UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.   20549

        
                                      FORM 10-Q/A
         

          [X]   QUARTERLY REPORT PURSUANT  TO SECTION 13  OR 15 (d)  OF THE
          SECURITIES EXCHANGE ACT OF 1934

          For the Quarterly Period Ended December 31, 1996
                                         -----------------

                                          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 0-20968
                                --------

                          Advanced Mammography Systems, Inc.
              ----------------------------------------------------------
                (Exact name of registrant as specified in its charter)

                    Delaware                                04-3166348     
            
          ------------------------------          ----------------------
          (State or other jurisdiction       (IRS Employer Identification
          of incorporation or                Number)
          organization)

               46 Jonspin Road, Wilmington, Massachusetts        01887
              ---------------------------------------------------------
                (Address or principal executive offices)     (Zip Code)

                                     (508) 657-8876                  
                ------------------------------------------------------
                (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      
               ----

          As of January  31, 1997,  there were 8,346,740  shares of  Common
          Stock, $.01 par value, outstanding.  

        
                             AMENDMENT NO. 1
         

        
             The undersigned registrant hereby amends the following items,
        financial statements, exhibits or other portions of its Form 10-Q
        for the quarterly period ended December 31, 1996 as set forth in the
        pages attached hereto:
         

        
             (List all such items, financial statements, exhibits or other
         portions amended)
         

        
        1.   Items 1 and 2 Financial Statements and Management's
             Discussion and Analysis - Amended to reflect a change in 
             accounting for the May 1996 issuance of the convertible
             debentures.  (See Note 1 in NOTES TO CONSOLIDATED FINANCIAL
             STATEMENTS (UNAUDITED))

         

     <PAGE>

                          ADVANCED MAMMOGRAPHY SYSTEMS, INC.
                       ---------------------------------------

                                        INDEX
                                        -----


          PART I.   FINANCIAL INFORMATION                          Page No.
                    ---------------------                          --------

               Item 1.  Financial Statements

                    Balance Sheets - December 31, 1996 and              3  
                         September 30, 1996

                    Statements of Operations - Quarters Ended           4  
                         December 31, 1996 and December 31, 1995
                         and for the period from July 2, 1992 
                         (inception) to December 31, 1996

                    Statements of Cash Flows - Quarters Ended           5  
                         December 31, 1996 and December 31, 1995
                         and for the period from July 2, 1992
                         (inception) to December 31, 1996

                    Notes to Financial Statements                      6-10

               Item 2.  Management's Discussion and Analysis of       11-12
                         Financial Condition and Results of 
                         Operations


          PART II.  OTHER INFORMATION
                    -----------------
                                   
        
         

               Signatures                                              13  
               ----------
     
                                      2
     <PAGE> 

        
          FORM 10-Q/A
         
   
          PART 1 FINANCIAL INFORMATION 
          Item 1 Financial Statements


                          ADVANCED MAMMOGRAPHY SYSTEMS, INC.
                         (A COMPANY IN THE DEVELOPMENT STAGE)

                                    BALANCE SHEETS
                                    --------------

                                                    December 31,   September
                                                        1996          30,
                                                    (Unaudited)       1996
                                                   -------------  -----------

           ASSETS
           -------
           CURRENT ASSETS
           --------------
           Cash and cash equivalents                $1,283,766  $1,997,076

           Inventory                                 1,174,976   1,123,404

           Other current assets                          8,000      27,204
                                                   -----------  ----------
                     TOTAL CURRENT ASSETS            2,466,742   3,147,684


           Equipment- at cost, net of accumulated
             depreciation of $367,072 and
           $335,277 at December 31, 1996 and           646,926     611,432
           September 30, 1996, respectively

           Patent- at cost, net of amortization
           of $8,526 and $7,060 at December 31,
           1996 and September 30, 1996                  23,194      24,661

           Debt issue cost                             177,430     200,574
                                                    ----------   ---------
           TOTAL ASSETS                             $3,314,292  $3,984,351
                                                    ==========  ==========


