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, 1998
                                                            -----------------

( ) 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. 780, Syosset, NY 11791
                    ----------------------------------------
                    (Address of principal executive offices)

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

      ---------------------------------------------------------------------
      (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 (X) No ( )


                      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 11, 1999

  Class A Common Stock, $.001 Par Value                         20,905,475
-----------------------------------------------------         ---------------

  Class B Common Stock, $.001 Par Value                            764,858
-----------------------------------------------------         ---------------
                Class                                             Shares




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


                          MAGNA-LAB INC. AND SUBSIDIARY


                                    CONTENTS



PART 1 - FINANCIAL INFORMATION (UNAUDITED)

         ITEM 1.  - FINANCIAL STATEMENTS

                  CONDENSED CONSOLIDATED BALANCE SHEETS                        1

                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS              2

                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS              3

                  CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY    4

                  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS     5 - 9

         ITEM 2.  - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
                           OF OPERATION                                  10 - 11


PART II - OTHER INFORMATION

         ITEM 2   - CHANGES IN SECURITIES AND USE OF PROCEEDS                 12

         ITEM 6   - EXHIBITS AND REPORTS ON FORM 8-K                          12





















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. and Subsidiary

                      CONDENSED CONSOLIDATED BALANCE SHEETS
               November 30, 1998 (unaudited) and February 28, 1998

                                                                                  November 30,    February 28,
                                                                                         1998            1998
<S>                                                                             <C>             <C>   
                                     ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                                     $      13,000   $     599,000
  Accounts receivable, net of allowance for doubtful accounts of $356,000                   -               -
  Inventory, net of allowance for estimated
      non-realizable value of approximately $532,000                                        -               -
  Deposits and other, net of amounts written off                                            -               - 
                                                                                --------------  --------------
        Total current assets                                                           13,000         599,000
                                                                                --------------  --------------

PROPERTY AND EQUIPMENT, less accumulated depreciation and amortization
 and write-offs of approximately $794,000 and $791,000, respectively                   15,000          17,000
                                                                                --------------  --------------

OTHER ASSETS (deferred finance costs)                                                  10,000               - 
                                                                                --------------  --------------

                                                                                $      38,000   $     616,000
                                                                                ==============  ==============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                              $     231,000   $     254,000
  Accrued and other current liabilities                                               791,000         511,000
                                                                                --------------  --------------
        Total current liabilities                                                   1,022,000         765,000
                                                                                --------------  --------------


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, 19,422,142 and
   19,322,142 shares issued and outstanding, respectively.                             19,000          19,000
  Common stock, Class B, par value $.001 per share,
   3,750,000 shares authorized, 1,875,000 shares issued,
   764,858 and 764,858 shares outstanding, respectively.                                1,000           1,000
  Capital in excess of par value                                                   15,354,000      15,334,000
  Accumulated deficit                                                             (16,358,000)    (15,503,000)
                                                                                --------------  --------------
        Total stockholders' equity                                                   (984,000)       (149,000)
                                                                                $      38,000   $     616,000
                                                                                ==============  ==============


                 See accompanying notes to financial statements
</TABLE>

                                        1


<PAGE>

<TABLE>
<CAPTION>





                          MAGNA-LAB INC. and Subsidiary

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)






                                                            Three months ended           Nine months ended
                                                               November 30,                 November 30,
  
                                                          1998            1997          1998            1997
                                                       ------------------------------------------------------
<S>                                                <C>              <C>            <C>             <C>
REVENUES

COSTS AND EXPENSES:
  General and administrative                       $    83,000      $  105,000     $  241,000      $  407,000
  Selling and marketing                                      -               -              -          39,000
  Research and development                             197,000               -        619,000          42,000
                                                   ------------     -----------    -----------     -----------
                                                       280,000         105,000        860,000         488,000
                                                   ------------     -----------    -----------     -----------

OTHER INCOME (EXPENSE):
  Other income                                               -               -              -               -
  Interest and financing expense                             -               -              -          (5,000)
  Interest income                                        1,000               -          5,000               -
                                                   ------------     -----------    -----------     -----------


NET LOSS                                           $  (279,000)     $ (105,000)    $ (855,000)     $ (493,000)
                                                   ============     ===========    ===========     ===========



