U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
                                   (Mark One)

     (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                 For the quarterly period ended: November 30, 1997

    ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                        For the transition period from ____ to ____

                         Commission file number 0-21320

                                 Magna-Lab Inc.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

           New York                                      11-3074326
 -------------------------------               ---------------------------------
 (State or other jurisdiction of               (IRS Employer Identification No.)
  incorporation or organization)

                       P.O. Box 1313, Brentwood. NY 11717
                    ----------------------------------------
                    (Address of principal executive offices)

                                 (516) 595-2111
                           ---------------------------
                           (Issuer's telephone number)

                                 Not applicable
              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes ( ) No (X)

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date -January 22, 1998

Class A Common Stock, $.001 Par Value                               19,325,391
-----------------------------------------------------            ---------------

Class B Common Stock, $.001 Par Value                                1,761,609
-----------------------------------------------------           ----------------
Class                                                                 Shares






    Transitional Small Business Disclosure Format (check one) Yes ( ) No (X)
<PAGE>

                                 MAGNA-LAB INC.


                                    CONTENTS



PART 1 - FINANCIAL INFORMATION (UNAUDITED)

         ITEM 1. - FINANCIAL STATEMENTS

                           CONDENSED BALANCE SHEETS                         1

                           CONDENSED STATEMENTS OF OPERATIONS               2

                           CONDENSED STATEMENTS OF CASH FLOWS               3

                           CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY     4

                           NOTES TO CONDENSED FINANCIAL STATEMENTS        5 - 8

         ITEM 2.   - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
                           OF OPERATION                                   9 - 10


PART II - OTHER INFORMATION

         ITEM 1. - LEGAL PROCEEDINGS                                        11

         ITEM 2. - CHANGES IN SECURITIES AND USE OF PROCEEDS                11

         ITEM 5. - OTHER INFORMATION                                        11

         ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K                         11






All items which are not  applicable or to which the answer is negative have been
omitted from this report.













<PAGE>


PART I: FINANCIAL INFORMATION
        ITEM 1. - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                                 MAGNA-LAB INC.

                            CONDENSED BALANCE SHEETS
               November 30, 1997 (unaudited) and February 28, 1997
                                                                    November 30,    February 28,
                                                                           1997            1997
<S>                                                               <C>               <C>  
                                     ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                       $           -     $    10,000
  Accounts receivable                                                         -          61,000
  Inventory, net of allowance for estimated
      non-realizable value of approximately $532,000                          -               -
  Deposits and other, net of amounts written off                              -               -
                                                                  --------------    ------------
        Total current assets                                                  -          71,000
                                                                  --------------    ------------

PROPERTY AND EQUIPMENT, less accumulated depreciation
 and amortization and write offs of approximately $794,000
 and $791,000, respectively                                              15,000          18,000
                                                                  --------------    ------------ 
OTHER ASSETS                                                                  -               - 
                                                                  --------------    ------------

                                                                  $      15,000     $    89,000
                                                                  ==============    ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Notes payable to related party, overdue                         $      11,000     $    75,000
  Accounts payable                                                    1,282,000       1,126,000
  Accrued and other current liabilities                               1,235,000         908,000
                                                                  --------------    ------------
        Total current liabilities                                     2,528,000       2,109,000
                                                                  --------------    ------------


COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Preferred stock, par value $.01 per share, 5,000,000
   shares authorized, no shares issued                                        -               -
  Common stock, Class A, par value $.001 per share,
   40,000,000 shares authorized, 4,253,431 and
   3,765,851 shares issued and outstanding, respectively.                 4,000           4,000
  Common stock, Class B, par value $.001 per share, 
   3,750,000 shares authorized, 1,875,000 shares issued,
   1,761,569 and 1,824,149 shares outstanding, respectively.              2,000           2,000
  Capital in excess of par value                                     13,464,000      13,464,000
  Accumulated deficit                                               (15,983,000)    (15,490,000)
                                                                  --------------   -------------
        Total stockholders' equity                                   (2,513,000)     (2,020,000)
                                                                  --------------   -------------
                                                                  $      15,000    $     89,000
                                                                  ==============   =============


                 See accompanying notes to financial statements
</TABLE>

                                        1


<PAGE>


                                 MAGNA-LAB INC.