           LIABILITIES AND STOCKHOLDERS' EQUITY
           -------------------------------------
           CURRENT LIABILITIES
           -------------------

           Accounts payable & accrued expenses         $87,538    $184,785

           Compensation payable                         48,013      52,259
           Accounts payable to parent company        1,083,035     671,551
                                                    ---------- -----------

                     TOTAL CURRENT LIABILITIES       1,218,586     908,595
                                                     ---------  ----------
           Notes Payable                             1,482,164   1,471,751
                                                     ---------   ---------

                          TOTAL LIABILITIES          2,700,000   2,380,346


           STOCKHOLDERS' EQUITY
           --------------------

           Preferred stock, $.01 par value,
              5,000,000 shares authorized none
              issued                                         -           -

           Common stock, $.01 par value,
              authorized 25,000,000 shares;
              issued 8,346,740 and 8,346,740            83,467      83,467

        
           Additional paid in capital               14,368,543  14,368,543
           Deficit accumulated during the
              development stage                    (13,838,468)(12,848,005)
                                                   ----------- -----------
         

                     TOTAL STOCKHOLDERS' EQUITY        613,542   1,604,005
                                                   ----------- -----------

           TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
                                                    $3,314,292  $3,984,351
                                                   ===========  ==========

           See notes to financial statements


                                      3
     <PAGE> 

        
          FORM 10-Q/A
                                          
                  
                          ADVANCED MAMMOGRAPHY SYSTEMS, INC.
                         (A COMPANY IN THE DEVELOPMENT STAGE)

                               STATEMENTS OF OPERATIONS
                              -------------------------
                                     (UNAUDITED)
                                     -----------


                                                          
                                                         CUMULATIVE FROM 
                                    QUARTERS ENDED          JULY 2, 1992
                                    --------------      (INCEPTION DATE)
                              DECEMBER 31,   DECEMBER 31, TO DECEMBER 31,
                              -----------    -----------        1995 
                                  1996           1995     ---------------
                                 ------         ------    
      COST AND EXPENSES
      Acquired technology      $  -           $  -           $1,720,000
      Research & development     455,767       221,824        4,182,629
      General & administrative   532,062       432,110        6,302,358
                                 -------       --------      ----------
      LOSS FROM OPERATIONS     ( 987,829)     (653,934)     (12,204,987)

      Amortization of debt
       issuance cost           (  23,143)          --        (   364,962)
       
      Interest expense              --             --        ( 1,599,999)
       
      Interest & other income     20,509         12,106          331,480 
                               ----------     ----------     ------------

      
      NET LOSS AND DEFICIT
       ACCUMULATED DURING
       DEVELOPMENT STAGE      $( 990,463)    $( 641,828)    $(13,838,468)
                               ==========     ==========    =============
       

      NET LOSS PER SHARE      $(    .18 )    $(    .07 )                
                              ==========     ===========


      Weighted average number
       of common shares
       outstanding            5,596,740       3,848,376   
                              =========       =========


      See notes to financial statements.

            
                                      4
 <PAGE> 

        
      FORM 10-Q/A
         

                           ADVANCED MAMMOGRAPHY SYSTEMS, INC. 
                         (A COMPANY IN THE DEVELOPMENT STAGE)

                               STATEMENTS OF CASH FLOWS
                               ------------------------
                                     (UNAUDITED)
                                     -----------

                                                       QUARTERS ENDED
                                                      ----------------

                                                 DECEMBER 31,   DECEMBER 31
                                                 -----------    -----------
                                                     1996          1995
                                                    -----          -----
       CASH FLOWS FROM OPERATING ACTIVITIES:

         Net (Loss)                           $(   990,463) $(    641,828)
                                              ------------    -----------

         Adjustments to reconcile net loss to
          net cash flows from operating
           activities:
            Depreciation and amortization           43,676         28,283

            Amortization of debt issuance cost      23,143              -
               
            Amortization of discount related
             to issuance of convertible
             debentures (Note 7)                         -              -
        
            Common stock issued for technology
             rights                                      -              -

         Changes in assets and liabilities:

