<PAGE>   1





                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                             ______________________

                                  FORM 10-Q/A
                               (AMENDMENT NO. 1)

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934




     For the quarter ended                                    Commission File
     March 31, 1996                                           No. 1-9767
                             ----------------------                          


                   INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)


     Delaware                                                 94-2579751
     (State or other                                          (I.R.S. Employer
     jurisdiction of                                          Identification
     incorporation or                                         No.)
     organization)



                      9162 Eton Avenue, Chatsworth Ca.              91311
                 (Address of principal executive offices)         (Zip Code)

                        Telephone Number:  818-709-1244




     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 
                      --------                             --------  

     The number of shares of Common Stock of the registrant outstanding 
     as of May 6, 1996 was 6,287,712.
<PAGE>   2
                   INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.




                              INDEX TO FORM 10-Q/A

                   Three months ended March 31, 1996 and 1995




<TABLE>
<CAPTION>
                                                                          PAGE
       <S>         <C>                                                     <C>
       PART 1 -    FINANCIAL INFORMATION

                   ITEM 1 -  Consolidated Financial Statements

                   Consolidated Balance Sheets  . . . . . . . . . . . . . .2


                   Consolidated Statements of Operations  . . . . . . . . .3


                   Consolidated Statements of Cash Flows  . . . . . . . . .4


                   Notes to Consolidated Financial Statements.  . . . . . .5


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



       PART 2 -    OTHER INFORMATION

                   ITEM 1 - Legal Proceedings   . . . . . . . . . . . . . .*

                   ITEM 6 - Exhibits And Reports on Form 8-K

                   (a)  Exhibits  . . . . . . . . . . . . . . . . . . .   18

                   (b)  Reports on Form 8-K . . . . . . . . . . . . . .   19
                   
     SIGNATURES   . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
</TABLE>





                 *  Previously filed
                                       
                                       
                                       1
<PAGE>   3
PART 1        FINANCIAL INFORMATION

              ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS

                             INTERNATIONAL REMOTE IMAGING SYSTEMS,INC.
                                        CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                           December 31           March 31
A S S E T S                                       1995               1996
                                           -----------        -----------
                                                              (unaudited)
<S>                                          <C>               <C>
Current assets:                                 
  Cash and cash equivalents                  $  1,511,395      $          --
  Short-term investments                        4,736,727          4,616,857
  Accounts receivable-trade, net 
    of allowance for  doubtful accounts 
    of $87,759 in 1995 and 1996                 2,897,507          3,982,253
  Accounts receivable-service contracts           481,367            582,014
  Accounts receivable-other                       407,245            862,658
  Inventories                                   2,941,021          3,376,332
  Prepaid expenses and other current assets       285,683            307,848
  Deferred tax asset                              919,489            919,489
                                             ------------      -------------
          Total current assets                 14,180,434         14,647,451


  Property and equipment, at cost, net 
    of accumulated depreciation                   995,044          1,346,370

  Software development costs, net of 
    accumulated amortization of $667,425 
    in 1995 and $675,180 in 1996                  298,030            434,151
  Long term investments                           100,000            100,000
  Deferred warrant costs                        1,574,780          1,547,155
  Deferred tax asset                            3,594,100          3,594,100
  Other assets                                  1,460,157          1,864,481
                                             ------------      -------------
        Total assets                         $ 22,202,545      $  23,533,708
                                             ============      =============


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                           $    810,819      $   1,179,526
  Notes payable                                   185,633                 --
  Accrued expenses                              1,238,599          1,224,471
  Deferred revenue - other                             --            940,475
  Service contracts-deferred income               710,907            686,364
                                             ------------      -------------
        Total current liabilities               2,945,958          4,030,836
  Notes payable - long term portion               125,000                 --
  Service contracts-deferred income               190,045            234,043
                                             ------------      -------------
        Total liabilities                       3,261,003          4,264,879
                                             ------------      -------------
Shareholders' equity:
  Common stock, $.01 par value
    Authorized:  15,600,000 shares
    Issued and outstanding: 6,292,408 in 1995
                            6,374,970 in 1996      62,924             63,750
  Additional paid-in capital                   34,154,116         34,169,223
  Treasury stock 
  (96,473 and 84,462 shares in 1995 and 1996)    (453,386)          (377,980)
  Unearned compensation                           (95,884)           (66,848)
  Accumulated deficit                         (14,726,228)       (14,519,316)
                                             ------------      -------------
        Total shareholders' equity             18,941,542         19,268,829
                                             ------------      -------------
        Total liabilities and 
        shareholders' equity                 $ 22,202,545      $  23,533,708
                                             ============      =============
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       2
<PAGE>   4
                   INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)






<TABLE>
<CAPTION>
                                                                       For the three months ended March 31
                                                                       -----------------------------------

                                                                                   1995               1996
                                                                                   ----               ----
<S>                                                                          <C>                <C>
Sales of IVD imaging systems                                                 $  812,357         $  869,139
Sales of IVD imaging supplies and services                                    1,545,241          2,013,795
Sales of small instruments and supplies                                         809,679          1,021,162
                                                                             ----------         ----------
Net sales                                                                     3,167,277          3,904,096
                                                                             ----------         ----------

Cost of goods from IVD imaging systems                                          446,583            481,940
Cost of goods from IVD imaging supplies and services                            752,682          1,030,901
Cost of goods from sales of small instruments and supplies                      432,204            528,408
                                                                             ----------         ----------
Cost of goods sold                                                            1,631,469          2,041,249
                                                                             ----------         ----------

Gross margin                                                                  1,535,808          1,862,847

Marketing and selling                                                           639,977            790,057
General and administrative                                                      428,160            659,321
Research and development expenses                                               176,314            270,103
                                                                             ----------         ----------
     Total                                                                    1,244,451          1,719,481
                                                                             ----------         ----------

Operating income                                                                291,357            143,366
Other income:
  Interest income                                                               102,218             59,799
  Interest expense                                                              (18,310)            (5,366)
  Other income                                                                   34,229             27,815
                                                                             ----------         ----------

Income before provision for income taxes                                        409,494            225,614
Provision for income taxes                                                       12,000             18,702
                                                                             ----------         ----------

Net income                                                                   $  397,494         $  206,912
                                                                             ==========         ==========

Net income per share                                                         $      .07         $      .03
                                                                                  =====              =====
Weighted average number of common shares and common
  share equivalents outstanding for the period                                5,910,561          6,513,281
                                                                             ==========         ==========
</TABLE>