WEIGHTED AVERAGE NUMBER
 OF SHARES OUTSTANDING                              20,187,000       5,015,000     20,187,000       4,930,000
                                                    ==========       =========     ==========       =========


NET LOSS PER SHARE                                 $     (0.01)    $     (0.02)    $    (0.04)     $    (0.10)
                                                   ============    ============    ==========      ===========











                 See accompanying notes to financial statements

</TABLE>
                                        2


<PAGE>
<TABLE>
<CAPTION>


                          MAGNA-LAB INC. and Subsidiary


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



                                                                                     Nine Months ended November 30,
                                                                                          1998                1997
<S>                                                                             <C>                 <C>    
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                                      $     (855,000)     $     (493,000)
                                                                                ---------------     ---------------
  Adjustments:
    Depreciation and amortization                                                        1,000               3,000
  Effect on cash of changes in operating assets and liabilities:
    Accounts receivable                                                                      -              64,000
    Accounts payable and accrued liabilities                                           278,000             480,000
                                                                                ---------------     ---------------
           Total adjustments                                                           279,000             547,000
                                                                                ---------------     ---------------

NET CASH USED IN OPERATING ACTIVITIES                                                 (576,000)             54,000
                                                                                ---------------     ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Deferred finance costs                                                             (10,000)                  -
                                                                                ---------------     ---------------
NET CASH USED IN INVESTING ACTIVITIES                                                        -                   -
                                                                                ---------------     ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Repay note to related party                                                              -             (64,000)
                                                                                ---------------     ---------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                          -             (64,000)
                                                                                ---------------     ---------------

NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS                                                                 (586,000)            (10,000)
CASH AND CASH EQUIVALENTS:
  Beginning of period                                                                  599,000              10,000
                                                                                ---------------     ---------------
  End of period                                                                 $       13,000      $            -
                                                                                ===============     ===============


SUPPLEMENTAL INFORMATION ON NON-CASH TRANSACTIONS
    Common stock issued to settle account payable                               $       20,000      $            -
                                                                                ===============     ===============












                 See accompanying notes to financial statements

</TABLE>

                                        3


<PAGE>
<TABLE>
<CAPTION>


                          MAGNA-LAB INC. and Subsidiary


                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

             For the nine months ended November 30, 1998 (unaudited)










                                                               Common Stock
                                            -------------------------------------------------       Capital in
                                                    Class A                     Class B                 Excess
                                            ----------------------        -------------------           Of Par    Accumulated
                                              Shares        Amount        Shares       Amount        Value (a)        Deficit
                                        -------------------------------------------------------------------------------------
<S>                                       <C>             <C>            <C>        <C>            <C>            <C>

BALANCES, February 28, 1998               19,322,142      $ 19,000       764,858    $   1,000      $15,334,000    (15,503,000)

CONVERT B SHARES TO A                              -             -             -            -                -              -

SHARES ISSUED TO SETTLE LIABILITY            100,000             -             -            -           20,000              -

NET LOSS                                           -             -             -            -                -       (855,000)
                                          ------------------------------------------------------------------------------------

BALANCES, November 30, 1998 (unaudited)   19,422,142     $  19,000       764,858    $   1,000      $15,354,000    (16,358,000)
                                          ===========    ==========      ========   ==========     ============   ============















                 See accompanying notes to financial statements
</TABLE>

                                        4

<PAGE>





                          MAGNA-LAB INC. and Subsidiary

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1  - 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
disclosures   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 more complete  information and
financial  statements and notes thereto  included in the Company's annual report
on Form 10-KSB for the year ended February 28, 1998.

NOTE 2 - DISCUSSION OF THE COMPANY'S  ACTIVITIES/PRODUCTS AND CASH REQUIREMENTS;
GOING CONCERN CONSIDERATION:

BACKGROUND/HISTORY  - Since  commencement  of  operations  on February 10, 1992,
Magna-Lab  Inc. and  Subsidiary  (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.

Since  receiving US marketing  clearance for the MAGNA-SL in September 1994 from
the Food and Drug  Administration,  the Company sold and delivered four MAGNA-SL
scanners.  Three such sales were made to a related  party with which the Company
had  entered  into a sales,  marketing  and  distribution  agreement.  The third
scanner  delivered to this  related  party has not been paid for by such related
party  and  the  Company  has  recorded  a 100%  valuation  allowance  for  this
receivable.  The Company is  presently  unable to support  this  product and the
passage of time may make it impossible to realize any value from this product.