                       CONDENSED STATEMENTS OF OPERATIONS
                                   (unaudited)




<TABLE>
<CAPTION>


                                                           Three months ended                   Nine months ended
                                                              November 30,                         November 30,

                                                         1997             1996                 1997            1996
                                                   ----------------------------------------------------------------------
<S>                                                 <C>              <C>                   <C>              <C>    

REVENUES
  Sales                                             $          -     $     99,000          $          -      $   499,000
  Royalties                                                    -                -                     -          250,000
                                                    -------------    -------------         -------------     ------------
                                                               -           99,000                     -          749,000

COST OF SALES                                                  -           84,000                     -          343,000
                                                    -------------    -------------         -------------     ------------

GROSS PROFIT                                                   -           15,000                     -          406,000
                                                    -------------    -------------         -------------     ------------

OPERATING EXPENSES:
  General and administative                              105,000          337,000               407,000        1,010,000
  Selling and marketing                                        -          111,000                39,000          423,000
  Research and development                                     -          268,000                42,000          831,000
                                                    -------------    -------------         -------------     ------------
                                                         105,000          716,000               488,000        2,264,000
                                                    -------------    -------------         -------------     ------------
LOSS FROM OPERATIONS                                    (105,000)        (701,000)             (488,000)      (1,858,000)
                                                    -------------    -------------         -------------     ------------

OTHER INCOME (EXPENSE):
  Interest and financing expense                               -           (6,000)               (5,000)        ( 12,000)
  Interest income                                              -            6,000                     -           51,000
                                                    -------------    -------------         -------------     ------------

NET LOSS                                            $   (105,000)    $   (701,000)         $   (493,000)     $(1,819,000)
                                                    =============    =============         =============     ============


WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING                                 5,015,000        4,590,000             4,930,000        4,590,000
                                                    =============    =============         =============     ============

NET LOSS PER SHARE                                  $      (0.02)    $      (0.15)         $      (0.10)     $     (0.40)
                                                    =============    =============         =============     ============








                 See accompanying notes to financial statements
</TABLE>

                                        2


<PAGE>
<TABLE>
<CAPTION>


                                 MAGNA-LAB INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                Increase (Decrease) in Cash and Cash Equivalents
                                   (unaudited)


                                                                                  Nine months ended November 30,

                                                                                   1997                1996
                                                                            --------------------------------------
<S>                                                                          <C>                <C>    
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                   $     (493,000)    $   (1,819,000)
                                                                             ---------------    ---------------
  Adjustments:
    Depreciation and amortization                                                     3,000             85,000
    Effect on cash of changes in operating assets and liabilities:
      Inventory                                                                           -           (546,000)
      Accounts Receivable                                                            64,000           (121,000)
      Deposits and other                                                                  -            109,000
      Accounts payable and accrued liabilities                                      480,000            (55,000)
      Customer deposits                                                                   -           (316,000)
                                                                             ---------------    ---------------
           Total adjustments                                                        547,000           (844,000)
                                                                             ---------------    ---------------
                                                                              
NET CASH GENERATED (USED) IN OPERATING ACTIVITIES                                    54,000         (2,663,000)
                                                                             ---------------    ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of equipment and software                                                     -           (105,000)
  All other, net                                                                          -                  -
                                                                             ---------------    ---------------

NET CASH USED IN INVESTING ACTIVITIES                                                     -           (105,000)
                                                                             ---------------    ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repay Note payable to shareholder                                                 (64,000)                 -
  Deferred debt and offering costs; other                                                 -            (56,000)
                                                                             ---------------    ---------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                           (64,000)           (56,000)
                                                                             ---------------    ---------------
NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS                                                               (10,000)        (2,824,000)
CASH AND CASH EQUIVALENTS:
  Beginning of period                                                                10,000          3,047,000
                                                                             ---------------    ---------------
  End of period                                                              $            -     $      223,000
                                                                             ===============    ===============







                 See accompanying notes to financial statements
</TABLE>

                                        3


<PAGE>

<TABLE>
<CAPTION>




                                 MAGNA-LAB INC.

                   CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY

                   For the nine months ended November 30, 1997
                                   (unaudited)





                                                                                 
                                                       Common Stock                                Capital in
                                          ---------------------------------------------------        Excess
                                            Class A                   Class B                        Of Par       Accumulated
                                            Shares        Amount      Shares           Amount        Value (a)      Deficit
                                          -----------------------------------------------------------------------------------
<S>                                        <C>           <C>          <C>          <C>             <C>           <C>
BALANCES, February 28, 1997                3,765,851     $  4,000     1,824,149    $  2,000        $ 13,464,000  $ (15,490,000)

CONVERT B TO A SHARES                         62,580            -       (62,580)          -

SHARES DEEMED ISSUED IN PLACEMENT            300,000

SHARES DEEMED ISSUED IN DISPUTE              125,000            -

NET LOSS                                                                                                              (493,000)

BALANCES,
 November 30, 1997 (unaudited)             4,253,431     $  4,000     1,761,569    $  2,000        $ 13,464,000  $ (15,983,000)
                                           ==========    =========    ==========   =========       ============= ==============












(a) Includes  amounts  considered  "subscribed" in the Balance Sheet at February
    28, 1997.










