FORM 10-QSB

                   SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, DC  20549



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

For the quarterly period ended November 30, 1996

Commission File Number: 1-11140

                       OPHTHALMIC IMAGING SYSTEMS
         (Exact name of registrant as specified in its charter)

              CALIFORNIA                         94-3035367
       (State of Incorporation)        (IRS Employer Identification No.)

             221 LATHROP WAY, SUITE I, SACRAMENTO, CA  95815
                (Address of principal executive offices)

                             (916) 646-2020
                       (Issuer's telephone number)

Check  whether  the issuer (1) has filed all reports required to be filed
by Section 13 or  15(d) of the Exchange Act during the past 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   XX       No

As  of  November  30,  1996,  3,336,264 shares of common stock, at no par
value, were outstanding.

<PAGE>1
                    PART I     FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS


<PAGE>2

                       OPHTHALMIC IMAGING SYSTEMS
                         CONDENSED BALANCE SHEET
                            NOVEMBER 30, 1996
                               (UNAUDITED)

ASSETS
Current assets:
   Cash and equivalents                            $       459,404
   Accounts receivable, net                                876,337
   Inventories, net                                      1,582,766
   Prepaid expenses and other current assets                68,277
                                                   ---------------  
Total current assets                                     2,986,784
Furniture and equipment, net of accumulated
   depreciation and amortization of $665,899               434,241
Other assets                                                63,173
                                                   ---------------
                                                   $     3,484,198
                                                   ===============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Borrowings under line of credit                 $       281,000
   Accounts payable                                        905,577
   Accrued liabilities                                     753,748
   Accrued warrant appreciation right                      235,160
   Deferred extended warranty revenue                       79,881
   Customer deposits                                       150,980
   Current portion of notes payable                          5,002
                                                   ---------------
Total current liabilities                                2,411,348
Notes payable, less current portion                          2,096
Commitments
Stockholders' equity:
   Preferred stock, no par value, 20,000,000 shares 
    authorized; none issued or outstanding                      --
   Common stock, no par value, 20,000,000 shares 
    authorized; 3,336,264 issued and outstanding         9,025,687
   Accumulated deficit                                  (7,954,933)
                                                   ---------------
Total stockholders' equity                               1,070,754
                                                   ---------------
                                                   $     3,484,198
                                                   ===============

SEE ACCOMPANYING NOTES.

<PAGE>3

                       OPHTHALMIC IMAGING SYSTEMS
                   CONDENSED STATEMENTS OF OPERATIONS
                               (UNAUDITED)

                                    THREE MONTHS ENDED NOVEMBER 30,
                                    1996                     1995
                                    -------------------------------
NET REVENUES                        $      884,246    $   1,909,926
COST OF SALES                              650,173        1,236,194
                                    -------------------------------
GROSS PROFIT                               234,073          673,732

OPERATING EXPENSES:
  SALES AND MARKETING                      468,337          487,861
  GENERAL AND ADMINISTRATIVE               282,768          154,213
  RESEARCH AND DEVELOPMENT                 264,781          197,016
                                     ------------------------------
     TOTAL OPERATING EXPENSES            1,015,886          839,090
                                     ------------------------------
LOSS FROM OPERATIONS                      (781,813)        (165,358)
OTHER EXPENSE, NET                         (13,722)         (33,001)
                                     ------------------------------
NET LOSS                             $    (795,535)    $   (198,359)
                                     ==============================
SHARES USED IN THE CALCULATION OF
  NET LOSS PER SHARE                     3,320,969        1,010,450
                                     ==============================
NET LOSS PER SHARE                   $       (0.24)    $      (0.20)
                                     ==============================

SEE ACCOMPANYING NOTES.

<PAGE>4

                       OPHTHALMIC IMAGING SYSTEMS
                   CONDENSED STATEMENTS OF CASH FLOWS
               INCREASE (DECREASE) IN CASH AND EQUIVALENTS
                               (UNAUDITED)

                                             THREE MONTHS ENDED NOVEMBER 30,
                                             1996                       1995
                                             -------------------------------