CURRENT  ACTIVITIES  - In  February  1997,  the  Company  commenced  a  plan  of
restructuring  of the Company's  operations  (the "Plan") in order to reposition
the Company into a development and,  hopefully under a then existing or possible
future  agreement,  royalty company in the near-term.  The Company's  activities
under the Plan in the fiscal year ended  February 28, 1998 included  elimination
of   Company-directed   production,   marketing,   administration   and  systems
engineering and development related to the MAGNA-SL and attempting to strengthen
the relationship with Elscint Cryomagnetics, Ltd. ("Elscint" - See Note 5) which
was begun in June 1996. A critical component of the repositioning involved a new
development  initiative in Cardiac MRI (the "Cardiac MRI Initiative")  through a
joint  collaboration  with the Cardiac  Institute  of the Mount Sinai  School of
Medicine (New York City) and Dr.  Valentin Fuster  ("MSSM"),  as well as raising
sufficient financing to pursue the Cardiac MRI Initiative.  The Company received
a proposal from Elscint (the "Elscint  Proposal") to support the license/royalty
element of the Plan and has continued to have discussions with Elscint regarding
certain work that is integral to the Plan. The Company has, however, been unable
to  finalize  the  Elscint  Proposal  because  of  various  difficulties  in its
negotiations with Elscint,  including a lack of adequate funds and the Company's
belief that plans submitted by Elscint did not represent an adequate opportunity
for  the  Company's  shareholders.   See  also  Notes  5  and  9  regarding  the
relationship with Elscint.

In  accordance  with the Plan,  in March 1997,  the  majority  of the  Company's
workforce  including the entire sales and marketing  staff,  the  production and
engineering and  administrative  staff were  terminated.  Further,  the Company,
shortly thereafter,  vacated its production,  development and executive facility
and ceased the need for other  assets  including  leased  assets with  remaining
non-cancelable   terms,  and  took  other  measures.   The  Company  recorded  a
restructuring  charge of approximately  $1.5 million in the fourth quarter ended
February 28, 1997 for write downs of fixed assets, inventories and deposits made
with strategic vendors which are  non-refundable,  as well as accruals for lease
termination  and other  costs.  While the  ultimate  amount may differ from this
estimate,  the Company  presently  believes  that such  restructuring  charge is
adequate.

When the Company  vacated its principal  production,  development  and executive
facility, it placed certain inventory and

                                        5
<PAGE>

equipment in storage and several key  individuals  continued  the search for new
capital and the advancement of the development  collaboration with the MSSM. The
Company's operations were, therefore, severely curtailed at that time.

In  December  1997,  the  Company's  efforts to raise  additional  financing  to
initiate the Cardiac MRI Initiative were successful in raising $1.884 million in
a private  placement of 15,072,000  shares of common stock (the  "December  1997
Financing").  Such financing was conditioned on the Company initiating a program
to pay its existing liabilities on a reduced basis (the "Debt Reduction Program"
- See Note 9). Since  December 1997, the Company has: (1) initiated and advanced
the Cardiac MRI  Initiative,  (2) continued the Debt  Reduction  Program and (3)
continued to have  discussions  with Elscint with the objective of advancing the
Elscint  Proposal (such  discussions have not resulted in concluding the Elscint
Proposal,  see Notes 5 and 9). The December  1997  Financing  was believed to be
sufficient  to fund the  Company's  operations  until  approximately  July 1998,
assuming success in its Debt Reduction Program and discussions with Elscint. The
Company  has  deferred  certain  payments  due to MSSM  and  others  in order to
maintain its resources  beyond July 1998.  The Company now requires  significant
additional  financing  in order to support  the Plan.  It is  expected  that the
Company's ability to obtain such additional financing will be dependent upon the
success of development activities with MSSM and, to a lesser extent, the success
of the Debt Reduction Program and negotiations regarding the Elscint Proposal.

Activities  during the nine months ended November 30, 1998 included  advancement
of the Cardiac Initiative  through  collaborative  research with MSSM,  business
planning and capital  raising  activities and discussion with Elscint and others
about a possible license relationship for the MAGNA-SL.