            Inventories                         (   51,572)    (   50,642)
            Other current assets                    19,204              -

            Accounts payable & accrued expenses (   97,247)    (   11,312)
              Other current liabilities            407,238        246,024
                                                ----------    -----------

         Total adjustments                         344,442        212,353
                                                ----------    -----------

       NET CASH (USED) FOR OPERATING            (  646,021)    (  429,475)
         ACTIVITIES:                           -----------    -----------

       CASH FLOWS FROM INVESTING ACTIVITIES:

         Patent costs                                    -     (      798)
         Net additions to furniture, equipment,
           and leasehold improvements            (  67,289)             -
                                                ----------      ---------

       NET CASH (USED) FOR INVESTING
          ACTIVITIES:

       CASH FLOWS FROM FINANCING ACTIVITIES:
         Payment of notes payable                        -              -

         Proceeds from notes payable & warrants          -              -
         Public offering of stock, net                   -              -

         Sale of unit purchase option                    -              -

         Debt issuance cost                              -              -
         Costs of public offering

         Exercise of stock options                       -              -
         Exercise of stock warrants                      -              -
                                               -----------      ---------

       NET CASH PROVIDED BY FINANCING
         ACTIVITIES:                                     0              0
                                               -----------      ---------


       CASH AND CASH EQUIVALENTS:

         Net increase (decrease)               (   713,310)   (   430,273)
         Balance, beginning of period            1,997,076      1,832,563
                                              ------------   ------------

         Balance, end of period                 $1,283,766     $1,402,290
                                                ==========    ===========


                                                          CUMULATIVE FROM
                                                           JULY 2, 1992
                                                         (Inception Date)
                                                          TO DECEMBER 31,
                                                               1996
                                                         -----------------
       CASH FLOWS FROM OPERATING ACTIVITIES:
     
         Net (Loss)                                        $(13,838,468)
                                                           ------------
       
         Adjustments to reconcile net loss to net
         cash flows from operating activities:

            Depreciation and amortization                     1,143,766

            Amortization of debt issuance cost                  105,825
     
            Amortization of discount related to
             issuance of convertible debentures
             (Note C)                                         1,000,000
        
            Common stock issued for technology
             rights                                              40,000

         Changes in assets and liabilities:

            Inventories                                     ( 1,174,976)
            Other current assets                            (     8,000)

            Accounts payable & accrued expenses                  87,538

              Other current liabilities                       1,131,048
                                                             ----------
         Total adjustments                                    1,325,201
                                                             ----------

       NET CASH (USED) FOR OPERATING                        (11,513,267)
         ACTIVITIES:                                        -----------
       CASH FLOWS FROM INVESTING ACTIVITIES:

         Patent costs                                       (    31,721)

         Net additions to furniture, equipment,
           and leasehold improvements                       ( 1,013,997)
                                                           ------------
       NET CASH (USED) FOR INVESTING
          ACTIVITIES:                                        (1,045,718)

         Payment of notes payable                             2,000,000
         Proceeds from notes payable & warrants               5,000,000

         Public offering of stock, net                        8,901,000

         Sale of unit purchase option                               129
         Debt issuance cost                                  (  530,962)

         Costs of public offering                           ( 1,436,617)
         Exercise of stock options                               40,000

         Exercise of stock warrants                           3,869,201
                                                            -----------

       NET CASH PROVIDED BY FINANCING
         ACTIVITIES:                                         13,842,751
                                                            -----------


       CASH AND CASH EQUIVALENTS:
         Net increase (decrease)                              1,283,766

         Balance, beginning of period                                 -
                                                           ------------

         Balance, end of period                              $1,283,766
                                                             ==========

      See notes to financial statements.


                                      5
 <PAGE> 

        
      FORM 10-Q/A
         

      NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
      -----------------------------------------

      NOTE 1 - BASIS OF PRESENTATION
      ------------------------------

        
          The accompanying financial statements have been restated to
     include adjustments to the September 30, 1996 balances of additional
     paid in capital and deficit accumulated during the development stage
     to reflect a change in accounting for the May 1996 issuance of
     convertible debentures whereby the beneficial conversion feature of
     the debentures was recorded as additional interest expense.
         