OPERATING ACTIVITIES:
  Net loss                                     $    (795,535)    $  (198,359)
Adjustments to reconcile net loss to 
  net cash used in operating activities:
     Depreciation and amortization                    31,622          23,224
     Net decrease (increase) in current assets
        other than cash and equivalents              190,107        (469,989)
     Net increase in current liabilities
        other than short-term borrowings             247,986         313,373
                                               -----------------------------
Net cash used in operating activities               (325,820)       (331,751)
INVESTING ACTIVITIES:
Purchases of furniture and equipment                (104,668)        (39,865)
Net decrease (increase) in other assets               23,462          (6,541)
                                               -----------------------------
Net cash used in investing activities                (81,206)        (46,406)
FINANCING ACTIVITIES:
Principal payments on notes payable                   (1,386)         (5,826)
Net (repayments of) proceeds from line-of-credit
  borrowings                                        (269,000)         50,000
Net proceeds from sale of common stock                85,491       1,068,488
                                               -----------------------------
Net cash (used) provided by financing activities    (184,895)      1,112,662
                                               ----------------------------- 
Net increase (decrease) in cash and equivalents     (591,921)        734,505
Cash and equivalents at beginning of period        1,051,325         317,205
                                               -----------------------------
Cash and equivalents at end of period          $     459,404     $ 1,051,710
                                               =============================

SEE ACCOMPANYING NOTES.

<PAGE>5
                       Ophthalmic Imaging Systems

                 Notes to Condensed Financial Statements

          Three Month Periods ended November 30, 1996 and 1995

                               (Unaudited)


Note 1. Basis of Presentation

     The accompanying unaudited  condensed  balance  sheet as of November
     30,  1996, condensed statements of operations for  the  three  month
     periods   ended  November  30,  1996  and  1995  and  the  condensed
     statements  of cash flows for the three month periods ended November
     30, 1996 and  1995  have  been prepared in accordance with generally
     accepted accounting principles for interim financial information and
     with the instructions to Form  10-QSB  and Item 310(b) of Regulation
     S-B.  Accordingly, they do not include all  of  the  information and
     footnote  disclosures  required  by  generally  accepted  accounting
     principles for complete financial statements.  It is suggested  that
     these condensed financial statements be read in conjunction with the
     audited  financial  statements  and  notes  thereto  included in the
     registrant's (the Company's) Annual Report for the Fiscal Year Ended
     August  31, 1996 on Form 10-KSB.  In the opinion of management,  the
     accompanying condensed financial statements include all adjustments,
     consisting  only  of  normal  recurring adjustments, necessary for a
     fair presentation of the Company's financial position and results of
     operations for the periods presented.  The results of operations for
     the period ended November 30, 1996 are not necessarily indicative of
     the operating results for the full year.

     Certain amounts in the fiscal 1996 financial statements have been
     reclassified to conform with the presentation in the fiscal 1997
     financial statements.

Note 2. Net Loss Per Share

     Net loss per share is computed  using the weighted average number of
     shares of common stock outstanding.   Common  equivalent shares from
     stock options and warrants are excluded from the  computation of net
     loss per share because their effect is antidilutive.


<PAGE>6

Note 3. Line of Credit

     In April 1995, the Company entered into a revolving  line  of credit
     agreement  (the  "Credit Agreement") with a bank (the "Bank").   The
     maximum amount available  under the terms of the Credit Agreement is
     $750,000 and is based upon  eligible outstanding accounts receivable
     balances.  Borrowings under the  Credit  Agreement  bear interest at
     the Bank's prime lending rate plus two and one-half percent  and are
     secured  by  virtually  all  assets  of  the  Company  (10.75% as of
     November 30, 1996).

     The  Credit  Agreement contains certain restrictive covenants  which
     provide for, among  other  things,  certain  working capital and net
     worth balances and ratios, and limitations on the amount of net loss
     the Company may incur in a quarter.

     In connection with the Credit Agreement, the Company also modified a
     warrant  previously issued to the Bank.  The modifications  included
     increasing  the  number  of  common  shares for which the warrant is
     exercisable  to 25,000, changing the per  share  exercise  price  to
     $2.39 and extending the expiration date to April 2000.

     In November 1995,  the  Company  and  the  Bank  amended  the Credit
     Agreement.  The amendments included extending the maturity  date  to
     April  1996,  and  increasing the amount of the loss the Company may
     incur  in  a  quarter.   As  a  condition  to  amending  the  Credit
     Agreement, the Company modified the warrant issued to the Bank.  The
     modifications included  increasing the number of common shares under
     the warrant for which the warrant is exercisable to 67,500, reducing
     the per share exercise price  to  $1.73 and extending the expiration
     date to November 2000.  The number  of  shares for which the warrant
     is  exercisable  was  reduced to 50,000 due  to  the  occurrence  of
     certain events set forth in the Credit Agreement.

