Resmed Inc – ‘POS AM’ on 7/11/96 – S-1

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Document/Exhibit                   Description                      Pages   Size 

 1: S-1         Registration Statement (General Form)                109    505K 

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As filed with the Securities and Exchange Commission on July 10, 1996           

Registration No. 33-94610                                                       

      SECURITIES AND EXCHANGE COMMISSION
    WASHINGTON, D.C. 20549
      ________________________________
    AMENDMENT NO. 1 TO
      FORM S-1
    REGISTRATION STATEMENT
     UNDER
    THE SECURITIES ACT OF 1933
      ________________________________
       RESMED INC.
                  (Exact name of registrant as specified in its charter)
      ________________________________
 Delaware                        3842                   98-0152841
(State or other jurisdiction  (Primary Standard Industrial  (IRS Employer     
   of incorporation or            Classification Code    Identification No.)
organization)                      Number)                    

                 82 WATERLOO ROAD, NORTH RYDE, NEW SOUTH WALES 2113, AUSTRALIA
              61(2) 850-2300
       (Address, including zip code, and telephone number,
               including area code, of Registrant's principal executive offices)
        __________________________________

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DR. PETER C. FARRELL, PRESIDENT             Copies to  DIANA L. DAY, ESQ.      
5744 Pacific Center Blvd                               Latham & Watkins        
San Diego, California 92121                            701 "B" Street          
(619) 622-2040                                         Suite 2100              
(Name, address, including zip code, and                San Diego, CA 92101-1234
telephone number, including area code,                 (619) 236-1234          
of agent for service)                                                          

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  
As soon as practicable after this Registration Statement becomes effective.   

   If  any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act  
of 1933, check the following box.[x]                                            

   If  this  Form is filed to register additional securities for an offering
pursuant  to  Rule 462(b) under the Securities Act, please check the following  
box  and  list the Securities Act registration statement number of the earlier  
effective registration statement for the same offering.[ ]                      

   If  this Form is a post-effective amendment pursuant to Rule 462(c) under
the Securities Act, please check the following box and list the Securities Act  
registration  statement number of the earlier effective registration statement  
for the same offering.[ ]                                                       

                                                        [Enlarge/Download Table]

     CALCULATION OF REGISTRATION FEE                                                               
                                                                                                   
                                                   PROPOSED          PROPOSED                      
                                   AMOUNT          MAXIMUM           MAXIMUM          AMOUNT OF    
TITLE OF EACH CLASS OF SECURITIES  TO BE           OFFERING PRICE    AGGREGATE        REGISTRATION 
TO BE REGISTERED                   REGISTERED      PER SHARE(1)      OFFERING PRICE   FEE (2)      
---------------------------------  --------------  ----------------  ---------------  -------------
Common Stock, $.004 par value      197,000 shares  $          13.00  $     2,561,000  $      833.10
=================================  ==============  ================  ===============  =============
<FN>                                                                                               

(1)Estimated  in  accordance  with  Rule 457 solely for the purpose of determining the registration
fee.                                                                                               
(2) Previously paid.                                                                               
</FN>                                                                                              

__________________________________                                    

   THE  REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES  AS  MAY  BE  NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT  
SHALL  FILE  A  FURTHER  AMENDMENT  WHICH  SPECIFICALLY  STATES  THAT  THIS     
REGISTRATION  STATEMENT  SHALL  THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH  
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT  
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID  
SECTION 8(A), MAY DETERMINE.                                                    

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RESMED INC.                                                                     

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     CROSS REFERENCE SHEET                                                                        
     Pursuant to Regulation S-K, Item 501(b)                                                      

                                                                                                  
ITEM NUMBER AND HEADING IN                       LOCATION OR HEADING                              
FORM S-1 REGISTRATION STATEMENT                  IN PROSPECTUS                                    
-----------------------------------------------  -------------------------------------------------

1.  Forepart of the Registration Statement and   Facing Page; Cross Reference Sheet; Outside Front
 Outside Front Cover Page of Prospectus          Cover Page of Prospectus                         

2.  Inside Front and Outside Back Cover Pages    Inside Front Cover Page of Prospectus; Outside   
 of Prospectus                                   Back Cover Page of Prospectus                    

3.  Summary Information, Risk Factors, Ratio                                                      
 of Earnings to Fixed Charges                    Prospectus Summary; Risk Factors                 

4.  Use of Proceeds                              Plan of Distribution                             

5.  Determination of Offering Price              Outside Front Cover Page of Prospectus; Plan of  
                                                 Distribution                                     

6.  Dilution                                     Not Applicable                                   

7.  Selling Security Holders                     Selling Stockholders                             

8.  Plan of Distribution                         Plan of Distribution                             

9.  Description of Securities to be Registered   Description of Capital Stock                     

10.  Interests of Named Experts and Counsel      Legal Matters; Experts                           

11.  Information with Respect to Registrant      Prospectus Summary; Risk Factors; The Company;   
                                                 Dividend Policy; Price Range of Common Stock;    
                                                 Management's Discussion and Analysis of          
                                                 Financial Condition and Results of Operations;   
                                                 Business; Management; Principal Stockholders;    
                                                 Shares Eligible for Future Sale; Index to        
                                                 Consolidated Financial Statements                

12.  Disclosure of Commission Position on                                                         
 Indemnification for Securities Act Liabilities  Not Applicable                                   

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PROSPECTUS                                                                      

RESMED INC.   

197,000 SHARES    
OF    
COMMON STOCK    

   This Prospectus relates to 197,000 shares (the "Shares") of Common Stock,
$.004  par  value,  of  ResMed  Inc.,  a Delaware corporation ("ResMed" or the  
"Company")  which may be offered for sale by certain persons (collectively the  
"Selling  Stockholders")  who  have  acquired  or may acquire such shares upon  
exercise of stock options granted to such persons by the Company.               

   The  Shares may be offered to the public from time to time by the Selling
Stockholders.   The Company will not receive any of the proceeds from the sale  
of  the  Shares  by the Selling Stockholders.  The Company will pay certain of  
the  expenses  of  this  offering.    The  Selling Stockholders will also bear  
certain costs of this offering, including the commissions and discounts of any  
underwriters,  dealers  and  agents  and  any  legal  expenses  of the Selling  
Stockholders.   The Common Stock may be sold directly or through underwriters,  
dealers or agents in market transactions or privately-negotiated transactions.  
Such  sales  may  be made at prevailing market prices at the time of sale, at   
prices  related to such market prices, or at prices otherwise negotiated.  See  
"Plan of Distribution."                                                         

   The Company's Common Stock is traded in the NASDAQ National Market System
under the symbol "RESM."                                                        

_________________________________________ 
       THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
    SEE "RISK FACTORS" ON PAGE 6 HEREOF.
_________________________________________ 

   THESE  SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND  EXCHANGE  COMMISSION  NOR  HAS THE COMMISSION PASSED UPON THE ACCURACY OR  
ADEQUACY  OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL  
OFFENSE.                                                                        

_________________________________________ 

   The Shares being offered hereby by the Selling Stockholders have not been
registered  for sale under the securities laws of any state or jurisdiction as  
of  the date of this Prospectus.  Brokers or dealers effecting transactions in  
the  Shares  should confirm the registration thereof under the securities laws  
of  the  state  in  which  such  transactions  occur,  or the existence of any  
exemption from registration.                                                    

The date of this Prospectus is July 10, 1996                          

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AVAILABLE INFORMATION                                                 

   The  Company  is  subject  to the informational requirements (File Number
0-26038)  of  the  Securities  Exchange Act of 1934, as amended (the "Exchange  
Act),  and,  in  accordance therewith files reports and other information with  
the  Securities  and  Exchange  Commission  (the "Commission").  Such reports,  
proxy  statements,  and  other  information can be inspected and copied at the  
public reference facilities maintained by the Commission at Room 1024, 450 5th  
Street,  N.W., Washington, D.C. 20549 and at the following Regional Offices of  
the  Commission: New York Regional Office, 7 World Trade Center, New York, New  
York  10048  and Chicago Regional Office, Northwestern Atrium Center, 500 West  
Madison  Street,  Chicago,  Illinois  60621.    Copies of such material can be  
obtained  at  prescribed  rates  by  writing  to  the  Securities and Exchange  
Commission,  Public  Reference Section, 450 5th Street, N.W., Washington, D.C.  
20549.                                                                          

   No  dealer,  sales representative or any other person has been authorized
to give any information or to make any representations in connection with this  
offering other than those contained in this Prospectus, and, if given or made,  
such  information  or  representations  must not be relied upon as having been  
authorized  by  the Company or the Selling Stockholders.  This Prospectus does  
not  constitute  an  offer  to  sell, or a solicitation of an offer to buy any  
securities  other  than  the  registered  securities to which it relates or an  
offer  to,  or  a  solicitation  of, any person in any jurisdiction where such  
offer  or  solicitation  would  be  unlawful.    Neither  the delivery of this  
Prospectus  nor any sale made hereunder shall, under any circumstances, create  
any  implication  that  there has been no change in the affairs of the Company  
since  the  date hereof or that the information contained herein is correct as  
of any time subsequent to the date hereof.                                      

   The  Company  intends  to  furnish  to  its  stockholders  annual reports
containing  audited  consolidated  financial  statements  reported  on  by its  
independent  certified  public  accountants  and  quarterly reports containing  
unaudited  consolidated  financial information for the first three quarters of  
each fiscal year.                                                               

   SULLIVAN (Registered  Trademark),  VPAP (Registered  Trademark),  AutoSet
(Trademark),  Bubble  Mask (Trademark),  Bubble  Cushion(Trademark)  and        
SmartStart (Trademark) are trademarks of the Company.                           

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SUMMARY                                                               

   The  following  summary  is  qualified  by  the more detailed information
including  "Risk  Factors,"  and  Consolidated  Financial Statements and Notes  
thereto, appearing elsewhere in this Prospectus.                                

THE COMPANY                                                           

   ResMed  Inc.  designs,  manufactures  and  markets a diversified range of
products  for  the  diagnosis and treatment of a severe form of sleep disorder  
known  as  obstructive  sleep  apnea  ("OSA").  OSA is a breathing disorder in  
which  the  upper  airway  frequently collapses during sleep.  This results in  
cycles  of  subconscious  awakenings which, in severe cases, can occur several  
hundred  times  per  night.  Sufferers of OSA typically experience two or more  
clinical  symptoms  of  OSA,  such  as excessive daytime sleepiness or reduced  
cognitive  function,  including  memory  loss  and lack of concentration.  OSA  
sufferers  also  may experience oxygen deaturation, an increase in heart rate   
and  an  elevation  of  blood  pressure  during  the cycle of apneas.  Several  
reports  indicate  OSA may be associated with increased risk of cardiovascular  
morbidity and mortality due to angina, stroke and heart attack.                 

   The  primary  treatment  for  OSA  is continuous positive airway pressure
("CPAP") which involves the delivery of low positive airway pressure through a  
nasal  mask  worn  by  the OSA sufferer to pneumatically splint open the upper  
airway.    When  used as prescribed, nasal CPAP prevents upper airway collapse  
during  sleep  and  is generally considered effective for treating symptoms of  
OSA.    In  1986,  the Company's founders formed a relationship with Dr. Colin  
Sullivan  of the University of Sydney, the inventor of nasal CPAP for treating  
OSA.    The  Company,  in  collaboration  with  Dr.  Sullivan, the Chairman of  
ResMed's  Medical  Advisory Board, has developed a range of products which are  
now  marketed  in 40 countries.  The Company's primary products include small,  
portable  air  flow  generators,  which are used by the patient at home during  
sleep.    These  products  deliver  either  CPAP  or  variable positive airway  
pressure ("VPAP").  VPAP provides different pressure levels for inhalation and  
exhalation.  In addition, the Company markets proprietary nasal masks ("Bubble  
Masks"),  humidifiers,  air tubing, headgear and carry cases.  The Company has  
also  developed  several  proprietary  features such as a delay timer to allow  
patients  to  fall  asleep  while  air  pressure  from  the air flow generator  
gradually  builds  to  the  prescribed  level, and a SmartStart function which  
automatically  starts  and  stops  air  flow with placement and removal of the  
mask.    In  addition  to its conventional air flow generators, the Company is  
developing  an  autofeedback  CPAP  product  known  as  AutoSet.   This device  
automatically  and continuously adjusts the delivered air pressure in response  
to abnormalities detected in the patient's breathing pattern.                   

   While  OSA has been diagnosed in a broad cross-section of the population,
it  is  predominant  among  middle-aged  men  and people who are obese, smoke,  
consume alcohol in excess or use muscle relaxing drugs.  In addition, patients  
who  are  being treated for certain other medical conditions, including people  
on dialysis treatment or suffering from diabetes, are medically predisposed to  
OSA.    In 1993, the National Commission on Sleep Disorders Research estimated  
that approximately 20 million individuals in the U.S. suffer from sleep apnea,  
of whom approximately 6.5 million over 30 years of age suffer from moderate to  
severe  OSA.    However,  there  is a general lack of awareness of the disease  
among  both  the  medical community and the general public, which has led to a  
corresponding  failure  to  diagnose  the disorder.  It is estimated that less  
than  3%  of  those  afflicted by OSA know the cause of their fatigue or other  
symptoms.                                                                       
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   The  Company's  net  revenues  have  grown from approximately $816,000 in
fiscal  1990  to approximately $23.5 million in fiscal 1995.  Net revenues for  
the  nine  months  ended  March  31,  1996 represented a 43% increase over net  
revenues  for the nine months ended March 31, 1995.  The Company believes that  
this  growth  is  due,  in  part,  to  the  increasing  number of OSA patients  
receiving  treatment.    The  Company expects that the market for OSA products  
will  increase  in  the  future  due  to  several  factors,  including greater  
awareness  in  the  medical  community  of  OSA, an increase in the number and  
capacity  of  sleep  clinics,  and  improved  products  for home diagnosis and  
treatment  of  OSA.   The Company's strategy for the expansion of its business  
operations  consists  of three key elements: (i) continued product development  
and innovation; (ii) increased market penetration in the 40 countries in which  
the  Company  currently  markets its products, particularly the United States,  
and expansion of its market presence beyond these regions; and (iii) increased  
public and clinical awareness of OSA and its effects.                           

The Company holds the rights to five issued United States patents and 
eleven issued foreign patents.  In addition, the Company has eight pending      
United States patent applications and twenty foreign patent applications.       

   The  Company's  executive  offices are located at 82 Waterloo Road, North
Ryde,  New  South  Wales  2113,  Australia,  and its telephone number is 61(2)  
878-5244.                                                                       

RISK FACTORS                                                          

   An  investment  in  the  Common  Stock  involves  a  high degree of risk,
including  risks  of  intense  competition,  potential  technological  change   
resulting  in  product  obsolescence, reliance on third parties for marketing,  
compliance  with  changing  government  regulation,  reliance  on  adequate     
reimbursement  by  private  and governmental insurance programs, and the risks  
associated with international operations.  For a discussion of these and other  
risks to be considered, see "Risk Factors."                                     

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                             SUMMARY CONSOLIDATED FINANCIAL DATA                             
                             (In thousands, except per share data)                           
                                                                            NINE MONTHS      
                                                                                ENDED        
                                             YEAR ENDED JUNE 30,              MARCH 31,      
                                                                                             

                                   1991     1992     1993     1994     1995     1995     1996
                                 -------  -------  ------  -------  -------  -------  -------
CONSOLIDATED STATEMENT OF                                                                    
OPERATIONS DATA:                                                                             
 Net revenues                    $1,635   $3,356   $7,650  $13,857  $23,501  $16,755  $23,959
 Gross profit                       754    1,316    4,541    7,644   12,230    8,588   11,969
 Income (loss) from operations     (409)     (95)     637    1,289    2,787    1,897    2,457
 Net income (loss)               $ (115)  $  315   $  846  $ 1,232  $ 2,833    1,952    3,009
 Net income (loss) per common                                                                
   and common equivalent share   $(0.04)  $ 0.08   $ 0.22  $  0.34  $  0.63  $  0.45  $  0.42
 Weighted average common and                                                                 
   common equivalent shares                                                                  
   outstanding                    2,896    3,773    3,914    3,639    4,450    4,310    7,179

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CONSOLIDATED BALANCE SHEET DATA:            MARCH 31, 1996                    
                                            --------------                    

 Working capital                                    29,855                    
 Total assets                                       44,349                    
 Long-term debt, net of current maturities             861                    
 Total stockholders' equity                         37,516                    
<FN>                                                                          

_______________                                                               
Unless  otherwise  indicated,  all  information  in this Prospectus reflects a
five-for-two stock split of the Common Stock on March 13, 1995.               

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RISK FACTORS                                                          

   Certain  statements  in  this  Prospectus  that  are  not historical fact
constitute  "forward-looking  statements"  within  the  meaning of the Private  
Securities  Litigation  Reform  Act  of 1995.  Such forward-looking statements  
involve  known  and  unknown  risks, uncertainties and other factors which may  
cause  the  actual  results  of  the  Company  to be materially different from  
historical  results  or  from  any  results  expressed  or  implied  by  such   
forward-looking  statements.    Such  risks,  uncertainties  and other factors  
include, but are not limited to, the following risks:                           

UNCERTAINTY OF MARKET ACCEPTANCE OF PRODUCTS                                    

   There  can  be  no assurance that the Company will be able to enhance its
existing  products,  introduce  or acquire new products and maintain or expand  
its market share, gain market acceptance of its products or be able to develop  
or  acquire  additional  products.    Limited  market growth or failure of the  
Company's  products to achieve market acceptance would have a material adverse  
effect  on  the business, financial condition and results of operations of the  
Company.                                                                        

INTENSE COMPETITION                                                             

   The  markets  for  the  Company's  products  are highly competitive.  The
failure of the Company to meet the prices offered by its competitors, or offer  
products which either contain features similar to or more desirable than those  
products  offered  by  its  competitors  or which are perceived as reliable by  
consumers  could  have  a  material  adverse effect on the business, financial  
condition  and results of operations of the Company.  The United States market  
for  products  for the treatment of OSA is currently dominated by Respironics,  
Inc.  ("Respironics").    Other  competitors in this market include Healthdyne  
Technologies  Inc.  ("Healthdyne  Technologies"), Nellcor Puritan Bennett       
Corporation ("Nellcor Puritan Bennett")  and DeVilbiss Healthcare Inc.          
("DeVilbiss"), a division of Sunrise  Medical  Inc.    Most  of  the Company's  
competitors have greater financial,  research, manufacturing and marketing      
resources than the Company.  In  addition, some of the Company's  competitors   
sell additional lines of products,  and  therefore  can  bundle  products to    
offer higher discounts, or offer  rebates  or other incentive programs to gain  
a competitive advantage. The Company's competitors  may also employ litigation  
to gain a competitive advantage.  The Company's inability to compete            
effectively against existing or future  competitors would result in a material  
adverse effect on the Company's business,  financial  condition  and  results   
of operations.  See "Business - Obstructive Sleep  Apnea," "- Competition" and  
"- Patents and Proprietary Rights and Related Litigation."                      

TECHNOLOGICAL CHANGE RESULTING IN PRODUCT OBSOLESCENCE                          

   The  market  for  products  for  the treatment of OSA is characterized by
frequent  product  improvements  and  evolving  technology.    The  Company's   
revenues  and  profitability  could  be  adversely  affected  by technological  
change.    The  development  of  new  or innovative CPAP product technology by  
others  or  the  discovery  of  alternative treatments or a cure for OSA could  
result  in  the  Company's products becoming obsolete or noncompetitive, which  
would  have  a  material  adverse  effect on the Company's business, financial  
condition and results of operations.  See "Business - The Market," "- Existing  
Therapies."                                                                     

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LIMITED COMMERCIAL EXPERIENCE                                                   

   The  Company  has  limited  experience  in  manufacturing,  marketing and
selling  its  products.    The Company's ability to expand its operations will  
depend  in  part upon its ability to further develop its distribution network,  
manufacturing  capabilities  and  financial management systems, procedures and  
controls.    There  can be no assurance that the Company will be successful in  
managing  any expansion of its operations.  Failure to do so could result in a  
material  adverse  effect upon the Company's business, financial condition and  
results  of  operations.    See  "Business  -  Manufacturing" and "- Sales and  
Marketing."                                                                     

UNCERTAINTY OF FINANCIAL PERFORMANCE; VARIABILITY OF QUARTERLY RESULTS          

   The Company's revenues and profitability are dependent principally on the
sale  of  its  air flow generators, nasal mask systems and accessories.  There  
can  be  no  assurance that the Company will be able to continue such sales or  
will  be  able  to  achieve  continued  revenue growth and profitability.  The  
Company's  results,  including  its net revenues and gross margins, have, from  
time  to  time,  fluctuated on a quarterly basis and may be subject to similar  
fluctuations in the future.  These fluctuations may result from the absence of  
a  backlog  of  orders  for  the  Company's  products, the introduction of new  
products  by  the  Company  or  its competitors, the geographic mix of product  
sales,  the success of the Company's marketing efforts in new regions, changes  
in  third-party  reimbursement, timing of regulatory actions, timing of orders  
by  distributors,  expenditures  incurred  for  research  and  development,     
competitive  pricing in different regions, seasonality, the cost and effect of  
promotional  and  marketing  programs  and  the  effect  of  foreign  currency  
transaction  gains or losses, among other factors.  In addition, the Company's  
results  of  operations  could be adversely affected by changes in tax laws in  
the  various  countries  in  which  the  Company conducts its operations.  See  
"Management's  Discussion  and  Analysis of Financial Condition and Results of  
Operations."                                                                    

LIMITED MARKETING CAPABILITIES; RELIANCE ON HOME HEALTH CARE DEALERS            

The  Company  markets  its  products  to  physicians  and  clinicians 
specializing  in  sleep  disorders,  to sleep clinics that diagnose OSA and to  
home  health care dealers.  The Company has limited resources to market to the  
more  than  1,200  United  States  sleep clinics, and the more than 1,500 home  
health  care dealer branch locations, most of which use, sell and/or recommend  
several  brands  of  CPAP  products.   In general, OSA patients are influenced  
significantly  by  sleep  clinics and home health care dealers when purchasing  
CPAP  products.    In the United States, when a sleep physician prescribes the  
use  of CPAP products for home treatment of OSA (which prescription may or may  
not specify a brand of CPAP product), the patient purchases the product from a  
home  health care dealer.  Sleep clinic physicians may prescribe CPAP products  
for  patients based on the brand of CPAP product that is used in the clinic to  
treat  OSA.  Even if a sleep physician prescribes a certain brand name of CPAP  
product,  a  home health care dealer may substitute a competitive CPAP product  
for the patient.  Home health care dealers are experiencing price pressures as  
government and third-party reimbursement is declining for home care products.   
Home health care dealers are requiring price discounts from manufacturers such  
as  the  Company.   There can be no assurance that physicians will continue to  
prescribe  the  Company's  products,  or  that  home  health  care dealers and  
patients will not substitute competing products when a prescription specifying  
the  Company's  product  has  been written.  The Company's business, financial  
condition  and results of operations could be materially adversely affected by  
the  Company's  failure  to  market  effectively  to sleep clinics and/or home  
health  care  dealers  or  to  ensure  that its products are properly marketed  
and/or sold by such third parties.  No assurance can be given that the Company  
will have sufficient marketing capabilities in the future to sell its products  
profitably  or  at all.  The Company expects to incur significant expenditures  
to  develop  an  expanded direct sales force to market its products, and there  
can  be  no  assurance  that such efforts will be successful.  See "Business -  
Sales and Marketing."                                                           

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LIMITED PROTECTION OF PATENTS AND PROPRIETARY RIGHTS                            

   The Company relies on a combination of patents, trademarks, trade secrets
and  non-disclosure  agreements  to protect its proprietary technology, rights  
and  know-how.   There can be no assurance that the Company's patents will not  
be  infringed  upon,  that the non-disclosure agreements will not be breached,  
that  the  Company  would  have  adequate  remedies  for  any  such  breach or  
infringement,  or  that  the Company's trade secrets will not otherwise become  
known  to  or independently developed by competitors.  The Company is pursuing  
infringement  actions  against one of its competitors (Respironics) and is      
investigating possible infringement by others.  Litigation may be necessary to  
enforce  patents  issued  to the Company, to protect the Company's proprietary  
rights,  or  to  defend  third-party  claims of infringement by the Company of  
proprietary  rights  of  others.   Such litigation could result in substantial  
cost  to  the  Company  and a diversion of effort of the Company's personnel.   
There  can  be  no  assurance  that  any  patents  now or hereafter issued to,  
licensed  by,  or applied for by the Company will be upheld, if challenged, or  
that  the  protections  afforded  thereby will not be circumvented by others.   
Patent  laws  regarding  the  enforceability  of  patents vary from country to  
country.    Therefore,  there  can  be no assurance that patent issues will be  
uniformly  resolved,  or  that  local  laws  will  provide  the  Company  with  
consistent  rights  and benefits.  In addition, there can be no assurance that  
others  will not be issued patents which may prevent the sale of the Company's  
products  or  require  licensing  and  the payment of fees or royalties by the  
Company in order for the Company to be able to market certain products.         

POTENTIAL ADVERSE EFFECT OF RECENT AND PENDING PATENT LITIGATION                

   Recent  and pending litigation involving Respironics has resulted in, and
can  be expected to continue to result in, substantial cost to the Company and  
a  diversion  of  effort  of  the Company's personnel.  The Company's original  
Australian patent, which was due to expire in 1998 and covered the CPAP method  
of  treating,  and  the  device  for  treatment of, OSA, was challenged by the  
Australian  distributor  for  Respironics,  and in May 1994, was revoked by an  
Australian  appeals  court in reliance on issues specific to Australian patent  
law.    Such  revocation  will  permit  competitors to market CPAP products in  
Australia.    Consequently,  the  Company expects its dominant market share in  
Australia  will decrease.  At June 30, 1994, the Company accrued approximately  
$300,000 for estimated additional costs associated with this litigation, which  
amount remained outstanding at March 31, 1996.                                  

   In January 1995, the Company filed a complaint for patent infringement in
the  United  States  District  Court  for  the Southern District of California  
against  Respironics.    The  complaint  seeks  monetary  damages  from,  and   
injunctive  relief  against,  Respironics  resulting  from  its  alleged        
infringement  of  three  of the Company's patents related to the CPAP system,   
its  delay  timer  feature and a Bubble Cushion type mask.  In February 1995,   
Respironics filed  a complaint against the Company in the United States         
District Court for the  Western  District  of  Pennsylvania  seeking  a         
declaratory judgment that Respironics  does  not infringe claims of these       
patents and that the Company's patents are invalid and unenforceable.  The two  
actions have been combined and are proceeding in the United States District     
Court for the Western District of Pennsylvania.  In June 1996 the Company       
initiated a further action in Pennsylvania against Respironics regarding        
alleged infringement of the Company's continuation patent, granted June 4,      
1996, related to the delay timer feature.  An adverse ruling as to any of the   
four patents in suit could have an adverse effect on the Company's ability to   
enforce its patents against Respironics and others and enable others to gain a  
competitive advantage.    See  "Business - Patents  and Proprietary  Rights     
and Related Litigation."                                                        

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   On  May  17,  1995,  Respironics  and  its Australian distributor filed a
Statement of Claim against the Company and Dr. Peter C. Farrell in the Federal  
Court  of Australia, New South Wales District Registry. The Statement of Claim  
alleges  that  the  Company  engaged  in unfair trade practices, including the  
misuse  of  the  power  afforded by its Australian patents and dominant market  
position in violation of the Australian Trade Practices Act.  The Statement of  
Claim asserts damage claims in the aggregate amount of approximately $730,000,  
constituting lost profit on sales.  There can be no assurance that the Company  
will  be  successful  in defending such action or that the Company will not be  
required  to  make  significant  payments  to the claimants.  Furthermore, the  
Company expects to incur ongoing legal costs in defending such action.          

DEPENDENCE ON KEY CUSTOMERS                                                     

   Two  distributors of the Company's products, one located in Australia and
the other in Germany, accounted for approximately 10% and 15% of the Company's  
net  revenues for the fiscal year ended June 30, 1995.  In February, 1996, the  
Company  entered  into  an  agreement  to acquire the German distributor.  See  
"Recent  Developments."    There  can  be  no  assurance  that  the Australian  
distributor  or  any  of  the Company's customers will continue to do business  
with  the  Company.    The  loss of the Australian distributor could adversely  
affect the Company's business, financial condition and results of operations.   
See "Business - Sales and Marketing."                                           

DEPENDENCE ON SINGLE-SOURCE SUPPLIERS                                           

   The  Company  purchases  two key components for its CPAP devices from two
single-source  suppliers.    There  can  be  no  assurance  that a replacement  
supplier  could  be  located  on  a timely basis or that available inventories  
would  be adequate to meet the Company's production needs during any prolonged  
interruption  of  supply.  A reduction or stoppage in supply, or the Company's  
inability  to  develop  alternate supply sources, if required, would limit its  
ability  to  manufacture its CPAP devices and therefore could adversely affect  
its  business, financial condition and results of operations.  See "Business -  
Manufacturing."                                                                 

UNCERTAINTY OF INTERNATIONAL SOURCE OF SUPPLY                                   

   The  Company's  sole  supplier  for  one  product component is located in
Europe.    Operations  in  Europe are subject to the risks normally associated  
with  foreign  operations  including,  but not limited to, possible changes in  
export  or  import  restrictions and the modification or introduction of other  
governmental  policies  with  potentially  adverse  effects.  See "Business -   
Sales and Marketing."                                                           

LIMITATIONS ON THIRD-PARTY REIMBURSEMENT; PRICE CONTROLS                        

   The  cost  of  medical care is funded, in substantial part, by government
insurance  programs,  such  as Medicare and Medicaid in the United States, and  
private  and  corporate  health  insurance  plans.    The Company's success is  
dependent  upon  the  ability  of  the  Company's customers to obtain adequate  
reimbursement  from  such  third-party  payors  for  purchasing  the Company's  
products.    Third-party  payors may deny reimbursement if they determine that  
the prescribed device has not received appropriate United States Food and Drug  
Administration  ("FDA")  or  other  governmental regulatory clearances, is not  
used  in accordance with cost-effective treatment methods as determined by the  
payor,  or  is experimental, unnecessary or inappropriate.  Third-party payors  
are  increasingly  challenging  the  prices  charged  for medical products and  
services.  Also, the trend towards managed                                      

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health  care  in  the  United  States and the concurrent growth of HMOs, which  
could  control or significantly influence the purchase of health care services  
and  products, as well as legislative proposals to reform health care, may all  
result  in  lower  prices  for  the  Company's products.  The cost containment  
measures  that  health  care  providers  are  instituting  in  the face of the  
uncertainty  and  the  ultimate effect of any health care reform could have an  
adverse  effect  on  the Company's ability to sell its products and may have a  
material  adverse  effect  on  the Company's business, financial condition and  
results  of  operations.   In some markets, such as Spain, France and Germany,  
government  reimbursement is currently available for purchase or rental of the  
Company's  products,  subject  to  constraints  such as price controls or unit  
sales  limitations.    In other markets, such as Australia, the United Kingdom  
and  Japan,  there  is  currently limited or no reimbursement for devices that  
treat  OSA.    There  can  be no assurance that the Company's products will be  
considered  cost-effective  by  third-party payors, that reimbursement will be  
available  or,  if currently available, will continue to be available, or that  
changes  in  payors'  reimbursement  policies  will  not  adversely affect the  
Company's  ability to sell its products on a profitable basis, if at all.  See  
"Business - Third-Party Reimbursement."                                         

DEPENDENCE ON INTERNATIONAL SALES                                               

   Sales  outside North America accounted for approximately 56%, 53% and 47%
of the Company's net revenues in fiscal 1993, 1994 and 1995, respectively, and  
49%  for  the nine months ended March 31, 1996.  The Company expects that such  
sales  will continue to account for a significant portion of the Company's net  
revenues  in  the future.  The Company's sales are subject to certain inherent  
risks  of  global  operations,  including  international  monetary conditions,  
tariffs,  import  licenses,  trade policies, domestic and foreign tax policies  
and  foreign  medical device manufacturing regulations.  See "Business - Sales  
and  Marketing,"  and  "Management's  Discussion  and  Analysis  of  Financial  
Condition and Results of Operations."                                           

UNCERTAINTY OF CURRENCY FLUCTUATIONS                                            

   The  Company's  international  operations,  conducted  in various foreign
currencies,  could  be adversely affected by fluctuations in currency exchange  
rates  as well as changes in duty rates.  The Company has had foreign currency  
transaction  gains  and  losses  in recent periods.  A significant fall in the  
value  of  the United States dollar against certain international currencies    
could  have  a  material  adverse  effect on the Company's business, financial  
condition  and  results  of  operations.    See  "Management's Discussion and   
Analysis of Financial Condition and Results of Operations."                     

COSTS  AND  UNCERTAINTIES  OF  COMPLIANCE  WITH  AND  CHANGES  IN  GOVERNMENT   
REGULATION                                                                      

   The  development, manufacture and marketing of the Company's products are
subject  to  extensive  and  rigorous  regulation  by  the  FDA  and  by other  
governmental agencies and relevant foreign agencies.  The process of obtaining  
and maintaining FDA and other required regulatory approvals for medical device  
products  is  generally  lengthy  and  expensive,  and  the  outcome  is often  
unpredictable.    There  can be no assurance that the Company's current market  
clearances  can  be  maintained  or  that  approvals  will  be granted for the  
Company's  future  products on the basis of 510(K) clearances.  The regulatory  
process may delay the marketing of new products for lengthy periods, result in  
substantial  additional  costs  and  furnish  an  advantage  to  competitors.   
Moreover,  regulatory  approvals,  if  granted,  may  include  significant      
limitations  on  the  indicated uses for which a product may be marketed.  The  
FDA  actively  enforces  regulations  prohibiting  marketing  of  products for  
non-indicated uses.                                                             

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   The  Company  is  subject to FDA Good Manufacturing Practices ("GMP") and
extensive  record  keeping  and reporting requirements for sales in the United  
States.    The  Company's  manufacturing  facilities  are  subject to periodic  
inspections  by  United  States federal agencies and may be subject to similar  
inspections  by  corresponding  foreign  agencies.    To  date,  the Company's  
manufacturing  facilities  in  Australia  have not been inspected by the FDA.   
Failure to comply with applicable regulatory requirements can result in, among  
other things, import detentions, fines, civil penalties, suspensions or losses  
of  approvals,  recalls  or  seizures  of products, operating restrictions and  
criminal prosecutions.                                                          

   The  Company has experienced delays in the importation of certain product
accessories  manufactured  outside  the  United  States due to certain tariff   
classifications  and  restrictions.    Changes  in existing regulations or the  
manner  in which they are implemented or the adoption of new regulations could  
prevent  the Company from obtaining, or delay the timing of, future regulatory  
approvals.    No  assurance  can be given that new legislation or regulations,  
changes in the interpretation or enforcement of existing regulations, or other  
regulatory  factors  will  not have a material adverse effect on the Company's  
business,  financial  condition  and  results  of operations.  See "Business -  
Government Regulation."                                                         

RISK OF PRODUCT RECALL                                                          

   The  FDA and similar governmental authorities in other countries have the
authority  to  require  the  recall  of  products  in  the  event  of material  
deficiencies  or  defects  in design or manufacture.  A government mandated or  
voluntary  product  recall by the Company could occur as a result of component  
failures,  manufacturing  errors  or  design  defects.  Any recall of products  
could  have  a  material  adverse  effect on the Company's business, financial  
condition and results of operations.  See "Business - Government Regulation."   

