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 June 30, 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 July 31, 1996, there were 6,598,376 shares of Common Stock,
          $.01 par value, outstanding.

     <PAGE>
     
        
                                  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 June 30, 1996 as set forth
          in the pages attached hereto:
         

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

        
          1.    Item 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))
         

                                      -2-  

     <PAGE>
                          ADVANCED MAMMOGRAPHY SYSTEMS, INC.
                          ----------------------------------


                                        INDEX
                                        -----


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

                Item 1.   Financial Statements

                          Balance Sheets- June 30, 1996 and              4
                          September 30, 1995

                          Statements of Operations- Quarters and         5
                            Nine Months Ended June 30, 1996 and
                            June 30, 1995 and for the period from
                            July 2, 1992 (inception) to June 30, 1996

                          Statements of Cash Flows- Nine Months Ended    6
                            June 30, 1996 and June 30, 1995
                            and for the period from July 2, 1992
                            (inception) to June 30, 1996

                          Notes to Financial Statements                7-11

                Item 2.   Management's Discussion and Analysis        12-13
                            of Financial Condition and Results
                            of Operations


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

        
         

                 Signature                                              14
                 ---------

                                      -3-
     <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
                                    --------------


                                               June 30, 1996  September 30,
                                                (Unaudited)       1995
                                               -------------  ------------
          ASSETS
          ------
          CURRENT ASSETS
          --------------
          Cash and cash equivalents           $  2,462,966   $  1,832,563 
          Inventory                              1,109,565        969,979 
          Accounts receivable                            0              0 
                                              ------------   ------------ 
                    TOTAL CURRENT ASSETS         3,572,531      2,802,542 

          Furniture, equipment and
          leasehold improvements - net             523,900        603,797 
                                              ------------   ------------ 

          Patent costs - net                        22,897         24,028 
          Total other assets                         5,000         10,000 
          Capitalized debt issuance cost           231,431              0 
                                              ------------   ------------ 
          TOTAL ASSETS                        $  4,355,759   $  3,440,367 
                                              ============   ============ 

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

          CURRENT LIABILITIES
          -------------------
          Accounts payable & accrued expenses $    135,269   $     25,083 
          Compensation payable                      39,267         38,509 
          Accounts payable to parent company       234,125        133,428 
                                              ------------   ------------ 
                    TOTAL CURRENT LIABILITIES      408,661        197,020 
                                              ------------   ------------ 
        
          Notes Payable                          2,683,333              0 
                                              ------------   ------------ 
                    TOTAL LIABILITIES         $  3,091,994   $    197,020 
         

          STOCKHOLDERS' EQUITY
          --------------------
          Preferred stock, $.01 par value,
             authorized 5,000,000 shares;
             none issued                                 -              - 
          Common stock, $.01 par value,
             authorized 25,000,000 shares;
             issued 6,598,376                       65,984         65,984 
        
          Additional paid in capital            13,031,110     11,847,729 
          Deficit accumulated during the
             development stage                 (11,833,329)   ( 8,670,366)
                                              ------------   ------------ 
                    TOTAL STOCKHOLDERS' EQUITY   1,263,765      3,243,347 
                                              ------------   ------------ 
         
          TOTAL LIABILITIES & STOCKHOLDERS'
          EQUITY                              $  4,355,759   $  3,440,367 
                                              ============   ============ 


            The accompanying notes to financial statements are an integral
                                     part hereof.