     In April 1996, the Company  and  the  Bank  again amended the Credit
     Agreement.  The amendments included extending  the  maturity date to
     July  1996 and limiting the amount of the net loss the  Company  may
     incur in a quarter.


<PAGE>7

Note 3. Line of Credit (continued)

     In May  1996,  the  Bank exercised an alternative stock appreciation
     right  available  under  the  warrant.   In  conjunction  with  said
     exercise, the Company  has  accrued  a  liability  of  approximately
     $220,000 as of May 31, 1996, said amount being the entire  amount of
     the obligation under the warrant.  The Company recognized additional
     interest expense of approximately $151,000 during the quarter  ended
     May  31,  1996  in  connection  with said exercise.  The Company had
     previously  accrued  as interest expense  approximately  $69,000  in
     connection with a put  right  under  the  warrant,  which  right  is
     foregone  in  lieu  of  the  Bank  exercising  its alternative stock
     appreciation right.  The parties have agreed in  principal to revise
     the   form  of  consideration  and  timing  of  payment  under   the
     alternative  stock appreciation right, but have not as yet agreed to
     the definitive terms thereof.

     In November 1996,  the Company and the Bank again amended the Credit
     Agreement.  Then amendments  included, among other things, extending
     the  maturity  date to March 1997,  subject  to  the  occurrence  of
     certain equity transactions, and limiting the amount of the net loss
     the Company may  incur  in  the  first  and second quarter of fiscal
     1997.

     As of November 30, 1996, borrowings in the  amount  of $281,000 were
     outstanding against the Credit Agreement.  The Company  was  not  in
     compliance with certain of the restrictive covenants for the quarter
     ending November 30, 1996 and the Company has requested from the Bank
     a  waiver with respect to such non-compliance.  The potential impact
     of not  receiving  a  waiver  from  the  Bank is that the Bank could
     demand payment of the balance owing against the Credit Agreement.

Note 4. Private Placement

     On November 21, 1995, the Company completed  a  private placement of
     1,368,421 shares of its common stock with detachable  warrants.  The
     net  proceeds  from  this  offering  were  approximately $1,075,000.
     Along with each share of common stock issued,  the  purchasers  were
     given  an  "A  Warrant"  and a "B Warrant" to purchase shares of the
     Company's common stock.  The  A  and  B  Warrants per share exercise
     prices  are $1.25 and $1.75, respectively.   The  number  of  shares
     exercisable  as well as the per share exercise prices of the A and B
     Warrants are subject  to  adjustment  upon the occurrence of certain
     events.   The  A  and B Warrants expire on  February  19,  1997,  as
     amended, and November 21, 1997, respectively.


<PAGE>8

Note 4. Private Placement (continued)

     In addition, the A  and  B Warrants are subject to redemption by the
     Company at $.10 per warrant commencing May 21, 1996 and May 21, 1997
     (the  "Redemption  Dates"),  respectively.   The  A  and  B  Warrant
     redemption provisions  are  only  available  if the Company's common
     stock price exceeds $2.25 and $2.50, respectively,  for  the  twenty
     trading  days  immediately  preceding  the  corresponding Redemption
     Dates.

     The placement agent was issued a warrant to purchase  250,000 shares
     of  the  Company's  common  stock at $.95 per share.  The number  of
     shares exercisable as well as  the  per  share  exercise  price  are
     subject  to  adjustment upon the occurrence of certain events.  This
     warrant expires  in November 1999.  In addition, the placement agent
     will receive as a  commission,  10%  of the proceeds received by the
     Company upon the exercise of the A and B Warrants described above.

     In May 1996, 1,052,631 of the A Warrants  were  exercised.   The net
     proceeds from this exercise were approximately $1,184,000.

Note 5. Subsequent Events

     In December 1996, the Company received proceeds of approximately
     $225,000 (net of anticipated issuance costs of approximately
     $25,000) for the exercise of certain of the B Warrants issued
     pursuant to the Private Placement referred to in Note 4 above.


<PAGE>9

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

THE  STATEMENTS  BELOW  INCLUDE  STATEMENTS  THAT  ARE  "FORWARD  LOOKING
STATEMENTS"  WITHIN  THE MEANING OF SECTION 21A OF THE SECURITIES ACT  OF
1933, AS AMENDED, IN SECTION  21E  OF  THE  SECURITIES  ACT  OF  1934, AS
AMENDED,  AND  IS  SUBJECT  TO  THE  SAFE HARBOR CREATED THEREBY.  FUTURE
OPERATING RESULTS MAY BE ADVERSELY EFFECTED  AS  A  RESULT OF A NUMBER OF
FACTORS ENUMERATED IN THE COMPANY'S PUBLIC REPORTS.