POTENTIAL PRODUCT LIABILITY CLAIMS                                              

   The  Company is subject to potential product liability claims as a result
of  the design, manufacture and marketing of medical devices.  Claims alleging  
product  liability may involve large potential damages and significant defense  
costs.    There can be no assurance that the Company's insurance coverage will  
be  adequate  or  that  all  such  claims  will  be  covered  by the Company's  
insurance.    Insurance varies in cost, can be difficult to obtain and may not  
be  available  in the future on terms acceptable to the Company, if at all.  A  
successful  claim  against  the  Company  in excess of the available insurance  
coverage  could  have  a  material  adverse  effect on the Company's business,  
financial  condition  and  results  of  operations.    See "Business - Product  
Liability Insurance."                                                           

DEPENDENCE ON KEY PERSONNEL                                                     

   The  Company  is substantially dependent upon the continued services of a
limited  number of key employees and consultants.  The loss of the services of  
any  one  of  these  individuals  could  have a material adverse effect on the  
Company's  business,  financial  condition  and  results  of  operations.       
Additionally,  the  future  success  of  the  Company will depend, among other  
factors, on the Company's ability to continue to hire and retain the necessary  
qualified  scientific,  technical  and  managerial  personnel.    The  Company  
competes  for  such  personnel  with  numerous  other  companies,  academic     
institutions and other organizations.  See "Management."                        

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LIMITING EFFECT OF CERTAIN CHARTER AND DELAWARE LAW PROVISIONS ON MARKET PRICE  
OF COMMON STOCK                                                                 

   The  Board of Directors has the authority to issue up to 2,000,000 shares
of Preferred Stock and to determine the price, rights, preferences, privileges  
and  restrictions,  including  voting  rights, of those shares without further  
vote or action by the stockholders.  The rights of the holders of Common Stock  
will  be  subject  to,  and  may  be  adversely affected by, the rights of the  
holders of any Preferred Stock that may be issued in the future.  The issuance  
of  Preferred  Stock, while providing desirable flexibility in connection with  
possible  acquisitions  and  other  corporate  purposes may have the effect of  
delaying,  deferring  or  preventing  a  change in control of the Company, may  
discourage bids for the Common Stock at a premium over the market price of the  
Common Stock and may adversely affect the market price of the Common Stock and  
the  voting  and other rights of the holders of the Common Stock.  The Company  
has  no present plans to issue shares of Preferred Stock.  The Company's Board  
of  Directors  is divided into three classes, serving for staggered three year  
terms.    As  such,  at each annual meeting of stockholders, not more than one  
class of the Company's directors is elected.  Because it will require at least  
two  annual  meetings  to  elect  directors  constituting  a  majority  of the  
Company's  board  of directors, such classification could discourage, delay or  
prevent  a  merger,  tender  offer  or  proxy  contest involving the Company.   
Further, certain provisions of Delaware law could discourage, delay or prevent  
a  merger,  tender  offer  or  proxy  contest  involving  the  Company.    See  
"Management,"  "Description  of  Capital  Stock      Preferred  Stock" and "    
Delaware Anti-Takeover Statute."                                                

POTENTIAL VOLATILITY OF STOCK PRICE                                             

   The  stock  markets  have  experienced price and volume fluctuations that
have  particularly affected medical technology companies, resulting in changes  
in  the  market prices of the stocks of many companies which may not have been  
directly  related to the operating performance of those companies.  Such broad  
market fluctuations may adversely affect the market price of the Common Stock.  
In  addition,  the  market price of the Common Stock may be highly volatile.  
Factors  such  as variations in the Company's financial results, announcements  
of  technological  innovations  or  new  products  by  the  Company  or  its    
competitors,  government  regulation,  developments  with  respect to patents,  
proprietary  rights  or  litigation, and general market conditions may have a   
significant adverse effect on the market price of the Common Stock.             

ABSENCE OF FUTURE DIVIDENDS                                                     

   The  Company currently intends to retain all future earnings, if any, for
use  in the operation of its business, and does not anticipate paying any cash  
dividends in the foreseeable future.  See "Dividend Policy."                    

POTENTIAL  LACK  OF  ENFORCEABILITY  OF  U.S.  SECURITIES LAWS AGAINST CERTAIN  
INSIDERS                                                                        

   Two of the Company's five directors and all but two of its officers named
herein  reside outside the United States (principally in Australia).  All or a  
substantial  portion  of  the  assets  of these persons and of the Company are  
located  outside  the  United States.  As a result, it may not be possible for  
investors  to effect service of process in the United States upon such persons  
or to enforce against them judgments of United States courts in respect of any  
liabilities  relating  to  the  contents  of  this  Prospectus  or  otherwise   
predicated  on  Federal  securities  laws.   In addition, the Company has been  
advised by its Australian counsel that there is doubt as to the enforceability  
of  judgments of United States courts or the ability of stockholders to pursue  
claims  based  on  the  contents of this Prospectus or otherwise predicated on  
United  States  Federal  securities  laws  against these persons in Australian  
courts.                                                                         

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RECENT DEVELOPMENTS                                                   

   On  February  7,  1996,  ResMed-Priess  GmbH (i.Gr.) ("ResMed-Priess"), a
wholly-owned subsidiary of ResMed, and Dieter W Priess Medizinische technische  
Gerate,  a  registered  German trader ("Priess"), consummated a transaction in  
which  ResMed-Priess  purchased  certain  assets  of  Priess for approximately  
$10.35  million, pursuant to that certain Purchase Agreement dated February 7,  
1996  between ResMed-Priess and Priess.  Pursuant to the terms of the Purchase  
Agreement,  $6.35  million  of  the  purchase  price was payable in cash upon   
consummation  of  the  transaction,  and  the  remaining  $4.0  million  is  a  
contingent  purchase  price  which  may  be payable over a five year period if  
certain sales targets are achieved.  The purchased assets include, among other  
things,  intangible  assets  and all of Priess' tangible personal property and  
inventory  used in connection with its medical device distribution and service  
business.    ResMed  intends  to  continue  to  use the assets acquired in the  
ongoing  distribution business.  The funds used to acquire Priess' assets were  
obtained  from  ResMed's  initial  public  offering  of common stock which was  
consummated in June 1995.                                                       

   The  unaudited  pro  forma  condensed  statements  of  operations  of the
combined  company  for  the  fiscal  year  ended June 30, 1995, with pro forma  
adjustments  as  if  the transaction had taken place on July 1, 1994, show net  
revenues for the combined company of $29,381,000 and net income of $3,547,000.  

The unaudited pro forma condensed consolidated financial statements             
are not necessarily indicative of the actual results that would have            
occurred had the purchase been consummated on the applicable date               
indicated.  Moreover, they are not intended to be indicative of future          
results of operations or financial position.                                    

DIVIDEND POLICY                                                       

   The  Company  has paid cash dividends of $0.03 and $0.04 per common share
during  the  fiscal  years  ended  June  30, 1993 and 1994, respectively.  The  
Company  did  not  pay  dividends for the fiscal year ended June 30, 1995. The  
Company  currently  intends  to retain all future earnings, if any, for use in  
the  operation  of  its  business,  and  does  not  anticipate paying any cash  
dividends in the foreseeable future.                                            

PRICE RANGE OF COMMON STOCK                                           

   In  June  1995,  the Company completed its initial public offering of its
common  stock.  Since June 2, 1995, the Company's Common Stock has been traded  
through the National Market System of the NASDAQ Stock Market.                  

   The  following  table  sets  forth the high and low closing prices of the
Common Stock as reported by NASDAQ for the periods indicated.                   

                                                                [Download Table]


                                                                               

                      HIGH    LOW                                              
                      ------  -------                                          
 Fiscal 1995                                                                   
--------------------                                                           
Fourth Quarter                                                                 
  (June 2 - June 30)  $12.00  $  9.75                                          

Fiscal 1996                                                                    
--------------------                                                           
First Quarter         $18.00  $ 12.00                                          
Second Quarter        $17.75  $ 10.50                                          
Third Quarter         $14.25  $ 10.50                                          
Fourth Quarter        $17.25  $ 12.50                                          
  (April 1 - June 30)                                                          
<FN>                                                                           

     On  May 31, 1996, the closing bid price of the Common Stock as reported by
NASDAQ  was  $17.25.  As of such date, there were 125 holders of record of the 
Common Stock.                                                                  

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SELECTED CONSOLIDATED FINANCIAL DATA                                  

   The  selected  consolidated financial data set forth below should be read
in  conjunction  with  the Consolidated Financial Statements and related Notes  
included elsewhere in this Prospectus and Management's Discussion and Analysis  
of  Financial  Condition and Results of Operations.  The selected consolidated  
financial  data  presented below under the captions "Consolidated Statement of  
Operations Data" and "Consolidated Balance Sheet Data" as of June 30, 1995 and  
1994 and for the years then ended, are derived from the consolidated financial  
statements  of  ResMed  Inc.,  formerly  ResCare  Medical  Systems,  Ltd., and  
subsidiaries,  which  financial  statements  have  been  audited  by KPMG Peat  
Marwick  LLP,  independent  certified  public  accountants.    The  selected    
consolidated  financial data presented below, under the captions "Consolidated  
Statement  of  Operations Data" and "Consolidated Balance Sheet Data" for, and  
as  of  the  end of, each of the years in the three-year period ended June 30,  
1993,  are  derived  from the consolidated financial statements of ResMed Inc.  
and  subsidiaries,  which  financial  statements  have  been  audited by Price  
Waterhouse, independent accountants.  The consolidated financial statements as  
of  June  30, 1995, 1994 and 1993, and for each of the years in the three-year  
period ended June 30, 1995, and the reports thereon, are included elsewhere in  
this  prospectus.    The  data presented below under the heading "Consolidated  
Statement  of  Operations  Data" and "Consolidated Balance Sheet Data" for the  
year  ended  June  30, 1991 and as of June 30, 1991 and 1992 have been derived  
from  audited consolidated financial statements that are not included herein.   
The  data  presented  below  under  the  headings  "Consolidated  Statement of  
Operations"  and  "Consolidated  Balance  Sheet  Data"  as of and for the nine  
months  ended  March 31, 1995 and 1996 are derived from unaudited consolidated  
financial  statements  of  ResMed  Inc. and subsidiaries included herein.  The  
unaudited  consolidated  financial  statements  include  all  adjustments       
(consisting  only  of normal recurring adjustments) that the Company considers  
necessary  for  a  fair  presentation  of  the financial information set forth  
therein,  in  accordance  with  generally accepted accounting principles.  The  
results  of  operations  for  the  nine  months  ended  March 31, 1996 are not  
necessarily  indicative of the results to be expected for any future period or  
for the entire year.                                                            

                                                        [Enlarge/Download Table]


                                                                                            NINE MONTHS ENDED   
                                                     YEAR ENDED JUNE 30,                          MARCH 31,     
                                                 1991     1992     1993     1994     1995     1995      1996    
                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)            (UNAUDITED)    
                                                                                                                
CONSOLIDATED STATEMENT OF OPERATIONS                                                                            
DATA:                                                                                                           
Net revenues                                   $1,635   $3,356   $7,650   $13,857   $23,501   $16,755   $23,959 
Cost of sales                                     881    2,040    3,109     6,213    11,271     8,167    11,990 
                                               -------  -------  -------  --------  --------  --------  --------
Gross profit                                      754    1,316    4,541     7,644    12,230     8,588    11,969 
Selling, general and  administrative expenses     766      744    3,084     4,809     7,447     5,248     7,501 
Research and development expenses                 397      667      820     1,546     1,996     1,443     2,011 
                                               -------  -------  -------  --------  --------  --------  --------
Total operating expenses                        1,163    1,411    3,904     6,355     9,443     6,691     9,512 
Income (loss) from operations                    (409)     (95)     637     1,289     2,787     1,897     2,457 
Interest income, net                               50       65       61        98       205       121       814 
Government grants                                 244      311      432       440       527       253       434 
Other, net                                          -       34       75         4       262       333       594 
                                               -------  -------  -------  --------  --------  --------  --------
Total other income                                294      410      568       542       994       707     1,842 
                                               -------  -------  -------  --------  --------  --------  --------
Income (loss) before income taxes                (115)     315    1,205     1,831     3,781     2,604     4,299 
Income taxes                                        -        -     (359)     (599)     (948)     (652)   (1,290)
                                               -------  -------  -------  --------  --------  --------  --------
Net income (loss)                              $ (115)  $  315   $  846   $ 1,232     2,833   $ 1,952   $ 3,009 
                                               =======  =======  =======  ========  ========  ========  ========
Net income (loss) per common and                                                                                
  common equivalent share                      $(0.04)  $ 0.08   $ 0.22   $  0.34   $  0.63   $  0.45   $  0.42 
Cash dividends per common share                $    -   $    -   $ 0.03   $  0.04   $     -   $     -   $     - 
Weighted average common and                                                                                     
  common equivalent shares outstanding          2,896    3,773    3,914     3,639     4,450     4,310     7,179 

                                                        [Enlarge/Download Table]


                                                          JUNE 30,                   MARCH 31,
                                           1991    1992    1993    1994    1995       1996    
                                                  (IN THOUSANDS)                   (UNAUDITED)
                                                                                              
CONSOLIDATED BALANCE SHEET DATA:                                                              
Working Capital                            $1,166  $1,501  $2,589  $5,010  $27,354   $29,855  
Total assets                                2,004   2,886   5,173   9,608   35,313    44,349  
Long-term debt, net of current maturities     262     218     163     386      787       861  
Total stockholders' equity                  1,257   1,689   2,895   5,630   28,867    37,516  

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MANAGEMENTS DISCUSSION AND ANALYSIS                                   
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                      

OVERVIEW                                                                        

   ResMed  Inc.,  a  Delaware  corporation,  was  formed  in March 1994 as a
holding  company  for  its  Australian,  European  and United States operating  
subsidiaries.    Its  Australian  subsidiaries,  RHL and ResCare Limited, were  
originally  organized  in  1989  by  Dr.  Peter Farrell to acquire from Baxter  
Center  for  Medical  Research  Pty  Limited ("Baxter"), the rights to certain  
technology  relating  to  nasal  CPAP  treatment  of  OSA, as well as Baxter's  
existing  CPAP  device  business.    Baxter had sold CPAP devices in Australia  
since  1988,  having  acquired  the  rights to the technology in 1987 from Dr.  
Colin  Sullivan  of  the University of Sydney, who invented nasal CPAP for the  
treatment of OSA.                                                               

   The  Company  designs,  manufactures and markets nasal CPAP equipment for
the  diagnosis  and  treatment  of obstructive sleep apnea.  The Company's net  
revenues  are generated from the sale of its various nasal CPAP devices, nasal  
mask  systems,  accessories  and other products, and, to a lesser extent, from  
royalties.    The  Company  receives  other  income through licensing fees and  
certain Australian government grants.                                           

  Prior  to  1990,  the  Company  engaged  independent  subcontractors  to
manufacture  its  CPAP products and marketed its products in several countries  
primarily  through independent distributors.  In 1990, the Company executed an  
exclusive  distribution  agreement  with Medtronic, Inc. ("Medtronic") for the  
sale  of  its  products in North America.  In May 1992, the Company terminated  
this  arrangement  with  Medtronic,  acquired  certain inventory maintained by  
Medtronic,  employed  four  of  Medtronic's  sales employees, and issued stock  
options  to  Medtronic,  which were subsequently repurchased by the Company in  
October  1993.  After such termination, the Company established a direct sales  
force  in  the  United  States  and  developed  a network of independent sales  
representatives.    In  early  1992,  the  Company  commenced  manufacturing    
operations,  consisting  primarily  of  assembly  activities,  at  its Sydney,  
Australia facility.  This facility was expanded in December 1994.               

   The Company has in the past been, and is currently engaged in significant
patent  litigation  relating  to the enforcement and defense of certain of its  
patents.    Such  litigation  has required, and can be expected to continue to  
require  in the near future, significant expenditures for legal fees and other  
related  costs,  as  well  as  a  diversion  of  the  efforts of the Company's  
personnel.   The Company's original Australian patent, which was due to expire  
in  1998 and covered the CPAP method of treating, and the device for treatment  
of  OSA,  was challenged by the Australian distributor for Respironics, and in  
May  1994,  was  revoked  by an Australian appeals court in reliance on issues  
specific  to  Australian  patent  law.   Consequently, the Company expects its  
dominant  market  share  in  Australia  will  decrease.  At June 30, 1994, the  
Company  accrued  approximately  $300,000  for  estimated  additional  costs    
associated  with  this  litigation, which amount remained outstanding at March  
31,  1996.    In  January  1995,  the  Company  filed  a  complaint for patent  
infringement  in  the  United States against Respironics.  The complaint seeks  
monetary  damages  from,  and  injunctive relief against Respironics resulting  
from  its alleged infringement of three of the Company's patents.  In February  
1995,  Respironics filed a complaint against the Company seeking a declaratory  
judgment  that  Respironics does not infringe claims of these patents and that  
the  Company's  patents  are  invalid and unenforceable.  The two actions have  
been  combined and are  proceeding in the United States District Court for the  
Western  District  of  Pennsylvania. In June 1996 the Company initiated a       
further action in Pennsylvania against Respironics regarding alleged            
infringement of the Company's continuation patent, granted June 4, 1996,        
related to the delay timer feature.  An adverse ruling as to any of the four    
patents in suit could have an adverse effect on the Company's ability to        
enforce its patents against Respironics and others and enable others to gain a  
competitive advantage.   An adverse ruling could have an adverse effect  on     
the Company's ability to enforce its patents and proprietary rights to gain a   
competitive  advantage.    On  May  17, 1995, Respironics and its Australian    
distributor filed a Statement of Claim against the Company and Dr.              

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Peter  C.  Farrell  in the Federal Court of Australia.  The Statement of Claim  
alleges  that  the  Company  engaged  in unfair trade practices, including the  
misuse  of  the  power  afforded by its Australian patents and dominant market  
position in violation of the Australian Trade Practices Act.  The Statement of  
Claim asserts damage claims in the aggregate amount of approximately $730,000,  
constituting  lost  profit on sales.  While the Company intends to defend this  
action,  there  can  be  no  assurance  that the Company will be successful in  
defending  such  action  or  that  the  Company  will  not be required to make  
significant  payments  to  the claimants.  Furthermore, the Company expects to  
incur ongoing legal costs in defending such action.                             

The  Company  has  invested  significant  resources  in  research  and
development  and  product enhancement.  Since 1989, the Company has developed   
several  innovations  to  the original CPAP device to increase patient comfort  
and  to improve ease of product use.  The Company recently has been developing  
products  for  automated  treatment and monitoring of OSA, such as its AutoSet  
product  line.  The Company's research and development expenses are subsidized  
in  part  by  grants from the Australian federal government.  The Company also  
receives  grants  from  the Australian federal government to support marketing  
efforts to increase Australian export sales, and for incorporation of computer  
components into its products.                                                   

   The  Company's  income tax rate is governed by the laws of the regions in
which  the  Company's income is recognized.  To date, a substantial portion of  
the  Company's  income  has  been subject to income tax in Australia where the  
statutory  rate rose from 33% to 36% in July 1995.  During the past few years,  
the  Company's  effective  tax  rate  has fluctuated from approximately 25% to  
approximately  33%.    These  fluctuations  have  resulted  from,  and  future  
effective  tax  rates will depend upon, numerous factors, including the amount  
of  research  and  development  expenditures  for  which a 150% Australian tax  
deduction  is  available, the level of non-deductible expenses, and the use of  
available  net operating loss carryforward deductions and other tax credits or  
benefits available to the Company under applicable tax laws.                    

SALES BY GEOGRAPHIC REGION                                                      

   The Company currently markets its products in 40 countries through direct
sales personnel, independent manufacturers' representatives and distributors.   
The  Company  is subject to increasing competition in the United States, where  
prices  for  the  Company's  products  are generally lower than in most of the  
Company's other markets.  The following table sets forth the percentage of the  
Company's net revenues in each of the geographic regions reflected below.       

                                                                [Download Table]


                                                  NINE MONTHS    
                            YEAR ENDED JUNE 30,   ENDED MARCH 31,
                           1993    1994    1995    1995    1996  
                                                                 
North America               44%     47%     53%     53%     51%  
Europe                      31      30      29      28      33   
Australia/Rest of World     25      23      18      19      16   
                           ----    ----    ----    ----    ----  
                           100%    100%    100%    100%    100%  
                           ====    ====    ====    ====    ====  

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RESULTS OF OPERATIONS                                                           

   The  following  table sets forth for the periods indicated (i) percentage
of  net  revenues  represented  by  certain  line  items  in  the  Company's    
Consolidated  Statement of Operations and (ii) the percentage changes from the  
preceding periods.                                                              

                                                        [Enlarge/Download Table]


                                                                        PERIOD TO PERIOD CHANGE       
                                                                                     NINE MONTHS      
                                                         NINE MONTHS                 ENDED MARCH      
                                                         ENDED         YEAR ENDED    31, 1995 TO NINE 
                                YEAR ENDED JUNE 30,      MARCH 31,     JUNE 30,      MONTHS ENDED     
                                                                                                      
                                                                        1993    1994                  
                                                                         TO      TO                   
                                1993    1994    1995    1995    1996    1994    1995   MARCH 31, 1996 
                               ------  ------  ------  ------  ------  ------  ------  ---------------
Net revenues                   100.0%  100.0%  100.0%  100.0%  100.0%   81.1%   69.6%            43.0%
Cost of sales                   40.6    44.8    48.0    48.7    50.0    99.8    81.4             46.8 
Gross profit                    59.4    55.2    52.0    51.3    50.0    68.3    60.0             39.4 
Operating expenses:                                                                                   
 Selling, general and                                                                                 
  administrative                40.3    34.8    31.6    31.3    31.3    55.9    54.9             42.9 
 Research and development       10.7    11.1     8.5     8.6     8.4    88.5    29.1             39.6 
 Total operating expenses       51.0    45.9    40.1    39.9    39.7    62.8    48.6             42.2 
Income (loss) from operations    8.4     9.3    11.9    11.4    10.3   102.4   116.2             29.5 
Total other income               7.4     3.9     4.2     4.2     7.6    (4.6)   83.4            160.5 
Income before income taxes      15.8    13.2    16.1    15.6    17.9    52.0   106.5             65.0 
Net income                      11.1%    8.9%   12.1%   11.7%   12.6%   45.6%  130.0%            54.1%

NINE MONTHS ENDED MARCH 31, 1996 AND MARCH 31, 1995.                            

   Net Revenues.  Net revenues increased for the nine months ended March 31,
1996  to  $24.0 million from $16.8 million for the nine months ended March 31,  
1995,  an  increase  of  $7.2  million  or  43%.   This increase was primarily  
attributable to an increase in unit sales of the Company's flow generators and  
accessories  in North America and Europe and additional revenues generated in   
Europe  from  the Priess business since the February 7, 1996 acquisition.  Net  
revenues  increased in North American to $12.1 million from $8.8 million, and,  
increased  in  Europe  to  $8.0  million  from  $4.7 million.  In addition net  
revenues  were affected favorably by a product mix shift to new, higher-priced  
products such as Sullivan VPAP.  This favorable effect was partially offset by  
a  decrease in the selling prices of the Company's products in most geographic  
markets.                                                                        

   Gross Profit.  Gross profit increased for the nine months ended March 31,
1996  to  $12.0  million from $8.6 million for the nine months ended March 31,  
1995, an increase of $3.4 million or 39%. The increase resulted primarily from  
increased  unit  sales  during  the  nine  months ended March 31, 1996.  Gross  
profit  as  a  percentage  of net revenues decreased for the nine months ended  
March  31,  1996  to  50% from 51.3% in the nine months ended March 31, 1995.   
This  decrease was primarily due to an increase in the value of the Australian  
dollar relative to the United States dollar during the period and, to a lesser  
extent, to product mix changes.                                                 

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   Selling,  General  and  Administrative  Expenses.    Selling, general and
administrative  expenses increased for the nine months ended March 31, 1996 to  
$7.5  million  from  $5.2 million for the nine months ended March 31, 1995, an  
increase  of  $2.3  million or 43%.  As a percentage of net revenues, selling,  
general and administrative expenses remained static at 31% for the nine months  
ended March 31, 1996 and 1995.                                                  

   Research  and  Development  Expenses.   Research and development expenses
increased  in  the  nine months ended March 31, 1996 to $2.0 million from $1.4  
million for the nine months ended March 31, 1995, an increase of approximately  
$568,000  or  39%.   As a percentage of net revenues, research and development  
expenses  remained  relatively  consistent for the nine months ended March 31,  
1996 and the nine months ended March 31, 1995.                                  

   Other Income.  Other income increased for the nine months ended March 31,
1996  to  $1.8 million from $707,000 for the nine months ended March 31, 1995,  
an  increase  of  $1.1  million  or  161%.    This increase reflects increased  
interest  income  of  $693,000  relating to the initial public offering of the  
Company, additional government grant incomes, which increased to $434,000 from  
$253,000  for the nine months ended March 31, 1995 and the receipt of $242,000  
from  Teijin Limited of Japan for certain marketing rights for respiratory and  
related products in Japan.                                                      

   Income  Taxes.    The  Company's  effective  income tax rate for the nine
months  ended March 31, 1996 increased to approximately 30% from approximately  
25% for the nine months ended March 31, 1995.  This increase was primarily due  
to an increase in the Australian corporate tax rate from 33% to 36% on July 1,  
1995,  an effective German corporate taxation rate of 51%, partially offset by  
additional  research  and development expenses incurred in Australia for which  
the Company receives a 150% deduction for tax purposes.                         

FISCAL YEARS ENDED JUNE 30, 1995 AND JUNE 30, 1994                              

   Net  Revenues.    Net  revenues increased in fiscal 1995 to $23.5 million
from $13.9 million in fiscal 1994, an increase of $9.6 million or 69.6%.  This  
increase  was  primarily  attributable  to  an  increase  in unit sales of the  
Company's flow generators and accessories in North America, where net revenues  
increased  to  $12.5  million  from  $6.5  million, and to a lessor extent, in  
Europe,  where  net  revenues increased to $6.8 million from $4.2 million.  In  
addition,  net revenues were affected favorably by a product mix shift to new,  
higher-priced  products  such  as  Sullivan  VPAP.   This favorable effect was  
partially offset by a decrease in the selling prices of the Company's products  
in most geographic areas.                                                       

   Gross  Profit.    Gross  profit increased in fiscal 1995 to $12.2 million
from  $7.6 million in fiscal 1994, an increase of $4.6 million or 60.0%.  This  
increase  resulted  primarily  from  increased  unit sales during fiscal 1995.  
Gross  profit as a percentage of net revenues declined in fiscal 1995 to 52.0%  
from  55.2%  in fiscal 1994, primarily as a result of an increasing percentage  
of  the  Company's  sales occurring in the United States, where prices for the  
Company's  products are lower than elsewhere in the world.  In addition, gross  
profit  as  a  percentage  of  net revenues declined due to an increase in the  
value of the Australian dollar relative to the United States dollar during the  
period.    This  increased  the relative cost of manufacturing which occurs in  
Australia.    Also  contributing to the decrease was the introduction of a new  
lower margin humidifier manufactured by a third party for the Company.          

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   Selling,  General  and  Administrative  Expenses.    Selling, general and
administrative  expenses  increased  in  fiscal 1995 to $7.4 million from $4.8  
million  in  fiscal  1994,  an  increase  of  $2.6 million or 54.9%.  Selling,  
general  and  administrative expenses as a percentage of net revenues declined  
in  fiscal  1995  to 31.7% from 34.7% in fiscal 1994.  The dollar increase was  
due  primarily  to  an  increase  to  58  from  34  in the number of sales and  
administrative  personnel,  and  other expenses related to the increase in the  
Company's  sales.  Rent and leasehold expenses also increased primarily due to  
a substantial increase in the size of the Company's Australian facilities.  In  
addition,  fiscal 1994 included $311,000 of expenses associated with the grant  
of  compensatory stock options and the establishment of a $300,000 reserve for  
estimated  costs  associated with the Company's Australian patent litigation.   
The  decrease  in selling, general and administrative expenses as a percentage  
of  net  revenues  was  primarily  due  to  increased  efficiencies related to  
increased sales.                                                                

   Research  and  Development  Expenses.   Research and development expenses
increased  in fiscal 1995 to $2.0 million from $1.5 million in fiscal 1994, an  
increase  of  $500,000  or  29.1%.    Research  and  development expenses as a  
percentage  of  net  revenues  decreased  to 8.5% in fiscal 1995 from 11.2% in  
fiscal  1994.    The dollar increase in the amount of research and development  
expenditures  was  due  primarily to an increase in the number of research and  
development  personnel  to  approximately  30  in  1995 from 20 in 1994.  This  
increase was also attributable to higher payments for consulting fees relating  
to product development efforts.                                                 

   Other  Income.    Other  income increased in fiscal 1995 to $994,000 from
$542,000 for fiscal 1994, an increase of $452,000 or 84.4%.  This increase was  
due primarily to the recognition of income for the receipt in December 1994 of  
an  upfront  payment  of  $189,000  from  a Japanese company for the exclusive  
rights  to  market  certain  respiratory  and related products in the Japanese  
market  that  are  under  development by the Company.  In addition, government  
grants  for fiscal 1995 increased to $527,000 from $440,000 for fiscal 1994 as  
a  result  of  government  computer grant claims of $357,000 recognized by the  
Company on receipt of a favorable Australian government ruling in April 1995.   

   Income  Taxes.    The Company's effective income tax rate for fiscal 1995
was  decreased  to  approximately 25.1% as compared to 32.7% for fiscal 1994.   
This  increase  was  primarily  due to the Company's use of net operating loss  
carryforward  deductions  available  to  offset  United States income, and the  
additional  research  and  development  expenses  in  Australia  for which the  
Company receives a 150% deduction for tax purposes.                             

FISCAL YEARS ENDED JUNE 30, 1994 AND JUNE 30, 1993                              

   Net  Revenues.    Net  revenues increased in fiscal 1994 to $13.9 million
from  $7.7 million in fiscal 1993, an increase of $6.2 million or 81.1%.  This  
increase  was  primarily  attributable  to  an  increase  in unit sales of the  
Company's  products, primarily in North America, where sales increased to $6.5  
million  from  $3.4 million, and Europe, where sales increased to $4.2 million  
from  $2.3  million.  Increases in net revenues also resulted in part from the  
introduction  of  the  SULLIVAN  III  in the last quarter of fiscal 1993.  The  
average  selling  prices  for the Company's products declined slightly between  
these periods.                                                                  

   Gross Profit.  Gross profit increased in fiscal 1994 to $7.6 million from
$4.5  million  in  fiscal  1993,  an  increase of $3.1 million or 68.3%. Gross  
profit  as  a percentage of net revenues declined in fiscal 1994 to 55.2% from  
59.4% in fiscal 1993, as a result of an increasing percentage of the Company's  
sales  occurring in the United States, where prices for the Company's products  
are lower than in most of the Company's other markets.                          

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   Selling,  General  and  Administrative  Expenses.    Selling, general and
administrative  expenses  increased  in  fiscal 1994 to $4.8 million from $3.1  
million in fiscal 1993, an increase of $1.7 million or 55.9%. Selling, general  
and administrative expenses as a percentage of net revenues declined in fiscal  
1994  to  34.7%  from  40.3%  in  fiscal  1993.    The dollar increase was due  
primarily  to  the  increase  from  22  to  34  in  the  number  of  sales and  
administrative personnel, primarily relating to the expansion of the Company's  
United  States and international sales, marketing and promotional activities.   
In  addition,  the  Company  incurred  approximately  $200,000  of  expenses,   
including legal fees, in connection with an unconsummated business combination  
transaction  and established a $300,000 reserve for estimated costs associated  
with  the  Company's  Australian patent litigation.  Costs associated with the  
granting  of  compensatory  stock options increased to $311,000 in fiscal 1994  
from  $142,000  in  fiscal  1993.    The  decrease  in  selling,  general  and  
administrative  expenses  as a percentage of net revenues was primarily due to  
increased efficiencies related to increased sales.                              

   Research  and  Development  Expenses.   Research and development expenses
increased  in  fiscal  1994  to  $1.5 million from $820,000 in fiscal 1993, an  
increase  of  $680,000  or  88.5%.  Research  and  development  expenses  as a  
percentage  of  net  revenues  increased slightly to 11.2% in fiscal 1994 from  
10.7%  in fiscal 1993.  The increase in the amount of research and development  
expenditures  was  due primarily to an increase from 17 to 29 in the number of  
research and development personnel during fiscal 1994.  This increase was also  
attributable  to  costs  associated  with  the  development  of  new  product   
prototypes  and the payment of consulting fees relating to product development  
efforts.                                                                        

   Other  Income.   Other income, consisting of primarily government grants,
remained  relatively constant, aggregating $542,000 in fiscal 1994 as compared  
to $568,000 in fiscal 1993.                                                     

   Income  Taxes.    The Company's effective income tax rate for fiscal 1994
was  approximately  32.7% as compared to 29.8% for fiscal 1993.  This increase  
was due to several factors including an increase in non-deductible expenses.    

