personnel and equipment, all of which are outside 
the control of the Company. ISD yields can be adversely affected by defective 
sensing elements, component quality and performance of assembly personnel and 
equipment. Historically, the Company has experienced fluctuations in yields of 
its products, particularly during initial production of new products, which 
have adversely affected product gross margin.

     Significant Customer Concentration. Historically, a relatively small 
number of customers have accounted for a significant percentage of the 
Company's total revenues, and the Company expects that this trend will 
continue. In the three months ended June 30, 1998, the Company had three 
customers which accounted for 35%, 32% and 17% of total revenues, 
respectively. In the three months ended June 30, 1997, the Company had four 
customers which accounted for 37%, 19%, 13%, and 11% of total revenues, 
respectively. As a result, any cancellation, reduction, rescheduling or delay 
in orders by or shipments to any customer or the discontinuation or redesign 
by any customer of its products which currently incorporate one or more of the 
Company's products would have a material adverse effect on the Company's 
business, financial condition or operating results.

     Dependence on Automotive Industry; Need to Penetrate New Markets. The 
Company has historically derived approximately 88% of its total revenues from 
products sold for applications in the automotive industry. Accordingly, 
improvement in the Company's future operating results will depend in part on 
its ability to increase its market share in the automotive industry. Further, 
the Company believes that its operating results may be affected by the 
cyclical nature of the automotive industry. Any downturn in any customer's 
business or the economy in general may cause purchases of the Company's 
products to be deferred, reduced or canceled resulting in a material adverse 
effect on the Company's business, financial condition or operating results. If 
the Company were unable to successfully penetrate new markets or to expand its 
penetration of the automotive market, its business, financial condition or 
operating results would be materially adversely affected.

     Declining Average Selling Prices. The Company sells a substantial portion 
of its products pursuant to exclusive contracts which typically contain 
volume-pricing provisions that require the Company to reduce its per unit 
price as certain volume levels are achieved. If the Company is unable to make 
corresponding product cost reductions, the resulting decline in the average 
selling prices of the products sold pursuant to such contracts may reduce the 
Company's product gross margin. If the Company is unable to sufficiently 
reduce its costs on existing products or introduce new products with higher 
margins in a timely manner, the Company's business, financial condition or 
operating results will be materially adversely affected.

                                       14

<PAGE>    14


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS (continued)


     Dependence on Sensing Element Suppliers.  The Company is currently 
dependent upon a small number of third party vendors for substantially all of 
the sensing elements incorporated into its ISDs. For example, the Company 
currently purchases a pressure-sensing element incorporated in certain of its 
ISDs from a single source, Nagano Keiki Co., Ltd. ("Nagano"). The Company 
believes that Nagano is currently the only high volume supplier of this type 
of sensing element.  Any failure of the Company to maintain its existing 
relationships with sensing element suppliers or to identify and work with new 
sensing element suppliers could have a material adverse effect on the 
Company's business, financial condition or operating results. 

     Narrow Product Base.  The Company currently depends upon the sale and 
success of a limited number of product lines. Because the Company's primary 
source of revenue is dependent upon a narrow product base, any interruption or 
reduction in these sales due to production problems, lack of adequate demand, 
replacement by new technologies or other internal or external problems 
resulting in the failure of such product lines to win broad acceptance in the 
marketplace would have a material adverse effect on the Company's business, 
financial condition or operating results. 

     Rapid Technological Change; Need to Develop New Products.  The markets 
for the Company's products are characterized by rapid technological change as 
well as evolving industry standards that may render existing products 
obsolete. As a result, the success of new products depends on a variety of 
factors, including effective definition of products that meet evolving market 
needs, successful and timely completion of development and introduction of 
these products, successful design wins in new systems and the ability to offer 
products at competitive prices. A failure in any of these areas could have a 
material adverse effect on the Company's business, financial condition or 
operating results. 

     Competition.  The markets in which the Company competes are highly 
competitive and characterized by diverse industry requirements and severe 
pricing pressure in many applications. In the ASIC market, the Company 
competes with analog and mixed signal semiconductor companies such as 
Motorola, Inc. ("Motorola"), Texas Instruments Incorporated ("TI") and Analog 
Devices, Inc. The Company's products also compete indirectly with conventional 
hybrid circuits and standard analog and mixed signal ICs. In the ISD market, 
the Company competes with Delco, a subsidiary of General Motors ("GM"), 
Motorola, TI, Kavlico and Denso Corporation ("Denso"). These companies all 
have substantially greater financial, technical, manufacturing, marketing, 
distribution, personnel and other resources than the Company. 