The Company is continuing its efforts to: (1) raise additional capital, (2) move
forward with the Cardiac MRI Initiative, (3) complete the Debt Reduction Program
and (4) either complete the Elscint  Proposal,  if possible on acceptable terms,
or enter into a strategic  arrangement  with others,  if  possible.  There is no
assurance  that any of these efforts will be successful or that the Company will
be able to continue even its  significantly  reduced  operations,  for which the
Company  presently  requires   additional   capital.   Further,   the  Company's
development activities are largely dependent upon the relationship with the MSSM
and payments under that relationship are in arrears.

GOING CONCERN  CONSIDERATION AND RISK FACTORS - As indicated in the accompanying
unaudited condensed consolidated  financial statements,  as of November 30, 1998
the  Company  had over $1 million in  negative  working  capital,  approximately
$1,022,000 of liabilities,  negative net worth of approximately ($984,000) and a
development  agenda which requires  immediate  additional  financing in order to
continue  its efforts.  Further,  as  indicated  in the  accompanying  unaudited
consolidated financial statements, the Company has incurred a cumulative loss of
approximately  $16.4  million since  inception and has no present,  or projected
near-term,  revenue.  Losses have  continued  since  November  30,  1998.  These
factors,  among  others,  indicate  that  the  Company  is in need of  immediate
significant  additional  financing  and/or a strategic  business  arrangement in
order to continue  the Plan.  The Company  believes  that its cash  resources at
November  30,  1998 are not  sufficient  to fund its  operations  in the quarter
beginning on December 1, 1998 and that it presently requires  additional capital
to continue its planned operations. The Company has been in contact with various
existing and potential investors and believes, but cannot assure, that it may be
successful  in raising the  additional  capital  that it needs to  continue  the
operation of the Plan in the short term. The current turmoil in the domestic and
global financial markets is a significant "risk factor" in the Company's efforts
to attempt to continue its Plan.

Management's plans discussed in the preceding paragraphs are subject to numerous
"risk  factors"   including  the   availability  of  capital  (which  is  needed
immediately) on acceptable terms and in an uncertain market,  the uncertainty of
success of  developments  under the Cardiac MRI  Initiative,  the cooperation of
MSSM in the present  arrearage in payments by the Company,  the  uncertainty  of
continued success of the Debt Reduction Program,  the risks and uncertainties of
any  new  technology  development  program,  competitive  factors,  the  limited
availability and difficulty in retention of competent  scientific and management
personnel,  uncertainties  related  to  existing  or new  potentially  competing
technologies,  necessary regulatory  approvals for products  contemplated by the
Cardiac MRI Initiative,  uncertainties of intellectual  property  protection for
new  technology,  difficulties  in  concluding  the  Elscint  Proposal  or other
potential license arrangements and other factors associated with the development
and  potential  growth  of a  business  from a new  technology.  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.


                                        6
<PAGE>

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 1,000,000 Class B
shares,  which were  forfeited  at March 31, 1998  because  certain  performance
objectives  were not met,  from shares  outstanding  in  computing  net loss 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 -  RELATIONSHIP  WITH THE CARDIAC  INSTITUTE OF THE MOUNT SINAI SCHOOL OF
MEDICINE:

In May 1997,  the Company  entered into a three-year  agreement with the Cardiac
Institute of the Mount Sinai School of Medicine (New York City) and Dr. Valentin
Fuster  (as  principal  investigator)  ("MSSM")  for  a  collaborative  research
arrangement  devoted to utilizing MRI in cardiac  arterial imaging (the "Cardiac
MRI Initiative").  Under the agreement, the Company is required to make payments
to MSSM of  $600,000 in each of the first and second  years and  $300,000 in the
third year. The start of the annual periods was delayed and payments of $300,000
were made to MSSM during the fiscal year ended  February 28,  1998.  The Company
has also agreed to pay royalties,  as defined in the agreement,  to MSSM for the
sole and exclusive right to use, make, have made, sell and otherwise exploit the
results of the collaboration.

The Company accrues for the cost of the collaboration  with MSSM as research and
development  expense  monthly,  subsequent  to the  delayed  start  of  payments
mentioned  above.  For the quarter  and nine months  ended  November  30,  1998,
$150,000 and  $450,000,  respectively,  was charged to research and  development
expense for this arrangement. At November 30, 1998, the Company is in arrears by
$300,000, approximately $150,000 of which was paid in January 1999.