QUARTERLY RESULTS                                                               

   The  Company's  results,  including net revenues and gross margins, have,
from  time  to  time,  fluctuated  on  a quarterly basis and may be subject to  
similar  fluctuations  in  the future.  These fluctuations may result from the  
absence of a backlog of orders for the Company's products, the introduction of  
new  products by the Company or its competitors, the geographic mix of product  
sales,  the success of the Company's marketing efforts in new regions, changes  
in  third-party  reimbursement, timing of regulatory actions, timing of orders  
by  distributors,  expenditures  incurred  for  research  and  development,     
competitive  pricing in different regions, seasonality, the cost and effect of  
promotional  and  marketing  programs  and  the  effect  of  foreign  currency  
transaction gains or losses, among other factors.                               

   The  following table sets forth certain selected financial information of
the  Company  for  its seven most recent fiscal quarters.  In the opinion of the
Company's management, this unaudited information has been prepared on the same  
basis  as  the  audited  financial  information,  and includes all adjustments  
(consisting  only  of normal, recurring adjustments) necessary to present this  
information  fairly  when  read in conjunction with the Company's Consolidated  
Financial  Statements  and  Notes  thereto  contained  elsewhere  in  this      
Prospectus:                                                                     

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                                                        [Enlarge/Download Table]


                                                       THREE MONTHS ENDED                             
                                  SEP. 30,  DEC. 31,  MAR. 31,  JUNE 30,  SEP. 30,  DEC. 31,  MAR. 31,
                                   1994      1994      1995      1995       1995      1995      1996  
                                                       (IN THOUSANDS)                                 
                                                                                                      
Net revenues                       $4,273    $6,102    $6,380    $6,746     $6,703    $7,896    $9,360
Cost of sales                       2,108     3,013     3,046     3,104      3,212     4,004     4,774
                                   ------    ------    ------    -------    ------    ------    ------
Gross profit                        2,165     3,089     3,334     3,642      3,491     3,892     4,586
Selling, general and                                                                                  
 administrative expenses            1,377     1,915     1,956     2,199      2,130     2,469     2,902
Research and development expenses     441       446       556       553        680       691       640
                                   ------    ------    ------    -------    ------    ------    ------
 Total operating expenses           1,818     2,361     2,512     2,752      2,810     3,160     3,542
                                   ------    ------    ------    -------    ------    ------    ------
Income from operations                347       728       822       890        681       732     1,044
Interest income, net                   25        60        36        84        257       274       283
Government grants                     107        78        68       274        135       170       129
Other income (expense), net             -       189       144       (71)       150        91       353
                                   ------    ------    ------    -------    ------    ------    ------
   Total other income                 132       327       248       287        542       535       765
                                   ------    ------    ------    -------    ------    ------    ------
Income before income taxes            479     1,055     1,070     1,177      1,223     1,267     1,809
Income taxes                          120       265       267       296        343       345       602
                                   ------    ------    ------    -------    ------    ------    ------
Net income                         $  359    $  790    $  803    $  881     $  880    $  922    $1,207
                                   ======    ======    ======    =======    ======    ======    ======

                                                        [Enlarge/Download Table]


      AS A PERCENTAGE OF NET REVENUES                                                                  
                                   SEP. 30,  DEC. 31,  MAR. 31,  JUNE 30,  SEP. 30,  DEC. 31,  MAR. 31,
                                   1994      1994      1995      1995      1995      1995      1996    
                                                  (IN THOUSANDS)                                       
                                                                                                       
Net revenues                       100%      100%      100%      100%      100%      100%      100%    
  Cost of sales                     49        49        48        46        48        51        51     
                                   ----      ----      ----      ----      ----      ----      ----    
Gross profit                        51        51        52        54        52        49        49     
Selling, general and                                                                                   
 administrative expenses            32        32        30        33        32        31        31     
Research and development expenses   11         7         9         8        10         9         7     
                                   ----      ----      ----      ----      ----      ----      ----    
 Total operating expenses           43        39        39        41        42        40        38     
                                   ----      ----      ----      ----      ----      ----      ----    
Income from operations               8        12        13        13        10         9        11     
Interest income, net                 -         1         1         1         4         4         3     
Government grants                    3         1         1         4         2         2         1     
Other income (expense), net          -         3         2        (1)        2         1         4     
                                   ====      ----      ----      ----      ----      ----      ----    
 Total other income                  3         5         4         4         8         7         8     
                                   ----      ----      ----      ----      ----      ----      ----    
Income before income taxes          11        17        17        17        18        16        19     
Income taxes                         3         4         4         4         5         4         6     
                                   ----      ----      ----      ----      ----      ----      ----    
Net income                           8%       13%       13%       13%       13%       12%       13%    
                                   ====      ====      ====      ====      ====      ====      ====    

   Although  net  revenues  have generally increased over time, net revenues
have  historically  fluctuated on a quarterly basis as a result of seasonality  
of demand, the timing of new product introductions and entry into new markets.  
Government  grant  proceeds have fluctuated on a quarterly basis, in part due 
to  limitations  on grant amounts that are dependent upon Company expenditures  
and due to the timing of application for such grants.                           

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LIQUIDITY AND CAPITAL RESOURCES                                                 

   As  of  March  31,  1996 and June 30, 1995, the Company had cash and cash
equivalents and marketable securities of approximately $22.1 million and $23.8  
million,  respectively.    The  Company's  working  capital approximated $29.9  
million  and $27.4 million at March 31, 1996 and June 30, 1995, respectively.   
The  increase  in  working  capital  balances  reflects  the  increase in cash  
balances arising from increased selling activity, the receipt of approximately  
$5  million from the exercise of 153,000 stock options and the exercise by the  
underwriters  of  the  Company's  initial  public  offering of their full over  
allotment  of  450,000  shares  at  a net offering price of $10.23 per share.   
These  increases  were  offset  by  the payment of $6.5 million to acquire the  
Priess business.                                                                

   During  the  nine  months  ended March 31, 1996, the Company's operations
generated  $961,000  cash  from operations, primarily as a result of increased  
profit from operations offset partially by increases in both inventory for new  
product  introductions and accounts receivable due to increased sales.  During  
the  nine  months  ended  March  31,  1995  approximately $127,000 of cash was  
generated from operations.                                                      

   The  Company's capital expenditures for the nine month period ended March
31,  1996 and 1995 aggregated $7.4 million ad $1.1 million, respectively.  The  
majority  of  the  expenditures in the nine month period ending March 31, 1996  
relate  to  the  purchase  of  Priess,  the purchase of production tooling and  
equipment  and,  to  a lesser extent, office furniture, computers and research  
and  development  equipment.    As a result of these capital expenditures, the  
Company's  March  31,  1996  balance  sheet  reflects  net  property plant and  
equipment  of  approximately  $3.0 million at March 31, 1996, compared to $2.0  
million at June 30, 1995.                                                       

   The  results  of  the  Company's international operations are affected by
changes  in  exchange rates between currencies.  Changes in exchange rates may  
negatively  affect  the  Company's  consolidated  net  sales  and gross profit  
margins  from  international  operations.   The Company is exposed to the risk  
that  the  dollar-value equivalent of anticipated cash flows will be adversely  
affected  by  the  changes  in  foreign  currency exchange rates.  The Company  
attempts  to  manage  this  risk  by  entering  into  foreign  currency option  
contracts.                                                                      

   In May 1993, the Australian federal government agreed to lend the Company
approximately $800,000 over a six-year term. Such loan bears no interest for    
the first three years and will bear interest at the rate of 3.8% thereafter     
until maturity.    The  outstanding  principal balance of such loan was         
$787,000 and $861,000 at June 30, 1995 and March 31, 1996, respectively.        

NEW ACCOUNTING STANDARDS                                                        

In March 1995, the Financial Accounting Standards Board issued Statement of     
Financial Accounting Standards No. ("SFAS") 121, "Accounting for the            
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"   
effective for fiscal years beginning after December 15, 1995.  SFAS 121         
provides guidance for recognition and measurement of impairment of long-lived   
assets, certain identifiable intangibles and goodwill related both to assets    
to be held and used and assets to be disposed of.  The adoption of SFAS 121 is  
not expected to have a material effect on the Company's financial position or   
results of operations.                                                          

In October 1995, the Financial Accounting Standards Board issued SFAS 123,      
"Accounting for Stock-Based Compensation," effective for fiscal years           
beginning after December 15, 1995.  Under the provisions of SFAS 123, the       
Company is encouraged, but not required, to measure compensation costs related  
to its employee stock compensation under the fair value method.  If the         
Company elects not to recognize compensation expense under this method, it is   
required to disclose the pro forma effects based on the SFAS 123 methodology.   
The Company anticipates adopting the pro forma method of disclosure under SFAS  
123.                                                                            

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BUSINESS                                                              

   The  Company  designs,  manufactures and markets nasal CPAP equipment for
the diagnosis and treatment of obstructive sleep apnea ("OSA").                 

OBSTRUCTIVE SLEEP APNEA                                                         

   OSA  is  a  breathing  disorder  in  which  an  individual  experiences a
temporary collapse of the upper airway during sleep.  This restricts breathing  
and severely disrupts the individual's sleep.  Sleep is a complex neurological  
process  that  includes two distinct states:  non-rapid eve movement (non-REM)  
sleep  and  rapid  eye  movement (REM) sleep.  REM sleep, which occupies about  
20-25% of sleep in adults, is characterized by a high level of brain activity,  
bursts  of  rapid  eye  movement,  increased  heart and respiration rates, and  
paralysis  of many muscles.  Non-REM sleep is subdivided into four stages that  
generally  parallel  sleep  depth:  stage 1 is the lightest and stage 4 is the  
deepest.  The inability of an individual to experience adequate amounts of REM  
and  deeper  levels  (stages  3  and  4)  of  non-REM sleep results in daytime  
tiredness  and reduced cognitive function, both of which are characteristic of  
OSA.                                                                            

   The  upper  airway  has  no  rigid  support  and  is  held open by active
contraction  of  upper  airway muscles.  Normally, during REM sleep and deeper  
levels  of  non-REM sleep, upper airway muscles relax and the airway narrows.   
Individuals  with  narrow upper airways or poor muscle tone are prone to upper  
airway  closure  during  sleep  (an  "apnea"),  resulting  in  an inability to  
breathe,  or  near  closure (an "hypopnea") which causes snoring and breathing  
difficulties.    These  breathing irregularities result in a lowering of blood  
oxygen  concentration,  and  after 10 seconds or more, the brain reacts to the  
lack  of  oxygen  and  signals the body to respond.  Typically, the individual  
subconsciously  arouses  from REM sleep or from Stages 3 or 4 of non-REM sleep  
to  Stages  1  or  2 of non-REM sleep, causing the throat muscles to contract,  
thus  opening  the  airway.   After a few gasping breaths, blood oxygen levels  
increase  and the individual can resume a deeper sleep until the cycle repeats  
itself.    The  cycle  of  complete  or  partial  upper  airway  closure  with  
subconscious  arousal  to  lighter  levels of sleep can be repeated as many as  
several  hundred  times  during six to eight hours of sleep.  Sufferers of OSA  
typically  experience  10  or  more such cycles per hour and experience two or  
more clinical symptoms of OSA, such as excessive daytime sleepiness or reduced  
cognitive  function.    These  awakenings greatly impair the quality of sleep,  
although the individual is not normally aware of these disruptions.             

   Sleep  fragmentation and the loss of the deeper levels of sleep caused by
OSA  can  lead  to  excessive  daytime  sleepiness, reduced cognitive function  
(including  memory  loss  and lack of concentration) and irritability. OSA has  
been  associated  with employment difficulties, marital discord, impotence and  
other  adverse  effects.    Patients with OSA have been shown to have impaired  
daytime  performance  in  a  variety  of cognitive functions including problem  
solving,  response  speed and visual motor coordination.  Certain studies have  
linked  OSA  to increased occurrences of traffic and workplace accidents.  OSA  
sufferers  also  may  experience an increase in heart rate and an elevation of  
blood  pressure during the cycle of apneas.  Several reports indicate that the  
oxygen  denaturation,  increased heart rate and elevated blood pressure caused  
by  OSA  may be associated with increased risk of cardiovascular morbidity and  
mortality due to angina, stroke and heart attack.                               

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THE MARKET                                                                      

   In  its  "Wake  Up  America"  report  to  Congress  in 1993, the National
Commission on Sleep Disorders Research estimated that approximately 40 million  
individuals  in  the  United States suffer from chronic disorders of sleep and  
wakefulness,  such as sleep apnea, insomnia and narcolepsy.  According to this  
report, sleep apnea is the most common sleep disorder, affecting approximately  
20  million  individuals  in  the  United States.  Nearly 6.5 million of these  
persons over the age of 30 experience moderate to severe forms of sleep apnea.  
However,  there  is a general lack of awareness of OSA among both the medical 
community  and the general public, which has led to a corresponding failure to  
diagnose  the  disorder.    It is estimated that less than 3% of those persons  
afflicted  by  OSA  know  the  cause  of  their  fatigue  or  other symptoms.   
Healthcare  professionals  are  often  unable to diagnose OSA because they are  
unaware  that  such  nonspecific symptoms as fatigue, snoring and irritability  
are characteristic of OSA.                                                      

   While  OSA has been diagnosed in a broad cross-section of the population,
it  is  predominant  among  middle-aged  men  and  those who are obese, smoke,  
consume alcohol in excess or use muscle-relaxing drugs.  In addition, patients  
who are being treated for certain other conditions, including those undergoing  
dialysis  treatment  or  suffering from diabetes, are medically predisposed to  
OSA.                                                                            

   Generally,  an  individual  seeking  treatment for the symptoms of OSA is
referred  by  a general practitioner to a specialist, such as a pulmonologist,  
neurologist  or  psychiatrist  for  further  evaluation.  The diagnosis of OSA  
typically  requires  monitoring  the  patient  during  sleep at either a sleep  
clinic  or  the  patient's  home.    During  overnight  testing,  respiratory   
parameters and sleep patterns are monitored along with other vital signs, such  
as  blood  pressure,  heart  rate  and blood oxygen levels.  These tests allow  
sleep clinicians to detect any sleep disturbances such as apneas, hypopneas or  
subconscious awakenings.                                                        

   The  Company  estimates  that  there  are currently more than 1,200 sleep
clinics  in  the  United States, a substantial portion of which are affiliated  
with  hospitals.  Sleep clinics generally range in size from one to six beds.   
The  number of sleep clinics has expanded significantly from approximately 100  
such  facilities  in  1985.  The Company believes that despite the increase in  
sleep  clinics,  testing facilities currently remain inadequate to address the  
large population of undiagnosed OSA sufferers.                                  

EXISTING THERAPIES                                                              

   Prior  to  1981,  the  primary  treatment  for  OSA  was a tracheotomy, a
surgical procedure to cut a hole in the patient's windpipe to create a channel  
for  airflow.    More  recently,  surgery  has  involved  either                
uvulopalatopharyngoplasty ("UPPP"), in which surgery is performed on the upper  
airway  to  remove excess tissue and to streamline the shape of the airway, or  
mandibular  advancement,  in which the lower jaw is moved forward to widen the  
patient's airway.  UPPP alone has a poor success rate; however, when performed  
in  conjunction  with  mandibular advancement, a greater success rate has been  
claimed.    This combined procedure, performed by highly specialized surgeons,  
is expensive and involves prolonged and often painful recovery periods.         

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   Nasal  continuous  positive  airway pressure ("CPAP") was first used as a
treatment  for  OSA  in  1980  by  Dr.  Colin E. Sullivan, the Chairman of the  
Company's  Medical  Advisory  Board.    CPAP  systems  were commercialized for  
treatment  of  OSA in the United States in the mid-1980s.  Today, use of nasal  
CPAP,  although  not  a medical cure for OSA, is generally acknowledged as the  
most  effective  and least invasive treatment for OSA, allowing the individual  
to enjoy a more normal sleep pattern.  The Company estimates that during 1994,  
CPAP  treatment  was  prescribed  for  over 100,000 new patients in the United  
States.                                                                         

   During nasal CPAP treatment, a patient sleeps with a nasal mask connected
to  a  small  portable  air  flow  generator  that  delivers  room  air  at  a  
predetermined  positive  pressure.    The patient breathes in air from the air  
flow  generator  and  breathes  out  through  an  exhaust  port  in the mask.   
Continuous  air  pressure applied in this manner acts as a pneumatic splint to  
keep  the  upper  airway open and unobstructed.  Upon diagnosis of OSA and the  
decision  to  prescribe CPAP treatment for an OSA sufferer, the physician must  
determine  an appropriate pressure setting for the CPAP device.  This pressure  
titration  (adjustment)  procedure  typically occurs in the sleep clinic while  
the  patient  sleeps using the CPAP device and a technician manually increases  
the pressure until sleeping and breathing are normalized.  After determination  
of  the  proper  therapeutic  pressure, the patient is prescribed a nasal CPAP  
device set to that pressure for home use.                                       

   CPAP  is a treatment and not a cure for OSA, and, therefore, must be used
on  a  nightly  basis for life.  Patient compliance has been a major factor in  
the  efficacy of CPAP treatment.  Early generations of CPAP units provided      
limited  patient  comfort and convenience.  Patients experienced soreness from  
the  repeated  use  of  nasal masks and had difficulty falling asleep with the  
CPAP  device  operating  at  the  prescribed  pressure.    Recently,  product   
innovations  to  improve  patient comfort and compliance have been developed.   
These  include  more  comfortable  mask  systems, delay timers which gradually  
raise  air  pressure  allowing  the  patient  to  fall asleep more easily, and  
bi-level  air  flow  generators  which  provide  different  air  pressures for  
inhalation and exhalation.                                                      

BUSINESS STRATEGY                                                               

   The  Company believes that the number of OSA patients receiving treatment
will  increase  in  the  future  due  to  several factors, including increased  
awareness of OSA, an increase in the number and capacity of sleep clinics, and  
improved  products  for  the  diagnosis  and  treatment  of  OSA at home.  The  
Company's  strategy  for  the expansion of its business operations consists of  
the following key elements:                                                     

   Continue  Product  Development and Innovation.  The Company believes that
it  is  a  leading innovator in nasal CPAP technology for the treatment of OSA  
and that its continued product development and innovation will be a key factor  
in  its  success.    Since  its  founding,  the Company has introduced product  
advancements  and  improvements  designed  to  increase  patient  comfort  and  
encourage  compliance,  such  as delay timers, heated humidifiers, and pliable  
Bubble  Masks.    The  Company is currently developing automatic CPAP devices,  
such as AutoSet, that are designed to continually adjust CPAP pressure to meet  
the  individual  patient's  needs,  eliminating  the  need for manual pressure  
titration.                                                                      

   Expand Market Presence.  The Company currently markets its products in 40
countries  through a network of independent distributors, the Company's direct  
sales  force  and  manufacturers'  representatives.    The Company intends to   
increase  its sales and marketing efforts in its current markets, particularly  
in the United States, as well as to continue expansion into new countries.      

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   Increase  Public  and Clinical Awareness.  The Company intends to promote
awareness of the prevalence of, and treatment alternatives for, OSA with three  
main  groups:  (1)  populations  with predispositions to OSA; (2) primary care  
physicians and other specialists, such as cardiologists and anesthesiologists;  
and  (3)  special interest groups, such as sleep disorder support groups.  The  
Company  is  working  with  other  physicians  to  discover  other  medical     
applications  of nasal CPAP, including the treatment of post-operative surgery  
patients  and pediatric patients, such as premature babies and infants at risk  
for Sudden Infant Death Syndrome.                                               

PRODUCTS                                                                        

   The  Company  designs,  manufactures and markets nasal CPAP equipment for
the  diagnosis  and  treatment  of  OSA.    These products consist of air flow  
generators,  which  are small, portable devices that provide a preset positive  
airway pressure, and air delivery systems that include nasal masks, tubing and  
headsets  that connect the airflow generator to the patient.  In addition, the  
Company  markets  accessories  to  improve  patient  comfort, convenience and   
compliance, such as heated humidifiers.                                         

AIR FLOW GENERATORS.                                                  

   The Company manufactures and markets a broad range of air flow generators
which are sold to the end user at prices which vary from approximately $600 to  
$3,000,  depending  upon  the  model,  features and country of sale.  Air flow  
generators  accounted  for approximately 63%, 61% and 67% of the Company's net  
revenues in 1993, 1994 and 1995 respectively.                                   

   CPAP.    The  Company's CPAP air flow generators consist of the APD2, the
SULLIVAN  III,  SULLIVAN IV and SULLIVAN V series.  The APD2 was introduced in  
1991  to replace an earlier model, the APD1.  The SULLIVAN III and SULLIVAN IV  
are  enhancements  to  the  APD2  that  were  introduced  in  1993  and  1994,  
respectively.    The  SULLIVAN  V series of flow generators were introduced in  
July  1995  and  replaced  the APD2, SULLIVAN III and SULLIVAN IV models.  The  
SULLIVAN  V  weighs  less  than  4.5  pounds,  is  about  four inches high and  
conveniently  fits  under most beds.  Each model continuously delivers a fixed  
pressure air flow to the patient.                                               

   VPAP.    In  1994,  the  Company  introduced  the SULLIVAN VPAP (Variable
Positive  Airway Pressure) in the United States which it believes will improve  
patient  comfort  by  applying  different  air  pressure  for  inhalation  and  
exhalation.  In  March  1996  the  Company  released  the SULLIVAN VPAP II and  
Sullivan  Comfort  variable  pressure  flow  generators to further enhance its  
variable  Positive  Airway Pressure devices.  The SULLIVAN VPAP is expected to  
be  particularly  beneficial  for  those  patients  needing high levels of air  
pressure for inhalation as well as less resistance for exhalation.              

   Air  Flow  Generators  Under  Development.  The Company is developing the
AutoSet CPAP device for home use which is designed to automatically adjust air  
pressure as needed on a breath by breath basis.  The Company currently markets  
a  similar  device  for use in sleep clinics (AutoSet Clinical) outside of the  
United  States.    While  conventional  CPAP  units  operate  at  a fixed CPAP  
pressure, the actual pressure required for effective treatment of OSA can vary  
depending  on factors such as weight change, alcohol consumption, sedative use  
and  body  position.  The AutoSet is designed to detect the patient's level of  
airway  resistance  and continually adjust the air pressure to the appropriate  
therapeutic  level  throughout the night.  The Company is developing a version  
of  the  AutoSet  which  will  record  airway  resistance and actual levels of  
therapeutic  air pressure during home use for later review by sleep physicians  
for diagnostic purposes.                                                        

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                                                        [Enlarge/Download Table]


     The following table lists the Company's air flow generator products.             

                                                                                      
                                                                       DATE OF        
                                                                       COMMERCIAL     
PRODUCT           FEATURES                                             INTRODUCTION   
----------------  ---------------------------------------------------  ---------------
APD2              Fixed-pressure portable device                       April 1991*    
SULLIVAN III      Microprocessor-controlled, fixed-pressure portable   May 1993**     
                  device with tamper resistant key pad for easier                     
                  pressure setting                                                    
SULLIVAN VPAP     Dual-pressure portable device, provides different    June 1994      
                  pressure levels for inhalation and exhalation                       
SULLIVAN IV       Fixed-pressure portable device with reduced noise    October 1994***
                  levels                                                              
SULLIVAN V        Reduced size fixed pressure portable device          July 1995      
SULLIVAN VPAP II  Dual pressure portable device with reduced noise     March 1996     
                  and improved pressure dynamics                                      
Sullivan Comfort  Limited feature dual pressure device                 March 1996     
AutoSet           Microprocessor-controlled, automatically and         In development 
                  continually adjusts pressure in response to a                       
                  patient's changing breathing patterns throughout                    
                  sleep period, stores data for subsequent analysis                   
Pediatric CPAP    Microprocessor-controlled, fixed-pressure, portable  In development 
                  device for infants and children                                     
<FN>                                                                                  

*  Received FDA clearance in May 1991.                                                
**  Received FDA clearance in March 1994.                                             
***  The Sullivan IV is currently being sold only outside of the United States.       

   The Company provides  optional  features including a  delay timer,  which
allows the patient to select the time over which a  gradual transition to full  
therapeutic  pressure is  achieved, allowing the  patient to fall asleep more   
easily.    Another feature, of the  SmartStart function,  automatically starts  
airflow when the patient breathes into the mask and stops airflow upon removal  
of the mask.    This feature,  in  conjunction  with an installed  hour meter,  
records the number of hours a  patient receives therapy,  thereby permitting    
physicians to monitor  patient compliance.  Most units come equipped with a     
carry  bag for  enhanced   portability.    In addition, every unit has          
international electric voltage compatibility.                                   

   MASK SYSTEMS.  The Company's mask system includes the mask frame, a nasal
cushion,  and  headgear to secure the nasal cushion to the face.  Mask systems  
and  components  accounted for approximately 26%, 23% and 21% of the Company's  
net revenues in 1993, 1994 and 1995, respectively.                              

   The  Company's  Bubble  Mask  includes  a  patented  Bubble Cushion which
represents  a significant advance in patient comfort.  Introduced in 1991, the  
Bubble  Cushion  contains  a  silicone  membrane  which  readily  adjusts to a  
patient's  facial  contours.   Air pressure seals the thin membrane around the  
patient's  nose,  thereby  minimizing  air leakage and the possibility of skin  
irritation  from  repeated  usage.  The Company's headgear includes the ResCap  
which  has a five-point attachment method of stabilizing the Bubble Cushion on  
the patient's nose.                                                             

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   Typically, patients replace masks or mask cushions every 12 to 18 months,
at  a  cost  of  approximately $100-$200 depending upon the model and market.   
Bubble Masks are available in a variety of sizes and are sold independently of  
the Company's air flow generators either as replacement products or with other  
manufacturers'  air flow generators.  The Company also manufactures the Bubble  
Mask on an OEM basis for Puritan-Bennett, one of its competitors.               

ACCESSORIES AND OTHER PRODUCTS.                                       

   In  order  to  enhance  patient  comfort, convenience and compliance, the
Company  also  markets  a  variety  of  other products and accessories.  These  
products include humidifiers which connect directly with the CPAP and VPAP air  
flow  generator  to  moisten (humidify) and, if desired, heat air delivered to  
the  patient.    This  prevents  the  drying of nasal passages which can cause  
discomfort  upon  repeated  use  of  the  system.   Other optional accessories  
include carry bags to carry portable flow generators, replacement filters, and  
tubing that connects the mask to the air flow generator.                        

CLINICAL SUPPORT                                                                

   The  Company  also manufactures products that are used primarily in sleep
clinics  and  hospitals to measure key respiratory parameters.  These products  
consist  of  CPAP  devices together with additional diagnostic tools to assist  
clinicians  in  the  diagnosis,  titration  (measurement) and establishment of  
therapeutic pressures necessary to treat OSA sufferers.                         

   CPAP  CLINICAL  INTERFACE.   Introduced in October 1991, the LCU/RCU is a
diagnostic  and  monitoring  device  that is used by clinicians to measure and  
adjust  the pressures being delivered by a CPAP device to a patient undergoing  
a  sleep  study.   The clinical interface allows the physician to conduct this  
review  and  adjustment  from  a remote location within the sleep lab.  In the  
United States, clinical interface devices are typically provided to clinics by  
the  Company  without  charge  in  order  to  increase  clinical awareness and  
interest in the Company's products.                                             

   AUTOSET CLINICAL.  The Company's AutoSet Clinical is the clinical version
of  AutoSet  allowing  real-time  observation  and  review by the clinician of  
respiratory  parameters during a sleep study.  AutoSet Clinical incorporates a  
PC-based monitoring device which permits real-time diagnosis of patient airway  
resistance.    This  device  may  also  be  used  in  the therapeutic mode for  
automatic  breath--by-breath  adjustment  to maintain an open airway.  AutoSet  
Clinical  is  currently  marketed only outside the United States.  The Company  
submitted an application for 510(k) clearance with the FDA in May 1995.         

PRODUCT DEVELOPMENT                                                             

   The Company is committed to an ongoing program of product advancement and
development.    During  the  past year, the Company has introduced several new  
products,  including  SULLIVAN  VPAP  II,  Sullivan  Comfort,  SULLIVAN  V and  
improved  nasal  masks.   Currently, the Company's product development efforts  
are  focused  on  automated  CPAP  systems,  improved  mask  systems  and  a    
manufacturing cost-reduction program for existing products.                     

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   In  December  1994, the Company entered into a marketing rights agreement
with  a  Japanese  company  for such company to market certain respiratory and  
related  products  under  development  by  the  Company in Japan.  The Company  
received an up-front fee in exchange for such rights.                           

   The  Company  consults  with physicians at major sleep centers throughout
the  world  to  identify  technology  trends in the treatment of OSA.  Some of  
these physicians currently serve on the Company's Medical Advisory Board.  New  
product  ideas  are  also  identified by the Company's marketing staff, direct  
sales  force,  network  of  distributors  and manufacturers' representatives.   
Typically, new product development is then performed by the Company's internal  
development staff in collaboration with Dr. Sullivan and his colleagues at the  
Royal  Prince  Alfred  Hospital,  the University of Sydney, and other research  
groups around the world.                                                        

SALES AND MARKETING                                                             

  The  Company  currently  markets  its  products  in 40 countries using a
network  of  distributors,  independent manufacturers' representatives and its  
direct  sales force.  The Company attempts to tailor its marketing approach to  
each  national market, based on regional awareness of OSA as a health problem,  
physician  referral  patterns,  consumer  preferences  and local reimbursement  
policies.                                                                       

   NORTH  AMERICA.  In the United States, the Company's marketing activities
are  conducted through a field sales organization comprised of 18 direct sales  
employees,  including  three  regional  sales  managers,  and nine independent  
manufacturers'  representatives  organizations.    The Company's United States  
field sales organization markets and sells the Company's products primarily to  
more than 1,500 home health care dealer branch locations throughout the United  
States.   The Company also promotes and markets its products directly to sleep  
clinics.    Patients  who are diagnosed with OSA and prescribed CPAP treatment  
are  typically  referred  by the diagnosing sleep clinic to a home health care  
dealer to fill the prescription.  The home health care dealer, in consultation  
with  the  referring  physician,  will  assist  the  patient  in selecting the  
equipment,  will  fit  the  patient with the appropriate mask and set the flow  
generator  pressure  to  the  prescribed  level.   In the United States, sales  
employees and manufacturers' representatives are managed by the three regional  
sales managers and the Company's national sales manager.  A marketing manager,  
responsible  for  marketing  in  the United States and Canada, is based in the  
Company's  office  in  San  Diego.  The Company's Canadian sales are conducted  
through  a  Canadian distributor.  Sales in North America accounted for 53% of  
the  Company's  total net revenues for the fiscal year ended June 30, 1995 and  
51% for the nine months ended March 31, 1996.                                   

   EUROPE.    The  Company  markets  its  products  in  most  major European
countries.    In  countries  other  than  the  United Kingdom and Germany, the  
Company  uses  independent  distributors  to  sell  its  products.    These     
distributors  have  been  selected in each country based on their knowledge of  
respiratory  medicine  as  well as a commitment to nasal CPAP therapy.  In the  
United  Kingdom,  the  Company  has  an office which  is  responsible for       
coordination  of  all  European  distributors  and  who, in conjunction with a  
United Kingdom sales manager, conducts direct sales in the United Kingdom.  In  
addition,  the Company uses a consultant in Switzerland to assist in sales and  
marketing  efforts for selected European countries.  Sales in Europe accounted  
for 29% of the Company's total net revenues for the fiscal year ended June 30,  
1996 and 33% for the nine months ended March 31, 1996.                          

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   AUSTRALIA/REST  OF  WORLD.    Prior  to  May  1994,  the  Company was the
exclusive  source  of  nasal  CPAP  air flow generator units in Australia as a  
result  of  its  ownership of Dr. Sullivan's original nasal CPAP patent.  This  
patent,  which  was  due  to  expire  in  1998  and covered the CPAP method of  
treating,  and  the  device  for  treatment  of,  OSA,  was  challenged by the  
Australian  distributor  for  Respironics  and  in  May 1994 was revoked by an  
Australian  appeals  court in reliance on issues specific to Australian patent  
law.    Such  revocation  will  permit  competitors to market CPAP products in  
Australia.    Consequently,  the Company expects its dominant market share in   
Australia  will  decrease.    The Company has expanded its direct sales effort  
during  1994  and  sales  are  currently  conducted  through  its  independent  
distributors and its direct sales force of four people.  Marketing in the rest  
of  the  world  is  the  responsibility  of  the  Vice  President of Sales and  
Marketing  based in Sydney, Australia.  Sales in Australia and the rest of the  
world  accounted  for  18%  of the Company's total net revenues for the fiscal  
year ended June 30, 1995 and 16% for the nine months ended March 31, 1996.      