                                      -4-
     <PAGE>

              
          FORM 10-Q/A
         

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

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


                                                QUARTERS ENDED JUNE 30,
                                                -----------------------
                                                 1996            1995
                                                 ----            ----
          COST AND EXPENSES
          Acquired technology                  $    -          $    -
          Research & development                 253,161         235,372
          General & administrative               551,785         273,137
                                               ---------       ---------
          LOSS FROM OPERATIONS                 $(804,946)      $(508,509)

          Amortization of debt
            issuance cost                           -               -
        
          Interest expense                      (883,333)           -
         
          Interest & other income                 14,314          18,524
                                               ---------       ---------
        
          NET LOSS AND DEFICIT
            ACCUMULATED DURING               $(1,673,965)      $(489,985)
            DEVELOPMENT STAGE                ===========       =========

          NET LOSS PER SHARE                 $(      .43)      $(    .13)
                                             ===========       =========
         

          Weighted average number
            of common shares                   3,848,376       3,734,000
            outstanding                        =========       =========


                                              NINE MONTHS ENDED JUNE 30,
                                              --------------------------
                                                 1996            1995
                                                 ----            ----
          COST AND EXPENSES
          Acquired technology                $      -        $      -
          Research & development                 750,956         754,201
          General & administrative             1,571,595         999,488
                                             -----------     -----------
          LOSS FROM OPERATIONS                (2,322,551)     (1,753,689)

          Amortization of debt
            issuance cost                           -               -
        
          Interest expense                      (883,333)           -
         
          Interest & other income                 42,923          42,118
                                             -----------     -----------

        
          NET LOSS AND DEFICIT
            ACCUMULATED DURING               $(3,162,961)    $(1,711,571)
            DEVELOPMENT STAGE                ===========     ===========

          NET LOSS PER SHARE                 $(      .82)    $(      .51)
                                             ===========     ===========
         

          Weighted average number
            of common shares                   3,848,376       3,326,424
            outstanding                      ===========     ===========


                                                  CUMULATIVE FROM
                                                   JULY 2, 1992
                                                 (INCEPTION DATE)
                                                 TO JUNE 30, 1996
                                            --------------------------
          COST AND EXPENSES
          Acquired technology                      $  1,720,000
          Research & development                      3,470,524
          General & administrative                    5,132,157
                                                   ------------
          LOSS FROM OPERATIONS                      (10,322,681)

          Amortization of debt
            issuance cost                           (   310,962)
        
          Interest expense                          ( 1,483,332)
         
          Interest & other income                       283,646
                                                   ------------
        
          NET LOSS AND DEFICIT
            ACCUMULATED DURING                     $(11,833,329)
            DEVELOPMENT STAGE                      ============
         

          NET LOSS PER SHARE

          Weighted average number
            of common shares
            outstanding


             The accompanying notes to financial statements are an
                             integral part hereof.

                                      -5-
     <PAGE>
            
        
            FORM 10-Q/A
         

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

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

                                             NINE MONTHS ENDED JUNE 30,
                                             --------------------------
                                                1996             1995
                                                ----             ----
          CASH FLOWS FROM OPERATING
            ACTIVITIES:           
        
            Net Income (Loss)               $(3,162,961)     $(1,711,571)
                                            -----------      -----------
          
            Adjustments to reconcile
            net loss to net cash flows
            from operating activities:

              Depreciation and
              amortization                       89,884           80,739

              Amortization of debt
              issuance cost                                         -   
        
              Amortization of beneficial
              conversion feature                883,333             -
         
              Common stock issued for
              technology rights                    -                -   

            Changes in assets and
            liabilities:

              Inventories                    (  139,586)      (1,082,031)

              Other current assets                5,000       (    8,988)

              Accounts payable & accrued
              expenses                          110,186          181,509

              Other current liabilities         101,455       (  296,018)
                                            -----------      -----------

            Total adjustments                   166,939       (1,124,789)
                                            -----------      -----------

          NET CASH (USED) FOR OPERATING      (2,112,691)      (2,836,360)
          ACTIVITIES:                       -----------      -----------

          CASH FLOWS FROM INVESTING
          ACTIVITIES:

            Patent costs                     (    3,098)      (   16,302)

            Net additions to furniture,
            equipment, and leasehold         (    5,758)      (  103,713)
            improvements                    -----------      -----------

          NET CASH (USED) FOR INVESTING      (    8,856)      (  120,015)
          ACTIVITIES:                       -----------      -----------