                 See accompanying notes to financial statements
</TABLE>

                                        4

<PAGE>





                                 MAGNA-LAB INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)
NOTE 1  - ACTIVITIES:

         Since  commencement of operations on February 10. 1992,  Magna-Lab Inc.
(the  "Company")  has  developed  and  intended  to  manufacture  and market the
MAGNA-SL,  the  first of a planned  series of  anatomy  specific  MRI  (Magnetic
Resonance  Imaging)  products which are smaller and cost less to own install and
operate than present "whole body" MRI systems.  The Company's  efforts to market
and sell the  MAGNA-SL  did not  generate  sufficient  revenues  to sustain  the
Company's planned operations.

         In February  1997,  the Board of Directors  retained a  consultant  and
approved a plan of restructuring of the Company's  operations conceived with the
assistance  of the  consultant  (the  "Plan").  The Plan has, as its  objective,
restructuring of the Company's  existing  business by elimination of production,
marketing  and  certain  system   engineering  by  strengthening   the  existing
relationship with Elscint  Cryomagnetics,  Ltd. ("Elscint" - see Form 10-KSB for
the year ended  February  28,1997  for a  discussion  of the  relationship  with
Elscint),  and repositioning the Company into a royalty and development  company
in the near term.  The  repositioning  involves a  significant  new  development
initiative  in Cardiac  MRI through a joint  collaboration  with the Mount Sinai
School of Medicine (New York City) (the "Cardiac MRI  Initiative").  The Company
has received a proposal from Elscint (the "Elscint  Proposal")  for certain work
that is integral  to the Plan but the  Company  has been unable to finalize  the
proposal  because of lack of  adequate  funds.  The  Company  has  concluded  an
agreement with the Mount Sinai School of Medicine for the Cardiac MRI Initiative
but had been unable to fund its  obligations  under the agreement  until January
1998. See Note 11 - Subsequent Events.

         The Plan  involves  termination,  in March 1997, of the majority of the
Company's  workforce  including  the  entire  sales  and  marketing  staff,  the
production  department and portions of the engineering staff.  Further, the Plan
includes  elimination  of the Company's  production,  development  and executive
facility,  reductions in the need for other assets  including leased assets with
remaining  non-cancelable  terms,  and other  measures.  The Plan also  includes
raising new  financing  in order to support the Cardiac MRI  Initiative  and the
financial resources needed to go forward with the Elscint Proposal.  The Company
recorded a  restructuring  charge of  approximately  $1.5  million to the fourth
quarter ending February 28, 1997 for write downs of fixed assets, inventory (see
next   paragraph)   and  deposits   made  with   strategic   vendors  which  are
non-refundable,  as well as accruals for lease  termination and other costs. The
ultimate amount may differ from this estimate.

         Pursuant  to  the  Plan  and  after  its  further   attempts  to  raise
substantial additional working capital were unsuccessful,  on March 5, 1997, the
Company informed 10 of its 20 employees that they were being  indefinitely  laid
off and between  March 5 and March 15, 1997,  another 4 employees  were laid off
due to  insufficient  funds for their  payroll.  The  remaining  employees  were
offered the  opportunity  to continue  with the Company in exchange for deferred
compensation  pending successful  completion of continuing efforts to complete a
financing.  At November 30, 1997,  unpaid  payroll to terminated  and continuing
employees totaled approximately  $385,000. At February 1, 1998, only Lawrence A.
Minkoff,  Ph.D., the Company's Chairman,  President and Chief Executive Officer,
is in the  full  time  employ  of the  Company.  The  remaining  employees  have
terminated their full time relationship with the Company and approximately  four
of them serve or have  indicated  that they may serve as part time  employees or
consultants to the Company.  When the Company vacated its principal  production,
development  and  executive  facility it agreed to a judgment  against it by the
landlord for unpaid rent in amounts  exceeding  $50,000 and for additional  rent
totaling approximately $70,000 in settlement of the unexpired term of the lease.
The Company then placed  certain  inventory and equipment in storage and several
key individuals  continued the search for new capital and the advancement of the
development collaboration with the Mount Sinai School of Medicine. The Company's
operations have, therefore, been severely curtailed. Additionally, virtually all
of the Company's  creditors have threatened or initiated legal action to recover
amounts  due them  which the  Company  has had no  ability to pay (See - Note 11
Subsequent Events and Part II, Item 1 - Legal Proceedings).