   Two  distributors  of  the  Company's products located, one in Australia,
Medical  Gases of Australia, and one in Germany, Priess Med Technik, accounted  
for  10%  and 16% of the Company's net revenues for the fiscal year ended June  
30, 1995.  In February, 1996, the Company entered into an agreement to acquire  
Priess  Med  Technik.    See "Recent Developments."  There can be no assurance  
that  the  Australian  distributor  or  any  of  the  Company's customers will  
continue to do business with the Company.                                       

MANUFACTURING                                                                   

   The  Company  performs  its  manufacturing  operations at its facility in
Sydney,  Australia.    Although the Company has not been inspected by the FDA,  
the  Company  believes  it  is  in  substantial  compliance  with all such FDA  
requirements  including following FDA Good Manufacturing Practices for medical  
devices.    The  Company has recently expanded its manufacturing facilities in  
Australia  and  intends  to  further  expand  such  facilities or to establish  
manufacturing  facilities  in  the United States in the future.  The timing of  
such  expenditure  and  the  decision  to  expand  the  existing facilities or  
establish  additional  facilities will depend upon the level of demand for the  
Company's  products,  the geographic mix of such demand and the relative costs  
of such establishment or expansion.                                             

   The  Company's manufacturing operations consist primarily of assembly and
testing  of  the Company's air flow generators, masks and accessories.  Of the  
numerous  raw  materials,  parts and components purchased for assembly of the   
Company's  diagnostic  and  therapeutic  sleep  disorder  products,  most  are  
off-the-shelf  items,  available  from  multiple vendors.  Several components,  
such  as  printed  circuit boards and plastic mouldings, are produced by third  
parties  to  meet  certain specifications established by the Company.  Two key  
components  of  each  of  the Company's CPAP devices are purchased from single  
source  suppliers.    While  the  Company  maintains  an  inventory  of  these  
components, there can be no assurance that such inventories would be adequate   
to  meet  the  Company's production needs during any prolonged interruption of  
supply.   The Company's supplier for one such component is located in Europe.   
Operations in Europe are subject to the risks normally associated with foreign  
operations including, but not limited to, possible changes in export or import  
restrictions  and  the  modification  or  introduction  of  other governmental  
policies  with  potentially  adverse  effects.    The  Company  is  currently   
qualifying  additional  sources  of supply for these components.  However, the  
Company's  inability  to develop alternative supply sources, if required, or a  
reduction  or  stoppage  in  supply,  could  adversely  affect  its ability to  
manufacture  its  CPAP devices and therefore its business, financial condition  
and results of operations.  The Company's quality control group performs tests  
at  various  steps  in  the  manufacturing cycle to ensure compliance with the  
Company's specifications.                                                       

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   The  Company  generally  manufactures to its internal sales forecasts and
fills  orders as received and as a result has no significant backlog of orders  
for  its  products.  The Company uses management information systems fully      
integrate its manufacturing planning, billing and accounting systems.  The      
systems operate on local area computer networks that run commercially           
available software packages allowing management real-time information and       
monitoring of daily operations.                                                 

SERVICE AND WARRANTY                                                            

   The  Company  offers  one-to-two  year limited warranties on its air flow
generator  products.    Warranties  on  mask systems are for 90 days.  In most  
markets,  the  Company  relies  on  its  distributors  to repair the Company's  
products,  with  parts  supplied  by  the Company.  In the United States, home  
health  care  dealers  generally arrange shipment of products to the Company's  
San Diego facility for repair.                                                  

   The  Company  has  received  returns  of  its products from the field for
various  reasons.    The  Company  believes  that  the level of returns it has  
experienced  to  date  is  consistent  with  levels  typically  experienced by  
manufacturers of similar devices.                                               

PATENTS AND PROPRIETARY RIGHTS AND RELATED LITIGATION                           

   The  Company  owns  or  has  licensed rights to five issued United States
patents and eleven issued  foreign patents.  In addition, the Company has       
eight pending United States patent applications and twenty foreign patent       
applications.  Some of these patents and patent applications relate to          
significant aspects and features of the Company's products.  These include      
United States patents relating to CPAP devices, a delay timer system, the       
Bubble Mask and an automated  means of varying air pressure based upon a        
patient's changing needs during nightly use, such as employed in the Company's  
AutoSet device.                                                                 

 The  Company  relies  on  a  combination  of  patents,  trade  secrets,
non-disclosure  agreements and proprietary know-how to protect its proprietary  
technology  and  rights.  There can be no assurance that the Company's patents  
will  not  be  infringed  upon, that the non-disclosure agreements will not be  
breached, that the Company would have adequate remedies for any such breach or  
infringement,  or  that  the Company's trade secrets will not otherwise become  
known  to  or independently developed by competitors.  The Company is pursuing  
an  infringement  action  against one of its competitors (Respironics) and is   
investigating  possible  infringement  by  others.    Other  litigation may be  
necessary  to  enforce patents issued to the Company, to protect the Company's  
proprietary  rights,  or  to  defend third-party claims of infringement by the  
Company  of  proprietary  rights  of  others.  Such litigation could result in  
substantial  cost  to  the  Company,  and diversion of effort by the Company's  
personnel.  There can be no assurance that any patents now or hereafter issued  
to,  licensed by, or applied for by the Company will be upheld, if challenged,  
or  that the protections afforded thereby will not be circumvented by others.   
Patent  laws  regarding  the  enforceability  of  patents vary from country to  
country.    Therefore,  there  can  be no assurance that patent issues will be  
uniformly  resolved,  or  that  local  laws  will  provide  the  Company  with  
consistent  rights  and benefits.  In addition, there can be no assurance that  
others  will not be issued patents which may prevent the sale of the Company's  
products  or  require  licensing  and  the payment of fees or royalties by the  
Company in order for the Company to be able to market certain products.         

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   Recent  and  pending  litigation  has resulted in, and can be expected to
continue  to  result  in,  substantial  cost to the Company and a diversion of  
effort  of  the  Company's  personnel.    In  May 1994, the Company's original  
Australian  patent,  which  was  issued in 1981 and was due to expire in 1998,  
covering  the  CPAP method of treating and the device for treatment of OSA was  
challenged by the Australian distributor for Respironics and was revoked by an  
Australian  appeals  court in reliance on issues specific to Australian patent  
law.    Under  Australian  patent  law,  a  patent  application  can  be filed  
provisionally to secure priority status and the inventor has a one-year period  
to  finalize  the  application.   The patent is entitled to the benefit of its  
initial filing date provided the final application corresponds sufficiently to  
the provisional application.  During the period prior to the final application  
for  the Company's patent in question, Dr. Sullivan published his work on CPAP  
for  treatment of OSA.  The court concluded Dr. Sullivan's patent could not be  
"fairly  based"  on  the  provisional  application  on which it had relied for  
priority,  and  therefore  priority was not granted to this application.  Such  
"Provisional"  applications and "fair basing" are aspects that are peculiar to  
Australian patent law.  As a result of such conclusion, the Australian appeals  
court  revoked Dr. Sullivan's original 1981 CPAP patent on the grounds that it  
was  anticipated  by  his prior publication.  Such revocation will permit the   
Company's  competitors to market CPAP devices substantially identical to those  
of  the  Company  in  Australia.    Consequently,  it can be expected that the  
Company's  dominant market share in Australia will decrease over time.  During  
the  fiscal year ended June 30, 1995 and the nine months ended March 31, 1996,  
Australia  represented  approximately  15.7% and  12.4%, respectively, of the   
Company's net  revenues.   At June 30, 1994, the Company accrued approximately  
$300,000 for estimated additional costs associated with this litigation, which  
amount remained  outstanding as of March 31, 1996.   The  Company believes the  
validity of its other patents will not be affected by this decision.            

   In January 1995, the Company filed a complaint for patent infringement in
the  United  States  District  Court  for  the Southern District of California  
against  Respironics.    The  complaint  seeks  monetary  damages  from,  and   
injunctive relief against Respironics resulting from its alleged infringement   
of  three of the Company's patents related to the CPAP device, its delay timer  
feature  and  the  Bubble  Mask  (the  "Subject  Patents").  In February 1995,  
Respironics  filed  a  complaint  against  the  Company  in  the United States  
District  Court for the Western District of Pennsylvania seeking a declaratory  
judgment  that (i) Respironics does not infringe claims of the Subject Patents  
and  (ii) the Subject Patents are invalid and unenforceable.  In May 1995, the  
two actions were combined are proceeding in the United States District Court    
for  the  Western  District  of Pennsylvania. In June 1996 the Company          
initiated a further action in Pennsylvania against Respironics regarding        
alleged infringement of the Company's continuation patent, granted June 4,      
1996, related to the delayed timer feature.  The action is continuing and is    
expected to be defended by Respironics.  An adverse ruling as to any of the     
four patents in suit could have an adverse effect on the Company's ability to   
enforce its patents against Respironics and others and enable others to gain    
a competitive advantage.                                                        

   On  May  17,  1995,  Respironics  and  its Australian distributor filed a
Statement of Claim against the Company and Dr. Peter C. Farrell in the Federal  
Court of Australia, New South Wales District Registry.  The Statement of Claim  
alleges  that  the  Company  engaged  in unfair trade practices, including the  
misuse  of  the  power  afforded by its Australian patents and dominant market  
position in violation of the Australian Trade Practices Act.  The Statement of  
Claim asserts damage claims in the aggregate amount of approximately $900,000,  
constituting  lost  profit on sales.  While the Company intends to defend this  
action,  there  can  be  no  assurance  that the Company will be successful in  
defending  such  action  or  that  the  Company  will  not be required to make  
significant  payments  to  the claimants.  Furthermore, the Company expects to  
incur ongoing legal costs in defending such action.                             

   In  addition,  there  can be no assurance that others do not have or will
not  be  issued  patents  which  may  prevent the sale of the Company's future  
products  or  require  licensing  and  the payment of fees or royalties by the  
Company  in  order  for  the  Company  to be able to market certain products.   
Litigation may be necessary to defend against claims of infringement of patent  
rights owned by the Company's competitors.                                      

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THIRD-PARTY REIMBURSEMENT                                                       

   The  cost of medical care is funded in substantial part by government and
private  insurance  programs.  Although the Company does not generally receive  
payments for its products directly from these payors, the Company's success is  
dependent  upon  the  ability of patients to obtain adequate reimbursement for  
the Company's products.  In most markets, the Company's products are purchased  
primarily  by home health care dealers, hospitals or sleep clinics, which then  
invoice third-party payors directly.                                            

   In  the  United States, third-party payors include Medicare, Medicaid and
corporate health insurance plans.  These payors may deny reimbursement if they  
determine  that  a  device  has not received appropriate FDA clearance, is not  
used  in accordance with cost-effective treatment methods, or is experimental,  
unnecessary  or  inappropriate.    Third-party  payors  are  also increasingly  
challenging  prices  charged  for  medical  products and services, and certain  
private  insurers  have  initiated  reimbursement  systems  designed to reduce  
health  care  costs.  The trend towards managed health care and the concurrent  
growth  of HMOs which could control or significantly influence the purchase of  
health  care services and products, as well as legislative proposals to reform  
health care, may all result in lower prices for the Company's products.  There  
can be no assurance that the Company's products will be considered cost-        
effective by third-party payors,  that reimbursement will be available or, if   
currently available, will continue  to  be  available,  or  that payors'        
reimbursement policies will not adversely  affect  the  Company's ability to    
sell its products on a profitable basis, if at all.                             

   The  cost containment measures that health care providers are instituting
in  the  face  of  the  uncertainty and the ultimate effect of any health care  
reform  could  have  an  adverse  effect  on the Company's ability to sell its  
products  and  may  have  a  material  adverse effect on the Company business,  
financial condition and results of operations.                                  

   In  some  foreign  markets, such as Spain, France and Germany, government
reimbursement  is  currently available for purchase or rental of the Company's  
products subject, however, to constraints such as price controls or unit sales  
limitations.                                                                    

   In Australia and in other foreign markets, such as the United Kingdom and
Japan,  there  is currently limited or no reimbursement for devices that treat  
OSA.                                                                            

GOVERNMENT REGULATION                                                           

   The  Company's  products are subject to extensive regulation particularly
as  to  safety,  efficacy  and  adherence  to  GMP  and  related manufacturing  
standards.    Medical  device  products  are subject to rigorous FDA and other  
governmental  agency  regulations  in  the  United  States  and regulations of  
relevant  foreign  agencies  abroad.    The  FDA  regulates  the introduction,  
manufacture,  advertising,  labeling,  packaging,  marketing, distribution and  
record  keeping  for  such  products, in order to ensure that medical products  
distributed  in  the  United  States are safe and effective for their intended  
use.    In  addition,  the  FDA is authorized to establish special controls to  
provide reasonable assurance of the safety and effectiveness of most devices.   
Noncompliance  with  applicable  requirements can result in import detentions,  
fines,  civil  penalties,  injunctions,  suspensions  or  losses of regulatory  
approvals,  recall  or seizure of products, operating restrictions, refusal of  
the  government to approve product export applications or allow the Company to  
enter into supply contracts, and criminal prosecution.                          

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   The  FDA requires that a manufacturer introducing a new medical device or
a new indication for use of an existing medical device obtain either a Section  
510(k)  premarket notification clearance or a premarket approval ("PMA") prior  
to  it  being  introduced  into  the market.  The Company's products currently  
marketed in the United States are marketed in reliance on 510(k) pre-marketing  
clearance.    The  process  of  obtaining a Section 510(k) clearance generally  
requires  the submission of performance data and often clinical data, which in  
some  cases can be extensive, to demonstrate that the device is "substantially  
equivalent"  to  a  device that was on the market prior to 1976 or to a device  
that  has  been  found  by  the FDA to be "substantially equivalent" to such a  
pre-1976  device.    As  a  result,  FDA clearance requirements may extend the  
development  process  for a considerable length of time.  In addition, in some  
cases,  the  FDA may require additional review by an advisory panel, which can  
further  lengthen  the  process.    The PMA process, which is reserved for new  
devices  that are not substantially equivalent to any predicate device and for  
high  risk devices or those used to support or sustain human life, may take     
several  years  and  requires  the  submission  of  extensive  performance and  
clinical information.                                                           

   As a medical device manufacturer, the Company is subject to inspection on
a  routine  basis  by  the  FDA  for  compliance  with  the  FDA's current GMP  
regulations  which  impose  procedural  and  documentation  requirements with   
respect  to  manufacturing  and  quality  control  activities.    Although the  
Company  has  never  been  the  subject  of  a GMP inspection by the FDA, the   
Company  believes  that  its manufacturing and quality control procedures meet  
the  requirements of these regulations.  If the FDA were to determine that the  
Company's  products  were  not manufactured or sold in accordance with the FDA  
regulations, the FDA would have the authority to ban products from the market,  
impose  civil  penalties,  effect  recalls  of  previously  sold products from  
customer  locations  and  prohibit  the  operation of manufacturing facilities  
located within the United States.                                               

   Sales  of  medical  devices  outside  the  United  States  are subject to
regulatory  requirements  that  vary widely from country to country.  The time  
required  to obtain approvals by foreign countries may vary from that required  
for FDA approval.                                                               

COMPETITION                                                                     

   The  markets  for  the  Company's  products  are highly competitive.  The
Company  believes that the principal competitive factors in all of its markets  
are  product  features,  reliability  and  price.    Reputation  and efficient  
distribution  are also important factors.  Patent protection could also become  
an  important  issue  in the future.  Failure of the Company to offer products  
which  contain  features  similar  to  or  more  desirable than those products  
offered  by  its competitors, which are perceived as reliable by consumers, or  
to  meet  the  prices offered by its competitors could have a material adverse  
effect  on  the business, financial condition and results of operations of the  
Company.                                                                        

   The  Company competes on a market-by-market basis with various companies,
most  of  which  may  have  greater financial and marketing resources than the  
Company.    The  Company  believes  that  it  competes favorably in the United  
States,  its  principal  market,  where Respironics, Healthdyne Technologies,   
DeVilbiss  and Nellcor Puritan Bennett  are the primary competitors for the     
Company's CPAP  products.  The  Company's  principal European competitors are   
also Respironics,  Healthdyne  Technologies, DeVilbiss and Nellcor Puritan      
Bennett, as well as regional European manufacturers.                            

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   Any  product developed by the Company that gains regulatory approval will
have  to  compete for market acceptance and market share.  An important factor  
in  such  competition  may be the timing of market introduction of competitive  
products.   Accordingly, the relative speed with which the Company can develop  
products,  complete  clinical  testing  and  regulatory approval processes and  
supply  commercial quantities of the product to the market are expected to be   
important competitive factors.                                                  

   The  Company's  products  may also face competition from other methods of
treatment for OSA, such as surgical procedures and pharmaceutical treatment.    

PRODUCT LIABILITY INSURANCE                                                     

   The  Company's  business  exposes it to potential product liability risks
that are inherent in the design, manufacture and marketing of medical devices.  
Claims  alleging  product  liability  may involve large potential damages and 
significant  defense  costs.  Although the Company currently maintains product  
liability  insurance  intended to cover such claims with coverage limits which  
the  Company  deems  adequate for such purpose, there can be no assurance that  
the  coverage elements of the Company's insurance policies will be adequate or  
that all such claims will be covered by the Company's insurance.  In addition,  
the  Company's insurance policies must be renewed annually.  While the Company  
has  been  able  to  obtain  product  liability  insurance  in  the past, such  
insurance  varies in cost, can be difficult to obtain and may not be available  
in  the future on terms acceptable to the Company, if it is available at all.   
A  successful  claim  against the Company in excess of the available insurance  
coverage  could  have  a  material  adverse  effect on the Company's business,  
financial condition or results of operations.                                   

EMPLOYEES                                                                       

   As  of  March  31,  1996,  the Company had 205 employees and 11 full time
consultants,  including  95  persons  in  manufacturing,  31  in  research and  
development,  57  in  sales  and  marketing  and 33 in administration.  Of the  
Company's  employees  and consultants, 155 are located in Australia, 30 in the  
United  States, 24 in Germany, and seven in the United Kingdom and the rest of  
Europe.  The Company believes that the success of its business will depend, in  
part,  on  its ability to attract and retain qualified personnel.  None of the  
Company's  employees  is  covered  by  a collective bargaining agreement.  The  
Company believes that its relationship with its employees is good.              

FACILITIES                                                                      

   The  Company's  principal  offices  are located in Sydney, Australia at a
leased facility of approximately 44,000 square feet.  This facility is leased   
through  1997 and contains approximately 28,000 square feet of assembly space,  
and  approximately  16,000 square feet devoted to research and administrative   
offices.    The  Company  believes  that this facility is adequate to meet its  
requirements  at  least  through early 1997.  Sales and warehousing facilities  
are  also  leased  in  San  Diego,  California, Moenchengladbach, Germany, and  
Oxford, England.                                                                

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MANAGEMENT                                                            

                                                        [Enlarge/Download Table]

EXECUTIVE OFFICERS AND DIRECTORS                                                          


     The executive officers and directors of the Company are as follows:                  

                                                                                          
NAME                     AGE  POSITION                                                    
-----------------------  ---  ------------------------------------------------------------
Peter C. Farrell          54  President, Chief Executive Officer and Chairman of the Board
                              of Directors                                                
Christopher G. Roberts    43  Executive Vice President and Director                       
Walter Flicker            41  Vice President, Corporate Development and Secretary         
Michael Berthon-Jones     44  Vice President, Clinical Research                           
Michael D. Hallett        38  Vice President, Marketing USA                               
William A. Nicklin        44  Vice President, Manufacturing                               
Adrian Smith              32  Vice President, Finance                                     
Norman W. DeWitt          47  Vice President, U.S. Operations                             
Mark Abourizk             39  Legal Counsel                                               
Vic Yerbury               56  Vice President, Operations, ResMed Ltd.                     
Jonathan C. Wright        46  Vice President, Sales and Marketing                         
Donagh McCarthy(l)        50  Director                                                    
Gary W. Pace              49  Director                                                    
Michael A. Quinn(1)       49  Director                                                    
<FN>                                                                                      

_______________                                                                           
(1)     Member of Audit and Compensation Committees                                       

   Dr.  Farrell  has  been President and a director of the Company since its
inception in June 1989 and Chief Executive Officer since July 1990.  From July  
1984  to  June  1989,  Dr.  Farrell  served  as  Vice  President, Research and  
Development  at  various subsidiaries of Baxter International, Inc. ("Baxter")  
and  from August 1985 to June 1989, he also served as Managing Director of the  
Baxter  Center  for  Medical  Research Pty Ltd., a subsidiary of Baxter.  From  
January  1978  to  December 1989, he was Foundation Director of the Center for  
Biomedical Engineering at the University of New South Wales where he currently  
serves  as a Visiting Professor.  Dr. Farrell from 1992 to 1996 was a director  
of  F.H. Faulding & Co. Limited, a pharmaceutical company with annual revenues  
over $1 billion.  He holds a B.E. in chemical engineering with Honors from the  
University  of  Sydney, an S.M. in chemical engineering from the Massachusetts  
Institute  of  Technology,  a Ph.D. in chemical engineering and bioengineering  
from  the University of Washington, Seattle and a D.Sc. from the University of  
New South Wales.                                                                

   Dr.  Roberts  joined  the  Company  in  August  1992  as  Executive  Vice
President.    He  has been a director of the Company since September 1992.  He  
also  served  as a director of the Company from August 1989 to November 1990.   
From February 1989 to June 1992, Dr. Roberts served in various positions, most  
recently  as  Vice  President-Clinical  and  Regulatory  Affairs, with medical  
device  subsidiaries  of  Pacific  Dunlop  Limited,  a  large  multinational    
manufacturing  company.    From  January  1984 to December 1988, he served as   
President  of  BGS  Medical  Corporation,  a  medical device company which was  
acquired  in  September 1987 by Electro Biology Inc. ("EBI"), at which time he  
became  Vice  President-Clinical  and  Regulatory Affairs of EBI.  Dr. Roberts  
holds  a  B.E.  in chemical engineering with Honors from the University of New  
South  Wales,  an  M.B.A.  from Macquarie University and a Ph.D. in biomedical  
engineering from the University of New South Wales.                             

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   Mr. Flicker has been Vice President, Corporate Development since February
1995.    From  December 1989 until February 1995 he served as Vice President,   
Finance of the Company and has served as Secretary of the Company since August  
1990.   From July 1989 to November 1989, he was an engineering consultant with  
Bio-Agrix  Pty  Ltd.,  a biomedical engineering consulting company.  From July  
1988  to  June  1989,  Mr.  Flicker  served as Business Development Manager at  
Baxter  Center  for  Medical  Research Pty Ltd., a subsidiary of Baxter.  From  
July  1984  to  July  1988,  Mr.  Flicker  served as Executive Director of the  
Medical  Engineering  Research  Association, an Australian biomedical industry  
association.    Mr. Flicker holds a B.E. with Honors in mechanical engineering  
and a M.E. in biomedical engineering from the University of New South Wales.    

   Dr.  Berthon-Jones  has  been  Vice  President,  Clinical Research of the
Company  since  July  1994.    From  July 1988 to June 1994, he was a research  
scientist  at  the  David Read Laboratory at the University of Sydney.  During  
1988,  Dr.  Berthon-Jones  was a self-employed software consultant.  From July  
1985  until  June  1988, he was a senior research officer at the University of  
Sydney  Department  of  Physiology.   Dr. Berthon-Jones holds a M.D. and Ph.D.  
from the University of Sydney.                                                  

Dr. Hallett has been Vice President, marketing USA, from March 1996.  
From January 1993 to February 1996 Dr Hallett was Vice President European       
Operations.  From  July  1989  to December 1992, he was a Baxter Visiting       
Research Fellow-Biomedical  Engineering  at  the  University  of New South      
Wales.  From October  1986  to June 1989, Dr. Hallett was a research engineer   
at the Baxter Center  for  Medical  Research, Sydney, Australia.  From March    
1985 to October 1986,  he was a technical support marketing executive at        
Terumo Corporation, a manufacturer of medical electronics and cardiopulmonary   
bypass equipment.  Dr. Hallett  received  a  B.E.  in Chemical  and  Materials  
Engineering from the University of Auckland, and a Masters and Ph.D. in         
Biomedical Engineering from the University of New South Wales.                  

   Mr.  Nicklin  has been Vice President, Manufacturing of the Company since
January  1990.    From  October  1987  to  November  1989,  he  served  as the  
Manufacturing  Director of Valuca Pty Ltd., a manufacturer of small electrical  
appliances.   From November 1989 to January 1990, Mr. Nicklin was a consultant  
to  Hanimex,  a  manufacturer of photographic products.  From November 1978 to  
October  1986, Mr. Nicklin held various positions, including General Manager,   
Manufacturing,  at  Hanimex.    Mr.  Nicklin holds a certificate in mechanical  
engineering.                                                                    

   Mr.  Smith  has  been  Vice President, Finance since February 1995.  From
January  1986 through January 1995, Mr. Smith was employed by Price Waterhouse  
specializing  in  the  auditing  of listed public companies in the medical and  
scientific  field.  Mr. Smith holds a B.Ec. from Macquarie University and is a  
certified chartered accountant.                                                 

   Mr.  Abourizk  joined  the Company as General Counsel in July 1995.  From
1993  to June 1995, Mr. Abourizk managed the Sydney office of Francis Abourizk  
Lightowlers,  a  legal  partnership  specializing  in  intellectual  property   
matters.    From  March  1989  to May 1993, Mr. Abourizk was Deputy Manager of  
Sirotech  Legal  Group  a technology transfer company.  During the period from  
March  1986  to  February  1989, Mr. Abourizk became a Senior Associate in the  
Intellectual  Property  Group  of an Australian national law firm, Corrs Pavey  
Whiting  & Byrne.  Mr. Abourizk received a B.Sc. (Hons) from Monash University  
in  1978  and  LL.B.  degree  in 1980 and in 1993 gained a Graduate Diploma in  
Intellectual  Property from University of Melbourne.  Mr. Abourizk is admitted  
to  practice before the High Court of Australia, the Supreme Court of Victoria  
(Barrister and Solicitor) and the Supreme Court of New South Wales (Solicitor). 

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   Mr.  Yerbury joined the Company as Vice President, Product Development in
July  1995.    From  July  1994  he  was  employed  as a management consultant  
specializing in technology development.  Since May 1991, Mr. Yerbury served as  
Divisional  General  Manager  of  British  Aerospace  Australia  in  charge of  
contract  management  and radio tracking systems.  From February 1988 to April  
1991,  Mr.  Yerbury  was the General Manager of Lend Lease Technology, part of  
the  Australian  Lend  Lease  Corporation,  responsible  for  development  and  
commercialization  of  remote  radio  based  tracking  system  and  radio data  
networks.  Mr. Yerbury received a degree in Chemical Engineering from the       
University College London.                                                      

  Mr.  DeWitt has been Vice President, U.S. Operations since October 1994.
From  November  1990 to September 1994, he was an attorney in private practice  
in  Minneapolis,  Minnesota,  most  recently  affiliated  with  the  financial  
management advisory firm of Stevens, Foster & Co., Inc. and as a consultant to  
the Company.  Prior thereto, Mr. DeWitt held positions both as an attorney and  
senior manager with Westlund Companies, Inc., a real estate construction firm,  
from  March  1988  to  October  1990.    Mr.  DeWitt holds a B.A. from Amherst  
College,  a J.D. from the University of Minnesota Law School and a L.L.M. from  
William Mitchell College of Law.                                                

   Dr.  Wright  has  been Vice President, Sales and Marketing of the Company
since  June  1994.    From  October  1991  to  May  1994,  he was New Business  
Development  Manager  at  Johnson  & Johnson Medical Pty Ltd., a subsidiary of  
Johnson  and  Johnson, Inc.  From September 1988 to September 1991, Dr. Wright  
was  a  Project Manager at Sirotech Ltd., a technology transfer company.  From  
May  1987,  Dr.  Wright  was  a  Senior  Project  Leader  at  Vaso Products, a  
subsidiary  of  Bellara  Medical  Products  Ltd., Australia, a manufacturer of  
vascular  devices.   Dr. Wright received a B.Sc. degree from the University of  
NSW, a Ph.D. from the University of Sydney, and a Graduate Diploma (Marketing)  
from the University of Technology, Sydney.                                      

  Mr.  McCarthy  has  been  a director of the Company since November 1994.
Since  June 1993 he has been the President of the North America Renal Division  
of  Baxter.    Mr.  McCarthy  has held various positions at Baxter since 1982,  
including  that  of  Vice  President-Global  Marketing,  Strategy  and Product  
Development.    Mr.  McCarthy received a B.S. in Engineering from the National  
University  of  Ireland  and  a  M.B.A. from the Wharton School, University of  
Pennsylvania.                                                                   

   Dr. Pace has been a director of the Company since July 1994.  Dr. Pace is
President  and  Chief  Executive  Officer of Research Triangle Pharmaceuticals  
Inc.,  a  start-up  company exploring opportunities in pharmaceuticals, since   
November  1994.    From  January  1993  to September 1994, he was the founding  
President  and  Chief  Executive  Officer  of  Free  Radical  Sciences Inc., a  
start-up  pharmaceutical  company and is currently a member of its Scientific   
Advisory  Board.    From  September  1989  to January 1993, he was Senior Vice  
President  of  Clintec  International, Inc., a Baxter/Nestle joint venture and  
manufacturer  of  clinical  nutritional products.  Dr. Pace holds a B.Sc. with  
Honors  from  the  University  of  New  South  Wales  and  a  Ph.D.  from  the  
Massachusetts Institute of Technology.                                          

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   Mr.  Quinn,  a  director  of the Company since September 1992, has been a
management  and  financial  consultant since February 1992.  From July 1988 to  
January 1992, he served as Executive Chairman of Phoenix Scientific Industries  
Limited,  a  manufacturer  of  health care and scientific products.  From July  
1983  to  June  1988, Mr. Quinn was Managing Director and Company Secretary at  
Memtec  Limited,  an  industrial  membrane  filtration company ("Memtec").  He  
currently  is a director of Memtec and of Heggies Bulkhaul Limited.  Mr. Quinn  
holds  a  B.Sc. in physics and applied mathematics and a Bachelor of Economics  
from the University of Western Australia and a M.B.A. from Harvard University.  

   The  Company's  Board  of  Directors  is  divided  into  three classes of
directors,  with directors serving for staggered, three-year terms.  Mr. Quinn  
is  the  sole  current  member  of  Class  I, whose term expires in 1998.  Dr.  
Roberts and Mr. McCarthy are members of Class II, whose term expires in 1996.   
Dr. Farrell and Dr. Pace are members of Class III, whose term expires in 1997.  

   All  non-employee  directors  are  entitled  to receive reimbursement for
traveling  costs and other out--of-pocket expenses incurred in attending Board  
of  Directors'  meetings  and  such other industry conferences attended at the  
request  of  the Company.  Non-employee directors receive annual compensation   
in the amount of $10,000.                                                       

MEDICAL ADVISORY BOARD                                                          

   The Company has a Medical Advisory Board ("MAB") consisting of physicians
and scientists specializing in the field of sleep disorders.  MAB members meet  
as  a  group  twice a year with members of the Company's senior management and  
members  of  its  research  and marketing departments to advise the Company on  
technology  trends  in  the  treatment  of OSA and other developments in sleep  
disorders medicine.  MAB members are also available to consult on an as-needed  
basis with the senior management of the Company.  MAB members are as follows:   

   Colin Sullivan, M.D., Ph.D., F.R.A.C.P., age 52, is the inventor of nasal
CPAP  for  treating obstructive sleep apnea and is a thoracic physician at the  
Royal Prince Alfred Hospital.  He is Professor of Medicine and Director of the  
David Read Laboratory at the Sydney University Medical School.  He is a Fellow  
of  the  Royal  Australian  College of Physicians and Director of the National  
SIDS  Council  Pediatric  Sleep  Laboratory at the Royal Alexandria Children's  
Hospital,  Camperdown.    Dr. Sullivan is the Chairman of the Medical Advisory  
Board,  and  has  continued to contribute to the Company's innovation, product  
development  and  clinical  testing,  producing  multiple patented inventions,  
including  the delay timer, AutoSet and the Bubble Mask.  He has authored over  
100  papers  in  sleep  disorders  and related respiratory areas and is on the  
editorial  board  of  several  professional journals.  Dr. Sullivan's M.D. and  
Ph.D. degrees are from the University of Sydney Medical School.                 

   William C. Dement, M.D., Ph.D., age 59, is the Lowell W. and Josephine Q.
Berry  Professor  of  Psychiatry  and  Behavioral  Sciences  at  the  Stanford  
University  School  of  Medicine  and Director of the Stanford Sleep Disorders  
Clinic and Research Center.  He was Chairman of the USA National Commission on  
Sleep  Disorders Research.  During the 1950's, Dr. Dement was part of the team  
at  the  University  of  Chicago  that  discovered  REM  sleep.    In  1970 he  
established  the  first  sleep  disorders  clinic  in  which  he  introduced    
polysomnography.    Dr.  Dement  has  co-authored more than 400 papers and has  
written  definitive  textbooks  on  sleep.    He  is on the editorial board of  
several  professional journals.  Dr. Dement is a graduate of the University of  
Washington,  Seattle,  and  received  his  M.D.  and  Ph.D.  degrees  from the  
University of Chicago.                                                          

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   Neil  J.  Douglas,  M.D.,  F.R.C.P.,  age  48,  is Reader in Medicine and
Respiratory  Medicine,  University  of  Edinburgh,  an  Honorary  Consultant    
Physician,  Lothian  Health  Board  and  Director,  Scottish  National  Sleep   
Laboratory.    He  is  a  member  of the Action on Smoking and Health Scotland  
Council  and  the  National Panel of Specialists for Respiratory Medicine.  He  
chairs  the  Ethics  of  Medical  Research  Volunteer Studies Sub-Committee of  
Lothian  Health  Board  and is a member of the Working Party on Sleep Apnea of  
the  Royal  College  of  Physicians  of  London.  He is the author of over 100  
papers  in  the  area of sleep and pulmonary medicine.  Dr. Douglas has a M.D.  
from the University of Edinburgh.                                               

   Ralph  Pascualy,  M.D.,  A.C.P.,  age  46,  is  Medical Director, Pacific
Northwest Sleep/Wake Disorders Center, Providence Medical Center, Seattle.  He  
held research fellowships in psychiatry prior to a professional focus on sleep  
disorders  medicine  in the early 1980s.  He was awarded the William C. Dement  
Award  in  Sleep  Disorders Medicine in 1983 and became an Accredited Clinical  
Polysomnographer in 1986.  Dr. Pascualy trained in sleep disorders medicine at  
Stanford.    He  is Editor-in-Chief of the Research Newsletter of the Clinical  
Sleep  Society, Chairs the National Insurance Committee and is a member of the  
Technology  Committee  of  the  Association of Sleep Disorders Centers.  He is  
also  a  member  of  the  Gerontological  Society,  the  American  Psychiatric  
Association, and National Affairs Committee of the Association of Professional  
Sleep  Societies.  He is a graduate of Columbia University and received a M.D.  
from the State University of New York.                                          

   Clifford  W.  Zwillich, M.D., age 56, is Chief, Division of Pulmonary and
Critical  Care  Medicine,  Pennsylvania  State  University,  and Distinguished  
Professor of Medicine.  His major scientific interest is the body's control of  
respiration.    He serves on the Editorial Boards of more than 10 journals and  
is  active  in  numerous  associations  specializing in pulmonary medicine and  
sleep  disorders.   Dr. Zwillich holds a B.A. degree from Hunter College and a  
M.D.  from the University of Kansas.  He completed his senior residency at the  
Harvard  Medical  School  in  the  early  1970s  and then undertook a research  
fellowship at the University of Colorado Health Services Center.                

   Members  of  the Medical Advisory Board, other than Dr. Sullivan, receive
approximately  $1,000  per  month  and  all  members  receive reimbursement of  
traveling  costs  and  other out-of-pocket expenses incurred in attending such  
industry conferences as may be requested by the Company.                        