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

                                       3
<PAGE>   5
                   INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                     For the three months ended March 31
                                                                     -----------------------------------

                                                                                  1995               1996
                                                                                  ----               ----
<S>                                                                        <C>               <C>
Cash flows from operating activities:
   Net income                                                              $   397,494       $   206,912
   Adjustments to reconcile net income to
      cash provided by operations:
         Depreciation and amortization                                          89,676           106,329
         Common stock compensation                                              11,702            29,036
   Changes in assets and liabilities:
      Accounts receivable - trade                                              469,583        (1,084,746)
      Accounts receivable - other                                             (187,177)         (455,413)
      Service contracts, net                                                   (86,728)          (81,190)
      Inventories                                                               44,761          (435,311)
      Prepaid expenses and other current assets                                (79,880)          (22,165)
      Accounts payable                                                        (305,762)          311,365
      Accrued expenses                                                        (277,942)          (14,128)
      Deferred revenue - other                                                      --           940,475
                                                                           -----------       -----------
Net cash provided by (used) by operating activities                             75,727          (498,836)
                                                                           -----------       -----------

Cash flows from investing activities:
   Acquisition of property and equipment,                                     (165,330)         (446,900)
   Acquisition of product line                                                       --         (213,700)
   Software development costs                                                   (2,615)         (146,876)
   Acquisition of other assets                                                (787,910)         (162,999)
   (Increase) decrease in short term investments                              (429,871)          119,869 
                                                                           -----------       -----------
Net cash used in investing activities                                       (1,385,726)         (850,606)
                                                                           -----------       -----------

Cash flow from financing activities:
   Notes payable                                                              (200,000)         (310,633)
   Issuance of common stock for cash                                           174,656            29,893
   Issuance of common stock for cash under Employee Stock
      Purchase Plan                                                                 --            61,445
   Cash overdraft                                                                   --            57,342
                                                                           -----------       -----------
Net cash used by financing activities                                          (25,344)         (161,953)
                                                                           -----------       -----------

Net decrease in cash and cash equivalents                                   (1,335,343)       (1,511,395)
Cash and cash equivalents at beginning of period                             2,688,250         1,511,395
                                                                           -----------       -----------
Cash and cash equivalents at end of period                                 $ 1,352,907       $        --      
                                                                           ===========       ===========


Supplemental schedule  of non cash investing activities:

   Issuance of warrants for acquisition of other assets                    $   213,750       $        --
                                                                           ===========       ===========
</TABLE>

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

                                       4
<PAGE>   6





                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Formation and Business of the Company.

    International Remote Imaging Systems, Inc. (IRIS) was incorporated in
California in 1979 and reincorporated during 1987 in Delaware.  In February
1996, IRIS acquired StatSpin Inc. ("StatSpin").  IRIS engages in the business of
developing, manufacturing and selling in vitro diagnostic imaging systems and
other laboratory instruments based on proprietary technologies.  This
transaction was accounted for as a pooling-of-interests.  Accordingly, the
consolidated financial statements have been retroactively restated for all
periods presented to include the financial position, results of operations and
cash flows of StatSpin.

2.  Summary of Significant Accounting Policies.

Unaudited Interim Financial Statements:

    In the opinion of IRIS, the accompanying unaudited financial statements
contain all normal recurring adjustments necessary to present fairly the
financial position of IRIS as of March 31, 1996  and the results of its
operations and cash flows for the three months ended March 31, 1996 and 1995. It
is suggested that these financial statements be read in conjunction with the
financial statements and notes thereto included in the latest IRIS annual 
report on Form 10-K1A, Amendment No. 1.  Interim results are not necessarily 
indicative of results for a full year.

Use of Estimates:

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the
reporting periods.  Actual results could differ from those estimates.

Principles of Consolidation:

    The financial statements include the accounts of IRIS and StatSpin Inc., a
wholly-owned subsidiary acquired on February 1, 1996.  All significant
intercompany accounts and transactions have been eliminated in the consolidated
financial statements.  IRIS acquisition of StatSpin was recorded using the
pooling-of-interests method of accounting.

Cash, Cash Equivalents and Short-term Investments:

    Short-term investments principally include certificates of deposit and debt
instruments of the United States Government with initial maturities greater
than three months and less than one year.  Long term investments represent
certificates of deposit and debt instruments with maturities greater than one
year.  IRIS considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. IRIS places its cash
and investments with high credit quality institutions.  At times, these
deposits may be in excess of the federally insured limit.

Accounts Receivable:

    IRIS sells predominantly to entities in the healthcare industry.  IRIS
grants uncollateralized credit to customers, primarily domestic hospitals,
clinical and research laboratories. IRIS performs ongoing credit evaluations of
its customers before granting uncollaterized credit and, to date, has not
experienced any material credit related losses.

                                       5
<PAGE>   7
Property and Equipment and Depreciation:

    Property and equipment are recorded at cost, less accumulated depreciation
and amortization.  Depreciation is computed using the straight-line method
over three to five years, the estimated useful lives of these assets.
Leasehold improvements are amortized over the lesser of their useful life or
the remaining term of the lease.

Costs of maintenance and repairs are charged to expense when incurred; costs of
renewals and betterments are capitalized.  Upon sale or retirement, the cost
and related accumulated depreciation are eliminated from the respective
accounts and the resulting gain or loss is included in current income.

Software Development Costs:

    IRIS capitalizes certain software development costs in accordance with
Statement of Financial Accounting Standards (SFAS) No. 86 -- "Accounting for
the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed" for
new products currently under development and product enhancements once
technological feasibility has been established.  IRIS amortizes capitalized
software costs using the greater of the straight line method over the estimated
product life, or a percentage of total units sold divided by the projected
sales.  Amortization of software development costs was $7,755 and $5,752 for
the three months ended March 31, 1996 and 1995, respectively.

Deferred Warrant Costs:

    Deferred warrant costs are the result of the issuance of warrants in
conjunction with various development and technology license agreements.  These
costs are being amortized over the term of the related agreement, or with
respect to perpetual technology license agreements, over the expected life of
the related technology of, generally, ten years.