     The Company also anticipates that additional competitors may enter the 
Company's markets, resulting in even greater competition. Many of the 
Company's current or prospective competitors own or have investments in wafer 
foundries, which provide dedicated capacity to these competitors and enable 
them to influence or control costs more effectively than the Company. There 
can be no assurance that the Company will be able to compete successfully with 
existing or new competitors. Increased competition could result in significant 
price reductions or the loss of current or potential customers or design wins 
which could materially adversely affect the Company's business, financial 
condition or operating results. 

     Dependence on Key Personnel; Need for Additional Technical Personnel.  
The Company is substantially dependent upon the services of its executive 
officers. The Company's future success depends on the continued contributions 
of such officers, including the maintenance, enhancement and establishment of 
key customer relationships and the management of operations. The loss of the 
services of any of these officers by the Company could have a material adverse 
effect on the Company's business, financial condition or operating results. 
Such officers have not entered into employment agreements with the Company. 
The Company believes that its future success will be heavily dependent upon 
its ability to attract and retain qualified design, technical and management 
personnel. There can be no assurance that the Company will be able to continue 
to attract and retain these personnel, and the failure to do so could have a 
material adverse effect on the Company's business, financial condition or 
operating results.

     Dependence on Sole Source Suppliers. Certain components of the Company's 
current products, such as fabricated wafers, sensing elements, packages and PC 
boards, are acquired from single source suppliers. The Company purchases these 
components on a purchase order basis and may not carry significant 
inventories. The Company currently has no supply contracts with any of its 
assembly contractors. 

                                       15

<PAGE>    15



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS (continued)


     The Company's reliance on independent contractors to assemble and package 
its products involves significant risks, including reduced control over 
quality and delivery schedules, the potential lack of adequate capacity and 
discontinuance or phase-out of such contractors' assembly processes. 
Historically, due to a lack of significant volumes, the Company has 
experienced difficulty ensuring that independent assembly contractors would 
continue to assemble or package the Company's products and that alternative 
independent assembly contractors would be available in such instances. 

     Dependence on Independent Wafer Suppliers.  The Company relies on a small 
number of independent foundries for the manufacture of all of its ASICs, 
including those incorporated into its ISDs. Although the Company has initiated 
efforts to qualify second sources for certain of its key components, none of 
the Company's ASICs is currently fabricated by more than one foundry. Although 
processed wafer capacity in the semiconductor industry is currently widely 
available, there can be no assurance that the Company's foundries will 
continue to provide the Company an adequate supply of wafers to meet its 
customers' demands. 

     The Company believes that as a result of fluctuations in demand and 
changing technologies, processed wafer capacity may become limited from time 
to time, resulting in greater difficulty in obtaining adequate supplies of 
wafers, increased prices and increased lead times. Any increase in the demand 
for processed wafers over expected levels or any failure of processed wafer 
supply in the industry to grow at anticipated rates will magnify these 
shortages. There can be no assurance that the Company will be able to complete 
qualification of products fabricated by Symbios, or any other new wafer 
supplier, in a timely manner or at all, and any such failure could have a 
material adverse effect on the Company's business, financial condition or 
operating results. 

     The use of independent wafer foundries entails certain other risks, 
including reduced control over manufacturing yields and production costs. The 
Company has from time to time experienced lower than anticipated manufacturing 
yields in connection with the introduction of new products. For instance, the 
Company encountered a substantial yield problem with certain of its ISD 
products during the quarter ended March 31, 1998 due to a limitation of an 
ASIC design with respect to a particular variation in the foundry wafer 
process. These yield losses had a material adverse effect on the Company's 
operating results. There can be no assurance that the Company's wafer 
foundries will not produce wafers with lower than expected manufacturing 
yields in the future, which could materially adversely affect the Company's 
business, financial condition or operating results. 

     Dependence on Patents and Proprietary Rights.  The Company relies on a 
combination of patents, maskwork rights, trade secret laws, copyrights, 
trademarks and employee and third party non-disclosure agreements to protect 
its intellectual property rights. The Company has been issued four patents and 
has filed two additional patent applications in the United States and one 
foreign patent application relating to ASIC designs. In addition, the Company 
has filed one patent application in the United States relating to package 
design. There can be no assurance that any patents will issue from any of the 
Company's pending applications or that claims allowed from pending 
applications will be of sufficient scope or strength, or be issued in all 
countries where the Company's products can be sold, to provide meaningful 
protection or any commercial advantage to the Company. 

     The semiconductor industry is characterized by vigorous protection and 
pursuit of intellectual property rights or positions which have resulted in 
significant and often protracted and expensive litigation. Although there is 
currently no pending intellectual property litigation against the Company, the 
Company may from time to time be notified of claims that the Company may be 
infringing patents or other intellectual property rights owned by third 
parties. If it is necessary or desirable, the Company may seek licenses under 
such patents or other intellectual property rights. However, there can be no 
assurance that licenses will be offered or that the terms of any licenses will 
be acceptable to the Company. A failure to obtain a license from a third party 
for technology used by the Company could cause the Company to incur 
substantial liabilities and to suspend the manufacture of products requiring 
the technology. 