          CASH FLOWS FROM FINANCING
          ACTIVITIES:

            Payment of notes payable               -                -   

            Proceeds from notes payable
            & warrants                             -                -   

            Proceeds from issuance of
            convertible debentures            2,751,950

            Public offering of stock,
            net                                    -                -   

            Debt issuance cost                     -                -   

            Cost of Public offering                -                -   

            Sale of option to purchase
            units                                  -                -   

            Exercise of stock options &            -           3,422,141   
            warrants                        -----------      -----------

          NET CASH PROVIDED BY FINANCING
          ACTIVITIES:                         2,751,950        3,422,141
                                            -----------      -----------

          CASH AND CASH EQUIVALENTS:

            Net increase (decrease)             630,403          465,766

            Balance, beginning of period      1,832,563        1,996,270
                                            -----------      -----------

            Balance, end of period          $ 2,462,966      $ 2,462,036
                                            ===========      ===========


                                                  CUMULATIVE FROM
                                                   JULY 2, 1992
                                                 (INCEPTION DATE)
                                                 TO JUNE 30, 1996
                                            --------------------------
          CASH FLOWS FROM OPERATING
            ACTIVITIES:
        
            Net Income (Loss)                      $(11,833,329)
                                                   -------------
         
            Adjustments to reconcile
            net loss to net cash flows
            from operating activities:

              Depreciation and
              amortization                            1,041,054

              Amortization of debt
              issuance cost                              51,825
        
              Amortization of beneficial
              conversion feature                        883,333
         
              Common stock issued for
              technology rights                          40,000

            Changes in assets and
            liabilities:

              Inventories                           ( 1,109,565)

              Other current assets                  (     5,000)

              Accounts payable & accrued
              expenses                                  135,269

              Other current liabilities                 273,392
                                                    ------------

            Total adjustments                           426,975
                                                    ------------

          NET CASH (USED) FOR OPERATING
          ACTIVITIES:                               (10,523,021)
                                                    ------------

          CASH FLOWS FROM INVESTING
          ACTIVITIES:

            Patent costs                            (    28,218)

            Net additions to furniture,
            equipment, and leasehold
            improvements                            (   800,496)
                                                    ------------

          NET CASH (USED) FOR INVESTING
          ACTIVITIES:                               (   828,714)
                                                    ------------

          CASH FLOWS FROM FINANCING
          ACTIVITIES:

            Payment of notes payable                ( 2,000,000)

            Proceeds from notes payable
            & warrants                                2,000,000

            Proceeds from issuance of
            convertible debentures                    2,751,950

            Public offering of stock,
            net                                       8,901,000

            Debt issuance cost                      (   310,962)

            Cost of Public offering                 ( 1,436,617)

            Sale of option to purchase
            units                                           129

            Exercise of stock options &
            warrants                                  3,909,201
                                                    ------------
          NET CASH PROVIDED BY FINANCING
          ACTIVITIES:                                13,814,701
                                                    ------------

          CASH AND CASH EQUIVALENTS:

            Net increase (decrease)                   2,462,966

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

            Balance, end of period                   $2,462,966
                                                     ===========


            The accompanying notes to financial statements are an integral
                                     part hereof.

                                      -6- 
     <PAGE>

        
          FORM 10-Q/A
         

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

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

              
               The accompanying financial statements have been restated
          from those originally issued to reflect a change in accounting for
          the May 1996 issuance of the convertible debentures by Advanced
          Mammography Systems, Inc. ("AMS" or the "Company") described in
          Note 7 to these financial statements.  The debentures may be 
          converted at a discount to the traded market price of the common 
          stock into which the debentures are convertible.  Previously, the
          measurement of the conversion feature was calculated assuming that
          the estimated fair value of the common stock into which the 
          security is convertible was the quoted market price adjusted to
          reflect transferability restrictions.  Accordingly, no portion
          of the proceeds on the debt issuance was allocated to the intrinsic
          value of the "fixed discount".  In March 1997, the Securities and
          Exchange Commission's  position was announced that a discount
          should be computed based on the Company's quoted market price and
          an allocation of a portion of the proceeds of the offering should
          be recognized as additional interest expense on the debentures.  
          The Company is restating its financial statements to comply with
          this accounting treatment.  The impact on the results of operations
          for the three and nine months ended June 30, 1996 was to increase
          the net loss by approximately $883,000 and to increase the net 
          loss per share by $.22 and $.23, respectively.
         