OVERVIEW

To date, the Company has designed, developed, manufactured  and  marketed
ophthalmic  digital imaging systems and has derived substantially all  of
its revenues from the sale of such products. The Company has a reputation
within the ophthalmic  community  for  producing  high quality, reliable,
easy to use equipment and believes itself to be an  acknowledged industry
leader  in  the sales of digital ophthalmic imaging systems  for  instant
fluorescein angiography.

The Company believes,  however,  that as the U.S. healthcare system moves
toward managed care the needs of the  managed care providers are changing
the nature and demand for medical imaging  equipment  and  services.  New
opportunities  in  telemedicine are emerging that may allow managed  care
organizations to reduce  costs while maintaining their quality of patient
care.  The Company plans to  leverage  its digital imaging technology and
established  customer  base  to  develop product  features  and  services
targeting telemedicine/managed care  applications  for  the ocular health
care industry.

Since its inception, the Company's products have addressed  primarily the
needs of the ophthalmic flourescein angiography market, and more recently
the  indocyanine  green  ("ICG")  market.  The Company believes that  the
overall angiography market remains limited,  however, and that sustaining
growth  in  its traditional angiography equipment  business  will  become
increasingly difficult.  In recognition of this, the Company is expanding
its product capabilities  to  address  the  emerging telemedicine market,
including  remote  consultation.   While  the Company  will  continue  to
support its entire line of digital angiography  products,  it  will focus
its future efforts on developing product enhancements and pursuing viable
opportunities   in   this   market,   particularly   as  they  relate  to
telemedicine/managed care applications.

The Company's objective is to become a leading provider  of  telemedicine
products   and  services  in  the  ocular  health  care  industry,  while
maintaining  its  position  as  a  market  leader in its existing digital
imaging products.

In  this  regard,  in  fiscal 1996 the Company developed  a  Reading  and
Documentation Center, through  which  it intends to provide documentation
services of electronically transmitted  digital images acquired at remote
locations.


<PAGE>10

During fiscal 1996, the Company also secured  an  agreement  to conduct a
pilot program with a major managed care provider to evaluate remote image
interpretation for diabetic retinopathy screening.  At the conclusion  of
the  pilot  program, if successful, the Company anticipates entering into
negotiations  with  the provider, and others, for contracting the Reading
Center services.  The  Company  currently has several initial commitments
to purchase its Reading and Documentation  Center services.  There can be
no assurance, however, that the pilot program  will  prove  a  success or
that these negotiations or commitments will result in contracts for these
services.

During  the  recently  completed fall meeting of the American Academy  of
Ophthalmology, the Company  introduced  a  lower-priced  digital  imaging
system  incorporating  telemedicine  features  and  targeting the general
ophthalmology  market.   The majority of orders received  in  conjunction
with this introduction are  projected  for delivery during the second and
third quarters of fiscal 1997.

The  Company  continues  to  assess  potential  market  opportunities  in
anticipation of results from clinical validation studies of its Glaucoma-
Scope<reg-trade-mark> product, an instrument  specifically  designed  for
the  early  diagnosis  of  glaucoma,  a  commonly  occurring  eye disease
regularly screened for by eye care practitioners.

The  Company's  results  of operations have historically fluctuated  from
quarter to quarter due to  a  number  of  factors and are not necessarily
indicative  of  the  results  to be expected for  any  future  period  or
expected for the fiscal year ending  August  31,  1997.   There can be no
assurance  that  revenue  growth  or  profitability  can  be achieved  or
sustained in the future.

The following discussion should be read in conjunction with the unaudited
interim  financial statements and the notes thereto which are  set  forth
elsewhere  in  this Report on Form 10-QSB.  In the opinion of management,
the  unaudited  interim   period   financial   statements   include   all
adjustments,  all  of  which  are  of a normal recurring nature, that are
necessary for a fair presentation of the results of the periods.


<PAGE>11

RESULTS OF OPERATIONS

The  Company's  revenues  for  the first  quarter  of  fiscal  1997  were
$884,246, representing a decrease  of  approximately 54% from revenues of
$1,909,926  for  the  first quarter of fiscal  1996.   A  primary  factor
contributing to the reduced  1997  first  quarter  revenue  level was the
reallocation of the Company's resources to address emerging opportunities
in  the  telemedicine/managed  care market.  In addition, the 1996  first
quarter revenue levels were largely  attributable  to strong sales of the
Company's   digital   angiography   systems   incorporating    ICG    and
Windows<trademark>  features introduced over the previous two years.  The
Company   will  continue   to   allocate   resources   to   address   the
telemedicine/managed care market, as sustaining growth in its traditional
angiography  equipment business becomes increasingly difficult.  Based on
its backlog of  current  orders,  however,  the Company believes that its
revenues will improve during the remainder of  the year.  Nonetheless, in
comparison to previous years, the Company may experience  reduced revenue
levels from sales of its digital imaging equipment products  in the near-
term.