        
          This amended Form 10-Q should be read in conjunction with all
     subsequent filings with the Securities and Exchange Commission which
     disclose significant developments including a proposed merger of
     Advanced Mammography Systems, Inc. ("AMS" or the "Company") and 
     Advanced NMR Systems, Inc. ("ANMR").
         

           The results of operations for the interim periods shown in this
      report are not necessarily indicative of results to be expected for the
      fiscal year.  In the opinion of management, the information contained
      herein reflects all adjustments necessary to make the results of
      operations for the interim periods a fair statement of such operations. 
      All such adjustments are of a normal recurring nature.

           The accompanying financial statements do not contain all of the
      disclosures required by generally accepted accounting principles and
      should be read in conjunction with the financial statements and related
      notes included in the Company's annual report on Form 10-K for the year
      ended September 30, 1996.


      NOTE 2 - THE COMPANY
      --------------------
        
           The Company is a development stage company which was organized in
      Delaware in July 1992 to acquire and develop proprietary technology 
      from ANMR in order to design, manufacture and commercialize a dedicated
      (or partial body) magnetic resonance imaging ("MRI") system for
      breast imaging which can be used to detect and characterize breast 
      tissue abnormalities.
         

           In February 1996, the U.S. Food and Drug Administration (the "FDA")
      cleared the commercial use of the Company s AuroraTM dedicated MR Breast
      Imaging System.  In order to fully commercialize the Aurora System and to
      demonstrate diagnostic effectiveness as an accepted tool for the
      diagnosis and management of breast disease and permit reimbursement for
      dedicated breast MRI by third parties such as Medicare, private insurance
      and managed care consortiums, the Company must develop maximum clinical
      utility.  The Company has launched a clinical study which includes a
      scientific investigation of the improved breast imaging device in a large

                                      6
     <PAGE>

      patient population to provide objective evidence of its clinical utility. 
      The System has been placed at the University of Texas Medical Branch at
      Galveston and the Company expects to install a second System at the
      Faulkner-Sagoff Centre for Breast Health Care in Boston, MA for research
      testing.  It is anticipated that the breast imaging technology should
      gain clinical acceptance over the next two years and continue to evolve
      as further information is obtained from the clinical studies concerning
      additional applications. 

           The Company completed its initial public offering ("IPO") in January
      1993, selling 1,483,500 shares of Common Stock at a price of $6.00 per
      share including 193,500 shares underlying an over-allotment option
      exercised by the underwriter in March 1993.  The public offering
      generated cash proceeds of approximately $7,500,000 net of commissions
      and other costs.  The IPO proceeds were used for the repayment of debt, 
      for research and development and for working capital.  In January 1995,
      the Company called for redemption of all of its remaining outstanding
      redeemable stock purchase warrants (the "Warrants") to purchase shares of
      its Common Stock and received $2.3 million in proceeds.  In  May  1996,
      the Company completed a private placement of $3 million of Convertible
      Debentures. (See Note 7)

      NOTE 3 - THE ANMR ESCROW SHARES
      -------------------------------

           In connection with the Company's January 1993 public offering, ANMR,
      which was the sole stockholder of the Company, placed in escrow an
      aggregate of 2,750,000 (the "Escrow Shares") of the 4,000,000 shares of
      the Common Stock it owned.  ANMR may vote the Escrow Shares, but cannot
      assign or transfer them while they remain subject to the escrow.

           All Escrow Shares not released from escrow will be forfeited and
      contributed to the capital of the Company as a result of the Company's
      failure to achieve certain financial milestones, which if achieved would
      have resulted in the release of the Escrow Shares.  The conditions for
      the release of the Escrow Shares have not been met and it is expected
      that the Escrow Shares will be returned to the Company as of May 1997. 
      Upon forfeiture of the Escrow Shares the Company will incur an expense
      based on the fair market value of the Company's Common Stock and ANMR s
      interest in the Company will be reduced to approximately 20%.