         As indicated in the attached financial  statements,  as of November 30,
1997  Magna-Lab  Inc.  (the  "Company")  had  no  substantial   current  assets,
approximately $2.5 million of liabilities and no cash. Further,  the Company has
incurred a loss of approximately $493,000 for the nine months ended November 30,
1997 as indicated in the accompanying

                                        5

<PAGE>

condensed  financial  statements  and losses have  continued  since November 30,
1997. These factors, among others,  indicate that the Company is in need of very
significant additional financing or a strategic business arrangement in order to
continue any aspect of its planned operations in the fiscal year beginning March
1,  1997.  (See  Note  11  Subsequent  Events  regarding,  among  other  things,
completion of certain financing in December 1997 and January 1998).

         While the Company had  severely  curtailed  its  operations  during the
quarter ended May 31, 1997, it continued,  in the nine months ended November 30,
1997, to search for new capital in order to continue its operations  pursuant to
the Plan. In October 1997, the Company reached  agreement with an investor group
to provide certain  limited  funding to the Company  predicated on the Company's
ability to reduce its recorded liabilities  (through creditor  concessions) by a
very material amount. See Note 11 Subsequent Events.

         In May 1997,  the Company  entered into an  agreement  with Mount Sinai
School  of  Medicine  (New York  City) and Dr.  Valentin  Fuster  (as  principal
investigator) for a collaborative  research arrangement devoted to utilizing MRI
in cardiac arterial imaging and requiring  payments totaling  approximately $1.5
million over three years.  The initial  required payment of $150,000 was made in
December 1997 and charged to research and development costs at that time.

         The Company is continuing its efforts to (1) raise additional  capital,
(2) enter into a strategic  arrangement  with others,  and (3) move forward with
the new product opportunity in cardiac MRI and the Elscint proposal. There is no
assurance  that any of these efforts will be successful or that the Company will
be able to  continue  even its  severely  curtailed  operations,  for  which the
Company will require additional capital. See Note 11 Subsequent Events.

         There can be no assurances  that  management's  plans  described in the
preceding  paragraphs will be realized.  These factors,  among others,  indicate
that the Company may be unable to continue operations as a going concern.


NOTE 2  - BASIS OF PRESENTATION:

The accompanying  financial statements have been prepared in accordance with the
instructions  to Form  10-QSB  and do not  include  all of the  information  and
footnotes required by generally accepted accounting principles.  All adjustments
which are of a normal  recurring  nature  and,  in the  opinion  of  management,
necessary for a fair presentation have been included. These statements should be
read in conjunction with the financial  statements and notes thereto included in
the Company's annual report on Form 10-KSB for the year ended February 28, 1997.

NOTE 3  -  LOSS PER SHARE OF COMMON STOCK:

Net loss per share is computed  based on the weighted  average number of Class A
Common  and  Class  B  Common  shares  outstanding  after  subtracting   certain
(1,000,000)  Class B shares,  which are  forfeitable  at March 31,  1998  unless
certain events occur,  from shares  outstanding in computing net loss per share.
Such forfeitable shares would not be deducted in computing net income per share.
Dilutive options and warrants outstanding would be considered in the computation
of net income per share under the treasury  stock method when their effect is to
reduce reported net income per share.

NOTE 4 - DEPOSITS:

In August  1993,  the Company  made a $480,000  non-refundable  deposit  payment
pursuant  to  an  agreement  with  an  unaffiliated  European  supplier  of  MRI
components  (consoles).   The  unamortized  deposit  of  approximately  $332,000
remaining at February 28, 1997 has been written off to restructuring  charges in
the statement of operations for the fiscal year ended February 28, 1997.

NOTE 5 - ROYALTY  INCOME IN NINE MONTH 1996  PERIOD AND THIRD  PARTY  CLAIM - In
June 1996, the Company  entered into a license and  distribution  agreement with
Elscint as  described  in the Form 10-KSB for the year ended  February 28, 1997.
Revenues of $250,000 recorded in the nine months ended November 30, 1996 reflect
initial,  non-refundable royalties under the agreement with Elscint. The Company
and Elscint are having discussions about revisions to the agreement as discussed
elsewhere herein and in the Form 10-KSB.