NOTE 5 - RELATIONSHIP WITH ELSCINT:

In June 1996,  the Company  and Elscint  entered  into an  agreement  covering a
strategic  business  arrangement in which Elscint would manufacture the MAGNA-SL
for marketing and sale by Elscint in certain non-United States territories.  The
Company would be paid royalties on each system manufactured and sold by Elscint.
To maintain  its rights  under the  agreement,  Elscint  was  required to sell a
minimum  number of systems as defined  therein.  Additionally,  Elscint  and the
Company agreed to cooperate in various other matters.  Importantly,  the Company
was required to complete certain development tasks and enhancements,  which were
not completed to Elscint's  satisfaction as described  below. The Company agreed
to provide certain ongoing  research and development  support which is no longer
practical  given the Company's  resources.  Elscint was granted a right of first
negotiation on certain new products.

The  Company  was   obligated  to  complete   certain   development   tasks  and
enhancements,  which,  if not  completed  by  November  1996,  could  result  in
termination  of the agreement by Elscint.  Elscint has informed the Company that
it is not satisfied with the completion of certain of the tasks agreed to by the
parties and has  reserved  all of its rights  including  to  complete  the tasks
itself at the  Company's  expense or to terminate the agreement and seek damages
from the Company. In 1997, Elscint presented to the Company the Elscint Proposal
(See Note 2) to assume the  uncompleted  tasks and make a major  alteration  and
improvement of certain  systems  comprising the MAGNA-SL.  The Elscint  Proposal
required a development  payment of $500,000 plus certain support activities from
the Company.  The Company  initially agreed to proceed with the Elscint Proposal
but has been unsatisfied  with certain aspects of Elscint's  expressed plans and
has not been able to make the  required  payments to  initiate  or complete  the
Proposal.  The Company has continued to attempt to have discussions with Elscint
regarding the Elscint  Proposal but there can be no assurance that this proposal
will go forward (See Note 9).  Further,  the Company  believes  that Elscint has
recently  divested itself of the business which would have included the MAGNA-SL
and that the Elscint Proposal may no longer be available to the Company.








                                        7
<PAGE>

NOTE 6 - PROPERTY AND EQUIPMENT:

Details of property and equipment at November 30, 1998 are as follows:

         Machinery and equipment                               $ 760,000
         Purchased software                                       49,000
                                                               ---------
                                                                 809,000
         Less: accumulated depreciation and amortization         394,000
                 amounts written off in restructuring charge     400,000
                                                               ---------  
                                                               $  15,000
                                                               ---------


NOTE 7 - ACCRUED LIABILITIES:

Included in accrued liabilities at November 30, 1998 are approximately  $150,000
for accrued  restructuring costs and approximately  $350,000 related to the MSSM
collaboration (Note 4).

NOTE 8 - OTHER

RESTRUCTURING  CHARGE  RECOUPED IN NINE MONTHS ENDED  NOVEMBER 30, 1997 - During
the nine months ended November 30, 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 nine months ended November 30, 1997.

NOTE 9 - COMMITMENTS AND CONTINGENCIES:

DEBT  REDUCTION  PROGRAM - By  November  30,  1997,  the  Company  had  recorded
liabilities of approximately $2,528,000 (unaudited), no cash and no other assets
that were realizable in the near-term.  After a period of seeking new investment
into the Company to advance the Plan,  new investors  were  identified.  The new
investors indicated their willingness to invest in the Company's Plan if certain
conditions  were met including the  reduction of recorded  liabilities  (through
creditor  concessions) by a very material amount. In approximately October 1997,
with the assistance of  reorganization  counsel  retained for this purpose,  the
Company commenced a "Debt Reduction Program".

Under the Debt Reduction Program, the Company contacted its creditors,  informed
them of the Company's dire financial condition and advised such creditors of the
Debt Reduction Program and the Company's willingness to settle liabilities for a
reduced amount. As of November 30, 1998, the majority of vendor claims have been
agreed to be settled  for  reduced  amounts  and efforts are still in process to
settle remaining amounts in an orderly manner.

In total,  approximately $1,650,000 of liabilities at November 30, 1997 has been
either paid or agreed to be reduced.  The difference  between recorded  payables
and accruals and amounts paid for  settlement  has been included in other income
in the consolidated financial statements.