           The Company believes that its transaction with ANMR described above
      was on terms not less favorable to the Company than the terms that would
      have been available from unaffiliated parties under similar
      circumstances.  Actual comparisons with other transactions are not
      possible, however.

                                      7
     <PAGE>


      NOTE 4 - THE SHARED SERVICES AGREEMENT
      --------------------------------------

           To optimize the Company's and ANMR's operating efficiency, the
      Company and ANMR entered into a Shared Services Agreement as of January
      25, 1993, whereby the companies share common expenses and functions, for
      example, executive officers, marketing, field service, administration,
      regulatory approvals and outside services.  On August 29, 1996, the
      original Agreement dated January 25, 1993, was terminated and the Company
      and ANMR entered into a new agreement which outlines a more accurate
      method of allocating the services that are shared by the companies.  The
      new agreement has developed as a result of two significant factors:  (a)
      the changes in the company profile of ANMR which is modifying its
      technology operations related to the manufacture of its InstaScan
      retrofit system and is attending to its service divisions, and (b) the
      growing independence of both companies as each company pursues divergent
      objectives.  Vendors for parts and services have been instructed to
      provide separate invoices directly to the Company or ANMR, as the case
      may be.  The Company s expenses related to the use of the facilities,
      such as rent, utilities and insurance, will be apportioned based on the
      number of square feet occupied by the Company or ANMR, respectively.  The
      remaining expenses, including senior management, administration and
      miscellaneous supplies and resources, will be allocated equitably between
      the companies, but will be modified as circumstances dictate.


      NOTE 5 - THE ANMR LICENSE AGREEMENT
      -----------------------------------

           In June 1992, the Company entered into the ANMR License Agreement
      with ANMR pursuant to which the Company was granted a perpetual,
      worldwide exclusive, royalty-free license to all proprietary technology
      and related know-how, including patents owned and/or licensed by ANMR and
      patent applications filed or to be filed by ANMR (the "Licensed
      Technology"), to the extent, if any, useful in connection with developing
      a dedicated MRI system for mammography (the "Field of Use").

           The Company believes other dedicated use (or partial body) MRI
      scanners might be developed for fields of use in addition to breast
      imaging.  The Company has not been granted the right to use any
      technology now or hereafter obtained by the Company from ANMR in
      connection with any other dedicated use MRI scanners.  However, the
      Company has been granted a 50% interest in any entity which may be
      organized by ANMR to develop dedicated use MRI scanners outside the Field
      of Use ("ANMR Entity") and a 50% interest in any net profits, as defined
      in the ANMR License Agreement (after allocation of development expense),
      derived by ANMR from the sale or license of dedicated use MRI scanners
      utilizing or based upon the Licensed Technology outside the Field of Use. 
      The ANMR License Agreement provides that (i) any inventions outside the
      Field of Use developed solely by ANMR or an ANMR entity shall be owned by
      ANMR or such ANMR entity and automatically licensed to the Company on an

                                      8
     <PAGE>

      exclusive, worldwide basis, within the Field of Use, and (ii) any
      inventions developed solely by the Company shall be automatically
      licensed to ANMR on an exclusive worldwide basis for use solely outside
      the Field of Use, and (iii) any inventions outside the Field of Use
      jointly developed by the Company and ANMR or an ANMR entity shall be
      jointly owned in equal shares by the Company, on the one hand, and ANMR
      or an ANMR Entity, on the other hand, and AMS or an ANMR entity shall
      automatically license its interest to ANMR on an exclusive, worldwide
      basis.  Accordingly, ANMR shall obtain the right to future technology
      developed by AMS for use in connection with breast imaging, and the
      Company shall obtain the right to further technology developed by the
      Company for use outside the Field of Use.

           Neither party may assign its rights under the ANMR License Agreement
      without the prior written consent of the other party, except that either
      party may transfer, assign or sublicense its rights under the ANMR
      License Agreement in connection with disposing of any entire product
      line, subcontracting to a third party the development, manufacture or
      sale of a particular product, granting to a third party the right to
      manufacture, develop or sell a particular product in any territory within
      or without the United States, or, in the case of the Company, a transfer
      of all of its rights to the Licensed Technology to a single entity.