Contributions  to  revenues  from sales of Glaucoma-Scope<reg-trade-mark>
units have been negligible and management does not anticipate significant
near-term  sales  improvement  for   the  Glaucoma-Scope<reg-trade-mark>,
recognizing that longer-term sales growth  remains  dependent upon market
acceptance  of  the  system  and  resolution  of  healthcare  reform  and
reimbursement issues.

Gross  margins  were  approximately  26% during the first  quarter  ended
November 30, 1996 versus approximately  35% for the comparable quarter of
1996. This decrease in gross margin percentage was attributable primarily
to   the  fixed  manufacturing  and  support  costs   relative   to   the
significantly   decreased   revenue  levels  during  1997.   The  Company
continues to evaluate its expenses  in  this area consistent with current
and anticipated business conditions and management anticipates that near-
term margin improvement, if any, would result  principally  from  reduced
material    costs    associated    with   current    deliverable   system
configurations, economies of scale from  increased  unit  production  and
other manufacturing efficiencies.

Sales and marketing and general and administrative expenses accounted for
approximately  85%  of  total revenues during the first quarter of fiscal
1997 as compared with approximately  34%  during  the  first  quarter  of
fiscal  1996.  Expense levels also increased to $751,105 during the first
quarter of  1997  versus  $642,074 during the first quarter of 1996.  The
primary factors contributing  to  the increase were costs associated with
hiring additional support personnel, the impact of increased reserves for
potential credit losses and marketing, sales and related costs associated
with  the  telemedicine/managed care  start-up  marketing  efforts.   The
Company anticipates  expenses  in  this  area  will continue to run above
historical levels.


<PAGE>12

Research and development expenses, as a percentage of revenues, was
approximately 30% in the first  quarter  of 1997 versus approximately 10%
during  the  same  period of 1996.  Expense levels  increased  in  actual
dollar terms to $264,781  during  the first quarter of 1997 from $197,016
in 1996.  The Company anticipates that  it  will  incur increased expense
levels in near-term as it dedicates more resources  to  the  research and
development  of  telemedicine/managed care applications, while continuing
to incur expenses  with respect to its current products.  In this regard,
the Company intends  to  continue  research  and  development  efforts on
product  enhancements  and  reducing  cost configurations for its current
products,   particularly   as   they  impact  telemedicine/managed   care
applications.

Other expense was $13,722 during  the first quarter of fiscal 1997 versus
$33,001 during the same period of 1996.   The primary contributing factor
to this change was a decrease in interest expense during 1997 versus 1996
associated  with  an  existing  credit  line, including  a  reduction  in
borrowings against said credit line and in  particular  conjunction  with
interest  expense  recognized during the 1996 first quarter in connection
with a put right under a warrant previously issued to the Company's Bank,
which right was foregone  in  lieu of the Bank exercising its alternative
stock appreciation right available  under  said warrant in May 1996.  The
parties have agreed in principal to revise the  form of consideration and
timing  of  payment under the alternative stock appreciation  right,  but
have not as yet agreed to the definitive terms thereof.


LIQUIDITY AND CAPITAL RESOURCES

The Company's  operating activities used cash of $325,820 and $331,751 in
the first quarter  of  fiscal 1997 and 1996, respectively.  The cash used
by operations in the 1997  first  quarter resulted primarily from the net
loss during the period and the decrease in accounts receivable associated
with significantly reduced revenue levels during the period, which amount
was  partially  offset  by increases in  customer  deposits  from  orders
generated at the AAO meeting  and  other  current  liabilities, excluding
borrowings under the Credit Agreement.  Cash used by  operations  in  the
first  quarter of fiscal 1996 resulted primarily from the net loss during
the quarter and increases in accounts receivable and inventory, offset in
part by increases in accounts payable.