Revenue Recognition:

    IRIS derives revenue from the sale of IVD imaging systems, sales of
supplies and service for its IVD imaging systems and sales of small laboratory
instruments and related supplies.  IRIS generally recognizes product revenues
once all of the following conditions have been met: (i) an authorized purchase
order has been received in writing, (ii) customer credit worthiness has been
established, and (iii) shipment of the product to the customer designated
location has occurred.  Estimated installation expense is recognized as part of
the accrual for warranty expenses at the time of shipment.

    IRIS recognizes service revenues ratably over the term of the service
period, which typically ranges from twelve to sixty months.  Payments for
service contracts are generally made in advance.  Deferred revenue represents
the revenues to be recognized over the remaining term of the service contracts.

Warranties:

    IRIS recognizes the full estimated cost of warranty expense at the time of
product shipment.

Research and Development Expenditures:

    Except for certain software development costs required to be capitalized as
described above (see Software Development Costs), research and development
expenditures are charged to operations as incurred.  Net research and
development expense includes total research and development costs incurred,
including costs incurred under research and development contracts, less costs
reimbursed under research and development contracts.

Income Taxes:

    In 1993, IRIS changed its method of accounting for income taxes by adopting
SFAS No. 109, "Accounting for Income Taxes" which requires recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns.
Under this method, deferred tax liabilities and assets are determined based on
the difference between the financial statement and the tax basis of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.  Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.





                                       6
<PAGE>   8
Income tax expense represents the tax payable for the period and the change
during the period in deferred tax assets and liabilities.

Reclassifications:

   Certain reclassifications have been made to the interim financial statements
for the period ended March 31, 1995, to conform with the 1995 year end and the
1996 interim financial statement presentation.  These reclassifications had no
effect on net income or shareholder's equity.

3.  Marketable Debt Securities.

    On January 1, 1994, IRIS adopted Statement of Financial Accounting
Standards No. 115 "Accounting for Certain Investments in Debt and Equity
Securities" (SFAS 115) and determined that all its debt securities should be
classified as "held-to-maturity" based on the Company's intent and ability to
hold those securities to maturity. Under SFAS 115, debt securities classified
as "held-to-maturity" are carried at amortized cost.

    At March 31, 1996, IRIS had the following debt securities included in
short-term and long-term investments:

<TABLE>
<CAPTION>
                                                                         Expected Maturity Value and Period
                                                                        -------------------------------------
                                                      Amortized Cost    Within One Year     One to Five Years
                                                      --------------    ---------------     -----------------
                              <S>                         <C>                <C>                  <C>
                              US Treasury Bills           $3,816,073         $4,033,000
                              US Treasury Note               100,000                              $100,000
</TABLE>

4.  Inventories.

    Inventories, with the exception of rental units, are carried at the lower
cost or market on a first in, first out basis and are composed of the
following:

<TABLE>
<CAPTION>
                                                                     December 31, 1995     March 31, 1996
                                                                     -----------------     --------------
                             <S>                                            <C>                <C>
                             Finished goods                                 $  422,115         $  476,726

                             Work-in-process                                   276,115            261,402

                             Consumables, raw materials,
                             parts, sub-assemblies                           2,242,791          2,638,204
                                                                            ----------         ----------

                                                                            $2,941,021         $3,376,332
                                                                            ==========         ==========
 </TABLE>


5.  Property and Equipment.

       Property and equipment is composed of the following:

<TABLE>
<CAPTION>
                                                                         December 31,1995       March 31, 1996
                                                                         ----------------       --------------
                              <S>                                              <C>                 <C>
                              Leasehold improvements                           $  327,178          $   341,897

                              Furniture and fixtures                              115,544              188,474

                              Machinery and equipment                           2,422,835            2,507,416

                              Tools, dies, and molds                              532,070              804,566

                              Rental units                                        166,268              180,407
                                                                               ----------          -----------
                                                                                3,563,895            4,022,760

                              Less accumulated depreciation                    (2,568,851)          (2,676,390)
                                                                               ----------          -----------

                                                                               $  995,044          $ 1,346,370
                                                                               ==========          ===========
</TABLE>

      Property and equipment includes $1,304,448 and $1,284,448 for March 31,
1996 and December 31, 1995, respectively,  of fully depreciated assets which
remain in service.  Depreciation expense was $96,000 and $83,000 for the three
month periods ended March 31, 1996 and 1995, respectively.  Maintenance and
repairs expense for the three month periods ended March 31, 1996 and 1995 was
$13,000 and $12,000, respectively.





                                       7
<PAGE>   9
     Rental units are carried at cost less accumulated depreciation  ($175,123
at March 31, 1996 and $163,952 at December 31, 1995).  Future minimum rental
revenue on noncancellable leases as of March 31, 1996 is approximately $204,000
due during 1996.

6.  Accrued Expenses.

           Accrued expenses are composed of the following:

<TABLE>
<CAPTION>
                                                                           December 31, 1995        March 31, 1996
                                                                           -----------------        --------------
                                    <S>                                           <C>                   <C>
                                    Accrued bonuses                               $  366,372            $   56,149

                                    Accrued commission                                76,079                90,000

                                    Accrued payroll                                   88,228                33,122

                                    Accrued vacation                                 135,832               149,515

                                    Accrued professional fees                        155,552                93,202

                                    Accrued taxes - other                             70,642                12,150

                                    Accrued expenses - other                          76,071               529,260

                                    Accrued warranty expense                         269,823               261,073
                                                                                  ----------            ----------

                                                                                  $1,238,599            $1,224,471
                                                                                  ==========            ==========
</TABLE>


7.  Income Taxes.

    The income tax provision for the three months ended March 31, 1996 and 1995
consists of estimated alternative minimum taxes and reflects the utilization of
net operating loss carryforwards for both federal and state purposes.

    In the fourth quarter of 1995, IRIS recognized a tax benefit of $3,587,000
through a reduction in the Company's deferred tax asset valuation allowance.
This reduction in the valuation allowance resulted principally from the
Company's assessment of the realizability of its net operating loss
carryforwards based on recent operating history as well as an assessment that
operations will continue to generate taxable income.  Realization of the
deferred tax assets are dependent upon continued generation of sufficient
taxable income prior to expiration of the loss carryforwards.  Although
realization is not assured, management believes it is more likely than not that
the remaining net deferred tax assets will be realized.  The amount of the
deferred tax assets considered realizable, however, could be reduced in the
future if estimates of future taxable income during the carryforward period are
reduced.