                                        6

<PAGE>

As discussed in the Company's Form 10-KSB for the year ended February 28, 1997 a
third party had claimed,  and the Company disputed, a fee in connection with the
Elscint agreement  referred to in the preceding  paragraph.  On August 27, 1997,
this dispute was settled by the issuance of 125,000 unregistered shares of Class
A common stock to this third party.  Such amount had been charged to  operations
as part of restructuring charges in the fiscal year ended February 28, 1997.

NOTE 6 -  PROPERTY AND EQUIPMENT:

Details of property and equipment at November 30, 1997 are as follows:

         Machinery and equipment                              $760,000
         Purchased software                                     49,000
                                                              ---------
                                                               809,000
         Less: accumulated depreciation and amortization       393,000
               amounts written off in restructuring charge     401,000
                                                              ---------   
                                                              $ 15,000
                                                              ---------
               
NOTE 7 - NOTES PAYABLE:

In February 1997, the Company issued an interest bearing (10%) note payable to a
shareholder on March 15, 1997 for $75,000, secured by certain amounts receivable
from the taxing authorities of the United Kingdom and the machine delivered to a
related  party in December  1996 but not paid for by that  party.  In June 1997,
upon  collection of the  receivable  from the taxing  authorities  of the United
Kingdom,  the Company  repaid  approximately  $64,000 of this note and  interest
payable. The remainder, plus penalty interest remains due.

NOTE 8 - STOCKHOLDERS' EQUITY:

In May 1997,  the The Board of  Directors  of the  Company  determined  that the
purposes of the 1992 Stock Option Plan were not being  adequately  achieved with
respect to those employees and consultants holding options that were exercisable
above  the then  current  market  value  and that it was  essential  to the best
interests of the Company and the Company's  shareholders that the Company retain
and motivate such employees and consultants.  As a result,  certain options were
"repriced"  as described in the Form's  10-QSB for the  quarteres  ended May and
August 31, 1997 In  addition,  in  recognition  of their  efforts to advance the
Plan, the  completion of the agreement with Mount Sinai School of Medicine,  and
the early  successful  results of the work with Mount Sinai  School of Medicine,
the Board  awarded  (subject  to  shareholders  approval  which has not yet been
obtained)  new  options to purchase an  aggregate  of 900,000  shares of Class A
common stock at $0.25 per share to officers and  directors of the Company and to
the consultant as also described in the Forms' 10-QSB for the quarters ended May
and August 31, 1997.

Note 9 - ACCRUED LIABILITIES:

Included in accrued liabilities at November 30, 1997 are approximately  $385,000
for accrued payroll and approximately  $184,000 in accrued  restructuring costs.
During the nine  months  ended  November  30,  1997,  approximately  $50,000 was
charged to the restructuring accrual.

Note 10 - OTHER

Related party matters - A director of the Company, who is also a principal owner
of a company  which owns stock in the Company,  is a partner in a law firm which
provides legal services to the Company.  Amounts owing to such firm are included
in the financial statements at approximately $290,000 at November 30, 1997.

Restructuring charge recouped in May 1997 quarter - During the quarter ended May
31,  1997,  inventories  which had been written off to  restructuring  charge at
February 28, 1997  totaling  approximately  $60,000 were returned to vendors for
credit. This amount has been credited to general and administrative costs during
the quarter ended May 31, 1997.

Litigation  matters  -  As  a  result  of  the  Company's  distressed  financial
condition, it is subject to the risk of litigation related to unsettled payables
as further discussed in Form 10-KSB for the year ended February 28, 1997.

                                        7

<PAGE>

Vendor  claims - The Company has received  statements of account with one vendor
for amounts (approximately  $132,000 plus claimed interest) materially in excess
of amounts  recorded by the Company  (approximately  $22,000) for goods received
from this  vendor.  The vendor  statements  indicate  billings of  approximately
$83,000 in January  1997 and $16,000 in April 1997.  The Company does not have a
record of being billed for such amounts nor for receipt of such materials.  This
matter is being investigated for resolution.

Note 11 SUBSEQUENT EVENTS:

Subsequent  to the  completion  of the quarter  ended  November  30,  1997,  the
following  events,  pursuant to the Plan of restructuring  outlined above,  have
occurred which are material to the Company's  financial  position and results of
operations:

(a) Private placement with accredited investors - Pursuant to a private offering
to accredited  investors beginning in November 1997, in January 1998 the Company
completed the offering of  15,072,000  shares of class A common stock to a group
of accredited  investors for gross  proceeds of  approximately  $1,884,000.  The
proceeds  are to be used to advance the Plan of  restructuring  outlined  above,
including the initial  funding of the  agreement  with the Mount Sinai School of
Medicine.