The  Company  has  received  statements  of account  from one vendor for amounts
(approximately  $132,000 plus claimed interest)  materially in excess of amounts
recorded by the Company  (approximately  $22,000) for amounts  alleged to be due
from this  vendor.  The vendor  statements  indicate  billings of  approximately
$83,000 in January  1997 and  $16,000  in April 1997 for  components  fabricated
which were not  received by the  Company.  The Company does not have a record of
being  billed for such  amounts nor for receipt of such  fabricated  components.
Company  reorganization counsel has attempted to contact this vendor and resolve
this matter but the vendor does not respond.  This matter is being  investigated
for resolution.

The  Company's  Debt  Reduction  Program is ongoing and the Company has been the
subject of several threatened,  and certain actual, legal actions for nonpayment
of  obligations.  While the principal  legal actions have been settled,  various
other  creditors have  threatened the Company with litigation to recover amounts
due them.  While the Company has had success in  reducing  its  liabilities  and
negotiating  with its creditors  and others in accordance  with the Plan and the
Debt

                                        8
<PAGE>

Reduction Plan, the ultimate  liabilities in these matters are not known and the
vendors (or other parties), in some cases, may seek damages in excess of amounts
recorded in the consolidated financial statements.

The Company believes,  but no assurance can be made, that its liability will not
exceed amounts recorded in the consolidated financial statements.

WARRANTY,  SERVICE, PRODUCT LIABILITY - The Company has been unable to honor its
obligations for warranty and service for the MAGNA-SL since  approximately March
1997.  Additionally,  product  liability  claims relating to the MAGNA-SL may be
asserted  against the Company.  If such claims are asserted against the Company,
there can be no  assurance  that the Company will have  sufficient  resources to
defend against any such claim or satisfy any such successful claim. In the event
of an uninsured or inadequately  insured product  liability claim, the Company's
business and financial condition could further be materially adversely affected.

AGREEMENT WITH ELSCINT - Elscint has informed the Company on several  occasions,
including  in May 1998,  that it  believes  the  Company to be in default of its
obligations  under the June 1996  agreement  with  Elscint  described in Note 5.
Elscint may assert damages against the Company. The Company has not recorded any
liability to its consolidated  financial statements for this contingency because
it is unable to determine what, if any, liability it could have to Elscint after
any defenses and counterclaims which it may make against Elscint.  The Company's
intention is to reach a negotiated  settlement of the business issues (including
the "Elscint Proposal" described in Note 2) with Elscint, if possible.  However,
during the quarter  ended  November 30, 1998  discussions  with Elscint have not
resulted in a  conclusion  and the Company  believes  that  Elscint has recently
divested  itself of the business  which would include the potential  business of
the  MAGNA-SL.  Therefore,  the  Company is not  presently  in the  position  to
conclude that the possibility of any business  arrangement  being concluded with
Elscint or its potential successors will be possible.

AGREEMENT WITH THIRD PARTY  DEVELOPER - In May 1998, the Company entered into an
agreement  with  a  third  party  developer  ("Developer")  under  which  it  is
contemplated  that  Developer  will  provide  the Company  with  design  review,
pre-production prototypes, regulatory compliance services, production prototypes
and ultimately production of the first product under the Cardiac MRI Initiative.
The Company  made  payments to Developer  of  approximately  $35,000 in the nine
months ended November 30, 1998 to initiate the  relationship.  This relationship
will involve  costs of several  hundred  thousand  dollars in the first year and
will be dependent upon the Company's ability to obtain additional capital.


NOTE 10 - SUBSEQUENT EVENT - PRIVATE PLACEMENT OF EQUITY SECURITIES

On October 25, 1998, the Company commenced a private  placement  offering of its
class A common stock to accredited  investors.  The private  placement  offering
calls for a minimum of $800,000  (5,333,333  shares) and a maximum of $1,200,000
(8,000,000  shares).  On January 7,  1999,  the  Company  received  proceeds  of
$222,500  (1,483,333  shares)  under the private  placement  offering  from nine
investors who agreed to waive the minimum necessary for closing.  The Company is
continuing its efforts to raise  additional  amounts under this  placement.  The
Company  plans to use the  proceeds of the  offering  to fund the  collaborative
development  effort with The  Cardiac  Institute  of the Mount  Sinai  School of
Medicine and for working capital.



