EXECUTIVE COMPENSATION                                                          

   The  following  table  sets forth the aggregate compensation for services
rendered  in  all capacities to the Company during its fiscal years ended June  
30,  1993,  1994  and  1995  by  its  chief  executive officer and each of its  
executive officers whose compensation exceeded $100,000 during its fiscal year  
ended June 30, 1995.                                                            

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                                                        [Enlarge/Download Table]


     SUMMARY COMPENSATION TABLE                                                          

                                                          LONG-TERM                      
                                                          COMPENSATION AWARDS            
                                                          NUMBER OF SHARES OF   ALL OTHER
                       FISCAL    ANNUAL COMPENSATION      COMMON STOCK          COMPENSA-
                       YEAR                               UNDERLYING OPTIONS    TION(1)  
NAME AND PRINCIPAL POSITION                                                              

                                                                                         
                                   SALARY        BONUS                                   
                                   --------      -------                                 
Peter C. Farrell        1995       $130,253      $58,950       4,500           $ 7,164   
 President and Chief    1994        139,091       54,807      97,500             5,709   
 Executive Officer      1993         89,747       43,889      50,000             3,593   

Christopher G. Roberts  1995       $ 32,451      $37,662       3,000           $84,850   
 Executive Vice         1994         48,630       35,015      87,500            49,824   
 President              1993         42,187       39,894           -            29,079   
<FN>                                                                                     

_______________                                                                          
(1)     These include pension plan payments made in lieu of salary.                      

   The  following  table  sets  forth certain information on grants of stock
options  made  during  the fiscal year ended June 30, 1995 under the Company's  
1995  Stock  Option  Plan,  to  the  executive  officers  named in the Summary  
Compensation  Table  and  certain information concerning all options exercised  
and  held  by  such persons.  Options granted under the 1995 Stock Option Plan  
are  exercisable  starting  12  months  after  the grant date, with 33% of the  
shares covered thereby becoming exercisable at that time and an additional 33%  
of the option shares becoming exercisable on each successive anniversary date,  
with  all  option shares exercisable beginning on the third anniversary date.   
Under  the  terms  of  the  Company's  1995  Stock  Option Plan, this exercise  
schedule may be accelerated in certain specific situations.                     

                                                        [Enlarge/Download Table]


     OPTION GRANTS IN LAST FISCAL YEAR                                                          

                 NUMBER OF     % OF TOTAL                                                       
                 SHARES OF     OPTIONS GRANTED                         POTENTIAL REALIZABLE     
                 COMMON STOCK  TO EMPLOYEES IN                         VALUE AT ASSUMED         
                 UNDERLYING    FISCAL YEAR    PER SHARE                ANNUAL RATES OF STOCK    
                 OPTIONS       ENDED          EXERCISE   EXPIRATION    PRICE  APPRECIATION      
NAME             GRANTED       JUNE 30, 1995  PRICE      DATE          FOR OPTION TERM          
                                                                                                
                                                                         5%            10%      
                                                                        --------        --------
Peter C. Farrell  4,500        1.9%           $11.00     June 1, 2005   $31,822        $80,643  
Christopher G.                                                                                  
  Roberts         3,000        1.3%           $11.00     June 1, 2005   $20,754        $52,594  

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     AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR                                                    
     AND FISCAL YEAR-END OPTION VALUES                                                                  

                       SHARES                      NUMBER OF UNEXERCISED      VALUE OF UNEXERCISED      
                       ACQUIRED      VALUE         OPTIONS AT                 IN-THE-MONEY OPTIONS      
NAME                   ON EXERCISE   REALIZED      JUNE 30, 1995              AT JUNE 30, 1995(1)       
                                                                                                        

                                                 EXERCISABLE  UNEXERCISABLE  EXERCISABLE  UNEXERCISABLE 
                                                 -----------  -------------  -----------  --------------
Peter C. Farrell        170,000     $455,000               -          4,500            -  $        4,500
Christopher G. Roberts   37,500      275,000               -          3,000            -  $        3,000
<FN>                                                                                                    
_______________                                                                                         
(1)       Calculated on the basis of the fair market value of the Common Stock at June 30, 1995 of      
$12.00  per  share,  minus  the  per  share  exercise  price,  multiplied  by the number of shares      
underlying the option.                                                                                  

PENSION PLANS                                                                   

   The  Company  contributes  to  government-mandated  independently managed
retirement trusts for all Australian employees under 65 years of age at a rate  
ranging  from 5% to 5.5% of each employee's annual salary.  Employees may make  
additional  voluntary  contributions  through  salary  reduction.  All Company  
contributions are immediately and fully vested to the employee's account.  The  
retirement  trusts,  which provide lump sum benefits on retirement, disability  
or death of participants, are controlled by Australian government regulation.   
Each such trust's assets are adequate to satisfy all current vested benefits.   
The  Company  also  pays  for  death  and  disability insurance for Australian  
employees  under  60 years of age.  The lump sum benefit is capped at $113,000  
per  employee,  with  the actual benefit being dependent on the employee's age  
and salary.                                                                     

CONSULTING AND NON-COMPETITION AGREEMENTS                                       

   The  Company  has  no  employment  agreements  with  any of its executive
officers.    Dr.  Farrell  is  a party to a non-competition agreement with the  
Company  which  provides  that  he  will  not compete with the Company through  
January  1997,  or  for  a  period  of  24  months  following  termination  of  
employment,  if his employment is terminated prior to such date.  Dr. Sullivan  
is a party to a Consulting Agreement with the Company expiring on December 31,  
1997  (subject  to extension for an additional five year term), which provides  
for Dr. Sullivan to perform certain consulting services to the Company, as and  
when  requested  by the Company, and to receive certain consulting fees, based  
in  part  on  the  level  of  sales of certain of the Company's products.  The  
agreement  provides that Dr. Sullivan will not compete with the Company during  
the term of such agreement and for a two-year period thereafter.                

STOCK OPTION PLAN                                                               

   The  Company's  1995  Stock  Option  Plan (the "Plan") was adopted by the
Board of Directors on April 6, 1995.  The Plan provides for the granting of up  
to  700,000  options,  which are intended to qualify either as incentive stock  
options  ("Incentive  Stock Options") within the meaning of Section 422 of the  
Internal  Revenue  Code  of  1986,  as  amended,  or  as options which are not  
intended  to  meet  the  requirements  of  such  section  ("Nonstatutory Stock  
Options").    Options  to  purchase  shares  may  be granted under the Plan to  
persons  who, in the case of Incentive Stock Options, are employees (including  
officers)  of  the Company, or, in the case of Nonstatutory Stock Options, are  
employees  (including  officers), non-employee directors or consultants of the  
Company.                                                                        

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   The  Plan  provides for its administration by the Board of Directors or a
committee  chosen  by  the  Board  of  Directors  (the "Committee"), which has  
discretionary  authority,  subject  to certain restrictions, to determine the   
number  of  shares issued pursuant to Incentive Stock Options and Nonstatutory  
Stock  Options  and  the  individuals  to  whom,  the  times at which, and the  
exercise price for which, options will be granted.                              

   The  exercise price of all Incentive Stock Options granted under the Plan
must  be at least equal to the fair market value of such shares on the date of  
the  grant or, in the case of Incentive Stock Options granted to the holder of  
more  than 10 percent of the Company's Common Stock, at least 110% of the fair  
market  value  of  such shares on the date of the grant.  The maximum exercise  
period  for  which Incentive stock Options may be granted is 10 years from the  
date of grant (five years in the case of an individual owning more than 10% of  
the  Company's  Common Stock).  The aggregate fair market value (determined at  
the  date of the option grant) of shares with respect to which Incentive Stock  
Options  are exercisable for the first time by the holder of the option during  
any calendar year shall not exceed $100,000.                                    

   On June 1, 1995, the Committee granted options under the Plan to purchase
in  the aggregate up to 235,000 shares of Common Stock at an exercise price of  
$11.00 per share.  Such options vest rateably over three years and have a term  
of 10 years.                                                                    

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CERTAIN TRANSACTIONS                                                  

   From  February  1992  through  March 31, 1994, the Company rented certain
office  furniture  and equipment from Dr. Farrell at $750 per month.  In March  
1994,  the  Company  purchased  such  office  furniture and equipment from Dr.  
Farrell for $22,500, being its fair market value at the time of purchase.       

   Dr.  Sullivan  provides  consulting services to the Company pursuant to a
Consulting  Agreement  that  terminates  on  December  31,  1997  (subject  to  
extension  for  an  additional  five-year  term)  for which he receives annual  
payments  based  on  the net sales (as defined in the Consulting Agreement) of  
certain  of  the  Company's  products  subject  to a $90,000 per annum minimum  
payment.    The  Company  also  reimburses  Dr. Sullivan for his out-of-pocket  
expenses  in performing such consulting services.  The Company has also agreed  
to  pay  such  amounts to Dr. Sullivan for a period of 24 months following the  
termination  of  his  consulting relationship with the Company in exchange for  
his  agreement  not  to  compete  with  the Company during this period.  Total  
payments to Dr. Sullivan were $52,000, $147,000 and $228,000 for the Company's  
fiscal  years  ended  June 30, 1993, 1994 and 1995, respectively, and $215,000  
for the nine months ended March 31, 1996.                                       

   As  of  March 31, 1995, there were outstanding options ("RHL Options") to
purchase  up  to 1,054,750 shares of Common Stock of RHL, the Company's wholly  
owned  subsidiary.    The exercise prices of such options ranged from $0.15 to  
$3.64,  with  a  weighted average exercise price of $2.14. The majority of the  
RHL  Options  were  exercised  for shares of common stock of RHL and each such  
share  was  surrendered  in  exchange  for  2.5 shares of  Common Stock of the  
Company.  As a result, RHL received $1,768,000, and the Company issued 857,750  
shares  of  Common Stock to such holders.  The balance of the RHL Options were  
exchanged,  prior  to the completion of the Company's initial public offering,  
for  options  to purchase up to 197,000 shares of Common Stock at an aggregate  
exercise price of approximately $473,600.                                       

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DESCRIPTION OF CAPITAL STOCK                                          

   The authorized capital stock of the Company consists of 15,000,000 shares
of  Common  Stock  and  2,000,000  shares  of  Preferred Stock.  The following  
summary  of  certain rights of the Common Stock and Preferred Stock is subject  
to,  and  qualified  in  its  entirety  by,  the  provisions  of the Company's  
Certificate  of  Incorporation  that  is  included  as  an  exhibit  to  the    
Registration  Statement  of  which  this  Prospectus  is  a  part,  and by the  
provisions of applicable law, the material terms of which are set forth below.  

COMMON STOCK                                                                    

   The  holders  of  Common  Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders.  Subject to preferences that may  
be  applicable to any outstanding Preferred Stock, the holders of Common Stock  
are  entitled  to  receive  ratably such dividends, if any, as may be declared  
from  time  to  time  by the Board of Directors out of funds legally available  
therefor.    In  the  event  of  liquidation, dissolution or winding up of the  
Company,  the  holders  of  Common  Stock are entitled to share ratably in all  
assets  remaining  after payment of liabilities, subject to prior distribution  
rights  of Preferred Stock, if any, then outstanding.  The Common Stock has no  
preemptive  or  conversion  rights or other subscription rights.  There are no  
redemption  or  sinking  fund  provisions applicable to the Common Stock.  All  
outstanding  shares of Common Stock are fully paid and non-assessable, and the  
shares  of  Common Stock to be issued upon completion of this offering will be  
fully paid and non-assessable.                                                  

PREFERRED STOCK                                                                 

   As  of  the  date  hereof,  there were no outstanding shares of Preferred
Stock.   The Board of Directors has the authority to issue the Preferred Stock  
in  one  or  more  series  and  to fix the rights, preferences, privileges and  
restrictions  thereof,  including  dividend rights, dividend rates, conversion  
rights,  voting  rights,  terms  of redemption, redemption prices, liquidation  
preferences  and  the  number  of  shares  constituting  any  series  or  the   
designation  of  such  series,  without  further  vote  or  action  by  the     
stockholders.    The  issuance  of  Preferred  Stock  may  have  the effect of  
delaying,  deferring  or preventing a change in control of the Company without  
further  action  by  the  stockholders and may adversely affect the voting and  
other  rights  of  the  holders  of Common Stock, including the loss of voting  
control  to  others.  At present, the Company has no plans to issue any of the  
Preferred Stock.                                                                

DELAWARE ANTI-TAKEOVER STATUTE                                                  

   The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203") which, subject to certain exceptions, prohibits a Delaware  
corporation  from  engaging in any "business combination" with any "interested  
stockholder"  for  a  period  of  three  years  following  the  date that such  
stockholder  became an interested stockholder, unless: (i) prior to such date,  
the  Board  of  Directors  of  the  corporation,  approved either the business  
combination  or  the transaction which resulted in the stockholder becoming an  
interested  stockholder;  (ii)  upon  consummation  of  the  transaction which  
resulted in the stockholder becoming an interested stockholder, the interested  
stockholder  owned  at  least  85%  of  the  voting  stock  of the corporation  
outstanding  at  the time the transaction commenced, excluding for purposes of  
determining the number of shares outstanding those shares owned by persons who  
are  directors and also officers and by employee stock plans in which employee  
participants  do not have the right to determine confidentially whether shares  
held subject to the plan will be tendered in a tender                           

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or  exchange  offer;  or  (iii)  on  or  subsequent to such date, the business  
combination  is approved by the Board of Directors and authorized at an annual  
or  special  meeting  of  stockholders,  and  not  by  written consent, by the  
affirmative  vote of at least 66 2/3% of the outstanding voting stock which is  
not  owned by the interested stockholder.  Under Section 203, the restrictions  
described above also do not apply to certain business combinations proposed by  
an interested stockholder following the announcement or notification of one of  
certain  extraordinary transactions involving the corporation and a person who  
had  not been an interested stockholder during the previous three years or who  
became an interested stockholder during the previous three years or who became  
an interested stockholder with the approval of a majority of the corporation's  
directors  and which transaction is approved or not opposed by the majority of  
the board of directors then in office.                                          

   Section  203 generally defines a business combination to include: (i) any
merger  or  consolidation  involving  the  corporation  and  the  interested    
stockholders;  (ii)  any sale, transfer, pledge or other disposition of 10% or  
more  of  the  assets of the corporation to the interested stockholder-, (iii)  
subject  to  certain exceptions, any transaction which results in the issuance  
or  transfer  by  the  corporation  of  any  stock  of  the corporation to the  
interested  stockholder;  (iv) any transaction involving the corporation which  
has the effect of increasing the proportionate share of the stock of any class  
or series of the corporation beneficially owned by the interested stockholder;  
or  (v) the receipt by the interested stockholder of the benefit of any loans,  
advances,  guarantees,  pledges  or  other  financial  benefits provided by or  
through  the  corporation.    In  general,  Section  203 defines an interested  
stockholder  as  any  entity  or person beneficially owning 15% or more of the  
outstanding  voting  stock  of  the  corporation  and  any  entity  or  person  
affiliated with or controlling or controlled by such entity or person.          

TRANSFER AGENT                                                                  

   The  transfer  agent  for  the  Common Stock is American Stock Transfer &
Trust Company, 40 Wall Street, New York, New York 10005.                        

PRINCIPAL STOCKHOLDERS                                                

  The  following  table  sets  forth  certain  information  regarding  the
beneficial  ownership  of the Company's Common Stock as of May 17, 1996 by (i)  
each  person  (or  group of affiliated persons) known by the Company to be the  
beneficial owner of more than 5% of the outstanding Common Stock, (ii) each of  
the  Company's  Directors, (iii) the Company's Chief Executive Officer and the  
other  named  executive  officer,  and  (iv)  all  of  the Company's executive  
officers  and  Directors  as  a  group.   Except as otherwise indicated in the  
footnotes  to  this table, the Company believes that the persons named in this  
table  have sole voting and investment power with respect to all the shares of  
Common Stock indicated.                                                         

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                                                                [Download Table]


                                          SHARES           
                                          BENEFICIALLY     
                                          OWNED(1)         

                                                           

BENEFICIAL OWNER                       NUMBER      PERCENT 
-------------------------------------  ----------  --------

Invesco North America Group, Ltd         613,800       8.6%
 11 Devonshire Square                                      
 London EC2M 4YR                                           
 England                                                   
Peter C. Farrell                       549,940(3)      7.7%
 c/o ResMed Inc.                                           
Columbia Special Fund, Inc               529,000       7.4%
 1301 SW Fifth Avenue                                      
 PO Box 1350                                               
 Portland, OR  97207 and                                   
Columbia Funds Management Company                          
 1300 SW Sixth Avenue                                      
 PO Box 1350                                               
 Portland, OR  97207                                       
Twentieth Century Companies, Inc         375,000       5.2%
 4500 Main Street                                          
 PO Box 418210                                             
 Kansas City, MO 64141-9210                                
Christopher G. Roberts                 128,000(2)      1.8%
Michael A. Quinn                        15,500(3)        * 
Gary W. Pace                            47,833(3)        * 
Donagh McCarthy                          3,000(3)        * 
Walter Flicker                         107,000(4)      1.5%
All executive officers and directors                       
as a group (14 persons)                929,855(4)       13%
<FN>                                                       

_______________                                            
*     Less than one percent.                               

(1)     Beneficial ownership is determined in accordance with the rules of the  
Securities and Exchange Commission and generally includes voting or investment  
power  with  respect to securities.  Shares of Common Stock subject to options  
currently  exercisable or convertible, or exercisable or convertible within 60  
days  of  June 15, 1995 are deemed outstanding for computing the percentage of  
the  person  holding  such  options  but are not outstanding for computing the  
percentage  of any other person.  Except as indicated in the footnotes to this  
table and pursuant to applicable community property laws, the persons named in  
the  table have sole voting and investment power with respect to all shares of  
Common Stock beneficially owned by them.                                        

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(2)          Includes 6,250 shares held by his wife and 121,750 shares held of  
record by Cabbit Pty Ltd., an Australian corporation controlled by Dr. Roberts  
and  his  wife,  of which 5,000 shares of Common Stock are held through ResMed  
Staff  Partnership.    Does  not  include options to purchase shares of Common  
Stock  which  may  be  acquired upon the exercise of options granted under the  
1995 Option Plan which are not currently exercisable.                           
(3)      Does not include options to purchase shares of Common Stock which may  
be  acquired  upon  the exercise of options granted under the 1995 Option Plan  
which are not currently exercisable.                                            
(4)        Includes 22,000 shares held by his wife, 62,500 shares held jointly  
with  his  wife  and  22,500  shares  held  of  record  by NewFolk Pty Ltd, an  
Australian  corporation  controlled  by  Mr.  Flicker  and his wife.  Does not  
include  options to purchase shares of Common Stock which may be acquired upon  
the  exercise  of  options  granted  under  the 1995 Option Plan which are not  
currently exercisable.                                                          

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SELLING STOCKHOLDERS                                                  

   The  Shares  to  which  this  Prospectus relates are being registered for
reoffers  and  resales  by Selling Stockholders of the Company who may acquire  
such  shares  pursuant  to  the  exercise of options previously granted by the  
Company.    The Selling Stockholders named below may resell all, a portion, or  
none  of  the shares that they acquire or may acquire pursuant to the exercise  
of  such  options.    The  following  table  sets  forth  certain  information  
concerning  the  Selling  Stockholders  as of  July  14, 1995.    No Selling    
Stockholder  holds in excess of one percent of the outstanding Common Stock of  
the Company.                                                                    

                                                                [Download Table]


                                                                              

                    NUMBER OF       MAXIMUM NUMBER    NUMBER OF               
                    SHARES BEFORE   OF SHARES WHICH   SHARES AFTER            
NAME                OFFERING(1)     MAY BE SOLD (2)   OFFERING (3)            
------------------  --------------  ----------------  -------------           
Carter, Gary                20,000            15,000          5,000           
Deakyne, Teddee              3,750             3,750              0           
Dement, William             12,500            12,500              0           
DeWitt, Christine           42,083            21,250         20,833           
DeWitt, Norman               7,500             7,500              0           
Douglas, Neil               12,500            12,500              0           
Fox, Karyl                   1,250             1,250              0           
Freeman, Donna               4,500             4,500              0           
Godish, Ken                 12,500            12,500              0           
Kenyon, Curt                 3,750             3,750              0           
Kuhn, Nicholas              51,250            22,500         28,750           
Daniel Loizzi                3,750             3,750              0           
Lubsey, Frank               10,000            10,000              0           
McKenna, Larry               3,750             3,750              0           
Myhers, Rick                22,500            22,500              0           
Pascualy, Ralph             37,500            12,500         25,000           
Stram, Michael                 625               625              0           
Therrien, Edmond            15,500            12,500          3,000           
Valentino, Michael             625               625              0           
Wells, Roger                   625               625              0           
Williams, Jeanette             625               625              0           
Zwillich, Clifford          12,500            12,500              0           
<FN>                                                                          

_______________                                                               
(1)     Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power  with  respect to securities.  Shares of Common Stock subject to options
currently  exercisable or convertible, or exercisable or convertible within 60
days  of  June 15, 1995 are deemed outstanding for computing the percentage of
the  person  holding  such  options  but are not outstanding for computing the
percentage  of any other person.  Except as indicated in the footnotes to this
table and pursuant to applicable community property laws, the persons named in
the  table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them.                                      
(2)          Does not constitute a commitment to sell any or all of the stated
number  of  shares  of  Common  Stock.   The number of shares offered shall be
determined  from  time  to time by each Selling Stockholder at his or her sole
discretion.                                                                   
(3)     Assumes the maximum number of shares is sold.                         

     Each Selling Stockholder is either an employee of, ex-employee of, or a  
consultant to the Company or a subsidiary corporation of the Company.         

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PLAN OF DISTRIBUTION                                                  

   The  Shares  are  being  sold  by  the Selling Stockholders for their own
accounts.    The  Shares  may  be sold or transferred for value by the Selling  
Stockholders,  or  by  pledgees,  donees,  transferees  or other successors in  
interest  to  the  Selling  Stockholders,  in  one or more transactions in the  
over-the-counter  market,  in  negotiated  transactions or in a combination of  
such  methods  of  sale,  at  market prices prevailing at the time of sale, at  
prices  related  to  such  prevailing  market  prices  or  at prices otherwise  
negotiated.   The Selling Stockholders may effect such transactions by selling  
the  Shares  to or through broker-dealers, and such broker-dealers may receive  
compensation in the form of underwriting discounts, concessions or commissions  
from  the  Selling  Stockholders  and/or the purchasers of the shares for whom  
such  broker-dealers  may act as agent (which compensation may be less than or  
in  excess  of  customary  commissions).    The  Selling  Stockholders and any  
broker-dealers  that  participate  in  the  distribution  of the Shares may be  
deemed  to  be  "underwriters"  within  the  meaning  of  Section 2(11) of the  
Securities  Act  and  any  commissions  received by them and any profit on the  
resale  of  the Shares sold by them may be deemed to be underwriting discounts  
and commissions under the Securities Act of 1933.                               

   There  can be no assurance that any of the Selling Stockholders will sell
any or all of the Shares of Common Stock offered by them hereunder.             

   The  Company  will  not  receive  any  of the proceeds of the sale of the
Shares  by  the  Selling  Stockholders.    To  the  extent  that  the  Selling  
Stockholders  exercise their options to acquire the Shares, of which there can  
be  no  assurance,  the  Company will receive proceeds from the payment of the  
exercise  price therefor.  Any such proceeds will be applied by the Company to  
working capital to be used for general corporate purposes.                      

LEGAL MATTERS                                                         

   The  validity  of  the  shares offered hereby will be passed upon for the
Selling Stockholders by Latham and Watkins, San Diego, California.              

EXPERTS                                                               

   The  Consolidated  Financial  Statements  and schedule of ResMed Inc. and
subsidiaries  as  of  June 30, 1994 and 1995 and for the years then ended have  
been  included  herein  and in the Registration Statement in reliance upon the  
report  of  KPMG  Peat  Marwick LLP, independent certified public accountants,  
appearing  elsewhere herein, and upon the authority of said firm as experts in  
accounting  and  auditing.                                                      

   The  Consolidated  Financial  Statements  and schedule of ResMed Inc. and
subsidiaries  as  of  June  30, 1993 and for the years ended June 30, 1992 and  
1993,  have  been  included  herein  in  reliance  upon  the  report  of Price  
Waterhouse,  independent accountants, appearing elsewhere herein, and upon the  
authority of said firm as experts in accounting and auditing.                   

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  Prior  to  October  1994,  Price  Waterhouse  served  as  the  Company's
independent  accountants.    Price  Waterhouse  advised the Company that, as a  
result  of  having  performed valuation services in connection with a proposed  
transaction,  they  could  no longer be deemed independent for the purposes of  
auditing  the  Company's financial statements and issuing a report thereon for  
the fiscal year ended June 30, 1994.  In November 1994, the Company's Board of  
Directors retained KPMG Peat Marwick LLP to serve as the Company's independent  
auditors.    The  Company  had  no  disagreements with Price Waterhouse on any  
matter  of accounting principles or practices, financial statement disclosure,  
or auditing scope or procedures.                                                

   The  statements  in  this  Prospectus  in the first and second paragraphs
under  the  caption  "Business-Patents  and  Proprietary  Rights  and  Related  
Litigation"  (except  as such statements relate to foreign patents and foreign  
patent application) have been reviewed by Merchant & Gould, patent counsel for  
the  Company,  as  experts  on such matters, and, based upon that review, such  
statements are included herein.                                                 

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PART II                                                                         

INFORMATION NOT REQUIRED IN PROSPECTUS                                          

ITEM 13.     OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION                        

                                                                [Download Table]


     The following table sets forth various expenses which will be incurred in
connection  with  the  offering.  Other than the SEC registration fee, amounts
set forth below are estimates:                                                

                                                                              

SEC registration fee          $   833                                         
Legal fees and expenses        10,000                                         
Accounting fees and expenses    7,500                                         
Miscellaneous expenses          1,000                                         
                              -------                                         
Total                         $19,333                                         

ITEM 14.     INDEMNIFICATION OF DIRECTORS AND OFFICERS                          

   Article  Seventh  of  the  Certificate  of  Incorporation  of ResMed Inc.
("Registrant")  provides  with respect to the indemnification of directors and  
officers  that  Registrant  shall indemnify to the fullest extent permitted by  
Sections 102(b)(7) and 145 of the Delaware General Corporation Law, as amended  
from  time  to time, each person that such Sections grant Registrant the power  
to  indemnify.    Article  Seventh  of  the  Certificate  of  Incorporation of  
Registrant also provides that no director shall be liable to Registrant or any  
of  its  stockholders  for  monetary damages for breach of fiduciary duty as a  
director,  except  with  respect  to  (1)  a  breach of the director's duty of  
loyalty  to  Registrant or its stockholders, (2) acts or omissions not in good  
faith  or  which involve intentional misconduct or a knowing violation of law,  
(3) liability under Section 174 of the Delaware General Corporation Law or (4)  
a transaction from which the director derived an improper personal benefit, it  
being  the  intention of the foregoing provision to eliminate the liability of  
Registrant's directors to Registrant or its stockholders to the fullest extent  
permitted by Section 102(b)(7) of Delaware General Corporation Law, as amended  
from time to time.                                                              

ITEM 15.     RECENT SALES OF UNREGISTERED SECURITIES                            

   In  May  1994,  Registrant, a newly formed holding company, issued in the
aggregate  3,589,958 shares of Common Stock to seventy persons (54 persons who  
were  not  U.S.  persons  and who were outside of the United States, and 16 of  
whom  were  U.S.  persons)  constituting  all  of  the shareholders of ResCare  
Holdings  Ltd.,  an Australian corporation ("RHL"), in exchange for all of the  
outstanding  shares  of RHL.  Exemption from registration under the Securities  
Act of 1933, as amended (the "Securities Act"), is claimed for the issuance of  
Common  Stock  referred  to  above in reliance upon the exemptions afforded by  
Section  4(2)  of  the  Securities Act for transactions not involving a public  
offering,  and  by Section 3(a)(9) for securities exchanged by the issuer with  
its existing security holders.                                                  

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   Since  May  1994, an additional 88,375 shares of Common Stock were issued
to two persons in isolated transactions in exchange for shares of RHL acquired  
during  such period upon the exercise of outstanding options to acquire shares  
of  RHL  ("RHL Options").  In April 1995, Registrant offered to all Australian  
residents  holding  RHL  Options the opportunity to exchange the shares of RHL  
which  may  be  acquired by such persons upon the exercise of such RHL Options  
for  shares  of  Common Stock.  Registrant received irrevocable acceptances of  
such  offer  from  all  of  such holders on or prior to April 7, 1995, and has  
completed  such  exchange.    These issuances were made in accordance with the  
provisions of Regulation S under the Securities Act.                            

   In April 1995, Registrant offered to all United States and United Kingdom
residents  holding  RHL  Options  (22  persons, substantially all of whom were  
employees  or  persons  with  a  business  relationship  with  the Company) to  
exchange  the  RHL  Options  for options to purchase Common Stock.  Registrant  
received  irrevocable acceptances of such offer from all of such holders on or  
prior  to  April  7,  1995,  and  has completed such exchange.  Exemption from  
registration under the Securities Act is claimed for this offer in reliance on  
the exemption afforded by Section 4(2) of the Securities Act.                   

   Each  certificate  evidencing  such  shares  of  Common  Stock  bears  an
appropriate  restrictive  legend  and "stop transfer" orders are maintained on  
Registrant's  stock  transfer  records  thereagainst.    None  of  these sales  
involved participation by an underwriter or a broker-dealer.                    

ITEM 16.     EXHIBITS AND FINANCIAL STATEMENT SCHEDULES                         

   (a)     The following is a list of Exhibits filed herewith as part of the
Registration Statement:                                                         

3.1     -Certificate of Incorporation of Registrant, as amended*                
3.2     -By-laws of Registrant*                                                 
4.1     -Form of certificate evidencing shares of Common Stock*                 
5.1     -Opinion of Parker Duryee Rosoff & Haft**                               
10.1    -1995 Stock Option Plan*                                                
10.2    -Licensing Agreement between the University of Sydney and ResCare       
Limited dated May 17, 1991, as amended.*                                        
10.3    -Amended and Restated Consulting Agreement between Colin Sullivan and   
ResCare Limited dated September 2, 1994*                                        
10.4    -Loan Agreement between the Australian Trade Commission and ResCare     
Limited dated May 3, 1993.*                                                     
10.5    -Lease for 82 Waterloo Road, Sydney, Australia*                         
10.6    -Lease for 5744 Pacific Center Blvd., San Diego*                        
16.1    -Letter re Change in Certifying Accountant*                             
21.1    -Subsidiaries of the Registrant**                                       
23.1    -Consent of KPMG Peat Marwick LLP                                       
23.2    -Consent of Price Waterhouse                                            
23.3    -Consent of Parker Duryee Rosoff & Haft (included in Exhibit 5.1)**     
23.4    -Consent of KPMG Deutsche Treuhand Gesellschaft                         
24.1    -Power of Attorney**                                                    

_______________                                                                 
*Incorporated  by reference to the Registrant's Registration Statement on Form  
S-1 (No. 33-91094) declared effective on June 1, 1995.                          
**Incorporated by reference to the Registrant's Registration Statement on Form  
S-1 (No. 33-94610) filed with the Commission on July 14, 1995.                  

(b)     Financial Statement Schedules.                                