(b) Negotiated  settlements with creditors - In connection with the January 1998
private  placement of securities  outlined in (a) above, the Company has offered
its trade and other creditors the opportunity to settle the Company's obligation
to them for a reduced  amount.  As of  January  31,  1998,  certain  vendor  and
employee  claims have been agreed to be settled and efforts are still in process
to settle remaining amounts in an orderly manner.

(c)  Settlement  of  liabilities  to employees - In December  1997,  the Company
offered to settle  claims by  non-executive  employees of the Company for unpaid
payroll and expenses of  approximately  $133,000,  representing  the approximate
amount recorded by the Company for such liabilities. Over 90% of this amount has
been agreed for  settlement  and  efforts  are ongoing to settle the  remainder.
Executive  employees of the Company were offered the  opportunity  to settle the
liability for amounts due them for compensation for a reduced amount aggregating
approximately $150,000. This amount has been agreed to by the executives.

(d)  Settlement  of  litigation  with a vendor - In October  1997 a judgment for
$300,000 was entered against the Company in the action  commenced by a vendor to
recover  amounts  alleged to be due from the Company  (see Note 12 to  financial
statements at February 28, 1997).  In December 1997, the vendor agreed to settle
this judgment for a total of $150,000,  substantially  less than the amount that
had been accrued to the November 30, 1997 condensed balance sheet.

(e)  Settlement  of  judgment  in favor or a former  landlord - Amounts due to a
former  landlord,  including  amounts  under a  judgment  rendered  against  the
Company, have been settled for approximately $150,000.


















                                        8
<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation


THIS REPORT CONTAINS  FORWARD-LOOKING  STATEMENTS WITHIN THE MEANINGS OF SECTION
27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934. ACTUAL RESULTS AND EVENTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED

     (b)  MANAGEMENT'S  ANALYSIS  AND  DISCUSSION  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS

FINANCIAL CONDITION -

HISTORY - During the fiscal year ended February 28, 1994,  the Company  realized
net proceeds of approximately $5.4 million in connection with the initial public
offering  of its equity  securities.  At that time,  it was  estimated  that the
proceeds of the public  offering  would last the Company for  approximately  one
year and that the  Company  may be  dependent  upon the  receipt  of  additional
financing  in order to continue  its  activities  beyond  that time.  During the
fiscal year ended  February 28, 1995,  the Company  raised an aggregate of $1.65
million  through the private  placement of notes  payable in 1995 and  warrants.
During the fiscal year ended  February 29,  1996,  the Company  raised  $500,000
(approximately   $410,000  net  proceeds)  in  a  bridge  loan  transaction  and
approximately  $4.6  million in net  proceeds  from a public  offering of equity
securities.  During  the year  ended  February  28,  1997,  the  Company  raised
approximately  $75,000 in a secured note payable to a  shareholder  due in March
1997 (which  note has been  partially  repaid but is in default at November  30,
1997 as to approximately  $11,000 of principal plus accrued interest and penalty
interest) and  approximately  $100,000 in a private  placement  with  accredited
investors of 300,000 shares of the Company's Class A Common Stock.

In  January  1997,  the  Company  ran out of cash  and  since  then,  and  until
completion  of a private  placement of Class A common stock in December 1997 and
January  1998 (See Note 11  Subsequent  Events) has had no  financial  resources
available to it.

FINANCIAL POSITION AT NOVEMBER 30, 1997 - Financial  Condition and Going Concern
Matters - Reference  is made to the Form 10-KSB for the year ended  February 28,
1997 and to the Forms 10-QSB for the quarters  ended May and August 31, 1997 for
a discussion of conditions leading to the Company's financial situation.

         In February  1997,  the Board of Directors  retained a  consultant  and
approved a plan of restructuring of the Company's  operations conceived with the
assistance  of the  consultant  (the  "Plan").  The Plan has, as its  objective,
restructuring of the Company's  existing  business by elimination of production,
marketing  and  certain  system   engineering  by  strengthening   the  existing
relationship with Elscint  Cryomagnetics,  Ltd. ("Elscint" - see Form 10-KSB for
the year ended  February  28,1997  for a  discussion  of the  relationship  with
Elscint),  and repositioning the Company into a royalty and development  company
in the near term.  The  repositioning  involves a  significant  new  development
initiative  in Cardiac  MRI through a joint  collaboration  with the Mount Sinai
School of Medicine (New York City) (the "Cardiac MRI  Initiative").  The Company
has received a proposal from Elscint (the "Elscint  Proposal")  for certain work
which is integral  to the Plan but the  Company has been unable to finalize  the
proposal  because of lack of funds.  The Company has concluded an agreement with
the Mount Sinai School of Medicine for the Cardiac MRI  Initiative  but has been
unable to fund its obligations  under the agreement until January 1998. See Note
11 Subsequent Events.