    At March 31, 1996, IRIS had federal and state net operating loss
carryforwards of $13.8 million and $323,000, respectively,  which expire in
fiscal years ending in 2000 through 2010.  As of March 31, 1996, IRIS had
investment tax and R & D credit carryforwards of approximately $72,000 expiring
in fiscal years through 2003.

8.  LDA and Warrants.

    In October, 1992, LDA Systems, Inc. (LDA) completed an initial public
offering of 107,750 units, each unit consisting of one share of callable LDA
common stock and ten IRIS warrants, each five  warrants entitling the holder to
purchase one share of IRIS common stock for $3.75, exercisable at any time from
November 16, 1992 through July 31, 1995.  LDA received net proceeds of $774,000
from the unit offering.  LDA used these funds to engage IRIS during the period
October 1992 through June 1995 to conduct research, development, clinical
evaluations and pre- market testing of The White IRIS(R), a proposed new
product, in accordance with a research and development contract. In addition,
IRIS funded an additional $500,000 of the development costs at a rate of
$15,000 per month during this period.

    On April 25, 1994, LDA completed the sale of additional units to Corange
Limited consisting of 85,714 shares of callable LDA common stock and warrants
to purchase an aggregate of 248,571 shares of IRIS common stock at an exercise
price of $3.75 per share.  As part of the investment agreement, Corange was
granted the option to participate with LDA in the joint development,





                                       8
<PAGE>   10
manufacture, and marketing of certain future hematology instruments.  This
option expired October 30, 1995.

    IRIS had the option to purchase for cash or shares of IRIS common stock all
of the outstanding shares of LDA common stock at $20 per share until November
29, 1995.  In June 1995, IRIS completed the acquisition of LDA for
approximately 498,000 shares of IRIS Common Stock.  IRIS acquired LDA pursuant
to the exercise of its call option under the LDA Restated Certificate of
Incorporation to purchase all the outstanding shares of LDA Common Stock
tendering 2.5765 shares of IRIS Common Stock for each share of LDA Common
Stock.  As a result of the acquisition, IRIS incurred a non-recurring charge in
the second quarter of 1995 of approximately $3.2 million against earnings for
the acquisition of in- process research and development (i.e., work-in-process
not yet cleared for interstate commerce by the Food and Drug Administration).

    The following unaudited pro forma combined financial information gives
effect to the acquisition of LDA by IRIS under the purchase method of
accounting as though the acquisition had occurred on January 1, 1994.
Substantially all of the purchase price for the acquisition of LDA paid by
IRIS, including amounts of liabilities of LDA to be assumed by IRIS, has been
allocated to in-process research and development.  Under the purchase method of
accounting, the purchased research and development has been written off as of
the purchase date.  The one time write-off of in-process research and
development of approximately $2.9 million is excluded from the pro forma
information as it represents a non- recurring item.

<TABLE>
<CAPTION>
                                                     December 31, 1994        December 31, 1995
                                                     -----------------        -----------------
              <S>                                          <C>                      <C>
                           Net revenues                    $12,469,277              $14,392,158
                             Net income                    $   480,445              $ 4,846,984
              Primary and fully diluted
                     earnings per share                    $      0.08              $      0.73
</TABLE>

    The pro forma combined financial information is presented for informational
purposes only and is not necessarily indicative of the operating results that
would have occurred had the merger been consummated as of the above dates.  In
addition, the pro forma results are not intended to be a projection of future
results.

9.  PSI Development Agreement.

    On September 25, 1995, Poly U/A Systems, Inc. (PSI) engaged IRIS to develop
several new products based on IRIS and other technology to further enhance
automation in the urinalysis field.  Under the terms of the project, PSI will
have the right to use the IRIS technology and any newly developed technology
for developing, manufacturing and marketing the new products as stand-alone
devices, and IRIS will have the right to use any newly developed technology for
any other purpose and to incorporate the new products into The Yellow IRIS(R).
PSI has retained IRIS to conduct the research, development, clinical evaluation
and pre-market testing of the proposed new products.  IRIS will fund the first
$15,000 per month (up to a maximum of $500,000) of the cost of the project, and
PSI will reimburse IRIS for the excess.  IRIS has an option until 121 days
after termination of the project (which terminates not later than July 31,
1998) to acquire all of the Common Stock of PSI at prices rising over time from
$14 to $20 per share of PSI Common Stock.  IRIS may pay the option exercise
price in cash or with shares of IRIS Common Stock.  IRIS is also providing
financial and administrative services to PSI at cost.

    PSI, a privately-held company based in Los Angeles, California, was
organized in June 1995 to undertake the commercial development of several
potential products based on technology developed or licensed by IRIS.  In order
to fund its share of the project, PSI, in 1995, raised net proceeds of $2.0
million through the sale of 128 units at the price of $20,000 per unit.  Each
unit consists of 2,000 shares of PSI's Callable Common Stock and a warrant to
purchase 4,000 shares of IRIS Common Stock.  In the aggregate, investors
purchased 256,000 shares of PSI's Callable Common Stock and warrants to
purchase 512,000 shares of IRIS Common Stock.  The IRIS warrants are
exercisable at $6.50 per share during the last two years of their three-year
duration.  In connection with PSI's sale of units, IRIS also issued warrants to
the placement agent and the finder to purchase an aggregate of 150,000 shares
of IRIS Common Stock.  These warrants are exercisable at $7.80 per share for a
five year period and include certain registration rights.





                                       9
<PAGE>   11
10. Reference Lab Agreement.

    During the first quarter of 1995, IRIS and Boehringer Mannheim Corporation
(BMC) and Boehringer Mannheim GmbH (BMG), its German affiliate, announced a
joint project to develop a high capacity automated urinalysis system primarily
for reference laboratories based on the proprietary technologies of both
companies.  The program is jointly funded by both companies. In addition to
designing specific components of the new system, BMG originally agreed to pay
IRIS a fixed amount of $640,000 for its research and development of the
project.  During the first quarter of 1996, BMG agreed to pay IRIS an
additional $350,000 to complete the project.

    In connection with this project and certain distribution considerations,
IRIS issued Corange (an affiliate of BMG) warrants to purchase 250,000 shares
of IRIS Common Stock at an exercise price of $7.375 per share and granted
Corange certain registration rights with respect to the shares of IRIS Common
Stock issuable upon exercise of these warrants.