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SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES            

 The  other  financial  statement  schedules  are  omitted  because  the
conditions  requiring  their  filing  do not exist or the information required  
thereby  is  included  in  the financial statements filed, including the notes  
thereto.                                                                        

ITEM 17.     UNDERTAKINGS                                                       

(a)     The undersigned registrant hereby undertakes:                 

   (1)         To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:                

   (i)         To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;                                                         

   (ii)       To reflect in the prospectus any facts or events arising after
the  effective  date  of  the  registration  statement  (or  the  most  recent  
post-effective  amendment  thereof)  which,  individually or in the aggregate,  
represent  a  fundamental  change  in  the  information  set  forth  in  the    
registration  statement.    Notwithstanding  the  foregoing,  any  increase or  
decrease  in  volume  of  securities  offered  (if  the  total dollar value of  
securities  offered  would  not  exceed  that  which  was  registered) and any  
deviation from the low or high end of the estimated maximum offering range may  
be  reflected  in the form of prospectus filed with the Commission pursuant to  
Rule 424(b) if, in the aggregate, the changes in volume and price represent no  
more  than  a  20% change in the maximum aggregate offering price set forth in  
the  "Calculation  of  Registration  Fee"  table in the effective registration  
statement;                                                                      

   (iii)     To include any material information with respect to the plan of
distribution  not  previously  disclosed  in the registration statement or any  
material change to such information in the registration statement;              

   (2)          That, for the purpose of determining any liability under the
Securities  Act of 1933, each such post-effective amendment shall be deemed to  
be  a  new  registration statement relating to the securities offered therein,  
and  the  offering  of  such securities at that time shall be deemed to be the  
initial bona fide offering thereof.                                             

   (3)          To  remove  from  registration  by means of a post-effective
amendment  any  of  the securities being registered which remain unsold at the  
termination of the offering.                                                    

   (b)          Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons  
of  Registrant  pursuant  to  Item  14  of  this  Part  II to the Registration  
Statement,  or  otherwise,  Registrant has been advised that in the opinion of  
the  Securities and Exchange Commission such indemnification is against public  
policy  as expressed in the Securities Act, and is, therefore, unenforceable.   
In  the event that a claim for indemnification against such liabilities (other  
than  the  payment  by  Registrant of expenses incurred or paid by a director,  
officer  or  controlling person of Registrant in the successful defense of any  
action,  suit  or  proceeding)  is  asserted  by  such  director,  officer  or  
controlling  person  in  connection  with  the  securities  being  registered,  
Registrant  will,  unless  in  the  opinion of its counsel the matter has been  
settled  by  controlling  precedent,  submit  to  a  court  of  appropriate     
jurisdiction  the  question  whether such indemnification by it is against the  
public  policy  as expressed in the Securities Act and will be governed by the  
final adjudication of such issue.                                               

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SIGNATURES                                                            

   Pursuant  to  the  requirements of the Securities Act of 1933, Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on  
its  behalf by the undersigned, thereunto duly authorized in the City of North  
Ryde,  State  of  New  South Wales, Country of Australia, on the 10th day of    
July, 1996.                                                                     

RESMED INC.                                                           

By:  Peter C Farrell                                                  
________________________________                            
Peter C. Farrell                                            
President                                                   

                                                                [Download Table]


     Pursuant  to the requirements of the Securities Act, this Amendment No. 1
to  Registration  Statement  has  been  signed by the following persons in the
capacities and on the dates indicated.                                        

                                                                              

SIGNATURE                TITLE                                 DATE           
-----------------------  ------------------------------------  ---------------

/s/PETER C. FARRELL      President, Chief Executive Officer    July 10, 1996  
-----------------------                                                       
Peter C. Farrell         (Principal Executive Officer) and                    
                         Chairman                                             

ADRIAN SMITH             Vice President (Principal Financial   July 10, 1996  
-----------------------                                                       
Adrian Smith             Officer and Principal Accounting                     
                         Officer)                                             

DONAGH McCARTHY*         Director                              July 10, 1996  
-----------------------                                                       
Donagh McCarthy                                                               

GARY W. PACE*            Director                              July 10, 1996  
-----------------------                                                       
Gary W. Pace                                                                  

MICHAEL A. QUINN*        Director                              July 10, 1996  
-----------------------                                                       
Michael A. Quinn                                                              

CHRISTOPHER G. ROBERTS*                                                       
-----------------------                                                       
Christopher G. Roberts   Director                              July 10, 1996  
<FN>                                                                          

*By:     /s/ PETER C. FARRELL                                                 
     Peter C. Farrell                                                         
     Attorney-in-Fact                                                         

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                                                        [Enlarge/Download Table]

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                                                     

                                                                                               
Independent Auditors' Report of KPMG Peat Marwick LLP                                      F-2 
Independent Accountants' Report of Price Waterhouse                                        F-3 
Consolidated Balance Sheets as of June 30, 1994 and 1995                                   F-4 
Consolidated Statements of Income for the Years Ended June 30, 1993, 1994 and 1995         F-5 
Consolidated Statements of Stockholders' Equity for the Years Ended June 30, 1993,             
 1994 and 1995                                                                             F-6 
Consolidated Statements of Cash Flows for the Years Ended June 30, 1993, 1994 and 1995     F-7 
Notes to Consolidated Financial Statements                                                 F-8 

INDEX TO FINANCIAL STATEMENTS OF BUSINESS ACQUIRED                                             

Independent Auditors' report of KPMG Deutsche Treuhand Gesellschaft                        F-21
Balance sheet of Dieter W. Priess Medizintechnik as of December 31, 1994 and 1995          F-22
Statement of Income for the Years Ended December 31, 1994 and 1995                         F-24
Statements of Movement in Equity of Dieter W. Priess Medizintechnik for the Years              
 Ended December 31, 1994 and 1995                                                          F-24
Statement of Cash flows for the Years Ended December 31, 1994 and 1995                     F-25
Notes to Financial Statements                                                              F-26

Pro forma Condensed Financial Statements                                                   F-32

INDEX TO CONSOLIDATED FINANCIAL STATEMENT FOR THE THREE MONTH PERIOD ENDED                     
MARCH 31, 1995 AND 1996                                                                        

Condensed Consolidated Balance Sheet as of March 31, 1996 (unaudited) and June 30, 1995   F-38 
Condensed Consolidated Statements of Income (unaudited) for the Three Months Ended March       
 31, 1996 and 1995 and Nine Months Ended March 31, 1996 and 1995                          F-39 
Condensed Consolidated Statements of Cash Flow (unaudited) for the Nine Months Ended           
 March 31, 1996 and 1995                                                                  F-40 
Notes to Condensed Consolidated Financial Statements (unaudited)                          F-41 
Management's Discussion and Analysis of Financial Condition and Results of Operations     F-47 

F-1                                                                                            

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INDEPENDENT AUDITORS' REPORT                                                                   

The Board of Directors and Stockholders                                                        
ResMed Inc.:                                                                                   

We have audited the accompanying consolidated balance sheets of ResMed Inc.                    
and subsidiaries as of June 30, 1994 and 1995, and the related consolidated                    
statements of income, stockholders' equity, and cash flows for the years then                  
ended.  These consolidated financial statements are the responsibility of the                  
Company's management.  Our responsibility is to express an opinion on these                    
consolidated financial statements based on our audits.                                         

We conducted our audits in accordance with generally accepted auditing                         
standards.  Those standards require that we plan and perform the audit to                      
obtain reasonable assurance about whether the financial statements are free of                 
material misstatement.  An audit includes examining, on a test basis, evidence                 
supporting the amounts and disclosures in the financial statements.  An audit                  
also includes assessing the accounting principles used and significant                         
estimates made by management, as well as evaluating the overall financial                      
statement presentation.  We believe that our audits provide a reasonable basis                 
for our opinion.                                                                               

In our opinion, the consolidated financial statements referred to above                        
present fairly, in all material respects, the financial position of ResMed                     
Inc, and subsidiaries as of June 30, 1994 and 1995, and the results of their                   
operations and their cash flows for the years then ended in conformity with                    
generally accepted accounting principles.                                                      

San Diego, California                                KPMG Peat Marwick LLP                     
August 4, 1995                                                                                 

F-2                                                                                            

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REPORT OF INDEPENDENT ACCOUNTANTS                                                              

To the Shareholders                                                                            
 and Board of Directors of ResMed Inc.                                                         
 (formerly ResCare Medical Systems Ltd.):                                                      

We have audited the accompanying consolidated balance sheets of ResMed Inc. and                
its subsidiaries as of June 30, 1993 and the related consolidated statements of                
operations, of changes in shareholders' equity, and of cash flows for each of                  
the two years then ended.  These financial statements are the responsibility of                
the Company's management.  Our responsibility is to express an opinion on these                
financial statements based on our audits.                                                      

We conducted our audits in accordance with auditing standards generally                        
accepted in Australia, which are the same in all material respects to auditing                 
standards generally accepted in the United States of America.  Those standards                 
require that we plan and perform the audit to obtain reasonable assurance about                
whether the financial statements are free of material misstatement.  An audit                  
includes examining, on a test basis, evidence supporting the amounts and                       
disclosures in the financial statements.  An audit also includes assessing the                 
accounting principles used and significant estimates made by management, as                    
well as evaluating the overall financial statement presentation.  We believe                   
that our audit provide a reasonable basis for our opinion.                                     

In our opinion, the consolidated financial statements audited by us presented                  
fairly, in all material respects, the financial position of ResMed Inc. and its                
subsidiaries at June 30, 1993 and the results of their operations and their                    
cash flows for the two years then ended, in conformity with accounting                         
principles generally accepted in the United States of America.                                 

Price Waterhouse                                                                               
Andrew Sneddon                                                                                 

Price Waterhouse                                                                               
Sydney, Australia                                                                              
September 23, 1994                                                                             

F-3                                                                                            

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RESMED INC. AND SUBSIDIARIES                                                                   

                                                                [Download Table]
Consolidated Balance Sheets                                                  
June 30, 1994 and 1995                                                       
(In thousands, except per share data)                                        

                                                        June 30,     June 30,
Assets                                                    1994         1995  
                                                                             
Current assets:                                                              

Cash and cash equivalents                              $  3,739        3,256 
Marketable securities - available for sale (note 3)           -       20,510 
Accounts receivable, net of allowance for                                    
 doubtful accounts of $35 at June 30, 1994                                   
 and $144 at June 30, 1995                                2,368        3,792 
Government grants                                           455          825 
Inventories (note 4)                                      1,894        4,350 
Prepaid expenses and other current assets                    68          280 
                                                        _______      _______ 
  Total current assets                                    8,524       33,013 
                                                        _______      _______ 

Property and equipment, net (note 5)                        776        1,981 
Patents, net of accumulated amortization of $135                             
 at June 30, 1994, and $179 at June 30, 1995                124          161 
Deferred income taxes (note 10)                             132          139 
Other assets                                                 52           19 
                                                        _______      _______ 
                                                       $  9,608       35,313 
                                                        =======      ======= 
Liabilities and Stockholders' Equity                                         

Current liabilities:                                                         

Accounts payable                                       $  1,548        2,572 
Accrued expenses (note 6 and 15)                          1,177        2,006 
Income taxes payable                                        789        1,081 
                                                        _______      _______ 
  Total current liabilities                               3,514        5,659 
                                                        _______      _______ 

Long-term debt (note 7)                                     386          787 
Other liabilities                                            78            - 
                                                        _______      _______ 
                                                          3,978        6,446 
                                                        _______      _______ 
Stockholders' equity (note 8):                                               
Preferred stock, $.01 par value,                                             
 2,000 shares authorized; none issued                         -            - 
Common stock, $.004 par value, 15,000 shares                                 
 authorized;  issued and outstanding 3,590 at                                
 June 30, 1994 and 6,534 at June 30, 1995                    14           26 
Additional paid-in capital                                3,729       24,393 
Retained earnings                                         1,767        4,600 
Foreign currency translation adjustment                     120         (152)
                                                        _______      _______ 
Total stockholders' equity                                5,630       28,867 
                                                        _______      _______ 
Commitments and contingencies (notes 15 and 16)                              
                                                       $  9,608       35,313 
                                                        =======      ======= 
<FN>                                                                         
See accompanying notes to consolidated financial statements.                 

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ResMed Inc. and Subsidiaries                                                    

                                                                [Download Table]
Consolidated Statements of Income                                              
Years ended June                                                               
30, 1993, 1994 and 1995                                                        
(In thousands, except share and per share data)                                

                                                 June 30,  June 30,    June 30,
                                                   1993      1994       1995   
                                                                               
Net revenues                                     $ 7,650    13,857     23,501  

Cost of sales                                      3,109     6,213     11,271  
                                                 _______   _______    _______  
Gross profit                                       4,541     7,644     12,230  
                                                 _______   _______    _______  
Operating expenses:                                                            
  Selling, general and administrative (note 14)    3,084     4,809      7,447  
  Research and development (note 14)                 820     1,546      1,996  
                                                 _______   _______    _______  
Total operating expenses                           3,904     6,355      9,443  
                                                 _______   _______    _______  

Income from operations                               637     1,289      2,787  
                                                 _______   _______    _______  
Other income:                                                                  
  Interest income, net                                61        98        205  
  Government grants                                  432       440        527  
  Other, net (note 9)                                 75         4        262  
                                                 _______   _______    _______  
Total other income, net                              568       542        994  
                                                 _______   _______    _______  
Income before income taxes                         1,205     1,831      3,781  
Income taxes (note 10)                              (359)     (599)      (948) 
                                                 _______   _______    _______  
  Net income                                      $  846     1,232      2,833  
                                                 =======   =======    =======  
Net income per common and common                                               
 equivalent share:                                                             
  Primary                                         $ 0.22      0.34       0.63  
  Assuming full dilution                          $ 0.22      0.34       0.62  

Weighted average shares per common                                             
 and common equivalent outstanding:                                            
  Primary                                      3,913,569  3,639,434  4,449,867 
  Assuming full dilution                       3,913,569  3,639,434  4,512,533 
<FN>                                                                           
See accompanying notes to consolidated financial statements.                   

F-5                                                                             

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ResMed Inc. And Subsidiaries                                                    

                                                        [Enlarge/Download Table]
Consolidated Statements of Stockholders' Equity                                                               
Years ended June 30, 1993, 1994 and 1995                                                                      
(In thousands, except per share data)                                                                         

                                                                             Retained      Foreign            
                                                                Additional   earnings/     currency           
                                              Common stock      paid-in     (accumulated  translation         
                                            Shares      Amount  capital      deficit)      adjustment   Total 
                                                                                                              
Balance, June 30, 1992                       2,106       $   8     1,829         (75)        (73)       1,689 

Common stock issued for cash                   250           1       514           -           -          515 
Common stock issued on exercise of                                                                            
 options (note 8)                               34           -         9           -           -            9 
Issuance of stock options (note 8)               -           -       142           -           -          142 
Foreign Currency translation adjustment          -           -         -           -        (240)        (240)
Dividends declared, $ .03 per share              -           -         -         (66)          -          (66)
Net income                                       -           -         -         846           -          846 
                                            ______      ______    ______      ______      ______       ______ 
Balance, June 30, 1993                       2,390           9     2,494         705        (313)       2,895 

Common stock issued for cash                   375           5     1,098           -           -        1,103 
Common stock issued on exercise of                                                                            
 options (note 8)                              825                   174                                  174 
Issuance of stock options (note 8)               -           -       311           -           -          311 
Repurchase of stock options (note 8)             -           -      (348)          -           -         (348)
Foreign currency translation adjustment          -           -         -           -         433          433 
Dividends declared, $ .04 per share              -           -         -        (170)          -         (170)
Net income                                       -           -         -       1,232           -        1,232 
                                            ______      ______    ______      ______      ______       ______ 
Balance June 30, 1994                        3,590          14     3,729       1,767         120        5,630 

Common stock issued for cash,                                                                                 
 net (note 8)                                2,000           8    18,950           -           -       18,958 
Common stock issued on exercise of                                                                            
 options (note 8)                              944           4     1,714           -           -        1,718 
Foreign currency translation                                                                                  
 adjustment                                                                                 (272)        (272)
Net income                                       -           -         -       2,833           -        2,833 
                                            ______      ______    ______      ______      ______       ______ 
Balance, June 30, 1995                       6,534       $  26    24,393       4,600        (152)      28,867 
                                            ======      ======    ======      ======      ======       ====== 
<FN>                                                                                                          
See accompanying notes to consolidated financial statements.                                                  

F-6                                                                             

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RESMED INC. AND SUBSIDIARIES                                                    

                                                                [Download Table]
Consolidated Statements of Cash Flows                                            
Years ended June 30, 1993, 1994 and 1995                                         
(In thousands)                                                                   

                                                       June 30, June 30, June 30,
                                                         1993     1994     1995  
                                                                                 
Cash flows from operating activities:                                            
  Net income                                           $ 846    1,232    2,833   
  Adjustments to reconcile net income to net cash                                
  provided by operating activities:                                              
  Depreciation and amortization                          157      255      590   
  Provision for service warranties                        50      121      267   
  Issuance of stock options                              143      311        -   
  Deferred income taxes                                   41     (190)    (133)  
  Foreign currency options revaluation                     -        -       14   
  Changes in operating assets and liabilities:                                   
    Accounts receivable, net                          (1,155)    (693)  (1,589)  
    Government grants                                   (153)    (115)    (328)  
    Inventories                                         (122)    (774)  (2,596)  
    Prepaid expenses and other current assets            (15)     (34)     (41)  
    Accounts payable, accrued expenses and                                       
     other liabilities                                   850    1,023    1,385   
    Income taxes payable                                 318      471      292   
                                                     _______  _______  _______   
      Net cash provided by operating activities          960    1,607      694   
                                                     _______  _______  _______   
Cash flows from investing activities:                                            
  Purchases of property and equipment                   (309)    (342)  (1,805)  
  Purchase of marketable securities -                                            
    available for sales                                    -        -  (27,187)  
  Proceeds from sale of securities -                                             
    available for sale                                     -        -    6,677   
  Proceeds from sale of property and equipment            61        -        -   
  Purchases of patents                                     -      (60)       -   
  Other                                                    -      (52)      15   
                                                     _______  _______  _______   
      Net cash used in investing activities             (248)    (454) (22,300)  
                                                     _______  _______  _______   
Cash flows from financing activities:                                            
  Repurchase of stock options                              -     (348)       -   
  Proceeds from issuance of common stock, net            524    1,303   20,723   
  Dividends paid                                           -     (236)       -   
  Proceeds from issuance of long-term debt               170      198      420   
  Repayment of long-term debt                           (326)    (138)       -   
  Repayments of capital lease obligations                (30)    (133)       -   
                                                     _______  _______  _______   
      Net cash provided by financing activities          338      646   21,143   
                                                     _______  _______  _______   
Effect of exchange rate changes on cash                 (124)     271      (20)  
                                                     _______  _______  _______   
Net increase in cash and cash equivalents                926    2,070     (483)  
Cash and cash equivalents at beginning of                                        
   the period                                            743    1,669    3,739   
                                                     _______  _______  _______   
Cash and cash equivalents at end of the period       $ 1,669    3,739    3,256   
                                                     =======  =======  =======   
Supplemental disclosure of cash flow information:                                
  Income taxes paid                                   $    -      309      600   
  Interest paid                                            2        3        -   

Non-cash investing and financing activities:                                     
  ResMed entered into a capital lease obligation                                 
   for the acquisition of property and equipment.        147        -        -   
<FN>                                                                             
See accompanying notes to consolidated financial statements.                     

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RESMED INC AND SUBSIDIARIES                                                     

Notes to Consolidated Financial Statements                                      

1.    Organization and Basis of Presentation                                    

ResMed Inc. is a Delaware corporation formed in March 1994 as a holding         
company for ResCare Holdings Ltd. (RHL), a company resident in Australia.       
RHL designs, manufactures and markets devices for the evaluation and            
treatment of sleep disordered breathing, primarily obstructive sleep apnea.     
ResMed Inc.'s ("ResMed", or "the Company") principal manufacturing operations   
are located in Australia.  Other principal distribution and sales sites are     
located in the United States, the United Kingdom and Europe.                    

In May 1994, the shareholders of RHL approved a reorganization and      
reincorporation of RHL resulting in the exchange of the shares of the           
outstanding common stock of RHL for the shares of ResMed.  In addition,         
effective in March 1995, the Company effected a 5:2 stock split.  As a result   
of the reorganization, reincorporation and the stock split, the accounts        
within the consolidated financial statements have been reclassified to reflect  
a par value of $.004 per share.  The board of directors also authorized         
2,000,000 shares of $0.01 par value preferred stock.  No such shares where      
issued or outstanding at June 30, 1995.                                         

2.    Summary of Significant Accounting Policies                                

(a) Basis of Consolidation:                                             

    The consolidated financial statements include the accounts of ResMed
and its wholly owned subsidiaries.  All significant transactions and balances   
have been eliminated in consolidation.                                          

(b) Revenue Recognition:                                                

  Revenue on product sales is recorded at the time of shipment, when
earned.  Royalty revenue from license agreements is recorded when earned.       

(c) Cash and Cash Equivalents:                                          

   Cash equivalents include certificates of deposit, commercial paper,
and other highly liquid investments with original maturities of three months    
or less stated at cost, which approximates market.  Investments with original   
maturities of three months or less are considered to be cash equivalents for    
purposes of the consolidated statements of cash flows.                          

(d) Inventories:                                                        

      Inventories are stated at the lower of cost, determined principally by
the first-in, first-out method, or net realizable value.                        

F-8                                                                             

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RESMED INC AND SUBSIDIARIES                                                     

Notes to Consolidated Financial Statements                                      

2.    Summary of Significant Accounting Policies (continued)                    

(e) Property and Equipment:                                             

    Property and equipment is recorded at cost.  Depreciation expense is
computed using the straight-line method over the estimated useful lives of the  
assets, generally two to ten years.  Assets held under capital leases are       
recorded at the lower of the net present value of the minimum lease payments    
or the fair value of the leased asset at the inception of the lease.            
Amortization expense is computed using the straight-line method over the        
shorter of the estimated useful lives of the assets or the period of the        
related lease.  Straight-line and accelerated methods of depreciation are used  
for tax purposes.  Maintenance and repairs are charged to expense as incurred.  

(f) Patents:                                                            

    The registration costs for new patents are capitalized and amortized
over the estimated useful life of the patent, generally five years.  In the     
event of a patent being superseded, the unamortized costs are written off       
immediately.                                                                    

(g) Government Grants:                                                  

      Government grants revenue is recognized when earned.  Grants have been
obtained by ResMed from the Australian Federal Government to support the        
continued development and export of ResMed's proprietary positive airway        
pressure technology and to assist development of export markets in the amount   
of $432,000, $440,000 and $527,000 for the years ended June 30, 1993, 1994 and  
1995, respectively.                                                             

(h) Foreign Currency:                                                   

The consolidated financial statements of ResMed's non-U.S.      
subsidiaries are translated into U.S. dollars for financial reporting           
purposes.  The assets and liabilities of non-U.S. subsidiaries whose            
functional currencies are other than the U.S. dollar are translated at average  
exchange rates throughout the year.  The cumulative translation effects are     
reflected in stockholders' equity.  Gains and losses on transactions            
denominated in other than the functional currency of the entity are reflected   
in operations.                                                                  

(i) Research and Development:                                           

All research and development costs are expensed in the period   
incurred.                                                                       

(j) Net Income per Common and Common Equivalent Share:                  

 Primary net income per common and common equivalent share and net
income per common and common equivalent share assuming full dilution are        
computed using the weighted average number of shares outstanding adjusted for   
the incremental shares attributed to outstanding options to purchase common     
stock.                                                                          

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RESMED INC AND SUBSIDIARIES                                                     

Notes to Consolidated Financial Statements                                      

2.    Summary of Significant Accounting Policies (continued)                    

(k) Financial Instruments :                                             

 The carrying value of financial instruments such as cash and cash
equivalents, trade receivables and payables and long-term debt approximate      
their fair value.  ResMed also enters into foreign currency option contracts    
to manage fluctuations in foreign currency exchange rates.                      

    ResMed had outstanding foreign currency option contracts at June 30,
1995, maturing from August 1995 to October 1995.  The U.S. dollar equivalent    
face amounts of outstanding contracts was approximately $1,500,000 and          
$2,000,000, at June 30, 1994 and 1995, respectively.  The carrying value at     
June 30, 1994 and 1995 approximated fair value.                                 

(l) Income Taxes:                                                       

ResMed accounts for income taxes under Statement of Accounting  
Standards No. 109, "Accounting for Income Taxes" (Statement 109).  Statement    
109 requires an asset and liability method of accounting for income taxes.      
Under the asset and liability method of Statement 109, deferred tax assets and  
liabilities are recognized for the future tax consequences attributable to      
differences between the financial statement carrying amounts of existing        
assets and liabilities and their respective tax bases.  Deferred tax assets     
and liabilities are measured using enacted tax rates expected to apply to       
taxable income in the years in which those temporary differences are expected   
to be recovered or settled.  Under Statement 109, the effect on deferred tax    
assets and liabilities of a change in tax rates is recognized in income in the  
period that includes the enactment date.                                        

(m) Marketable Securities Available for Sale:                           

   The Company adopted Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities" (FAS    
115), on July 1, 1994.  In accordance with FAS 115, prior years' financial      
statements have not been restated to reflect the change in accounting method.   
There was no cumulative effect as a result of adopting FAS 115 in fiscal 1995.  

Management determines the appropriate classification of its     
investments in debt and equity securities at the time of purchase and           
reevaluates such determination at each balance sheet date.  Debt securities     
for which the Company does not have the intent or ability to hold to maturity   
are classified as available for sale.  Securities available for sale are        
carried at fair value, with the unrealized gains and losses, net of tax,        
reported in a separate component of shareholders' equity.  At June 30, 1995,    
the Company had no investments that qualified as trading or held to maturity.   

      The amortized cost of debt securities classified as available for sale
is adjusted for amortization of premiums and accretion of discounts to          
maturity.  Such amortization and interest are included in interest income.      
Realized gains and losses are included in other income or expense.  The cost    
of securities sold is based on the specific identification method.              

F-10                                                                            

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RESMED INC AND SUBSIDIARIES                                                     

Notes to Consolidated Financial Statements                                      

2.    Summary of Significant Accounting Policies (continued)                    

(m) Marketable Securities Available for Sale (continued):               

   At June 30, 1995, the Company's investments in debt securities were
classified on the accompanying consolidated balance sheet as marketable         
securities-available for sale.  These investments are diversified among high    
credit quality securities in accordance with the Company's investment policy.   

3.    Marketable Securities - Available for Sale                                

On July 1, 1994 the Company adopted statement of Financial Accounting   
Standard No. 115, "Accounting for Certain Investments in Debt and Equity        
Securities".  The fair value of Marketable Securities - Available for Sale at   
June 30, 1995 was $20,510,000.  These securities have contractual maturity      
dates between 2002 and 2025.  The estimated fair value of each investment       
approximates the amortized cost, and therefore, there are no unrealized gains   
or losses as of June 30, 1995.                                                  

Expected maturities may differ from contractual maturities because the  
issuers of the securities may have the right to prepay obligations without      
prepayment penalties.                                                           

4.    Inventories                                                               

                                                                [Download Table]
    Inventories were comprised of the following at June 30, 1994 and 1995 (in
thousands) :                                                                 

                                                June 30,    June 30,         
                                                    1994       1995          
                                                                             
Raw materials                                    $ 1,510      1,990          
Work in progress                                       -        888          
Finished goods                                       384      1,472          
                                                 _______    _______          
                                                 $ 1,894      4,350          
                                                 =======    =======          

5.    Property and Equipment                                                    

                                                                [Download Table]
    Property and equipment is comprised of the                       
following at June 30, 1994 and 1995 (in thousands):                  

                                                 June 30,    June 30,
                                                     1994       1995 
                                                                     
Machinery and equipment                             $ 668      1,579 
Furniture and fixtures                                317        426 
Vehicles                                              126        264 
Clinical equipment                                    189        491 
Leasehold improvements                                 20        297 
                                                  _______    _______ 
                                                    1,320      3,057 

Accumulated depreciation and amortization            (544)    (1,076)
                                                  _______    _______ 
                                                    $ 776      1,981 
                                                  =======    ======= 

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RESMED INC AND SUBSIDIARIES                                                     

Notes to Consolidated Financial Statements                                      

6.    Accrued Expenses                                                          

                                                                [Download Table]
    Accrued expenses at June 30, 1994 and 1995 consist of the following
(in thousands) :                                                       

                                                 June 30,  June 30,    
                                                    1994      1995     
                                                                       
Service warranties                                  $ 205        410   
Legal                                                 393        286   
Royalties                                              69         31   
Initial public offering costs - printing                -        154   
Initial public offering costs - legal                   -        140   
Employee benefits                                      96        355   
Other                                                 414        630   
                                                  _______    _______   
                                                  $ 1,177      2,006   
                                                  =======    =======   

7.    Long-term Debt                                                            

As part of an agreement between ResMed and the Australian Federal       
Government, ResMed obtained an $800,000 loan facility of which $386,000 and     
$787,000 were outstanding at June 30, 1994 and 1995, respectively.  The loan    
facility is unsecured and accrues interest at 3.8% per annum beginning May 3,   
1996 through April 3, 1997.  The facility is payable in six monthly             
installments beginning November 3, 1996.  Prior to May 3, 1996, the loan is     
interest free.                                                                  

8.    Stockholders' Equity                                                      

Initial Public Offering                                                 

On June 1, 1995, the Company completed an initial public offering of    
2,000,000 new shares of common stock at a price of $11.00 per share, resulting  
in net proceeds of approximately $18.9 million, after deducting issuance costs  
of $1.6 million.                                                                

  On July 10, 1995, the underwriters for the above-mentioned public offering
exercised their over-allotment of 450,000 new shares of common stock,           
resulting in additional net proceeds of approximately $4.6 million, after       
deducting issuance costs of approximately $347,000.                             

F-12                                                                            

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RESMED INC AND SUBSIDIARIES                                                     

Notes to Consolidated Financial Statements                                      

8.    Stockholders' Equity (continued)                                          

Stock Options                                                           

 Prior to the formation of the Company, RHL, a wholly owned subsidiary, at
the discretion of the directors, from time-to-time granted stock options to     
key personnel, including officers, directors and outside consultants.  The      
options  granted by RHL were exchanged for options with similar terms to        
purchase common stock of ResMed.  These options have expiration dates of two    
to five years from the date of grant and vest immediately.                      

On June 1, 1995, the Company granted 235,000 stock options to personnel,
including officers, directors and outside consultants in accordance with the    
1995 option plan.  These options have expiration dates of ten years from date   
of grant and vest over three years.      The Company granted these options      
with the exercise price equal to the market value at the date of grant.         

                                                                [Download Table]
    The following table summarizes option activity (adjusted for 5:2 stock
split effected in fiscal 1995).                                           

                                   Options      Exercise Price            
                                                                          
Outstanding, June 30, 1992        1,634,985     $ 0.15  -  3.64           

Granted                             199,375       0.72  -  3.18           
Exercised                           (34,500)      0.15  -  0.72           
                                  _________                               

Outstanding, June 30, 1993        1,799,860       0.15  -  3.64           

Granted                             668,250       0.78  -  3.58           
Exercised                          (824,985)      0.15  -  0.78           
Cancelled                          (500,000)      3.20  -  3.20           
                                  _________                               

Outstanding, June 30, 1994        1,143,125       0.15  -  3.64           

Granted                             235,000      11.00  - 11.00           
Exercised                          (944,500)      0.15  -  3.64           
                                  _________                               
Outstanding, June 30, 1995          433,625     $ 1.08  - 11.00           
                                  =========                               

During the year ended June 30, 1994, ResMed repurchased 500,000 options 
from a former distributor for $348,000.  Expenses related to compensatory       
options granted for the years ended June 30, 1993 and 1994 were $143,000, and   
$322,000, respectively.  No such expense was incurred in fiscal 1995.           

F-13                                                                            

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RESMED INC AND SUBSIDIARIES                                                     

Notes to Consolidated Financial Statements                                      

9.    Other, net                                                                

                                                                [Download Table]
    Other, net is comprised of the following at June 30, 1993,            
1994 and 1995 (in thousands):                                             

                                                1993      1994      1995  
                                                                          
License fees                                  $     -         -       189 
Loss on foreign currency options                    -         -       (97)
Gain (loss) on foreign currency transactions       71       (29)      166 
Other                                               4        33         4 
                                              _______   _______   _______ 
                                                 $ 75         4       262 
                                              =======   =======   ======= 

 In November 1994, the Company and an unrelated third-party entered into a
marketing rights agreement for the third-party to exclusively market certain    
respiratory and related products under development by the Company in the        
Japanese market. Under the terms of the agreement the third-party is required   
to provide up to $380,000 to the Company, of which $189,000 has been            
recognized in the consolidated statements of income during the year ended       
June 30, 1995.  The amounts recognized were limited by certain performance      
requirements of the agreement.                                                  

10.    Income Taxes                                                             

                                                                [Download Table]
    Income (loss) before income taxes for the years ended June 30, 1993, 1994
and 1995, was taxed under the following jurisdictions (in thousands).        

                                            1993      1994      1995         
                                                                             
U.S.                                         (74)     (141)       11         
Non-U.S.                                   1,279     1,972     3,770         
                                         _______   _______   _______         
                                           1,205     1,831     3,781         
                                         =======   =======   =======         

   The provision (benefit) for income taxes is presented below (in thousands):

                                                                [Download Table]
Current:                                                             

                                            1993      1994      1995 
                                                                     
U.S.                                     $     -         -         - 
Non-U.S.                                     318       789     1,081 
                                         _______   _______   _______ 
                                             318       789     1,081 
                                         _______   _______   _______ 
Deferred:                                                            

U.S.                                           -         -         - 
Non-U.S.                                      41      (190)     (133)
                                         _______   _______   _______ 
Provision for income taxes                 $ 359       599       948 
                                         =======   =======   ======= 

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RESMED INC AND SUBSIDIARIES                                                     

Notes to Consolidated Financial Statements                                      

10.    Income Taxes (continued)                                                 

                                                                [Download Table]
    The provision for income taxes differs from the amount of income tax 
determined by applying the applicable U.S. federal income tax rate of 34%
to pretax income as a result of the following (in thousands):            

                                             1993      1994      1995    
                                                                         
Computed "expected" tax expense             $ 410       623     1,286    
Increase (decrease) in income taxes                                      
resulting from:                                                          
  Issuance of stock options                    48       109         -    
  Non-deductible expenses                       -        60        40    
  Research and development credit             (98)     (219)     (274)   
  Non-deductible formation costs                -        31         -    
  Repurchase of stock options                   -      (118)        -    
  Utilization of net operating loss                                      
   carryforwards                              (98)        -       (11)   
  Change in valuation allowance                46        59       (10)   
  Effect of non-U.S. tax rates                 46       (18)      (29)   
  Effect of a change in Australian taxes        -         -       (48)   
  Other                                         5        72        (6)   
                                          _______   _______   _______    
                                            $ 359       599       948    
                                          =======   =======   =======    
                                                                [Download Table]
    The tax effects of temporary differences that give rise to              
significant portions of the deferred tax assets and deferred tax liabilities
are comprised of the following at June 30, 1994 and 1995 (in thousands):    

                                             1994       1995                
                                                                            
Deferred tax assets:                                                        
Employee benefit obligations                 $ 52         74                
Provision for service warranties               67        147                
Net operating loss carry forwards              84         74                
Accrual for legal costs                        98          -                
Intercompany profit in inventories             35        108                
Other accruals                                 83        245                
                                          _______    _______                
Total gross deferred tax assets               419        648                

Less valuation allowance                      (84)       (74)               
                                          _______    _______                
Net deferred tax assets                       335        574                
                                          _______    _______                
Deferred tax liabilities:                                                   
  Patents                                     (31)       (58)               
  Government grants                          (150)      (272)               
  Other receivables                           (11)       (97)               
  Other                                       (11)        (8)               
                                          _______    _______                
  Total gross deferred tax liabilities       (203)      (435)               
                                          _______    _______                
  Net deferred tax asset                    $ 132        139                
                                          =======    =======                

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RESMED INC AND SUBSIDIARIES                                                     

Notes to Consolidated Financial Statements                                      

10.    Income Taxes (continued)                                                 

The valuation allowance at June 30, 1994 and 1995, primarily relates to 
a provision for uncertainty as to the utilization of net operating loss         
carryforwards.  The net change in the valuation allowance was an increase       
of $59,000 for the year ended June 30, 1994.  For the year ended June 30,       
1995, the net change in the valuation allowance was a decrease of $10,000.      
The  measurement of tax assets and liabilities at June 30 of each year,         
reflect foreign currency translation adjustments, changes in enacted tax        
rates and changes in temporary differences.  Income taxes in 1993 and 1995      
were reduced by $98,000 and $11,000, respectively, through the utilization      
of net operating loss carryforwards.  Based on the Company's history of         
taxable income and its projection of future earnings, it believes that it is    
more likely than not that sufficient taxable income will be generated in the    
foreseeable future to realize the deferred tax asset.                           