           On August 6, 1996, ANMR announced that it has eliminated research,
      development and production of its InstaScan technology.  Restructuring of
      ANMR could have an impact on the future availability of ANMR scientific
      personnel under the Shared Services Agreement and its related technology
      before the period under the ANMR License Agreement.  


      NOTE 6 - THE AURORA BREAST IMAGING SYSTEM
      ------------------------------------------

           The Company intends to market its MRI breast imaging products or
      components thereof, either directly to hospitals and clinics or through a
      marketing or joint venture arrangement with one or more distributors.

           In February 1996, the Company was granted a 510(k) clearance by the
      FDA for the purpose of commercial distribution of the Aurora System.  To
      accelerate the establishment of MR's clinical efficacy and cost
      effectiveness in the diagnosis of breast diseases, in addition to its
      arrangements with its two current institutions, the Company is partnering
      under terms currently in negotiations with other leading institutions to
      conduct rigorous and scientifically sound clinical and economic outcome
      comparisons between MR breast imaging and mammography.  This marketing
      effort will fuel a comprehensive sales campaign, including advertising,
      trade shows, application training and other activities as appropriate. 
      The Company installed the first Aurora System at the Breast Imaging
      Center at the University of Texas Medical Branch at Galveston, Texas in
      February 1996.  The second installation of the Aurora System will be at

                                      9
     <PAGE>

      the world renowned Sagoff Centre at Faulkner Hospital, Boston, MA in
      April 1997.


      NOTE 7 - PRIVATE PLACEMENT OF CONVERTIBLE DEBENTURES
      ----------------------------------------------------

           In May  1996, the Company closed a Regulation S private placement
      (the "Placement") of $3 million principal amount 4% Convertible
      Debentures of the Company (the "Debentures") due December 1, 1998 (the
      "Maturity Date").  The Debentures accrue interest at the rate of 4% per
      annum from the date of issuance to the Maturity Date, or earlier either
      upon conversion or prepayment.  Upon conversion, the Company has the
      option to pay the accrued interest on the Debentures being converted in
      shares of its Common Stock at the then conversion rate.  At December 31,
      1996, approximately $1,482,000 of Debentures was still outstanding after
      certain conversions.  The net proceeds of the Placement of approximately
      $2,750,000, after payment of fees and related expenses, is being used for
      completion of product development of the Company s Aurora System, the
      commercialization and marketing of the Aurora System and working capital.

           In connection with the Placement, the Company issued to the
      placement agents for the Debentures, warrants for the purchase of 197,500
      shares of the Company's Common Stock at an exercise price of $2.20 per
      share for a period or eighteen months and warrants for an additional
      197,500 shares of Common Stock at an exercise price of $2.50 per share
      for a period of five years.


      NOTE 8 - PRIVATE PLACEMENT OF STOCK AND WARRANTS
      ------------------------------------------------

           On February 6, 1997, the Company sold an aggregate of 1,219,514
      shares of Common Stock and three year warrants to purchase 1,219,514
      shares of Common Stock at an exercise price of $1.93 per share for
      $1,500,000.  These placements were in accordance with Regulation S and
      Regulation D under the Securities Act of 1933.  In connection with the
      placements, the Company issued to the placement agent three year warrants
      for the purchase of 121,951 shares of Common Stock at an exercise price
      of $1.68 per share and paid 11-1/4% in fees and expenses.  


                                      10
 <PAGE> 

        
      FORM 10-Q/A
         

      ITEM 2

      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
      ---------------------------------------------------------------
      RESULTS OF OPERATIONS
      ---------------------

           The following discussion should be read in conjunction with the
      attached notes hereto, and with the audited financial statements and
      notes thereto for the year ended September 30, 1996.