<PAGE>13

Cash used in investing activities was $81,206 during the first quarter of
1997 as  compared  to  $46,406  during  the  same  period  for 1996.  The
Company's  primary  investing activities consist of equipment  and  other
capital asset acquisitions.   The  Company  does  not  currently have any
pending   material  commitments  regarding  capital  expenditures.    The
Company, however,  will  continue  to  upgrade  its  existing  management
information  systems,  which  may  result  in increased near-term capital
expenditures.   In  addition,  the  Company anticipates  certain  capital
expenditures   to   support   efforts  to  expand   its   technology   to
telemedicine/managed care applications.   The  Company  anticipates  that
related  expenditures,  if  any, will be financed from one or more of the
following  sources:   (i)  working  capital;  (ii)  borrowings  under  an
existing credit agreement, if  available;  or (iii) debt, equity or other
financing arrangements, if any, available to the Company.

The  Company  used cash of $184,895 in financing  activities  during  the
first quarter of fiscal 1997 as compared to generating cash in the amount
of $1,112,662 during  the  same  period  of fiscal 1996.  The use of cash
from  financing  activities  during  the  1997   period  was  principally
repayments  of borrowings under the Credit Agreement,  which  amount  was
partially offset  by  net  proceeds  from  the  exercise of stock options
issued  to  employees.   The  sources  of cash from financing  activities
during the 1996 period were principally  the  net proceeds from a private
placement  of  the Company's common stock in November  1995,  and,  to  a
lesser  extent,  borrowings   under   the  Credit  Agreement.   Principal
repayments on notes payable was negligible in both 1997 and 1996.



<PAGE>14

As indicated above, the Company intends to allocate significant resources
to  the development and marketing of telemedicine/managed  care  products
and services.   During  this  development period, the Company anticipates
that  it could experience a decrease  in  revenues  and  an  increase  in
operating  losses  as  a  result  of  incurring  additional  expenses  in
connection  with  activities relating to the development and marketing of
telemedicine/ managed  care  products  and  services.   Accordingly,  the
Company  anticipates  that  it could continue to experience negative cash
flow from operations in the near-term.   In  addition,  while  the Credit
Agreement has been extended to March 1997, there can be no assurance that
the  Company  will be able to negotiate further extensions.  As indicated
in Note 3 of the Notes to Condensed Financial Statements, the Company was
not in compliance  with  certain  of  the  restrictive  covenants for the
quarter ending November 30, 1996 and the Company has requested  from  the
Bank  a  waiver  with respect to such non-compliance.  While the Bank has
favorably responded  to  all  previous  such  requests  and  the  Company
believes  the  Bank  will so respond to its current request for a waiver,
there  can  be no assurance  that  said  waiver  will  be  granted.   The
potential impact of not receiving a waiver from the Bank is that the Bank
could demand  payment  of the balance owing against the Credit Agreement,
which amount was $281,000  as  of  November  30, 1996.  As also indicated
above,  although the Company and the Bank have  agreed  in  principal  to
revise the  form  of  consideration  and  timing  of  payment  under  the
alternative  stock  appreciation  right  and the Company believes that it
will be able to enter into a final agreement with the Bank with regard to
such matters, there can be no assurance that it will be able to do so, in
which case the entire amount of the obligation,  which amount at November
30, 1996, including accrued interest thereon, was approximately $235,000,
would be due.

Although the Company believes that it will be able  to  raise  the  funds
necessary  to  satisfy  its liquidity and capital requirements during the
next  twelve  months  from alternative  sources  including  extending  or
refinancing its Credit  Agreement,  other  debt financing, issuing equity
securities or entering into other financing arrangements, there can be no
assurance that such financing will be available  and,  if available, that
it  will  be  obtained  in  terms  favorable to the Company.   Additional
capital could also be made available  to  the  Company  pursuant  to  the
exercise  of  additional  warrants issued in connection with the November
1995 private placement, as  well  as  from  other outstanding options and
warrants.   In  this  regard, the Company has received  a  commitment  to
exercise a significant  number  of  these  warrants  from  certain of the
warrant holders, and while the Company is currently in active discussions
with  such  warrant  holders  regarding  said exercise, there can  be  no
assurance that any such warrants will be exercised  in  the near-term, if
at all.



<PAGE>15

                      PART II     OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS
          None.

ITEM 2. CHANGES IN SECURITIES
          In  November  1996,  the expiration date for the unexercised  A
          Warrants  issued pursuant  to  the  Private  Placement  of  the
          Company's  Common  Stock  effective  November  21,  1995,  were
          extended from November 21, 1996 to February 19, 1997.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
          As indicated  in  Note  3  of  the Notes to Condensed Financial
          Statements, the Company was not  in  compliance with certain of
          the restrictive covenants of a Credit  Facility  with  its Bank
          for  the  quarter ending November 30, 1996 and the Company  has
          requested from  the  Bank  a  waiver  with respect to such non-
          compliance.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
          None.