     Dependence on International Sales and Suppliers. The Company's sales to 
customers outside the United States are subject to a variety of risks, 
including those arising from fluctuations in currency exchange rates, tariffs, 
import restrictions and other trade barriers, unexpected changes in regulatory 
and governmental licensing requirements,

                                       16

<PAGE>    16


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS (continued)


longer accounts receivable payment cycles and potentially adverse tax 
consequences. Because a significant portion of the Company's international 
sales and in particular its European sales have to date been made through its 
German subsidiary and have been denominated in Deutsche Marks, fluctuations in 
the value of the Deutsche Mark relative to the U.S. Dollar or other currencies 
could adversely affect the pricing of the Company's products in foreign 
markets and make the Company's products relatively more expensive. In 
addition, fluctuations in the Deutsche Mark could adversely affect the 
profitability of sales made in Europe and therefore materially adversely 
affect the Company's business, financial condition or operating results. 

     Several Asian countries including South Korea, Japan and Thailand, have 
recently experienced significant economic downturns and significant declines 
in the value of their currencies relative to the U.S. dollar. Due to these 
conditions, it is possible that certain of the Company's customers will delay, 
reschedule or cancel significant current or future orders for the Company's 
products. If any such orders are delayed, rescheduled or canceled, the 
Company's business, financial condition and results of operations would be 
adversely affected. 


Year 2000 Compliance

     The Company is aware of the issues associated with the programming code 
in existing computer systems as the year 2000 approaches. The "year 2000 
problem" is pervasive and complex as virtually every computer operation will 
be affected in some way by the rollover of the two-digit year value to 00. 
This issue is whether computer systems will properly recognize date sensitive 
information when the year changes to 2000. Systems that do not properly 
recognize such information could generate erroneous data or cause a system to 
fail. Management is in the process of working with its software vendors to 
assure that the Company is prepared for the year 2000. The Company may also be 
affected by year 2000 issues at its vendors. Management does not anticipate 
that the Company will incur material operating expenses or be required to make 
any material investment in computer systems improvements to be year 2000 
compliant. However, uncertainty exists concerning the potential costs and 
effects associated with any year 2000 compliance. The Company is currently 
implementing an upgrade to its management information system that the Company 
believes is year 2000 compliant. Any year 2000 compliance problem of either 
the Company or its customers or vendors could materially adversely affect the 
Company's business, financial condition or operating results. 


                                       17

<PAGE>    1



                        PART II.   OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS


     As of the date hereof, to the Company's knowledge, there are no legal 
proceedings in which the Company is involved or litigation pending against the 
Company. 


ITEM 5.  OTHER INFORMATION

Use of Proceeds

     The net proceeds to the Company from the sale of the 2,875,000 shares of 
Common Stock in the Company's initial public offering (Registration Statement 
No. 333-41351 and No. 333-47885), effective March 13, 1998, including the 
underwriter's exercise of their over-allotment on April 8, 1998, were 
approximately $20,451,000 after deducting underwriting discounts and 
commissions, the Representatives' non-accountable expense allowance and other 
offering expenses. From the date of the closing of the initial public offering 
through June 30, 1998, the Company applied the net proceeds as follows: 
$766,347 was used to pay indebtedness to a related party, approximately 
$734,000 was used to purchase capital equipment, $801,275 was used to pay 
indebtedness to another related party, $500,000 was used to pay down the line 
of credit at the bank, approximately $3,800,000 was used for operating 
expenses and the balance has been invested in short-term interest bearing 
securities. 

Stockholder Proposals

     Proposals of stockholders intended to be presented at the next Annual 
Meeting of the Stockholders of the Company (other than proposals made under 
Rule 14a-8 of the Securities Exchange Act of 1934, as amended) must be 
received by the Company at its principal executive offices at 625 River Oaks 
Parkway, San Jose, California by March 25, 1999. 


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>

     (a)     Exhibits.
             ---------
            Exhibit
            Number                      Description
          ----------  ----------------------------------------------------
          <S>        <C>
             27.1     Financial Data Schedule.

</TABLE>

     (b)  Reports on Form 8-K. The Company did not file any Reports on Form
          8-K during the quarter ended June 30, 1998.


                                       18

<PAGE>    1



                                   SIGNATURE


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.



                                      INTEGRATED SENSOR SOLUTIONS, INC.
                                      ---------------------------------
                                                 (Registrant)



Date: August 14, 1998                 By /s/      DAVID SATTERFIELD   
                                         -----------------------------         
                                             David Satterfield
                                  Vice President Finance & Administration,
                                            Corporate Secretary
                                         (Authorized Officer and 
                                       Principal Financial Officer)




                                       19


<PAGE>    19