At June 30, 1995, ResMed has net operating loss carryforwards for U.S.  
federal income tax purposes of approximately $32,000 which are available to     
offset future U.S. federal taxable income, if any, through 2009.  In addition,  
ResMed has net operating loss carryforwards for European income tax purposes    
of approximately $42,000 which are available to offset future European taxable  
income, if any, over an indefinite period.                                      

11.    Employee Retirement Plans                                                

ResMed contributes to defined contribution (accumulation) pension plans 
(the plans) as required by Australian law covering all eligible employees       
resident in Australia.  All Australian employees after serving a qualifying     
period, are entitled to benefits on retirement, disability or death.            
Employees may contribute additional funds to the plans.  ResMed contributes to  
the plans at the rate of 5% - 5.5% of the salaries of all Australian            
employees.  Additionally, certain executives, at their discretion, may direct   
that an additional percentage of their total salary and benefit package be      
contributed to their individual plan account.  Total Company contributions to   
the plans, for the years ended June 30, 1993, 1994 and 1995 were $74,000,       
$131,000 and $157,000, respectively.                                            

12.    Significant Customers                                                    

 ResMed's customers are located primarily in the United States, Europe and
Australia.  One customer, Medical Gases of Australia, accounted for             
approximately, 21%, 18% and 10% of net sales in 1993, 1994 and 1995,            
respectively, and another customer, Priess Med Technik, located in Germany,     
accounted for approximately 20%, 19% and 15% of net sales in 1993, 1994 and     
1995, respectively.  The principals of Priess Med Technik own approximately 4%  
of the outstanding common stock of the Company.                                 

13.    Geographic Segment Information                                           

ResMed operates primarily in the respiratory medicine industry.         
Geographic segments have been classified into three regions; North America,     
Europe and Australia/Rest of World.  North America includes the U.S. and        
Canada, Australia/Rest of World includes Australia, New Zealand, South Africa   
and Asia.                                                                       

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RESMED INC AND SUBSIDIARIES                                                     

Notes to Consolidated Financial Statements                                      

13.    Geographic Segment Information (continued)                               

                                                                [Download Table]
    Financial information by geographic region for the years ended June 30,        
1993, 1994 and 1995, is summarized below (in thousands):                           

                                                                 Corporate,        
                                                     Australia/ unallocated        
                                 North                Rest of       and            
                                 America     Europe    World    elimination   Total
                                                                                   
1993                                                                               
Net revenues                     $ 3,370      2,341      1,939          -     7,650
Transfers among areas                  -          -      2,109     (2,109)        -
                                  ______     ______     ______     ______    ______
Total revenues                   $ 3,370      2,341      4,048     (2,109)    7,650
                                  ======     ======     ======     ======    ======
Income (loss) from operations      $ 348        502       (213)         -       637
                                  ======     ======     ======     ======    ======
Identifiable assets                $ 926          -      4,281       (103)    5,104
                                  ======     ======     ======     ======    ======
Depreciation and amortization        $ 5          -        152          -       157
                                  ======     ======     ======     ======    ======
Capital expenditures                $ 90          -        219          -       309
                                  ======     ======     ======     ======    ======
1994                                                                               

Net revenues                     $ 6,502      4,171      3,184          -    13,857
Transfers among areas                  -          -      4,115     (4,115)        -
                                  ______     ______     ______     ______    ______
Total revenues                   $ 6,502      4,171      7,299     (4,115)   13,857
                                  ======     ======     ======     ======    ======
Income from operations             $ 440        832         17          -     1,289
                                  ======     ======     ======     ======    ======
Identifiable assets              $ 2,137        293      6,408        514     9,352
                                  ======     ======     ======     ======    ======
Depreciation and amortization       $ 10          1        244          -       255
                                  ======     ======     ======     ======    ======
Capital expenditures                 $ 9         10        383          -       402
                                  ======     ======     ======     ======    ======
1995                                                                               

Net revenues                    $ 12,549      6,757      4,195          -    23,501
Transfers among areas                  -          -      6,551     (6,551)        -
                                  ______     ______     ______     ______    ______
Total revenues                  $ 12,549      6,757     10,746     (6,551)   23,501
                                  ======     ======     ======     ======    ======
Income (loss) from operations    $ 1,296      3,803     (2,312)         -     2,787
                                  ======     ======     ======     ======    ======
Identifiable assets              $ 3,721        462     11,199     19,631    35,013
                                  ======     ======     ======     ======    ======
Depreciation and amortization      $ 195          7        388          -       590
                                  ======     ======     ======     ======    ======
Capital expenditures               $ 334         25      1,431          -     1,790
                                  ======     ======     ======     ======    ======

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RESMED INC AND SUBSIDIARIES                                                     

Notes to Consolidated Financial Statements                                      

13    Geographic Segment Information (continued)                                

Net revenues which represent net sales to unaffiliated customers, is    
based on the location of the customers.  Transfers between geographic areas     
are recorded at amounts generally above cost and in accordance with the rules   
and regulations of the respective governing tax authorities.  Operating         
income or loss consists of total net sales less operating expenses, and does    
not include either interest and other income, net, or income taxes.             
Identifiable assets of geographic areas are those assets used in the            
Company's operations in each area.                                              

14.    Related Party Transactions                                               

For the years ended June 30, 1993, 1994 and 1995, legal and consulting  
service fees in the amount of $119,000, $414,000 and $282,000, were paid to     
certain directors of subsidiaries and director-related entities.                

Included in these amounts are payments made to Dr. Colin Sullivan.  Dr. 
Sullivan provides consulting services to the Company pursuant to a consulting   
agreement that terminates on December 31, 1997 (subject to extension for an     
additional five year term) for which he receives annual payments based on the   
net sales (as defined in the Consulting Agreement) of certain of the Company's  
products, subject to a $90,000 per annum minimum payment.  The Company also     
reimburses Dr. Sullivan for his out-of-pocket expenses in performing such       
consulting services.                                                            

The Company has also agreed to pay such amounts to Dr. Sullivan for a   
period of 24 months following the termination of his consulting relationship    
with the Company in exchange for his agreement not to compete with the Company  
during this period.  Total payments to Dr. Sullivan were $52,000, $147,000 and  
$228,000 for the Company's fiscal years ended June 30, 1993, 1994 and 1995,     
respectively.                                                                   

15.    Commitments                                                              

The Company leases certain equipment and fixtures under capital leases. 
Included in property and equipment are approximately $63,000 and $62,000 of     
assets held under capital leases at June 30, 1994 and June 30, 1995,            
respectively.  Accumulated amortization related to leased assets was            
approximately $24,000 and $38,000 at June 30, 1994 and 1995, respectively.      

At June 30, 1995, the present value of future minimum capital lease     
payments, included in accrued expenses in the accompanying consolidated         
balance sheets, and the future minimum lease payments under noncancellable      
operating leases are as follows:                                                

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RESMED INC AND SUBSIDIARIES                                                     

Notes to Consolidated Financial Statements                                      

                                                                [Download Table]
15.    Commitments (continued)                                   

                                              Capital   Operating
Years                                         leases     leases  
                                                                 
1996                                             $ 34        317 
1997                                                -        288 
1998                                                -        279 
1999                                                -         93 
Thereafter                                          -          - 
                                              _______    _______ 
Total minimum lease payments                       34        977 
                                              =======    ======= 

Less amount representing interest                 (2)            

Present value of net minimum capital                             
 lease payments                                   32             

Less current portion of obligations under                        
 capital leases                                  (32)            
                                              _______            
Obligation under capital leases, excluding                       
 current portion                              $    -             
                                              =======            

Rent expense under operating leases for the years ended June 30, 1993,  
1994 and 1995 was approximately $105,000, $104,000 and $162,000,                
respectively.                                                                   

16.    Legal Actions                                                            

In October 1994, in Australia, a patent held by ResMed was revoked on   
appeal on the grounds that the patent was not entitled to claim priority to a   
"provisional" application, which was filed before the inventor's publication.   
As a result of this claim, ResMed based in part on advice from legal counsel,   
at June 30, 1994 accrued approximately $300,000 for costs associated with this  
patent litigation which remains outstanding at June 30, 1995.  This amount is   
included in accrued expenses on the consolidated balance sheets.                

 In January 1995, the Company filed a complaint for patent infringement in
the United States District Court against Respironics Inc., a Delaware           
registered company.  In response, in February 1995, Respironics filed a         
complaint against the Company that asserts, (i) Respironics does not infringe   
the subject patents; and (ii) that the subject patents are invalid and          
unenforceable.  Management believes, based in part on advice from legal         
counsel, that this action will not have a material adverse effect on the        
operations or financial position of the Company.                                

 In May 1995, Respironics and its Australian distributor filed a statement
of claim against the Company and its President in the Federal Court of          
Australia, New South Wales District Registry.  The statement of claim alleges   
that the Company engaged in unfair trade practices, including the misuse of     
the power afforded by its Australian patents and dominant market position in    
violation of the Australian Trade Practices Act.  The statement of claim        
asserts damage claims in the aggregate amount of approximately $730,000,        
constituting lost profit on sales.  While the Company intends to defend this    
action, there can be no assurance that the Company will be successful in        
defending such action or that the Company will not be required to make          
significant payments to the claimants.  Furthermore, the Company expects to     
incur ongoing legal costs in defending such action.                             

F-19                                                                            

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DIETER W PRIESS   
MEDIZINTECHNIK  

FINANCIAL STATEMENTS AND SCHEDULES  

DECEMBER 31, 1995, AND 1994   

WITH INDEPENDENT AUDITORS' REPORT THEREON   

F-20                                                                            

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INDEPENDENT AUDITORS' REPORT    
Mr. Dieter W. Priess                                                            
Trading as Dieter W. Priess Medizintechnik                                      

We  have  audited  the  accompanying  balance  sheets  of  Dieter  W.  Priess   
Medizintechnik as of December 31, 1995 and 1994, and the related statements of  
income,  movements  in  equity and cash flows for the years then ended.  These  
financial statements are the responsibility of the business's management.  Our  
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

We  conducted  our  audits  in  accordance  with  generally  accepted auditing  
standards  in  the  United States of America.  Those standards require that we  
plan  and  perform  the audit to obtain reasonable assurance about whether the  
financial  statements  are  free  of  material misstatement. An audit includes  
examining, on a test basis, evidence supporting the amounts and disclosures in  
the  financial  statements.    An audit also includes assessing the accounting  
principles  used  and  significant  estimates  made  by management, as well as  
evaluating  the overall financial statement presentation.  We believe that our  
audits provide a reasonable basis for our opinion.                              

In  our opinion, the financial statements referred to above present fairly, in  
all  material  respects,  the  financial  position  of  Dieter  W.  Priess      
Medizintechnik  at  December  31,  1995  and  1994,  and  the  results  of its  
operations  and  its  cash  flows  for the years then ended in conformity with  
accounting principles generally accepted in the United States of America.       

Dusseldorf, Germany, March 27, 1996                                             

KPMG Deutsche Treuhand Gesellschaft                                             

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Medizintechnik  

                                                                [Download Table]


                                 Balance Sheets                                  
                           December 31, 1995 and 1994                            

                                                                                 

                                                       December 31,  December 31,
                                                              1995         1994  
                                                        -----------  ----------- 
Current Assets:                                                                  
 Cash and cash equivalents                        DM        154,407      302,432 
 Trade accounts receivable, less allowance for                                   
  doubtful accounts of DM 60,000 in 1995                                         
  and  DM  29,000  in 1994.                               1,567,510    1,263,272 
 Due from officers and employees                             11,017        8,842 
 Inventories:                                                                    
   Finished goods                                         2,713,895    1,932,741 
   Raw materials                                              4,000        5,300 
                                                        -----------  ----------- 
     Total inventories                                    2,717,895    1,938,041 
 Other current assets (note 4)                              182,027      146,252 
                                                        -----------  ----------- 
     Total current assets                                 4,632,856    3,658,839 
                                                        -----------  ----------- 

Property, plant, and equipment:                                                  
 Land                                                        51,641       51,641 
 Buildings                                                  515,981      437,106 
 Machinery and equipment                                  2,453,028    1,496,716 
 Construction in progress                                    14,000            - 
                                                        -----------  ----------- 
                                                          3,034,650    1,985,463 
 Less accumulated depreciation and amortization           1,686,207    1,060,903 
                                                        -----------  ----------- 
     Net property, plant, and equipment                   1,348,443      924,560 
                                                        -----------  ----------- 
                                                  DM     5,981,299     4,583,399 
                                                        ===========  =========== 

<FN>                                                                             

See accompanying notes to financial statements.                                  

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Dieter W. Priess  
Medizintechnik  

                                                                [Download Table]


                           Balance Sheets (Continued)                            
                           December 31, 1995 and 1994                            

                                                                                 

                                                       December 31,  December 31,
                                                              1995          1994 
                                                       -----------   ----------- 
Current liabilities:                                                             
 Bank overdraft (note 5)                          DM       711,340             - 
 Current installments of long-term debt (note 8)            56,556        67,371 
 Trade accounts payable                                  1,403,696       574,835 
 Income taxes payable                                      214,970       906,756 
 Accrued expenses (note 6)                                 147,820       116,800 
 Other liabilities (note 7)                                440,334       293,271 
                                                       -----------   ----------- 
   Total current liabilities                             2,974,716     1,959,033 

 Long-term debt, excluding current installments                                  
   (note 8)                                                558,578       615,134 
                                                       -----------   ----------- 
     Total liabilities                                   3,533,294     2,574,167 
                                                       -----------   ----------- 

Equity                                                                           
 Owner's current account                                 2,448,005     2,009,232 
                                                       -----------   ----------- 
                                                  DM     5,981,299     4,583,399 
                                                       ===========   =========== 

<FN>                                                                             

See accompanying notes to financial statements.                                  

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Dieter W. Priess  
Medizintechnik  

                                                                [Download Table]


                             Statements of Income                          
                    Years ended December 31, 1995 and 1994                 

                                                                           

                                                        1995         1994  
                                                   ----------   ---------- 

Net sales                                     DM   15,418,735   13,096,235 
Cost of goods sold                                  7,163,198    5,855,165 
                                                   ----------   -----------
   Gross profit                                     8.255,537    7,241,070 

Selling, general and administrative expenses        3,503,664    2,664,703 
                                                   ----------   -----------
                                                    4,751,873    4,576,367 

Other income (deductions):                                                 
 Interest income                                       11,135        6,882 
 Interest expense                                     (65,610)     (63,472)
 Other, net                                            14,843       13,031 
                                                   ----------   -----------
   Income before income taxes                       4,712,241    4,532,808 
Income taxes                                          828,788      797,962 
                                                   ----------   -----------
   Net income                                 DM    3,883,453    3,734,846 
                                                   ==========   ===========


                                                                [Download Table]


                      Statements of Movements in Equity     
                    Years ended December 31, 1995 and 1994  

                                                            

                                        1995         1994   
                                   -----------  ----------- 
Balance at beginning of year  DM    2,009,232     1,450,834 
Owner withdrawals                  (4,182,554)   (4,000,958)
Owner deposits                        737,874       824,510 
Net income                          3,883,453     3,734,846 
                                   ----------    ---------- 
Balance at end of year        DM    2,448,005     2,009,232 
                                   ==========    ========== 

<FN>                                                        

See accompanying notes to financial statements.             

F-24                                                                            

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Dieter W. Priess  
Medizintechnik  

                                                                [Download Table]


                            Statements of Cash Flows                            
                           December 31, 1995 and 1994                           

                                                                                

                                                             1995         1994  
                                                        -----------  -----------

Net cash provided by operating activities (note 9)  DM   3,770,846    3,603,479 
                                                        -----------  -----------

Cash flows from investing activities:                                           
 Proceeds from sale of equipment                           207,409        9,450 
 Capital expenditures                                   (1,325,569)    (693,124)
                                                        -----------  -----------
   Net cash used in investing activities                (1,118,160)    (683,674)
                                                        -----------  -----------

Cash flows from financing activities:                                           
 Proceeds from bank overdraft                              711,340            - 
 Principal payments on long-term debt                      (67,371)     (61,778)
 Owner withdrawals                                      (4,182,554)  (4,000,958)
 Owner deposits                                            737,874      824,510 
                                                        -----------  -----------
   Net cash used in financing activities                (2,800,711)  (3,238,226)
                                                        -----------  -----------

Net decrease in cash and cash equivalents                 (148,025)    (318,421)
Cash and cash equivalents at beginning of year             302,432      620,853 
                                                        -----------  -----------
Cash and cash equivalents at end of year            DM     154,407      302,432 
                                                        ===========  ===========
<FN>                                                                            

See accompanying notes to financial statements.                                 

F-25                                                                            

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Dieter W. Priess  
Medizintechnik  

Notes to Financial Statements   
December 31, 1995 and 1994  

(1)     Summary of Significant Accounting Policies and Practices                

(a)     DESCRIPTION OF BUSINESS                                                 
   The  business  is privately owned by Mr. Dieter W. Priess.  It is engaged
in the purchasing and selling of products for the diagnosis and treatment of a  
severe form of sleep disorder known as obstructive sleep apnea. The business's  
customers  are  located  throughout  Germany. The business is dependent on one  
major  supplier,    ResMed  Ltd.,  which  supplies  approximately 80% of total  
merchandise.                                                                    

   The assets and liabilities disclosed represent the assets and liabilities
allocated by Mr. Dieter W. Priess to the business.                              

(b)     PRESENTATION OF FINANCIAL STATEMENTS                                    
   The  accompanying  financial  statements have been prepared in accordance
with United States of America generally accepted accounting principles.         

(c)     CASH EQUIVALENTS                                                        
   Cash  equivalents  of  DM 154,407 and DM 302,432 at December 31, 1995 and
1994, respectively, consist of bank deposits with an initial term of less than  
three months.                                                                   

(d)     INVENTORIES                                                             
   Inventories,  which  represent principally purchased products, are stated
at  the  lower  of  cost  or  market.  Cost  is determined using the first-in,  
first-out method for all inventories.                                           

F-26                                                                            

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Dieter W. Priess  
Medizintechnik  

Notes to Financial Statements   

(1)     Summary of Significant Accounting Policies and Practices (cont'd)       

(e)     PROPERTY, PLANT, AND EQUIPMENT                                          
Property, plant, and equipment are stated at cost.                    

                                                                [Download Table]


     Depreciation  on  plant  and equipment is calculated on the straight-line
method over the estimated useful lives of the assets as follows:              

                                                                              

                         Useful life                                          
                         -----------                                          

Buildings                10-50 years                                          
Machinery and equipment    2-5 years                                          

(f)     USE OF ESTIMATES                                                        
   Management  of the Company has made a number of estimates and assumptions
relating  to  the  reporting  of  assets and liabilities and the disclosure of  
contingent  assets  and  liabilities  to prepare these financial statements in  
conformity with generally accepted accounting principles. Actual results could  
differ from those estimates.                                                    

F-27                                                                            

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Dieter W. Priess  
Medizintechnik  

Notes to Financial Statements   

(2)     Income Taxes                                                            
   The  business  is  subject  to a local tax on income of 17.6% in 1995 and
1994 .  German federal income taxes are levied at the owner level.              

   Local  income  tax  expense  attributable to income was DM 828,788 and DM
797,962  for  the  years  ended  December  31, 1995 and 1994, respectively and  
differed  from  the  amounts computed by applying the local income tax rate to  
pretax income as a result of the following:                                     

                                                                [Download Table]


                                                             

                                              1995      1994 
                                           --------  --------

Computed "expected" tax expense       DM   829,354   797,774 
Adjustment for permanent differences          (566)      188 
                                           --------  ------- 

                                      DM   828,788   797,962 
                                           ========  ======= 

(3)     Leases                                                                  
   The business has several noncancellable operating leases, primarily for
administrative  equipment,  that  expire  over  the  next three years.  Rental  
expense was DM 62,907 and 57,814 in 1995 and 1994, respectively.                

   Future minimum lease payments under noncancellable operating leases (with
initial  or  remaining  lease  terms in excess of one year) as of December 31,  
1995 are:                                                                       

                                                                [Download Table]


                                     

Year ending December 31:             
1996                      DM   41,647
1997                           38,455
1998                           36,187
                              -------

                          DM  116,289
                              =======

F-28                                                                            

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Dieter W. Priess  
Medizintechnik  

Notes to Financial Statements   

                                                                [Download Table]


(4)     Other Current Assets                                           

                                                                       

                                             December 31,  December 31,
                                                     1995          1994
                                              -----------   -----------

Amount receivable on sale of equipment  DM        108,900             -
Sundry other current assets                        73,127       146,252
                                              -----------   -----------

                                        DM        182,027       146,252
                                              ===========   ===========

(5)     Bank Overdraft                                                          
   The  business  has a credit facility of DM 1,000,000 granted until August
30,  1996.    The  used  portion  of  the facility bears interest at a rate of  
interest fixed quarterly by the bank.  The rate of interest ruling at December  
31,  1995  was  9.25%.   The credit facility is secured by trade receivables, 
plant  and  equipment  and  a mortgage on land and buildings of the business.   
Additional securities have been given by the owner of the business and parties  
related to the owner.                                                           

                                                                [Download Table]


(6)     Accrued Expenses                                                

                                                                        

                                              December 31,  December 31,
                                                      1995          1994
                                               -----------   -----------

Warranty accrual                         DM         35,820        31,000
Holiday pay accrual                                 38,000        34,000
Professional services accrual                       39,000        30,800
Subscriptions to business organizations             35,000        21,000
                                               -----------   -----------

                                         DM        147,820       116,800
                                               ===========   ===========
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Dieter W. Priess                                                        
Medizintechnik                                                          

Notes to Financial Statements                                           



(7)     Other liabilities                                               

                                                                        

                                December 31,  December 31,              
                                        1995          1994              
                                 -----------   -----------              

Sales commissions payable  DM         71,900        43,125              
Import duties payable                 83,693        75,719              
Social security payable               97,129        78,509              
Value added tax payable              174,887        90,714              
Sundry other liabilities              12,725         5,204              
                                 -----------   -----------              

                           DM        440,334       293,271              
                                 ===========   ===========              

                                                                [Download Table]


(8)     Long-term Debt                                                            
     Long-term debt at December 31, 1995 and 1994 consists of the following:      

                                                                                  

                                                        December 31,  December 31,
                                                                1995          1994
                                                         -----------   -----------
9.3%  bank loan payable in monthly installments                                   
      of DM 5,062, including interest, with                                       
      final payment of DM  5,062 due                                              
      May 30, 2002.                                DM        280,921       323,003

9.5%  bank loan payable in monthly installments                                   
      of DM 1,131, including interest, with                                       
      final payment of DM  1,131 due                                              
      May 30, 1996.                                            4,800        17,265

8.1%  bank loan payable in monthly  installments                                  
      of DM 3,031, including interest, with final                                 
      payment of DM 3,316 due June 30, 2010.                 329,413       342,237
                                                         -----------   -----------

                                                             615,134       682,505
                                                         ===========   ===========
      Disclosed as:                                                               

      Current                                                 56,556        67,371
      Long-term                                              558,578       615,134
                                                         -----------   -----------
                                                   DM        615,134       682,505
                                                         ===========   ===========

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Dieter W. Priess  
Medizintechnik  

Notes to Financial Statements   

   The  bank  loans  are  secured by the same securities securing the credit
facility  (See note 5).                                                         

(8)     Long-term Debt (cont'd)                                                 
     The aggregate maturities of long-term debt for each of the five years
subsequent  to  December  31,  1995  are as follows: 1996, DM 56,556; 1997, DM  
56,110; 1998 DM 60,833; 1999 DM 65,955; and 2000 DM 71,512.                     

                                                                [Download Table]


(9)          Reconciliation  of  Net  Income  to  Net Cash Provided by Operating 
Activities                                                                       
     The  reconciliation  of  net  income  to  net  cash  provided  by operating 
activities for the year ended December 31, 1995 and 1994 is as follows:          

                                                                                 

                                                                1995        1994 
                                                            ---------   ---------
Net income                                            DM   3,883,453   3,734,846 

Adjustments to reconcile net income to net                                       
 cash provided by operating activities:                                          
 Depreciation and amortization of property, plant                                
 and equipment                                               707,076     351,594 
 Allowance for doubtful accounts                              32,260       9,360 
 (Profit) Loss on sale of equipment                          (12,799)      3,334 

Changes in operating assets and liabilities:                                     
 Decrease (increase) in trade accounts receivable           (336,498)     42,744 
 Increase in amounts due from officers and employees          (2,175)     (6,042)
 Increase in inventories                                    (779,854)   (767,830)
 Increase in other current assets                            (35,775)   (110,274)
 Increase in trade accounts payable                          828,861     267,295 
 Increase (decrease) in income taxes payable                (691,786)     95,558 
 Increase  in accrued expenses                                31,020       7,800 
 Increase (decrease) in other liabilities                    147,063     (24,906)
                                                           ---------  ---------- 
Net cash provided by operating activities             DM   3,770,846   3,603,479 
                                                           =========  ========== 

   The  business  paid DM 65,610 and DM 63,472 for interest and DM 1,520,574
and DM 702,404 for income taxes in 1995 and 1994, respectively.                 

(10)     Events Subsequent to Balance Date                                      
   On  February 7, 1996 Mr. Dieter W. Priess entered into a contract to sell
certain  assets  and  the  operations  of  Dieter  W. Priess Medizintechnik to  
ResMed-Priess  GmbH.    ResMed-  Priess  GmbH  is a wholly owned subsidiary of  
ResMed Inc., which is incorporated in the United States of America.             

F-31                                                                            

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PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION                          

The following unaudited pro forma condensed consolidated financial    
statements present the estimated effects of the acquisition of the Priess       
Medizintechnik Medical Products Distribution business ("Priess").               
The Pro Forma Condensed Consolidated Statements of Operations for               
the year ended June 30, 1995 and the six months ended December 31,              
1995 assume that the purchase occurred on July 1, 1994.  Also                   
presented is the unaudited December 31, 1995 Pro Forma Condensed                
Consolidated Balance Sheet giving effect to the purchase of Priess as           
if it had been consummated on December 31, 1995.  See "Note 1 -                 
Basis of Presentation".                                                         

The pro forma information is based on the historical consolidated     
financial statements of ResMed Inc and the historical financial                 
statements of Priess adjusted for related preliminary estimates and             
assumptions.  The pro forma adjustments are applied to the historical           
consolidated financial statements of ResMed Inc and Priess to account           
for the Priess acquisition using the purchase method of accounting.             
Under purchase accounting, the total purchase price of Priess was               
allocated to the assets and liabilities acquired based on their relative        
fair values as of the acquisition date, with the excess of purchase price       
over the fair value of tangible assets acquired less the fair value of          
liabilities assumed recorded as intangible assets.  Although the final          
allocation may differ, the Pro Forma Condensed Consolidated                     
financial information reflects ResMed Inc's management's best                   
estimate based on currently available information.                              

The unaudited pro forma condensed consolidated financial statements   
are not necessarily indicative of the actual results that would have            
occurred had the purchase been consummated on the applicable date               
indicated.  Moreover, they are not intended to be indicative of future          
results of operations or financial position.  These unaudited pro forma         
financial statements should be read in conjunction with the Notes to            
the Pro Forma Condensed Consolidated Financial Statements, the                  
audited financial statements and notes for Priess included herein and           
the audited historical consolidated financial statements of ResMed              
Inc.                                                                            

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RESMED INC        

                                                        [Enlarge/Download Table]
               PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET                                   
                             DECEMBER 31, 1995                                                  
                               (UNAUDITED)                                                      
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)                                 

                                                            Priess                              
                                               ResMed Inc  Business           Pro forma         
                                               Historical  Historical  Adjustments  Consolidated
                                                                                                
Assets                                                                                          
Current assets:                                                                                 
Cash and cash equivalents                         $ 2,699        106       (106)2       2,699   
  Marketable securities - available for sale       24,630          -     (6,350)3a     18,280   
  Accounts receivable, net of allowance of                                                      
    $160 at December 31, 1995                       5,349      1,071     (1,071)2       5,349   
  Government grants                                   707          -          -           707   
  Inventories                                       5,187      1,858        (28)3       7,017   
  Prepaid expenses and other current assets           550        131       (131)2         550   
                                                _________  _________  _________     _________   
Total current assets                               39,122      3,166     (7,686)       34,602   
                                                _________  _________  _________     _________   

Property, plant and equipment, net                  2,336        922       (378)2,3     2,880   
Patents, net of accumulated amortization                                                        
 of $214 at December 31, 1995                         177          -          -           177   
Deferred income taxes                                 124          -          -           124   
Goodwill, net                                           -          -      4,042         4,042   
Other assets                                          293          -          -           293   
                                                _________  _________  _________     _________   
Total assets                                     $ 42,052      4,088     (4,022)       42,118   
                                                =========  =========  =========     =========   
Liabilities and Stockholders' Equity                                                            
Current liabilities:                                                                            
  Bank overdraft                                  $     -        486       (486)2    $      -   
  Accounts payable                                  2,227        959       (893)2,3     2,293   
  Accrued expenses                                  1,762        402       (402)2       1,762   
  Bank loans                                            -         39        (39)2           -   
  Income taxes payable                              1,367        147       (147)2       1,367   
                                                _________  _________  _________     _________   
Total current liabilities                           5,356      2,033     (1,967)        5,422   
                                                _________  _________  _________     _________   
Long-term debt                                        820        382       (382)2         820   
                                                _________  _________  _________     _________   
Total liabilities                                   6,176      2,415     (2,349)        6,242   
                                                _________  _________  _________     _________   
Stockholders' equity:                                                                           
  Preferred stock, $0.01 par value, 2,000,000                                                   
   shares authorized; none issued                       -          -          -             -   
  Common Stock $0.004 par value; 15,000,000                                                     
   shares authorized; issued and outstanding                                                    
   7,137,408 at December 31, 1995                      28          -          -            28   
  Additional paid-in-capital                       29,450          -          -        29,450   
  Retained Earnings                                 6,402      1,686     (1,686)2       6,402   
  Currency translation adjustment                      (4)       (13)        13 2          (4)  
                                                _________  _________  _________     _________   
                                                   35,876      1,673     (1,673)       35,876   
Commitments and contingencies                   _________  _________  _________     _________   
                                                 $ 42,052      4,088     (4,022)       42,118   
                                                =========  =========  =========     =========   

<FN>                                                                                            
See accompanying notes to unaudited pro forma condensed consolidated                            
financial statements.                                                                           

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RESMED INC        

                                                        [Enlarge/Download Table]
            PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS                          
                        SIX MONTHS ENDED DECEMBER 31, 1995                                    
                               (UNAUDITED)                                                    
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)                              

                                                        Priess                                
                                           ResMed Inc  Business   Pro forma                   
                                           Historical Historical Adjustments      Consolidated
                                                                                              
Net revenues                                   14,599      5,740     (2,670)3h     $  17,669  

Cost of sales                                   7,216      2,441     (2,446)3h         7,211  
                                            _________  _________  _________        _________  
Gross profit                                    7,383      3,299       (224)          10,458  
                                            _________  _________  _________        _________  
Operating expenses:                                                                           
  Selling, general and administrative           4,599      1,353        138 3c, 3e     6,090  
  Research and development                      1,371          -          -            1,371  
                                            _________  _________  _________        _________  
Total operating expenses                        5,970      1,353        138            7,461  
                                            _________  _________  _________        _________  
Income from operations                          1,413      1,946       (362)           2,997  
                                            _________  _________  _________        _________  
Other income:                                                                                 
  Interest income, net                            531        (43)      (190)3d           298  
  Government grants                               305          -          -              305  
  Other, net                                      241        (67)         -              174  
                                            _________  _________  _________        _________  
Total other income, net                         1,077       (110)      (190)             777  
                                            _________  _________  _________        _________  
Income before income taxes                      2,490      1,836       (552)           3,774  
Income taxes                                      688        542        310 df, 3g     1,540  
                                            _________  _________  _________        _________  
  Net income                                    1,802      1,294       (862)       $   2,234  
                                            =========  =========  =========        =========  
Net income per common and common                                                              
 equivalent share:                                                                            
  Primary                                        0.25          -          -             0.31  
  Assuming full dilution                         0.25          -          -             0.31  

Weighted average shares per common                                                            
 and common equivalent outstanding:                                                           
  Primary                                   7,172,533          -          -        7,172,533  
  Assuming full dilution                    7,188,372          -          -        7,188,372  

<FN>                                                                                          
See accompanying notes to unaudited pro forma condensed consolidated                          
financial statements.                                                                         

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RESMED INC        

                                                        [Enlarge/Download Table]
                 PRO FORMA CONDENSED STATEMENT OF OPERATIONS                                  
                         YEAR ENDED JUNE 30, 1995                                             
                              (UNAUDITED)                                                     
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)                                

                                                         Priess                               
                                           ResMed Inc   Business           Pro Forma          
                                           Historical  Historical  Adjustments    Consolidated

                                                                                              
Net revenues                                 $ 23,501      9,244     (3,364)3h     $  29,381  

Cost of sales                                  11,271      4,332     (3,234)3h        12,369  
                                            _________  _________  _________        _________  
Gross profit                                   12,230      4,912       (130)          17,012  
                                            _________  _________  _________        _________  
Operating expenses:                                                                           
  Selling, general and administrative           7,447      2,241        232 3h, 3e     9,920  
  Research and development                      1,996          -          -            1,996  
                                            _________  _________  _________        _________  
Total operating expenses                        9,443      2,241        232           11,916  
                                            _________  _________  _________        _________  

Income from operations                          2,787      2,671       (362)           5,096  
                                            _________  _________  _________        _________  
Other income:                                                                                 
  Interest income, net                            205        (26)      (444)3d          (265) 
  Government grants                               527          -          -              527  
  Other, net                                      262         11          -              273  
                                            _________  _________  _________        _________  
Total other income, net                           994        (15)      (444)             535  
                                            _________  _________  _________        _________  
Income before income taxes                      3,781      2,656       (806)           5,631  
Income taxes                                      948        700        436            2,084  
                                            _________  _________  _________        _________  
  Net income                                  $ 2,833      1,956     (1,242)3f, 3g $   3,547  
                                            =========  =========  =========        =========  
Net income per common and common                                                              
equivalent share:                                                                             
  Primary                                        0.63          -          -             0.80  
  Assuming full dilution                         0.62          -          -             0.79  

Weighted average shares per common                                                            
and common equivalent outstanding:                                                            
  Primary                                   4,449,867          -          -        4,449,867  
  Assuming full dilution                    4,512,533          -          -        4,512,533  
<FN>                                                                                          
See accompanying notes to unaudited pro forma condensed consolidated                          
financial statements.                                                                         

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RESMED INC        
NOTES TO UNAUDITED PRO FORMA        
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS   

1.     Basis of Presentation                                                    

The accompanying unaudited pro forma condensed statements of          
operations present the historical results of operations of ResMed Inc           
and Priess for the year ended June 30, 1995 and the six months ended            
December 31, 1995, with pro forma adjustments as if the transaction             
had taken place on July 1, 1994.  The unaudited pro forma condensed             
balance sheet presents the historical balance sheets of ResMed Inc and          
Priess as of December 31, 1995 with pro forma adjustments as if the             
transaction had been consummated as of December 31, 1995, in a                  
transaction accounted for as a purchase in accordance with generally            
accepted accounting principles.                                                 

Certain reclassifications have been made to the historical financial  
statements of Priess to conform to the pro forma condensed financial            
statement presentation.                                                         

2.     Adjustments to Reflect Entity Acquired                                   

                                                                [Download Table]
     The following adjustments to Priess historical financial statements
reflect excluded assets and liabilities not subject to acquisition      
(Dollars in thousands):                                                 

                                                                        
Cash and cash equivalent                         $ (106)                
Accounts receivable                              (1,071)                
Prepaid expenses and other current assets          (131)                
Property plant and equipment                       (208)                
Bank overdraft                                      486                 
Accounts payable                                    959                 
Accrued expenses                                    402                 
Bank loans (current)                                 39                 
Income taxes payable                                147                 
Long-term debt                                      382                 

3.     Pro Forma Adjustments                                                    

The following adjustments give pro forma effect to the Transactions   
(Dollars in Thousands):                                                         

                                                                [Download Table]
a)     Purchase Price of Priess is made up of the following     
components:                                                     

                                                                
Payment of cash funded with proceeds from the                   
 sale of marketable securities - available for sale      $ 6,350
Acquisition costs                                             66
                                                         _______
Total Exchange Consideration                             $ 6,416
                                                         =======

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RESMED INC                                                                      
3.     Pro Forma Adjustments (Continued)                                        

                                                                [Download Table]
b)     To adjust the assets and liabilities to their estimated fair values
(dollars in thousand):                                                    

                                                                          
Net assets acquired of Priess at December 31, 1995      $ 2,572           
Fair value adjustments to assets and liabilities:                         
  Inventories                                               (28)          
  Property plant and equipment                             (170)          
  The Priess Business goodwill                            4,042           
                                                        _______           
                                                          6,416           
                                                        =======           

The following adjustments to the unaudited pro forma statements of    
operations reflect:                                                             

c)     Adjustments for the elimination of various items charged or              
credited to Priess by the vendors which would not have been                     
incurred if the transactions had occurred at the beginning of                   
the period presented.  These items include personal costs and                   
costs associated with other insignificant business activities not               
acquired.                                                                       

d)     The acquisition was funded from proceeds from ResMed Inc's               
IPO dated June 2, 1995.  This entry represents the elimination                  
of interest income from cash reserves and marketable                            
securities held for sale.                                                       

e)     The amortization of excess of costs over acquired net assets             
over an estimate life of 15 years.  Such amortization expense is                
subject to possible adjustment at a later date.  Amortization                   
expense was $294,000 and $147,000 for the year ended June                       
30, 1995 and the six month period ended December 31, 1995,                      
respectively.                                                                   

f)     Additional German corporate taxation expense incurred by                 
ResMed Inc. on incorporation of Priess as if the transaction                    
had occurred as of the beginning of the period presented.  Prior                
to acquisition the entity was subject solely to regional German                 
trade tax with Federal German corporate tax payable by the                      
vendors individually.                                                           

g)     The tax effect, using German statutory rate, on the net pro              
forma adjustments.                                                              

h)     Elimination of intercompany sales made by ResMed Inc to                  
Priess and associated profit in Priess inventory as if the                      
transaction had occurred as of the beginning of the period                      
presented.                                                                      

The pro forma condensed consolidated statements of operations do not  
reflect any cost savings or economies of scale that the Corporation's           
management believes might have been achieved had the transaction                
occurred at the beginning of the period presented.                              