11. Product Line Acquisitions.

    During the first quarter of 1995, IRIS  acquired the digital refractometer
product line of Biovation, Inc. for $850,000 in cash and warrants to purchase
75,000 shares of IRIS Common Stock at an exercise price of $8.125 per share.
IRIS granted Biovation certain registration rights with respect to the shares
of IRIS Common Stock issuable upon exercise of these warrants.  The product
line consists of a patented device known as a digital refractometer and the
related consumables used in the operation and maintenance of the refractometer.

    In March 1996, IRIS acquired the urinalysis business of UroHealth Systems,
Inc. for $850,000; $788,000 in cash and $62,000 in the assumption of
liabilities.  UroHealth Systems generated  1995 revenues of approximately
$550,000 from this business which consists primarily of manufacturing and
marketing two proprietary product lines:  the Cen-Slide(R) 1500 System for
centrifugal urine sedimentation and manual microscopic examination and the
FloStar(R) urine specimen collection and dispensing container.  These products
are used primarily by hospital and physician office laboratories in manually
performing routine urinalysis.  Among other things, IRIS acquired seven U.S.
patents and eight corresponding foreign patents as well as the design for the
unique centrifuge used in the Cen-Slide(R) system.

    IRIS is transferring production of these products to its StatSpin
subsidiary and will market them under the IRIS/StatSpin label through
StatSpin's existing distribution channels.

12. Capital Stock.

Stock Issuances:

    During 1990, the IRIS Board of Directors adopted an Employee Stock Purchase
Plan designed to allow employees of the Company to buy its shares at 50% of the
then current market price, provided that the employee agrees to hold the shares
purchased for a minimum of 2 years.  Payments for the 50% portion may be made
at the option of the employee either by payroll deduction or by lump sum
payment, but in no event may it exceed more than 15% of the employee's total
compensation during any year.  The remaining 50% portion is recorded as
deferred compensation and amortized over the vesting period.  The shares
purchased pursuant to the Plan may not be transferred, except following the
death of the employee or a change in control, for a period of 2 years following
the date of purchase.  During the period of the limitation on transfer, IRIS
has the option to repurchase the shares at the employee's purchase price, if the
employee terminates employment with IRIS either voluntarily or as a result of
termination for cause.  During the periods ended March 31, 1996 and 1995, IRIS
issued 15,882 and 3,200 shares of common stock, respectively, in exchange for
$61,445 and $17,680 in cash and services, respectively, under the Plan.

    In addition, during the quarter ended March 31, 1996, IRIS issued 8,000
shares of stock on exercise of stock options granted to employees, former
employees and consultants.





                                       10
<PAGE>   12
Stock Options:

    For the three months ended March 31, 1996, 122,400 shares of common stock
were granted under the 1994 Stock Option Plan.  Options for 8,000 shares were
exercised and options for 9,600 shares were canceled.   At March 31, 1996,
options to purchase 728,201 shares of common stock were issued and outstanding
under IRIS stock option plans.  The outstanding options expire by the end of
2006.  The exercise price for these options range from $1.10 to $5.42 per share
for an aggregate exercise price of $3,239,200.  There were an additional
216,267 shares available at March 31, 1996, for the granting of future options.

Warrants:

    At March 31, 1996, there were warrants outstanding and exercisable to
purchase 250,000 shares of common stock exercisable at $7.375 per share until
February 6, 1998, 75,000 shares at $8.125 per share until March 30, 1998,
512,000 shares at $6.50 per share until September 29, 1998 and 150,000 shares
at $7.80 per share until September 28, 2000.

Preferred Stock:

    IRIS is authorized to issue 3,000,000 shares of preferred stock in one or
more series with such terms as may be designated by the Board of Directors.
There is no preferred stock outstanding.

13. Commitments.

Leases:

    IRIS leases its primary business location at a monthly rent of $13,623,
subject to increases based on the Consumer Price Index.  IRIS has the option to
renew the lease for two additional three-year periods commencing on July 3,
1997.  Through its StatSpin subsidiary (acquired in March 1996) located at 85
Morse Street, Norwood, Massachusetts, IRIS leases an additional 10,851 square
feet of office, laboratory, and manufacturing space.  The monthly rent for this
space is approximately $7,100.  While IRIS does not have any material amount of
unused space in its facilities, it has sufficient capacity now and expects its
capacity to be sufficient to meet any reasonable production increases in the
near term.

    At March 31, 1996, the minimum lease payments due over the remaining life
of these leases and other operating leases were:
<TABLE>
<CAPTION>
                                  Year ended
                                  December 31                       Amount
                                  -------------------------       --------
                                  <S>                             <C>
                                  1996 (nine months)              $198,435
                                  1997                             186,069
                                  1998                              85,932
                                  1999                              85,932
                                  2000                              21,483
                                                                  --------
                                                                  $577,851
                                                                  ========
</TABLE>

    Rent expense under all operating leases during the three months ended March
31, 1996 and 1995 was $47,310 and $44,973, respectively.

Other:

    Effective September 1, 1988, IRIS entered into a consulting and licensing
agreement with Cytocolor, Inc. relating to the use of a patented leukocyte
stain in The White IRIS(TM), a product currently under development by IRIS.
Under the terms of the agreement, IRIS is subject to the following future
royalty payments:
<TABLE>
             <S>                                          <C>
             1996                                         $ 20,000
             1997                                           20,000
             1998                                           20,000
             1999                                           20,000
             Years thereafter                              280,000
                                                          --------
                                                          $360,000
                                                          ========
</TABLE>

    In connection with the development agreement with PSI, IRIS has agreed to
fund $15,000 per month (up to a maximum of $500,000) of the cost of the
development project (see Note 9).





                                       11
<PAGE>   13
14. Earnings Per Share.

    The computation of per share amounts for the three months ended March 31,
1996 and 1995 is based on the weighted average number of common shares and
common share equivalents outstanding for the period.  Fully diluted and primary
earnings per share were $.03 and $.07 for the three months ended March 31, 1996
and 1995, respectively.

15. Licenses. 

    Pursuant to earlier payments and certain agreements with TOA Medical
Electronics Co., Ltd. (TOA), TOA has developed a urine sediment analyzer under
license from IRIS using pre-1989 IRIS technology.  The 1995 royalty amount
reflects an agreement with TOA to temporarily increase the amount of the
royalty from 3% to 5% and the scope of the royalty to apply to revenue on
consumables and service contracts, as well as instruments.  These changes were
made retroactive to October 1994 and expire in September 1996, at which time
the scope and amount of the royalty will revert to their original term unless
TOA exercises its right under the temporary agreement to negotiate a permanent
change to the license.  IRIS received royalties of $22,000 and $32,000,
respectively,  for the periods ended March 31, 1996 and 1995.