ITEM 5. OTHER INFORMATION
          None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
          (a)  The exhibits listed on the accompanying Index to Exhibits
               below are filed as a part hereof and are incorporated by
               reference.
          (b)  No reports on Form 8-K were filed  during  the quarter for
               which this report was filed.



<PAGE>16

                               SIGNATURES

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

                              OPHTHALMIC IMAGING SYSTEMS
                              (Registrant)


                              By:       STEVEN R VERDOONER
                                   Steven R. Verdooner,
                                   President and Chief Financial Officer
                                   (principal executive officer and
                                   principal financial and accounting
                                   officer)


Dated:  January 14, 1997

<PAGE>17

                            INDEX TO EXHIBITS

Exhibit
NUMBER                                                               Footnote
                        DESCRIPTION OF EXHIBIT                       REFERENCE

3.1             Articles  of  Incorporation of the Registrant, as         *
                amended.

3.2             Amended Bylaws of the Registrant.                         *

4.1             See  Exhibits  3.1  and 3.2 for provisions of the         *
                Articles of Incorporation,  as  amended,  and the
                amended  Bylaws  of  the  Registrant defining the
                rights  of  holders  of  Common   Stock   of  the
                Registrant.

4.2             Specimen of Stock Certificate.                            *

10.1            Lease  Agreement,  dated  as  of  July  10, 1987,         *
                between    the   Registrant   (as   tenant)   and
                Transamerica/Emkay   Income   Properties   I,  as
                amended on July 23, 1990 and June 11, 1991.

10.1(a)         Seventh   Amendment  to  lease  effective  as  of        (7)
                July 18, 1996.

10.2            Employment   Agreement,  dated  March  27,  1992,         *
                between the Registrant and Dennis J. Makes.

10.2(a)         Amendment  dated  June 30, 1993 to the Employment        (1)
                Agreement between the  Registrant  and  Dennis J.
                Makes dated March 27, 1992.

10.3            Confidentiality  Agreement,  dated March 27, 1992         *
                between the Registrant and Dennis J. Makes.

10.4            Confidentiality  Agreement,  dated March 27, 1992         *
                between the Registrant and Steven R. Verdooner.

10.5            Confidentiality  Agreement,  dated March 27, 1992         *
                between the Registrant and Richard Wullaert.

10.6            Consulting  Agreement,  dated  January  23, 1992,         *
                between the Registrant and G. Peter Halberg, M.D.


<PAGE>18

10.7            Assignment  dated October 23, 1990 of U.S. Patent         *
                Application for  Apparatus  and  Method for Topo-
                graphical   Analysis   of   the  Retina  to   the
                Registrant  by Steven R. Verdooner,  Patricia  C.
                Meade, and Dennis  J.  Makes (as recorded on Reel
                5490, Frame 423 in the Assignment  Branch  of the
                U.S. Patent and Trademark Office).

10.8            Form of International Distribution Agreement used         *
                by  the  Registrant  and  sample form of End User
                Software License Agreement.

10.9            Original  Equipment Manufacturer Agreement, dated         *
                April 1, 1991,  between  the  Registrant and SONY
                Medical   Electronics,   a   division   of   SONY
                Corporation of America.

10.10           Original   Equipment   Manufacturer/Value   Added         *
                Reseller  Agreement,  dated  May 7, 1991, between
                the Registrant and Eastman Kodak Company.

10.11           The  Registrant's  1992 Nonstatutory Stock Option         *
                Plan and sample form of Nonstatutory Stock Option
                Agreement.

10.12           Common   Stock  and  Warrant  Purchase  Agreement         *
                ("Stock  Purchase   Agreement"),   dated   as  of
                February 8, 1992, among the Registrant, Jonnie R.
                Williams,  Kathleen  M. O'Donnell, as Trustee  of
                Irrevocable Trust No. 6, FBO F.E. O'Donnell, Jr.,
                M.D., Steven R. Verdooner and Dennis J. Makes.

10.12(a)        Amendment  No.  1  to  Stock  Purchase Agreement,         *
                dated  March  25,  1992,  among  the  Registrant,
                Jonnie  R.  Williams,  individually,   Jonnie  R.
                Williams, as Trustee of Irrevocable Trust  No. 1,
                Rambert  Simmons,  and Kathleen M. O'Donnell,  as
                Trustee of Irrevocable  Trust  No.  6,  FBO  F.E.
                O'Donnell, Jr., M.D.