F-37                                                                            

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RESMED INC. AND SUBSIDIARIES        

                                                                [Download Table]
                 Condensed Consolidated Balance Sheets                
                (in US$ thousands, except per share data)             

                                                 March 31,    June 30,
                                                   1996         1995  
                                                      (unaudited)     
                                                                      
Assets                                                                
Current assets:                                                       
  Cash and cash equivalents                       $ 4,009     $ 3,256 
  Marketable securities - available for sale       18,081      20,510 
  Accounts receivable, net of allowance of $167                       
   at March 31, 1996 and $144 at June 30, 1995      5,745       3,792 
  Government grants receivable                        914         825 
  Inventories (note 3)                              6,137       4,350 
  Prepaid expenses and other current assets           941         280 
                                                  _______     ________
Total current assets                               35,827      33,013 
                                                  _______     ________

Property, plant and equipment, net                  2,954       1,981 
Patents, net of accumulated amortization of $240                      
 at March 31,1996 and $179 at June 30, 1995           177         161 
Deferred income taxes                                 128         139 
Goodwill, net                                       4,384           - 
Other assets                                          879          19 
                                                  _______     ________
Total assets                                      $44,349     $35,313 
                                                  =======     ========
Liabilities and Stockholders' Equity                                  
Current liabilities:                                                  
  Accounts payable                                $ 2,313     $ 2,572 
  Accrued expenses                                  2,210       2,006 
  Income taxes payable                              1,449       1,081 
                                                  _______     ________
Total current liabilities                           5,972       5,659 
                                                  _______     ________
Long-term debt                                        861         787 
                                                  _______     ________
Total liabilities                                   6,833       6,446 
                                                  _______     ________
Stockholders' equity:                                                 
  Preferred stock, $0.01 par value, 2,000,000                         
   shares authorized; none issued                       -           - 
  Common Stock $0.004 par value;                                      
   15,000,000 shares authorized; issued and                           
   outstanding 7,149,908 at March 31, 1996                            
   and 6,534,000 at June 30, 1995                      29          26 
  Additional paid-in capital                       29,381      24,393 
  Retained Earnings                                 7,609       4,600 
  Currency translation adjustment                     497        (152)
                                                  _______     ________
                                                   37,516      28,867 
Commitments and contingencies                     _______     ________
                                                  $44,349     $35,313 
                                                  =======     ========
<FN>                                                                  
See accompanying notes to condensed consolidated financial            
statements.                                                           

F-38                                                                            

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ResMed Inc. and Subsidiaries

                                                                [Download Table]
              Condensed Consolidated Statements of Income (Unaudited)               
                     (in US$ thousands, except per share data)                      

                                        Three Months Ended        Nine Months Ended 
                                             March 31,                March 31,     
                                        1996         1995        1996          1995 
                                                                                    
Net revenue                           $  9,360      $ 6,380     $ 23,959     $16,755
Cost of sales                            4,774        3,046       11,990       8,167
                                      ________     ________     ________     _______
Gross profit                             4,586        3,334       11,969       8,588
                                      ________     ________     ________     _______

Operating expenses                                                                  
  Selling, general and                                                              
   administrative expenses               2,902        1,956        7,501       5,248
  Research and development expenses        640          556        2,011       1,443
                                      ________     ________     ________     _______
Total operating expenses                 3,542        2,512        9,512       6,691
                                      ________     ________     ________     _______
Income from operations                   1,044          822        2,457       1,897
                                      ________     ________     ________     _______

Other income, net:                                                                  
  Interest income, net                     283           36          814         121
  Government grants                        129           68          434         253
  Other income, net                        353          144          594         333
                                      ________     ________     ________     _______
Total other income, net                    765          248        1,842         707
                                      ________     ________     ________     _______

Income before income taxes               1,809        1,070        4,299       2,604
Income taxes                               602          267        1,290         652
                                      ________     ________     ________     _______
Net income                            $  1,207       $  803      $ 3,009     $ 1,952
                                      ========     ========     ========     =======

Net income per common and                                                           
common equivalent share:                                                            
  Primary                               $0.17        $0.18        $0.42        $0.45
  Assuming full dilution                $0.17        $0.18        $0.42        $0.45

Weighted average shares per common                                                  
and common equivalent outstanding:                                                  
  Primary                                7,193        4,355        7,179       4,310
  Assuming full dilution                 7,227        4,357        7,201       4,311

<FN>                                                                                
See accompanying notes to condensed consolidated financial                          
statements.                                                                         

F-39                                                                            

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ResMed Inc. and Subsidiaries

                                                                [Download Table]
            Condensed Consolidated Statements of Cash Flows (Unaudited)
                             (in US$ thousands)                        

                                                  Nine Months Ended    
                                                       March 31,       

                                                   1996        1995    
                                                                       
Cash flows from operating activities:                                  
Net income                                       $ 3,009     $ 1,952   
                                                 _______    ________   
Adjustment to reconcile net income                                     
to net cash used in operating activities:                              
Depreciation and amortization                        693         449   
Provision for service warranties                      (8)        199   
Deferred income taxes                                 11         387   
Goodwill amortization                                 50           -   
Foreign currency options                            (493)        (34)  
Changes in operating assets and liabilities,                           
net of effects from acquisition:                                       
  Accounts receivable, net                        (1,805)     (1,162)  
  Government grants                                  (48)        (18)  
  Inventories                                       (133)     (1,828)  
  Prepaid expenses and other current assets         (585)       (120)  
  Accounts payable, accrued expenses                                   
   and income taxes payable                          270         302   
                                                 _______    ________   
  Net cash provided by operating activities          961         127   
                                                 _______    ________   
Cash flows used in investing activities:                               
  Purchases of property, plant and equipment        (931)     (1,141)  
  Purchases of patents                               (44)          -   
  Purchase of Priess                              (6,517)          -   
  Purchase of non-trading investments               (350)         15   
  Purchases of marketable securities -                                 
   available for sale                            (76,392)          -   
  Proceeds from sale of marketable securities -                        
    available for sale                            78,821           -   
                                                 _______    ________   
  Net cash used in investing activities           (5,413)     (1,126)  
                                                 _______    ________   
Cash flows provided by (used in) financing activities:                 
  Proceeds from issuance of common stock           4,991          24   
  Proceeds from issuance of long-term debt             -         210   
  Deferred offering costs                              -        (515)  
                                                 _______    ________   
  Net cash provided by (used in) financing                             
   activities                                      4,991        (281)  
                                                 _______    ________   
Effect of exchange rate changes on cash              214          52   
                                                 _______    ________   
Net increase (decrease) in cash                                        
and cash equivalents                                 753      (1,228)  
                                                 _______    ________   
Cash and cash equivalents at beginning                                 
of period                                          3,256       3,739   
                                                 _______    ________   
Cash and cash equivalents at end of period       $ 4,009     $ 2,511   
                                                 =======    ========   
Supplemental disclosure of cash flow information:                      
  Income taxes paid                                  945         600   
<FN>                                                                   
See accompany notes to condensed consolidated financial                
statements.                                                            

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ResMed Inc. and Subsidiaries        
Notes to Condensed Consolidated Financial Statements (unaudited)  

(1)  Organization and Basis of Presentation                                     

   ResMed Inc. (the Company), is a Delaware corporation formed in March 1994
as a holding company for ResMed Holdings Ltd. (RHL), a company resident in      
Australia.  RHL designs, manufactures and markets devices for the evaluation    
and treatment of sleep disordered breathing, primarily obstructive sleep        
apnea.  The Company's principal manufacturing operations are located in         
Australia.  Other principal distribution and sales sites are located in the     
United States, the United Kingdom, Germany and Europe.                          

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for        
interim financial information and with the instructions to Form 10-Q and        
Article 10 of Regulation S-X.  Accordingly, they do not include all of the      
information and footnotes required by generally accepted accounting             
principles for complete financial statements.  In the opinion of management,    
all adjustments (consisting of normal recurring accruals) considered            
necessary for a fair presentation have been included.  Operating results        
for the three months ended March 31, 1996 and the nine months ended March 31,   
1996 are not necessarily indicative of the results that may be expected for     
the year ended June 30, 1996.                                                   

In May 1994, the stockholders of RHL approved a reorganization and    
reincorporation of RHL resulting in the exchange of the shares of the           
outstanding common stock of RHL for the shares of the Company.  In addition,    
effective in March 1995, the Company effected a 5:2 stock split.  As a result   
of the reorganization, reincorporation and the stock split, the accounts        
within the consolidated financial statements have been restated to reflect a    
par value of $.004 per share.  The board of directors also authorized           
2,000,000 shares of $0.01 par value preferred stock.  None of the preferred     
stock was issued or outstanding at March 31, 1996.                              

(2)  Summary of Significant Accounting Policies                                 

(a)  Basis of Consolidation:                                                    

The consolidated financial statements include the accounts of the     
Company and its wholly owned subsidiaries.  All significant intercompany        
transactions and balances have been eliminated in consolidation.                

(b)  Revenue Recognition:                                                       

Revenue on product sales is recorded at the time of shipment.  Royalty
revenue from license agreements is recorded when earned.                        

(c)  Cash and Cash Equivalents:                                                 

Cash equivalents include certificates of deposit, commercial paper,   
and other highly liquid investments stated at cost, which approximates market.  
Investments with original maturities of 90 days or less are considered to be    
cash equivalents for purposes of the consolidated statements of cash flows.     

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ResMed Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)  

(2)  Summary of Significant Accounting Policies, Continued                      

(d)  Inventories:                                                               

Inventories are stated at the lower of cost, determined principally by
the first-in, first-out method, or net realizable value.                        

(e)  Property, Plant  and Equipment:                                            

 Property, plant and equipment is recorded at cost. Depreciation expense
is computed using the straight-line method over the estimated useful lives of   
the assets, generally two to 10 years.  Assets held under capital leases are    
recorded at the lower of the net present value of the minimum lease payments    
or the fair value of the leased asset at the inception of the lease.            
Amortization expense is computed using the straight-line method over the        
shorter of the estimated useful lives of the assets or the period of the        
related lease.  Straight-line and accelerated methods of depreciation are       
used for tax purposes.  Maintenance and repairs are charged to expense as       
incurred.                                                                       

(f)  Patents:                                                                   

The registration costs for new patents are capitalized and amortized  
over the estimated useful life of the patent, generally five years.  In the     
event of a patent being superseded, the unamortized costs are written off       
immediately.                                                                    

(g)  Government Grants:                                                         

Government grants revenue is recognized when earned.  Grants have been
obtained by the Company from the Australian Federal Government to support       
continued development and export of the Company's proprietary positive airway   
pressure technology and to assist development of export markets in the amount   
of $129,000 for the three month period ended March 31, 1996 and $434,000 for    
the nine month period ended March 31, 1996.                                     

(h)  Foreign Currency:                                                          

The consolidated financial statements of the Company's non-U.S.       
subsidiaries are translated into U.S. dollars for financial reporting           
purposes. Assets and liabilities of non-U.S. subsidiaries whose functional      
currencies are other than the U.S. dollar are translated at period end          
exchange rates, revenue and expense transactions are translated at average      
exchange rates for the period. Cumulative translation effects are reflected     
in stockholders' equity.  Gains and losses on transactions, denominated in      
other than the functional currency of the entity, are reflected in operations.  

(i)  Research and Development:                                                  

All research and development costs are expensed in the                
period incurred.                                                                

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ResMed Inc. and Subsidiaries          
Notes to Condensed Consolidated Financial Statements (unaudited)  

(2)  Summary of Significant Accounting Policies, Continued                      

(j)  Net Income per Common and Common Equivalent Share:                         

  Primary net income per common and common equivalent share and net income
per common and common equivalent share assuming full dilution are computed      
using the weighted average number of shares outstanding, adjusted for the       
incremental shares attributed to outstanding options to purchase common stock   
as determined under the treasury stock method.                                  

(k)  Financial Instruments:                                                     

The carrying value of financial instruments, such as cash and cash    
equivalents, foreign currency option contracts, accounts receivable,            
accounts payable, marketable securities and long-term debt approximate          
their fair value.  The Company does not hold or issue financial instruments     
for trading purposes.                                                           

The following table presents the carrying amounts and estimated fair  
values of the Company's financial instruments at March 31, 1996 and June 30,    
1995.  The Fair Value of Financial Instruments is defined as the amount at      
which the instrument could be exchanged in a current transaction between        
willing parties.                                                                

                                                                [Download Table]

                                March 31, 1996   June 30,  1995 
                                Carrying  Fair   Carrying  Fair 
                                Amount    Value  Amount    Value
(US$ in thousands)                                              
                                                                
Financial assets                                                
     Cash and cash equivalents     4,009   4,009   3,256   3,256
     Marketable securities -                                    
      available for sale          18,081  18,081  20,510  20,510
     Government grants receivable    914     914     825     825
     Accounts Receivable           5,745   5,745   3,792   3,792
     Other assets                    879     879      19      19
Financial liabilities                                           
     Accounts Payable              2,313   2,313   2,572   2,572
     Long term debt                  861     861     787     787

The carrying amounts shown in the table are included in the statement 
of financial position under the indicated captions.                             

(l)  Foreign Exchange Risk Management:                                          

The Company enters into various types of foreign exchange contracts in
managing its foreign exchange risk, including derivative financial              
instruments encompassing forward exchange contracts and foreign currency        
options.                                                                        

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ResMed Inc. and Subsidiaries        
Notes to Condensed Consolidated Financial Statements (unaudited)  

(2)  Summary of Significant Accounting Policies, Continued                      

(l)  Foreign Exchange Risk Management, Continued                                

The purpose of the Company's foreign currency hedging activities is to
protect the Company from adverse exchange rate fluctuations with respect to     
net cash movements resulting from the sales of products to foreign customers    
and from its Australian manufacturing activities.  The Company enters into      
foreign currency option contracts to hedge anticipated sales and manufacturing  
costs denominated in principally Australian Dollars, Pound Sterling and         
Deutschmarks.  The term of such currency derivatives is rarely more than        
three years.                                                                    

  Premiums to enter certain foreign currency options are included in other
assets and are amortized over the period of the agreement in the consolidated   
statement of income against other income, net.  At March 31, 1996 unamortized   
premiums amounted to $329,000.                                                  

Unrealised gains or losses are recognised as incurred in the balance  
sheet as either other assets or other liabilities and are recorded within       
other income, net on the Company's consolidated statement of income.            
Unrealised gains and losses on currency derivatives are determined based on     
dealer quoted prices.                                                           

Foreign currency option contracts have been purchased in part by the  
issue of put options to counterparts.  As a result, should foreign exchange     
rates drop below a specified level, on a specific date, the Company is          
required to deliver certain funds to counterparts at contracted foreign         
exchange rates.  As at March 31, 1996 none of the put options issued by the     
Company are exercisable as foreign exchange rates remain above the foreign      
exchange rates specified.                                                       

The Company is exposed to credit-related losses in the event of       
nonperformance by counterparts to financial instruments, but it does not        
expect any counterparts to fail to meet their obligations given their high      
credit ratings.  The credit exposure of foreign exchange options is             
represented by the fair value of options with a positive fair value at the      
reporting date.                                                                 

   At March 31, 1996 the Company held foreign currency option contracts with
notional amounts totalling $44,100,000 to hedge foreign currency items. These 
contracts mature at various dates prior to June 30, 1998.                       

(m)  Income Taxes:                                                              

The Company accounts for income taxes under Statement of Financial    
Accounting Standards No. 109, "Accounting for Income Taxes" (Statement 109).    
Statement 109 requires an asset and liability method of accounting for          
income taxes.  Under the asset and liability method of Statement 109,           
deferred tax assets and liabilities are recognized for the future tax           
consequences attributable to differences between the financial statement        
carrying amounts of existing assets and liabilities and their respective tax    
bases.  Deferred tax assets and liabilities are measured using enacted tax      
rates expected to apply to taxable income in the years in which                 

F-44                                                                            

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ResMed Inc. and Subsidiaries        
Notes to Condensed Consolidated Financial Statements (unaudited)  

(2)  Summary of Significant Accounting Policies, Continued                      

(m)  Income Taxes, Continued:                                                   

those temporary differences are expected to be recovered or settled.  
Under Statement 109, the effect on deferred tax assets and liabilities of a     
change in tax rates is recognized in income in the period that includes the     
enactment date.                                                                 

(n)  Priess Purchase                                                            

On February 7, 1996 the Company's fully owned German subsidiary ResMed
Priess GmbH acquired the business and associated assets of Dieter W Priess      
Medizintechnik (Priess), its German distributor for $6,350,000 in cash.         
Priess is based in Moenchengladbach, Germany and is engaged in the sale and     
distribution of respiratory products.  The acquisition has been accounted       
for as a purchase and, accordingly, the results of operations of Priess have    
been included in the Company's consolidated financial statements from           
February 7, 1996.  The excess of the purchase price over the fair value of      
the net identifiable assets acquired of $4,461,000 has been recorded as         
goodwill and is being amortized on a straight-line basis over 15 years.  The    
purchase agreement also provides for additional payments of up to $4,000,000    
over the next four years contingent on future sales revenues of Priess.  The    
additional payments, if any, will be accounted for as additional goodwill.      

                                                                [Download Table]

                                     $'000 
                                           
Consideration                              
      Outflow of cash                 6,517
                                      _____
Fair value of assets acquired              
      Inventory                       1,524
      Property Plant and equipment      532
                                      _____
                                      2,056
                                      _____
      Goodwill on acquisition         4,461
                                      _____
      Cash consideration              6,517
                                      =====

The following unaudited pro forma financial information presents the  
combined results of operations of the Company and Priess as if the              
acquisition had occurred as of the beginning of the nine month periods          
ended March 31, 1996 and March 31, 1995, after giving effect to certain         
adjustments, including amortization of goodwill, additional depreciation        
expense, reduced interest income from use of IPO funds relating to the          
acquisition, and related income tax effects.  The pro forma financial           
information does not necessarily reflect the results of operations that         
would have occurred had the Company and Priess constituted a single entity      
during such periods.                                                            

F-45                                                                            

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ResMed Inc. and Subsidiaries        
Notes to Condensed Consolidated Financial Statements (unaudited)  

(2)    Summary of Significant Accounting Policies, Continued                    

(n)  Priess Purchase, Continued:                                                

                                                                [Download Table]

                              Nine Months Ended 
                                   March 31,    
                                  (unaudited)   
                                1996       1995 
                              $'000      $'000  
                                                
Net sales                      27,954     21,369

Net income                      3,962      2,927

Net income per common and                       
common equivalent share:                        
       Primary                 $0.55      $0.68 
       Assuming full dilution  $0.55      $0.68 

(3)  Inventories                                                                

Inventories were comprised of the following at March 31,              
1996 and June 30, 1995:                                                         

                                                                [Download Table]

                  March 31,  June 30,  
                        1996       1995
                                       
Raw Materials        $ 2,404    $ 1,990
Work in progress         671        888
Finished goods         3,062      1,472
                     _______    _______
                     $ 6,137    $ 4,350
                     =======    =======

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ResMed Inc. and Subsidiaries        
Management's Discussion and Analysis of Financial Condition     
and Results of Operations         

Net Revenues                                                                    

Net revenues increased for the three months ended March 31, 1996 to $9.4        
million from $6.4 million for the three months ended March 31, 1995, an         
increase of $3.0 million or 47%.  For the nine month period ended March 31,     
1996 net revenues increased to $24.0 million from $16.8 million in fiscal       
1995 an increase of $7.2 million or 43%.  Both the three month and nine month   
increase in net revenues are primarily attributable to an increases in unit     
sales of the Company's flow generators and accessories in North America and     
Europe and additional revenues generated in Germany from the Priess business    
since February 7, 1996, date of acquisition.  Net revenues in North America     
increased to $4.5 million from $3.4 million for the quarter, $12.1 million      
from $8.8 million for the nine months and in Europe to $3.6 million from $2.0   
million for the quarter, $8.0 million from $4.7 million for the nine months,    
respectively.                                                                   

Gross Profit                                                                    

Gross profit increased for the three months ended March 31, 1996 to $4.6        
million from $3.3 million for the three months ended March 31, 1995, an         
increase of $1.3 million or 38%.  The increase resulted primarily from          
increased unit sales during the quarter ended March 31, 1996.  Gross profit     
as a percentage of net revenues decreased for the three months ended March      
31, 1996 to 49% from 52% in the three months ended March 31, 1995.  This        
decrease was primarily due to a 5% increase of the Australian dollar with       
respect to the United States dollar over the three months ended March 1996      
and to a lesser extent product mix changes.                                     

For the nine month period ended March 31, 1996 gross profit increased to        
$12 million from $8.6 million in the same period of fiscal 1995 an increase     
of $3.4 million or 39%.  Gross profit as a percentage of net revenues           
decreased for the nine month period ended March 31, 1996 to 50% from 51%, for   
the nine months ended March 31, 1995.                                           

Selling, General and Administrative Expenses                                    

Selling, general and administrative expenses increased for the three months     
ended March 31, 1996 to $2.9 million from $2.0 million for the three months     
ended March 31, 1995, an increase of $946,000 or 48%.  As a percentage of       
net revenues, selling, general and administrative expenses remained static      
at 31% for the quarter ended March 31, 1996 and the three months ended March    
31, 1995.  The increase in gross expenses was due primarily to an increase      
from 56 to 90 in the number of sales and administrative personnel, including    
24 persons employed on acquisition of Priess, legal costs associated with       
ongoing legal action (refer Part II Item 1) and other expenses related to       
the increase in Company sales.                                                  

Selling, general and administrative expenses for the nine months ended          
March 31, 1996 also increased to $7.5 million from $5.2 million for the         
nine months ended March 31, 1995 an increase of $2.3 million or 43%.  As a      
percentage of net revenues selling, general and administration expenses         
remained static at 31% for the nine months ended March 31, 1996 and 1995.       

F-47                                                                            

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ResMed Inc. and Subsidiaries        
Management's Discussion and Analysis of Financial Condition     
and Results of Operations         

Research and Development Expenses                                               

Research and development expenses increased for the three months ended March    
31, 1996 to $640,000 from $556,000 for the three months ended March 31, 1995,   
an increase of $84,000 or 15%.  As a percentage of net revenues, research and   
development expenses for the three months ended March 31, 1996 decreased to     
7% from 9% for the period ended March 31, 1996. The increase in gross           
research and development expenses was due to an increase from 24 to 31 in       
the number of engineering personnel and increased payment for consulting        
fees to facilitate product development of a number of new products.             

For the nine month period ended March 31, 1996 research and development         
expenses also increased to $2.0 million from $1.4 million for fiscal 1995 an    
increase of $568,000 or 39%.  As a percentage of net revenues research and      
development expenses remained relatively consistent for the nine months ended   
March 31, 1996 and the nine months ended March 31, 1995.  The gross increase    
in research and development expenses for the nine months ended March 31, 1996   
reflects the cost increases noted for the quarter ended March 31, 1996          
relating to the development of new products.                                    

Other Income, net                                                               

Other income, net increased for the three months ended March 31, 1996 to        
$765,000 from $248,000 for the three months ended March 31, 1995, an            
increase of $517,000 or 209%.  This increase was due primarily to interest      
revenue of $283,000 arising from the initial public offering of the Company     
and net foreign exchange gains of $333,000 relating to foreign exchange         
option contracts.  Government grant income also increased for the three         
months ended March 31, 1996 to $129,000 from $68,000 for the three months       
ended March 31, 1995 reflecting an increase in both manufacturing and           
research activity.                                                              

Other income, net also increased for the nine months ended March 31, 1996 to    
$1.8 million, from $707,000 for the nine months ended March 31, 1995 an         
increase of $1.1 million or 161%.  The increase in other income, net over       
the nine month period reflects increased interest income of $693,000 relating   
to the initial public offering of the Company, additional government grant      
incomes, which increased to $434,000 from $253,000 for the nine months ended    
March 31, 1995 and the receipt of $242,000 from Teijin Limited of Japan for     
certain marketing rights for respiratory and related products in Japan.         

Income Taxes                                                                    

The Company's effective income tax rate for the three months ended March 31,    
1996 increased to approximately 33% from approximately 25.0% for the three      
months ended March 31, 1995.  For the nine month period ended March 31, 1996    
the Company's effective income tax rate increased to 30% from 25% for the       
nine months ended March 31, 1995.  These increases are primarily due to an      
increase in the Australian corporate tax rate from 33% to 36% on July 1, 1995,  
an effective German corporate taxation rate of 51%, partially offset by         
additional research and development expenses incurred in Australia for which    
the Company receives a 150% deduction for tax purposes.                         

F-48                                                                            

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ResMed Inc. and Subsidiaries        
Management's Discussion and Analysis of Financial Condition     
and Results of Operations         

Liquidity and Capital Resources                                                 

As of March 31, 1996 and June 30, 1995, the Company had cash and cash           
equivalents and marketable securities available for sale of approximately       
$22.1 million and $23.8 million, respectively. The Company's working capital    
approximated $29.9 million and $27.4 million, at March 31, 1996 and June 30,    
1995, respectively.  The increase in working capital balances reflects the      
increase in cash balances arising from increased selling activity, the          
receipt of approximately $5 million from the exercise of 153,000 stock          
options and the exercise, by the underwriters of the Company's initial public   
offering of their full over allotment of 450,000 shares at a net offering       
price of $10.23 per share.  These increases were offset by the payment of       
$6.5 million to acquire the Priess business.                                    

During the nine months ended March 31, 1996, the Company's operations           
generated $961,000 cash from operations, primarily as a result of increased     
profit from operations offset partially by increases in both inventory for      
new product introductions and accounts receivable due to increased sales.       
During the nine months ended March 31, 1995 approximately $127,000 of cash      
was generated from operations.                                                  

The Company's capital expenditures for the nine month period ended March 31,    
1996 and 1995 aggregated $7.4 million and $1.1 million, respectively.  The      
majority of the expenditures in the nine month period ending March 31, 1996     
relate to the purchase of Priess, the purchase of production tooling and        
equipment and, to a lesser extent, office furniture, computers and research     
and development equipment.  As a result of these capital expenditures, the      
Company's March 31, 1996 balance sheet reflects net property plant and          
equipment of approximately $3.0 million at March 31, 1996, compared to $2.0     
million at June 30, 1995.                                                       

The results of the Company's international operations are affected by changes   
in exchange rates between currencies.  Changes in exchange rates may            
negatively affect the Company's consolidated net sales and gross profit         
margins from international operations.  The Company is exposed to the risk    
that the dollar-value equivalent of anticipated cash flows will be adversely    
affected by changes in foreign currency  exchange rates.  The Company manages   
this risk through foreign currency option contracts.                            

In May 1993, the Australian Federal Government agreed to lend the Company up    
to $800,000 over a six year term. Such loan bears no interest for the first     
three years and bears interest at a rate of 3.8% thereafter until maturity.     
The outstanding principal balance of such loan was $861,000 and $787,000 at     
March 31, 1996 and June 30, 1995, respectively.                                 

F-49                                                                            

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Exhibit 23.1                                                                    

The Board of Directors                                                          
ResMed, Inc.                                                                    

The audit referred to in our report dated August 4, 1995, included the          
related financial statement schedule as of June 30, 1995, and for each of the   
years in the two-year period ended June 30, 1995, included in the               
Registration Statement.  This financial statement schedule is the               
responsibility of the Company's management.  Our responsibility is to express   
an opinion on this financial statement schedule based on our audits.  In our    
opinion, such financial statement schedule, when considered in relation to the  
basic consolidate financial statements taken as a whole, present fairly in all  
material respects the information set forth therein.                            

We consent to the use of our reports included herein and to the reference to    
our firm under the headings "Selected Consolidated Financial Data" and          
"Experts" in the Prospectus.                                                    

KPMG PEAT MARWICK LLP                                                           
KPMG Peat Marwick LLP                                                           
San Diego, California                                                           
July 9, 1996                                                                    

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Exhibit 23.2                                                                    

ResMed Inc                                                                      
(Formerly ResCare Medical Systems Limited)                                      
82 Waterloo Road                                                                
NORTH RYDE  NSW  2113                                                           

Dear Sirs                                                                       

We consent to the use in this Registration Statement No 33-94610 of ResMed Inc  
of our report dated September 23, 1994, appearing in the Prospectus, which is   
part of such Registration Statement, and to the references to us under the      
headings "Selected Consolidated Financial Data" and "Experts" in such           
Prospectus.                                                                     

The audits referred to in our report included the related financial statement   
schedule as of June 30, 1993, and for the year ended June 30, 1993 in the       
Registration Statement.  This financial statement schedule is the               
responsibility of the Company's management.  Our responsibility is to express   
an opinion on this financial statement schedule based on our audits.  In our    
opinion, such financial statement schedule, when considered in relation to the  
basic consolidate financial statements taken as a whole, presents fairly in     
all material respects the information set forth therein.                        

PRICE WATERHOUSE                                                                
Price Waterhouse                                                                
Parramatta, Australia                                                           
July 10, 1996                                                                   

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Exhibit 23.4                                                                    

To the Sole Shareholder                                                         

Mr. Dieter W. Priess                                                            
Trading as Dieter W. Priess Medizintechnik:                                     

We consent to the inclusion of our report dated March 27, 1996, with respect    
to the balance sheets of Dieter W. Priess Medizintechnik as of December 31,     
1995 and 1994, and the related statements of income, movements in equity, and   
cash flows for the years then ended, which report appears in the Amendment      
No. 1 of Form S-1 of ResMed Inc. dated July 8, 1996.                            

Dusseldorf, Germany                                                             
July 10, 1996                                                                   

KPMG DEUTSCHE TREUHAND-GESELLSCHAFT                                             
KPMG Deutsche Treuhand-Gessellschaft                                            
Aktiengesellschaft                                                              
Wirtschaftsprufungsgesellschaft                                                 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘POS AM’ Filing		Date		First		Last			Other Filings
		6/30/10		87					10-K
		6/1/05		43
		5/30/02		87
		6/30/98		101					10-K
		12/31/97		44		75			10-Q
		4/3/97		69
		11/3/96		69
		8/30/96		86
Filed on:		7/11/96
		7/10/96		1		109
		7/9/96		107
		7/8/96		109
		6/30/96		31		98			10-K,  10-K/A
		6/4/96		10		34
		5/31/96		15
		5/30/96		87
		5/17/96		48
		5/3/96		69
		3/31/96		6		106			10-Q
		3/27/96		78		109
		2/7/96		15		104
		12/31/95		58		109
		12/15/95		24
		8/4/95		59		107
		7/14/95		51		55
		7/10/95		69
		7/1/95		20		105
		6/30/95		11		107
		6/15/95		49		51
		6/2/95		15		94
		6/1/95		45		70
		5/17/95		11		34
		4/7/95		55
		4/6/95		44
		3/31/95		6		106
		3/13/95		7
		12/31/94		58		109
		9/23/94		60		108
		9/2/94		55
		7/1/94		15		93
		6/30/94		10		76
		3/31/94		46
		6/30/93		15		108
		5/3/93		55
		6/30/92		52
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