16. Export Sales.

    IRIS had export equipment sales of $39,619 and $52,350, respectively,
during the three month periods ended March 31, 1996 and 1995.

17.  Significant  Events.

StatSpin Merger:

    On February 1, 1996, a newly formed subsidiary of IRIS completed its merger
with StatSpin, Inc., (StatSpin), which became a wholly owned subsidiary of
IRIS.  StatSpin manufactures special purpose centrifuges and other small
instruments widely used in clinical, veterinary, physicians offices and
research laboratories and sells its products primarily through leading
distributors to the physician office and veterinary laboratory markets.  IRIS
issued approximately 340,000 shares of common stock for all of the outstanding
common stock and appreciation rights of StatSpin and assumed options and
warrants to purchase an additional 126,000 shares of IRIS common stock.  This
represents an exchange ratio of 4.095 shares of IRIS for each common share and
stock appreciation right of StatSpin.  This transaction was accounted for as a
pooling-of-interests.

18. Research and Development Funding. 

    During the first quarter of 1995, IRIS and BMG announced a joint project to
develop a high-capacity, automated urinalysis system for reference laboratories
based on the proprietary technologies of both companies.  The program is
jointly funded by BMG and IRIS.  During the first quarter of 1996, IRIS
received $150,000 from BMC as partial payment for this project.  (See Note 10).

    In September 1995, IRIS and PSI entered into a joint project to develop
several new products based on IRIS technology (the PSI Products) to further
enhance automation in the urinalysis field.  (See Note 9).

    Reimbursements and costs connected with the PSI Products  and the Reference
Lab projects are as follows:

<TABLE>
<CAPTION>
                                                                        Three months ended March 31,
                                                                   ---------------------------------

                                                                        1995                    1996
                                                                  ---------                 --------
                                     <S>                          <C>                      <C>
                                     Reimbursements               $ 274,360                $ 812,687

                                     Costs                         (319,360)                (822,318)
                                                                  ---------                ---------

                                       Net Costs                   $(45,000)               $  (9,631)
                                                                  =========                =========
</TABLE>





                                       12
<PAGE>   14
19. Restatement of Prior Period Results of Operations

    The Company completed a review during the fourth quarter of 1996 of its
revenue recognition policy and procedures.  As a result of the review, the
Company has restated its 1995 and quarter ended March 31, 1996 results of
operations and related balance sheet accounts as described below to 
appropriately reflect the Company's revenue in accordance with its revenue 
recognition policy.  Such restatements pertain to the amount and timing of 
revenues recognized under an introductory sales program and the timing of
revenues recognized for shipments made "FOB destination" or under contingent 
sales terms.  The Company has established procedures to assure appropriate 
revenue recognition in the future.

    The table below sets forth selected operating data and accumulated deficit
as of December 31, 1995 and March 31, 1996 and for the year and quarter then
ended, respectively, on both a restated basis and as previously reported.  The
previously reported data in the table below has been restated to retroactively
reflect the pooling-of-interests transaction described in Note 1 under 
"Formation and Business of the Company".

<TABLE>
<CAPTION>
                                                                                   Year Ended                Three Months Ended
                                                                            December 31, 1995                    March 31, 1996
                                                                            -----------------                    --------------

                                                                As Reported       As Restated       As Reported     As Restated
                                                                -----------       -----------       -----------     -----------
                   <S>                                          <C>               <C>               <C>             <C>
                   Net sales                                    $15,021,658       $14,392,158       $ 4,344,571     $ 3,904,096
                   Cost of sales                                  7,360,524         7,126,816         2,160,767       2,041,249
                                                                -----------       -----------       -----------     -----------

                            Gross margin                          7,661,134         7,265,342         2,183,804       1,862,847
                   Operating expenses                             9,210,323         9,163,323         1,783,834       1,719,481
                                                                -----------       -----------       -----------     -----------

                            Operating income (loss)              (1,549,189)       (1,897,981)          399,970         143,366
                   Other income                                     377,760           377,760            82,248          82,248
                                                                -----------       -----------       -----------     -----------

                            Income (loss) before taxes           (1,171,429)       (1,520,221)          482,218         225,614
                   Tax provision (benefit)                       (3,528,044)       (3,646,633)           40,000          18,702
                                                                -----------       -----------       -----------     -----------

                            Net income                          $ 2,356,615       $ 2,126,412       $   442,218     $   206,912
                                                                ===========       ===========                                  

                   Net income per share                         $       .37       $       .33       $      0.07     $      0.03

                   Accumulated deficit                          $14,496,025       $14,726,228       $14,053,807     $14,519,316
</TABLE>

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

OVERVIEW

         The Company generates revenues from the initial sales of in vitro
diagnostic ("IVD") imaging systems based on its patented and proprietary
"Automated Intelligent Microscopy" technology, which in turn generate follow-on
sales of supplies and service necessary for their operation.  The Company also
generates revenues from sales of ancillary lines of small laboratory
instruments and supplies.

         The Company generates most of its revenues from sales of two models of
The Yellow IRIS(R) urinalysis workstation and related supplies and services.
These two models differ mainly by their speed and price.  The Company plans to
introduce a third model of The Yellow IRIS(R) later this year.  The Model
900UDx(TM) urine pathology system, the next model in The Yellow IRIS(R) family,
will be a higher capacity automated urinalysis workstation designed especially
for the high-volume testing requirements of large hospitals and reference
laboratories.  The Company received FDA clearance to market the Model
900UDx(TM) in March 1996.

         The Company has in the past partially funded its research and
development programs through (i) grants from the National Institutes of Health
obtained through the federal government's Small Business Innovative Research
program, (ii) joint development programs with strategic partners and (iii)
Company-sponsored research and development entities.