         The Plan  involves  termination,  in March 1997, of the majority of the
Company's  workforce  including  the  entire  sales  and  marketing  staff,  the
production  department and portions of the engineering staff.  Further, the Plan
includes  elimination  of the Company's  production,  development  and executive
facility,  reductions in the need for other assets  including leased assets with
remaining  non-cancelable  terms,  and other  measures.  The Plan also  includes
raising new  financing  in order to support the Cardiac MRI  Initiative  and the
financial resources needed to go forward with the Elscint Proposal.  The Company
recorded a  restructuring  charge of  approximately  $1.5  million to the fourth
quarter ending February 28, 1997 for write downs of fixed assets, inventory (see
next   paragraph)   and  deposits   made  with   strategic   vendors  which  are
non-refundable,  as well as accruals for lease  termination and other costs. The
ultimate amount may differ from this estimate.

         Pursuant  to  the  Plan  and  after  its  further   attempts  to  raise
substantial additional working capital were unsuccessful,  on March 5, 1997, the
Company informed 10 of its 20 employees that they were being  indefinitely  laid
off and between  March 5 and March 15, 1997,  another 4 employees  were laid off
due to insufficient funds for their payroll.

                                        9

<PAGE>

The  remaining  employees  were  offered the  opportunity  to continue  with the
Company in exchange for deferred  compensation pending successful  completion of
continuing efforts to complete a financing. At November 30, 1997, unpaid payroll
to terminated  and  continuing  employees  totaled  approximately  $385,000.  At
January 31, 1998,  only Lawrence A.  Minkoff,  Ph.D.,  the  Company's  Chairman,
President  and  Chief  Executive  Officer,  is in the full  time  employ  of the
Company.  When the Company  vacated its principal  production,  development  and
executive facility it agreed to a judgment against it by the landlord for unpaid
rent in amounts exceeding $50,000 and for additional rent totaling approximately
$70,000 in  settlement  of the  unexpired  term of the lease.  The Company  then
placed  certain  inventory and equipment in storage and several key  individuals
continued the search for new capital. The Company's operations have,  therefore,
been severely curtailed. Additionally,  virtually all of the Company's creditors
have  threatened or initiated legal action to recover amounts due them which the
Company  has no ability to pay (See - Part II,  Item 1 - Legal  Proceedings  and
Note 11 Subsequent Events).

As  indicated  in the  attached  financial  statements,  as of November 30, 1997
Magna-Lab Inc. (the "Company") had no substantial current assets , approximately
$2.5 million of  liabilities  and no cash.  Further,  the Company has incurred a
loss of  approximately  $493,000 for the nine months ended November 30, 1997, as
indicated in the accompanying  condensed financial  statements,  and losses have
continued since November 30, 1997. Pursuant to a private placement to accredited
investors  begun in November  1997,  in January 1998 the Company  completed  the
offering of  15,072,000  shares of class A common stock to a group of accredited
investors for gross proceeds of approximately $1,884,000. The proceeds are to be
used to advance the Plan of restructuring  outlined above,  specifically to fund
the launch of the Cardiac MRI initiative,  to reduce indebtedness and to provide
working capital.  Based on vendor and executive employee concessions to date and
anticipated, the Company expects that the proceeds of this offering will last it
no longer than six months,  after which it would require  additional  capital to
pursue the Plan.

         The Company is continuing its efforts to (1) raise additional  capital,
(2) enter into a strategic  arrangement  with others,  and (3) move forward with
the new product opportunity in cardiac MRI and the Elscint proposal.

         There can be no assurances  that  management's  plans  described in the
preceding  paragraphs will be realized.  These factors,  among others,  indicate
that the Company may be unable to continue operations as a going concern.

         The Company  believes,  based upon its resources after the January 1998
private  placement and  anticipated  operations and further  anticipated  vendor
settlements,  that it  does  not  have  the  financial  resources  to  fund  its
operations for more than six months without substantial  additional capital or a
strategic business  arrangement.  This belief, which is based upon estimates and
the  Company's  belief  about  its  financial  requirements,  as well  as  other
information  contained in this report, and upon present  resources,  conditions,
developments and anticipated operations. This belief is based upon estimates and
assumptions  including,  among other things,  levels of existing liabilities and
discussions with creditors,  as well as existing and projected  operating costs,
efficiencies   and   scheduling.    The   foregoing   information    constitutes
forward-looking   statements  within  the  meaning  of  Section  21E  under  the
Securities Exchange Act of 1934, as amended.