             
               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 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 nine-month period ended September 30,
          1995.

          NOTE 2 - THE COMPANY
          --------------------

        
               The Company is a development stage company which was organized
          in Delaware in July  1992 to  acquire  and develop  proprietary 
         
                                      -7-
     <PAGE>

          
          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  Company received  FDA clearance to begin  
          commercial marketing activities for its breast imaging system.
         

               The  Company completed its  initial public offering ("IPSO")
          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 IPSO 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 that will be  used to complete
          product development and commercial marketing activities (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.

               The Escrow Shares would be released  upon either the Company
          meeting certain  threshold amounts of  pretax net  income or  the
          average closing  bid price  of the Common  Stock meeting  certain
          threshold price levels  for certain prescribed periods.  The only
          unexpired threshold is the Company having a minimum pretax income
          equal to at  least $8.0 million for the  year ending December 31,
          1996.   No Escrow Shares have been  released from the escrow.  On
          May  1, 1997, all Escrow Shares not  released from escrow will be
          forfeited by ANMR and contributed to the capital of the Company.


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

               As  of January 25, 1993, the effective date of the Company's
          initial public offering, the  Shared Services Agreement with ANMR
          became effective.  Under the Agreement, (i) ANMR makes  available
          its  research scientists,  engineers and  other personnel  to the
          Company  and, to the extent that more than 51% of the time of any
          such individual is  devoted to performing  work for the  Company,
          such person is deemed  a full-time employee of the  Company, (ii)

                                      -8-
     <PAGE>

          ANMR causes its executive officers to serve as executive officers
          of the Company,  and (iii)  the Company continues  to occupy  its
          required  office and  research space  at ANMR's  facility and  to
          utilize ANMR's  administrative and clerical  staff and  services.
          To  the  extent feasible,  if  any  non-administrative full  time
          employees of either ANMR or the Company performs services for the
          other entity, ANMR or the Company, as the case may be, reimburses
          the  other  entity  for such  services.      The Shared  Services
          Agreement  had an initial term  of one year  expiring January 24,
          1994, and two one year renewal  options.  This Agreement has been
          extended  through August 24, 1996.  The Company also  pays ANMR a
          monthly  fee  for  overhead   services  which  is  calculated  by
          apportioning  the  total  amount  spent by  ANMR  on  all general
          overhead  expenses  based  on  a  fixed  percentage  of  overhead
          expenses plus an allocation of compensation of executive officers
          based  on the amount of time spent with the respective companies.
          ANMR's officers and employees are required by the Shared Services
          Agreement to devote  as much  time to the  Company's business  as
          they, in their  discretion, consider appropriate.  The  Boards of
          Directors  and the  President of  both ANMR  and the  Company are
          responsible for determining the  appropriate amount of time spent
          by ANMR's officers and employees pursuant to  the Shared Services
          Agreement,  and overseeing the provision of such services.  It is
          expected that as  of the  next renewal, the  allocations will  be
          recalculated retroactively  to better reflect  changes in  costs.
          Five of the seven officers and  directors of the Company are also
          officers and directors of ANMR.    Any conflicts will be resolved
          by Jack  Nelson, CEO of  both ANMR  and the Company,  and by  the
          Board  of  Directors  of  each  company,  consistent  with  their
          fiduciary duties.


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

               In  July  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").

               ANMR  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

                                      -9-
     <PAGE>

          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 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  and head
          coil technologies.  Restructuring of ANMR could have an impact on
          the future  availability of  ANMR scientific personnel  under the
          Shared Services  Agreement and its related  technology under the 
          ANMR License Agreement.  