                                       13
<PAGE>   15
         In recent years, the Company has, in addition to its internally-funded
projects, entered into four significant externally-funded projects, two joint
development projects with strategic partners and two projects with
Company-sponsored research and development entities.  From 1994 to 1996, the
Company collaborated with Boehringer Mannheim Corporation ("BMC"), an
Indianapolis-based manufacturer of diagnostic products, and Boehringer Mannheim
GmbH ("BMG"), BMC's German affiliate and a world leader in clinical chemistry,
in the development of (i) the CHEMSTRIP(R)/IRIStrip(TM) urine test strips and a
related urine test strip reader for The Yellow IRIS(R) and (ii) the Model
900UDx(R), the latest model in The Yellow IRIS(R) family.  The Company entered
into a project in October 1992 with LDA, a Company-sponsored research and
development entity, for development of The White IRIS(R) leukocyte differential
analyzer.  Corange International Limited ("Corange"), an affiliate of BMC and
BMG, provided substantial funding to LDA.  In June 1995, the Company acquired
LDA for approximately 498,000 shares of Common Stock.  As a result of the LDA
acquisition, the Company incurred a non-recurring, non-cash charge of $3.2
million against earnings for the quarter ended June 30, 1995 for the
acquisition of in-process research and development since The White IRIS(R) had
not yet received FDA clearance.  The Company entered into a similar project in
September 1995 with Poly U/A Systems, Inc. ("Poly"), another Company-sponsored
research and development entity, for development of several new products to
enhance automated urinalysis ("the Poly Products").  The program with Poly is
currently ongoing.  See "-- Liquidity and Capital Resources."

RESULTS OF OPERATIONS

         The consolidated financial statements of the Company contained in this
report have been retroactively restated for all periods presented to include
the financial position, results of operations and cash flows of StatSpin, Inc.
(formerly known as StatSpin Technologies) ("StatSpin") in accordance with the
pooling-of-interests method of accounting.





                                       14
<PAGE>   16
RESULTS OF OPERATIONS

         First Quarter 1996 Compared to First Quarter 1995

         IRIS had net income of $207,000 for the first quarter of 1996, an
decrease of $191,000 (48%)  from net income of $397,000 for the first quarter of
1995. The decrease of $148,000 in operating income was partially attributable to
$210,000 of expenses related to the acquisition of StatSpin. On a more
comparable basis, net income excluding the acquisition expenses would have been
approximately $398,000.  The improvement in operating income on this basis is
primarily attributable to increased sales of workstations and related supplies
(including CHEMSTRIP/IRIStrips(TM)), other laboratory instruments and related
supplies, and service contracts and repairs.

         Interest income declined by $42,000 due largely to decreased amounts of
invested cash.  Other income consisted primarily of royalties from TOA of
$22,000 and $32,000, respectively, for the quarters ended March 31, 1996 and
1995, respectively.  These royalty amounts include the effect of an agreement
with TOA to temporarily increase the amount of the royalty from 3% to 5% and the
scope of the royalty to apply to revenues on consumables and service contracts,
as well as instruments.  These changes were made retroactive to October 1994 and
expire in September of 1996, at which time the scope and amount of the royalty
will revert to their original term unless TOA exercises its right under the
temporary agreement to negotiate a permanent change in the license.

         Net sales increased 23% to $3.9 million for the first quarter of 1996
from $3.2 million during the first quarter of 1995.  The $737,000 increase is
primarily attributable to increased sales of workstations, other instruments,
service contracts and repairs, and related supplies, including increased sales
of CHEMSTRIPS/IRIStrips(TM).  Cost of goods increased to approximately $2.0
million for the first quarter of 1996 from $1.6 million in the first quarter of
1995 and remained constant as a percentage of sales at 52%.

         Total research and development expenses, including the costs of
development contracts, increased to $1.1 million in the first quarter of 1996
from $450,000 in the first quarter of 1995 as IRIS continued to invest in the
development of new applications and further improvements in its technology.
Research and development expenses related to The White IRIS(TM) decreased to
$71,000 during the first quarter of 1996 from $165,000 during the same quarter
in 1995. Research and development on this project decreased significantly
following submission to the FDA of an application for clearance to market The
White IRIS(R).  Research and development expenses related to the 900UDX(TM)
reference laboratory system were $124,000 for the first quarter of 1996 and were
offset by reimbursements of $150,000  from BMG.  Research and development
expenses related to PSI Products were $698,000 for the first quarter of 1996 and
were offset by reimbursements of $663,000 from PSI.  Research and development
expenses unrelated to these three projects increased to $189,000 for the first
quarter of 1996 from $131,000 for the first quarter of 1995, as research and
development activity, in general, was intensified.  See "--Overview",
"Business--Future Developments--The White IRIS(R) and Hematology",
"Business--Strategic Alliance with Boehringer Mannheim--Joint Development of the
Reference Laboratory System" in the IRIS Annual Report.

         Marketing and selling expenses in the first quarter of 1996 increased
by approximately $150,000 to $790,000 as compared to the first quarter of 1995.
The increase is due largely to a greater emphasis on direct marketing.  General
and administrative expenses of $659,000 in the first quarter of 1996 increased
by $231,000 from the first quarter of 1995 due in large part to expenses related
to the acquisition of StatSpin in the first quarter of 1996.




                                       15
<PAGE>   17
LIQUIDITY AND CAPITAL RESOURCES.

         Working capital decreased by $618,000 since December 31, 1995, to a
total of $10.6 million at March 31, 1996.  IRIS experienced negative cash flow
of $1.5 million during the first quarter of 1996 as compared to a negative cash
flow of $1.3 million during the first quarter of 1995.  Negative cash flow is
due primarily to continued growth in sales (as reflected in increased amounts of
inventory and accounts receivable).  IRIS believes that its current cash on hand
plus short term investments will be sufficient to meet is liquidity needs for
the next year.  However, IRIS is pursuing a revolving line of credit with its
principal bank to provide an alternative source of liquidity.

         During the first quarter 1996, IRIS spent $447,000 for capital
expenditures, primarily for machinery and equipment, compared with $165,000 for
capital expenditures during the first quarter of 1995.  IRIS currently has no
material commitments for capital expenditures.  Future commitments for capital
expenditures may prove necessary to continue IRIS efforts in research and
development and to manufacture and market its existing products.