      RESULTS OF OPERATIONS
      ---------------------

        
           The Company was formed in July 1992 and is in the development stage. 
      Through December 31, 1996, the Company had not derived any revenues from
      operations, although it has placed the first breast imaging system at a
      customer Beta site in Galveston, Texas and expects to receive payment for
      this system in fiscal 1997.  As a result of charging operations with the
      cost of its technology license acquired from ANMR, as well as salaries
      and consulting fees of persons engaged in research and development
      activities, the Company had an accumulated deficit of $13,838,000 at
      December 31, 1996. Of such deficit, $1,720,000 represented the purchase
      price of rights to certain technology transferred to the Company by ANMR
      in 1992.
         

           Total operating expenses for the three months of fiscal 1997 were
      $988,000, an increase of 51% compared to $654,000 in the same period in
      fiscal 1996.

           Research and development expense was $456,000 in the first three
      months of fiscal 1997, an increase of 105% compared with $222,000 in the
      same period in fiscal 1996.  The increase is due to the addition of
      technical personnel assigned to complete the R&D effort.  The Company
      expects research and development expense to stabilize at this level
      through fiscal 1997.  

           General & administrative expense for the first three months of
      fiscal 1997 was $532,000 versus $432,000 for the same period in fiscal
      1996.  The increase is due primarily to additional personnel responsible
      for clinical applications, customer support and regulatory and compliance
      management.  


      LIQUIDITY AND CAPITAL RESOURCES
      -------------------------------

           At December 31, 1996 the Company had working capital of $1,248,000
      including available cash of $1,284,000.  The Company expects to continue
      to incur substantial expenditures for development, marketing, and
      clinical studies of the breast imaging system.

           The Company believes its existing cash reserves, including the
      proceeds of from the May 1996 Debentures and the February 1997 placements
      (see Item 1 Notes 7 and 8) are adequate to fund its operating activities

                                      11
     <PAGE>

      for the next nine months.  The Company is seeking to obtain additional
      funds through debt or additional equity placements.  The February 1997
      placements were made pursuant to a funding agreement among the Company,
      placement agent and a potential lender.  The funding agreement provides
      for short term convertible debt financing not to exceed $10 million on
      mutually agreed terms.  The parties are conducting negotiations, however,
      there is no assurance that these negotiations will result in any
      financing or that the terms would be not dilutive to present
      stockholders. 

           The Company is including the following cautionary statement in its
      Report on Form 10-Q to make applicable and take advantage of the safe
      harbor provisions of the Private Securities Litigation Reform Act of 1995
      for any forward-looking statements made by, or on behalf of the Company. 
      Forward-looking statements include statements concerning plans,
      objectives, goals, strategies, future events or performance and
      underlying assumptions and other statements which are other than
      statements of historical facts.  Certain statements contained herein are
      forward looking statements and accordingly involve risks and
      uncertainties which could cause actual results or outcomes to differ
      materially from those expressed in the forward-looking statements.  The
      Company's expectations, beliefs and projects are expressed in good faith 
      and are believed by the Company to have a reasonable basis, including
      without limitations, management's examination of historical operating
      trends, data contained in the Company's records and other data available
      from third parties, but there can be no assurance that management's
      expectations, beliefs or projections will result or be achieved or
      accomplished.  In addition to other factors and matters discussed
      elsewhere herein, the following are important factors that, in the view
      of the Company, could cause actual results to differ materially from
      those discussed in the forward-looking statements:  technological
      advances by the Company's competitors, changes in health care reform,
      including reimbursement programs, capital needs to fund any delays or
      extensions of research programs, delays in product development, lack of
      market acceptance of technology and the availability of capital on terms
      satisfactory to the Company.  The Company disclaims any obligation to
      update any forward-looking statements to reflect events or circumstances
      after the date hereof.

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 <PAGE> 

        
      FORM 10-Q/A
         

                                      SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
      registrant has duly caused this report to be signed
      on its behalf by the undersigned thereunto duly authorized.

                                            Advanced Mammography Systems, Inc.
                                            ----------------------------------
                                                      (Registrant)
 
        


      Date:  August 4, 1997                 /s/ Steven J. James
                                            --------------------------------
                                            Steven J. James
                                            Chief Financial Officer
         


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