RESULTS OF OPERATIONS -

         Operations  in the  quarter  and nine months  ended  November  30, 1997
resulted in a net loss of approximately $105,000 and $493,000, respectively. The
majority of the  workforce  was  terminated  between March 5 and March 15, 1997,
however, six senior managers and executives continued to devote their efforts to
the Company's Plan of  restructure  during the majority of the quarter ended May
31, 1997 and approximately three executives continued to devote their efforts to
the Plan during the quarter  ended  August 31,  1997.  During the quarter  ended
November 1997 only one  executive  continued to devote his full time to the Plan
and one executive and a consultant  devoted part time. Their payroll,  which was
accrued  but not paid  during  the nine  months,  is the  principal  cost in the
accompanying  Statement  of  Operations  for the  three  and nine  months  ended
November 30, 1997. Net loss also includes the reversal of approximately  $60,000
of  restructuring  charge in the  quarter  ended May 31, 1997 as a result of the
return for credit of inventory which was written off to restructuring  charge at
February 28, 1997.

         Operations  in the  quarter  and nine months  ended  November  30, 1996
resulted in a net loss of approximately  $701,000 and $1,819,000,  respectively.
The  loss  results  from the low  level  of  shipments  (one  unit  and  certain
components in the nine months ended November 30, 1997) and the ongoing  selling,
general,  administrative and  research/development  costs of the Company at that
time, offset partially by initial royalties  recorded upon executing the license
and distribution agreement with Elscint.

                                       10


<PAGE>

THIS REPORT CONTAINS  FORWARD-LOOKING  STATEMENTS WITHIN THE MEANINGS OF SECTION
27A OF THER  SECURITIES ACT OF 1933 AND SECTION 21E OF THE  SECURITIES  EXCHANGE
ACT OF 1934.  ACTUAL  RESULTS  AND EVENTS  COULD  DIFFER  MATERIALLY  FROM THOSE
PROJECTED



PART II - OTHER INFORMATION

ITEM 1. - LEGAL PROCEEDINGS

Reference is made to Part I - Item 3 of Form 10-KSB for the year ended  February
28, 1997 for  discussion of a legal  proceeding  commenced  against the Company,
including  by Devcom  and by the  Company's  former  landlord  Heartland  Rental
Properties  Partnership).  See  paragraphs  (d) and (e) of Note 11 -  Subsequent
Events, above, for disclosure of the settlements of these two legal proceedings.
The Company  continues to be subject to judgments  for lesser  amounts and other
litigation and/or threatened litigation.

ITEM 2. - CHANGES IN SECURITIES AND USE OF PROCEEDS

See  paragraph  (a)  of  Note  11 -  Subsequent  Events  and  Part  1.  Item  2,
Management's  Analysis  and  Discussion  of Financial  Condition  and Results of
Operations,  for a discussion of a private placement of equity securities (under
Rule 506 of Regulation D).

ITEM 5. - OTHER INFORMATION

See Note 11 - Subsequent Events,  above, for a discussion of significant Company
developments during the October 1997 through January 1998 period.

In May 1997,  the Company  entered into an agreement  with Mount Sinai School of
Medicine and Dr. Valentin Fuster (as principal investigator) for a collaborative
research  arrangement  devoted to utilizing MRI in cardiac  arterial imaging and
requiring  payments  totaling  approximately  $1.5 million over three years. The
initial required payment of $150,000 was made by the Company in January 1998.

ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits

         Exhibit No.

               (11)      Statement  re:  computation  of  loss  per  share  -  A
                         statement  regarding the  computation of loss per share
                         is   omitted   because   computation   can  be  clearly
                         determined   from  the   material   contained  in  this
                         Quarterly Report on Form 10-QSB.
               (27)      Financial Data Schedule

                                       11



<PAGE>





                                            SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                                 MAGNA-LAB INC.
                              ------------------
                                 (Registrant)


Date:  February  10,  1998      By:   /s/ Lawrence A. Minkoff
                ----                  ---------------------------------
                                      Lawrence A. Minkoff , Chairman of the
                                      Board of Directors, Chief Executive
                                      Officer and President (Principal Executive
                                      Officer), Acting Treasurer (Principal 
                                      Financial and Accounting Officer)


























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