         In September 1995, the Company and PSI entered into a research and
development agreement to develop the PSI Products using the Company's
technology.  These products are intended to have dual potential as both
stand-alone products and enhancements to The Yellow IRIS(R) family of
urinalysis workstations.  Under the terms of this agreement, PSI will have the
right to use Company technology and any newly-developed technology for
developing, manufacturing and marketing the PSI Products as stand-alone
devices, and the Company will have the right to use the newly-developed
technology for any other purpose and to incorporate the PSI Products into The
Yellow IRIS(R) family of products.  PSI has retained the Company to conduct
research, development, clinical evaluation and premarket testing of the PSI
Products.  The Company is funding the first $15,000 per month (up to a maximum
of $500,000) of the cost of the project, and PSI is reimbursing the Company
for the excess.  PSI was organized by the Company in June 1995 and
subsequently raised net proceeds of approximately $2.0 million in a private
offering.  The Company has an option until 121 days after termination of the
agreement with PSI to acquire all of the common stock of PSI for an aggregate
price increasing on August 1, 1997 from $4.4 million to $5.1 million payable in
cash or shares of Common Stock of the Company.  If the Company elects to
exercise its option, the portion of the net cost of the acquisition allocated
to completed products would be capitalized and its subsequent amortization
would impact future earnings.  For the portion of the net cost of the
acquisition allocated to in-process research and development, the Company would
record a nonrecurring, noncash (if purchased with Common Stock), charge against
then current earnings.




                                       16
<PAGE>   18
RECENT ACQUISITIONS

         In 1995, the Company began implementing a strategy to achieve global
IVD imaging leadership by expanding its product line of IVD imaging systems and
adding complementary lines of small instruments and supplies.

         In March 1996, the Company purchased the Cen-Slide(R) 1500 System for
centrifugal urine sedimentation and manual microscopic examination and certain
other products for $788,000.

         In February 1996, the Company merged with StatSpin for approximately
340,000 shares of Common Stock and the assumption of options and warrants to
purchase an additional 126,000 shares of Common Stock in a pooling-of-interests
transaction for accounting purposes.  Accordingly, the financial statements of
the Company have been retroactively restated for all periods presented to
include the financial position, results of operations and cash flows of
StatSpin.  StatSpin manufactures special-purpose centrifuges,
application-specific consumable items and other small laboratory instruments.
Through this acquisition, the Company acquired sample preparation technologies
useful for future IVD imaging applications, as well as access to key
distributors for its small laboratory instruments and supplies.

         In June 1995, the Company purchased LDA for approximately 498,000
shares of Common Stock.  LDA was a Company-sponsored research and development
entity which provided funding for The White IRIS(R) leukocyte differential
analyzer under a research and development agreement with the Company.  See "--
Overview."

         In March 1995, the Company purchased its digital refractometer product
line from Biovation for $850,000 and warrants to purchase 75,000 shares of
Common Stock at $8.125 per share.

HEALTHCARE REFORM POLICIES

         In recent years, an increasing number of legislative proposals have
been introduced or proposed in Congress and in some state legislatures that
would effect major changes in the healthcare system, nationally, at the state
level or both.  Future legislation, regulation or payment policies of Medicare,
Medicaid, private health insurance plans, health maintenance organizations and
other third-party payors could adversely affect the demand for the Company's
current or future products and its ability to sell its products on a profitable
basis.  Moreover, healthcare legislation is an area of extensive and dynamic
change, and the Company cannot predict future legislative changes in the
healthcare field or their impact on its business.




                                       17
<PAGE>   19
INFLATION

         The Company does not foresee any material impact on its operations
from inflation.

RECENTLY-ISSUED ACCOUNTING STANDARDS

                 In December 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 123 ("SFAS No. 123"),
"Accounting for Stock Based Compensation."  The Company will adopt the
disclosure method as provided for in SFAS No. 123.

                 In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of
("Statement 121").  Statement 121 requires the Company to review the carrying
amounts of its long-lived assets and certain identifiable intangible assets for
impairment.  If it is determined the carrying amount of the asset is not
recoverable, the Company is required to recognize an impairment loss.  The
accounting standard was implemented during the first quarter of 1996 and did
not have a material impact on the financial statements.

FORWARD-LOOKING STATEMENTS

         Except for historical information, the matters discussed above are
forward-looking statements that are subject to certain risks and uncertainties
that could cause actual results to differ materially from those set forth in
such forward-looking statements.  In addition to those described above, such
risks and uncertainties include, among other things, the difficulties of
continuing penetration of the capital- intensive worldwide laboratory
instrument market, rapid technological change in the microelectronics and
software industries, increasing competition from imaging and non-imaging based
IVD products, unanticipated technological difficulties in gaining synergies,
and potential patent and other litigation with third parties.  The Company's
most recent Annual Report on Form 10-K, as amended, and other SEC filings 
describe these and other additional factors that could cause actual results 
to differ materially from those described in the forward-looking statements.

              ITEM 6 - Exhibits and Reports on Form 8-K

(a)  Exhibits

        3.1     Articles of Incorporation.1
        3.2     Bylaws.2/
        10.1    Agreement and Plan of Merger dated January 31, 1996 between 
                IRIS and StatSpin.3/
        10.2    Registration Rights Agreement dated January 31, 1996 between 
                IRIS and StatSpin Stockholders.3/
        10.3    Employment Agreement dated January 30, 1996 with Thomas F. 
                Kelley.3/
        10.4    Lease for the facilities of Registrant's subsidiary, 
                StatSpin.3/
        11      Statement re: Restated Computation of per Share Earnings.
        27      Restated Financial Data Schedule

_________________________________
1/       Incorporated by reference to the Company's Current Report on Form 8-K
         dated August 13, 1987 and its Quarterly Report on Form 10-Q for the
         quarter ended September 30, 1993.
2/       Incorporated by reference to the Company's Quarterly Report on Form
         10-Q for the quarter ended September 30, 1994 and its Annual Report on
         Form 10-K for the year ended December 31, 1995.





                                       18
<PAGE>   20
3/       Incorporated by reference to the Company's Annual Report on Form 10-K
         for the year ended December 31, 1995.

(b)      Reports on Form 8-K

         IRIS filed a Current Report on Form 8-K on February 16, 1996 with
respect to the acquisition  of Norfolk Scientific, Inc., d/b/a StatSpin
Technologies, which included certain financial statements of StatSpin and
unaudited pro forma condensed financial statements reflecting the combination
of IRIS and StatSpin using the pooling of interests accounting method.  IRIS
also filed a Current Report of Form 8-K on May 9, 1996 with respect to the
signing of a letter of intent for the acquisition of the digital imaging
business of Perceptive Scientific Instruments, Inc.


                                   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.

                   INTERNATIONAL REMOTE IMAGING SYSTEMS, INC.





Dated:  December 31, 1996              By: /s/ MARTIN S. McDERMUT
                                          --------------------------------------
                                          Martin S. McDermut
                                          Vice President of Finance 
                                          & Administration
                                          Chief Financial Officer





                                       19