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

               In February 1996, the Company was granted U.S. Food and Drug
          Administration  (FDA)  clearance  to  begin  commercial marketing
          activities for the Company's Aurora  dedicated MRI breast imaging
          system.    The Company  shipped its  first  Aurora system  to the
          University of Texas Medical Branch at Galveston in March 1996 and
          is  negotiating  with  several other  institutions  to  establish
          additional beta test sites for this device.


          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").

                                      -10-
     <PAGE>

               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.

               A Debenture holder may, at his election, convert all or part
          of his Debentures  at any time  (a) commencing 45 days  after the
          closing  as  to one-half  (1/2) of  the  principal amount  of his
          Debentures,  and (b) commencing 60  days after the  closing as to
          the balance of his Debentures into shares of the Company's Common
          Stock at  a conversion price equal  to the lesser of  (i) 125% of
          the Market Price on the closing , or (ii) 75% of the Market Price
          on  the date  of conversion,  subject to  customary anti-dilution
          provisions.  The Market  Price is defined as the  average closing
          bid price of  the Company's  Common Stock for  the three  trading
          days immediately preceding the closing or conversion date, as may
          be applicable, as reported  on the NASDAQ System (or  the closing
          bid price for the applicable day if the Common Stock is traded on
          the over-the-counter market  or on  an exchange).   In the  event
          that during the  period commencing  June 1, 1997,  the per  share
          price of the  Common Stock  exceeds $4.00 for  five trading  days
          during  any  ten day  period, the  Company  may, upon  three days
          written  notice, elect to  convert the Debentures  into shares of
          Common Stock at the applicable conversion rate as of the date  of
          notice.   Subsequent to  June 30,  1996, Debentures  for $197,000
          were converted into 191,031 shares of Common Stock.

               The  net   proceeds  of   the  Placement   of  approximately
          $2,750,000, after payment  of fees and related  expenses, will be
          used  for  completion of  product  development  of the  Company's
          dedicated    MR    breast    imaging   "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 $02.20 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.

               Upon  the closing  of the  Placement, the  Company  and ANMR
          terminated a  previously announced  Agreement and Plan  of Merger
          dated as of  February 4,  1996 providing  for the  merger of  AMS
          Merger Corporation,  a wholly owned subsidiary of  ANMR, with and
          into the Company.

                                      -11-

     <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  nine month  period ended
          September 30, 1995.

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

        
               The   Company  was  formed  in  July  1992  and  is  in  the
          development  stage.  Through June  30, 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 $11,833,000
          at  June 30, 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 nine months of fiscal 1996
          were $2,323,000, an increase of 32% compared to $1,754,000 in the
          same period in fiscal 1995.

               Research and  development expense was $751,000  in the first
          nine months of  fiscal 1996  compared with $754,000  in the  same
          period in 1995.   The  Company expects  research and  development
          expense to stabilize at this level through fiscal 1996.

               General &  administrative expense for the  first nine months
          of  fiscal  1996 was  $1,572,000   versus  $999,000 for  the same
          period in fiscal 1995.  This increase  was primarily attributable
          to manufacturing variances related to fixed overhead costs.

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

               At  June  30,  1996  the  Company  had  working  capital  of
          $3,164,000, including available cash  of $2,463,000.  The Company
          expects   to  continue  to  incur  substantial  expenditures  for
          development and marketing of the breast imaging system.

               The Company  believes its existing cash  reserves, including
          the proceeds of  the recent  issuance of Debentures  (see Item  1
          Note  7), are adequate to  fund its operating  activities for the

                                      -12-
     <PAGE>

          next nine months.  The Company is seeking to obtain funds through
          debt  or additional  equity  placements.   However,  there is  no
          assurance  that such placements  would be successful  or on terms
          not dilutive to present stockholders.


                                      -13-

     <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
         

                                      -14-