10.13           Cross-Indemnification       Agreement,      dated         *
                February  14,  1991, among Dennis  Makes,  Steven
                Verdooner, and Richard Wullaert.

10.14           Key  Man Life Insurance Policies in the amount of         *
                $1,000,000 for each of Dennis J. Makes and Steven
                R. Verdooner,  with  the  Registrant as the named
                beneficiary.

<PAGE>19

10.15           Warrant  dated  February  12,  1993 issued by the        (1)
                Registrant  to  Steven R. Verdooner  to  purchase
                50,000 shares of Common Stock.

10.16           Stock Option Plan.                                       (1)

10.17           Promissory  Note  dated  January 4, 1993 from the        (1)
                Registrant to Western Financial  Savings  Bank in
                the   amount   of   $25,209.83  due  in  full  by
                January 4, 1998.

10.18           Rental Agreement dated May 1, 1994 by and between        (2)
                the Registrant and Robert J. Rossetti.

10.19           Security  and  Loan  Agreement (with Credit Terms        (3)
                and  Conditions) dated  April  12,  1995  by  and
                between the Registrant and Imperial Bank.

10.19(a)        General  Security  Agreement dated April 12, 1995        (3)
                by and between the Registrant and Imperial Bank.

10.19(b)        Warrant  dated  November  1,  1995  issued by the        (4)
                Registrant  to  Imperial Bank to purchase  67,500
                shares of Common Stock.

10.19(c)        Amended  Loan and Security Agreement (with Credit        (4)
                Terms and Conditions) dated November 1, 1995.

10.19(d)        Registration  Rights  Agreement dated November 1,        (4)
                1995 between the Registrant and Imperial Bank.

10.19(e)        Amended  Loan and Security Agreement (with Credit        (6)
                Terms and Conditions) dated April 4, 1996).

10.19(f)        Amended  Loan and Security Agreement (with Credit        (7)
                Terms and Conditions) dated July 12, 1996).

10.19(g)        Amended  Loan and Security Agreement (with Credit        (7)
                Terms and Conditions) dated November 21, 1996).

10.20           Purchase   Agreements  dated  November  21,  1995        (4)
                between the  Registrant,  JB Oxford & Company and
                certain Investors.

10.20(a)        Warrant Agreement dated November 21, 1995 between        (4)
                the  Registrant,  JB Oxford & Company and certain
                Investors.

10.20(b)        First  Amendment Warrant Agreement dated November        (7)
                21, 1996  between  the  Registrant,  JB  Oxford &
                Company and certain Holders.


<PAGE>20

10.20(c)        Registration  Rights Agreement dated November 21,        (4)
                1995 between the  Registrant, JB Oxford & Company
                and certain Investors.

10.21           Employment  Agreement  dated  November  20,  1995        (4)
                between the Registrant and Steven R. Verdooner.

10.22           Employment  Agreement  dated  November  20,  1995        (4)
                between the Registrant and R. Michael Clark.

10.25           The  Registrant's  1995 Nonstatutory Stock Option        (5)
                Plan and sample form of Nonstatutory Stock Option
                Agreement.


*    Incorporated  by reference to the like-numbered exhibits previously filed
     with Registrant's Registration Statement on Form S-18, number 33-46864-LA.

(1)  Incorporated by  reference  to the Registrant's Annual Report on Form 10-
     KSB for the fiscal year ended August 31, 1993 filed on November 26, 1993.

(2)  Incorporated by reference to  the  Registrant's Annual Report on Form 10-
     KSB for the fiscal year ended August 31, 1994 filed on November 29, 1994.

(3)  Incorporated by reference to the Registrant's  Quarterly  Report  on Form
     10-QSB for the quarterly period ended May 31, 1995 filed on July 14, 1995.

(4)  Incorporated  by reference to the Registrant's Annual Report on Form  10-
     KSB for the fiscal year ended August 31, 1995 filed on November 29, 1995.

(5)  Incorporated by  reference  to the Registrant's Registration Statement on
     Form S-8 filed on May 28, 1996, number 333-0461.

(6)  Incorporated by reference to  the  Registrant's  Quarterly Report on Form
     10-QSB for the quarterly period ended May 31, 1996 filed on July 15, 1996.

(7)  Incorporated by reference to the Registrant's Annual  Report  on Form 10-
     KSB for the fiscal year ended August 31, 1996 filed on November 29, 1996.