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<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 or Plan of Operations -

BACKGROUND/HISTORY - The reader is referred to Note 2 to Condensed  Consolidated
Financial Statements for a discussion of the Company's background and history.

CURRENT ACTIVITIES - The reader is referred to Note 2 to Condensed  Consolidated
Financial Statements for a discussion of the Company's current activities.

Activities  during the nine months ended November 30, 1998 included  advancement
of the Cardiac Initiative  through  collaborative  research with MSSM,  business
planning  and  capital  raising  activities  and  discussion  with  Elscint  and
potential other licensees of the MAGNA-SL.

The Company is  continuing  its efforts to: (1) raise  additional  capital,  (2)
advance the goals and objectives of the Cardiac MRI Initiative, (3) complete the
Debt Reduction Program and (4) either complete the Elscint Proposal, if possible
on  acceptable  terms,  or enter into a strategic  arrangement  with others,  if
possible.  There is no assurance that any of these efforts will be successful or
that the Company will be able to continue its operations,  for which the Company
presently requires additional capital.

GOING  CONCERN  CONSIDERATION,  LIQUIDITY,  ARREARAGE ON  PRINCIPAL  DEVELOPMENT
CONTRACT AND RISK FACTORS - In December  1997,  the  Company's  efforts to raise
additional  financing to initiate the Cardiac MRI Initiative  were successful in
raising  $1.884  million in a private  placement of 15,072,000  shares of common
stock (the "December 1997 Financing").  The December 1997 Financing was believed
to be sufficient to fund the Company's operations until approximately July 1998,
assuming  success  in its  Debt  Reduction  Program  (see  Note  9 to  Condensed
Consolidated Financial Statements) and discussions with Elscint (see Notes 5 and
9 to  Condensed  Consolidated  Financial  Statements).  The Company has deferred
certain  payments  due to MSSM and  others in order to  maintain  its  resources
beyond July 1998. The Company now requires  significant  additional financing in
order to support the Plan.

As indicated in the  accompanying  unaudited  condensed  consolidated  financial
statements,  as of November 30, 1998 the Company had over $1 million in negative
working capital, approximately $1,022,000 of liabilities,  negative net worth of
approximately  ($984,000)  and a  development  agenda which  requires  immediate
additional financing in order to continue its efforts.  Further, as indicated in
the accompanying  unaudited condensed  consolidated  financial  statements,  the
Company has incurred a cumulative  loss of  approximately  $16.4  million  since
inception  and has no present,  or  projected  near-term,  revenue.  Losses have
continued since November 30, 1998.  These factors,  among others,  indicate that
the Company is in need of immediate  significant  additional  financing and/or a
strategic  business  arrangement  in order to continue the Plan. The Company has
virtually no cash  resources  at November  30, 1998 and, as such,  does not have
sufficient resources to fund its operations in the quarter beginning on December
1, 1998. The Company  requires  additional  capital  (virtually  immediately) in
order to continue  its  planned  operations.  The  Company's  development  plans
involve planned expenditures with MSSM of approximately $600,000 over the coming
twelve  months and in excess of  $500,000  (potentially  very  significantly  in
excess  of  $500,000)  with the  Developer.  These  costs,  in  addition  to the
Company's  operating  costs indicate a short-term  (one year)  financing need of
approximately  $2.5  million.  The  Company  has been in  contact  with  various
existing and potential investors and believes, but cannot assure, that it may be
successful  in raising the  additional  capital  that it needs to  continue  the
operation of the Plan in the short term. The current turmoil in the domestic and
global financial markets is a significant "risk factor" in the Company's efforts
to attempt to continue its Plan.

On October 25, 1998, the Company commenced a private  placement  offering of its
class A common stock to accredited  investors.  The private  placement  offering
calls for a minimum of $800,000 (5,333,333 shares) and a maximum of

                                       10
<PAGE>

$1,200,000 (8,000,000 shares). On January 7, 1999, the Company received proceeds
of $222,500 (in  exchange  for  1,483,333  shares)  under the private  placement
offering  from nine  investors  who agreed to waive the  minimum  necessary  for
closing. The Company is continuing its efforts to raise additional amounts under
this  placement.  The Company  plans to use the proceeds of the offering to fund
the  collaborative  development  effort with MSSM and for working  capital.  The
amount raised in January 1999 will permit the Company to make one payment toward
the  arrearage  with MSSM, it will not permit the Company to bring such payments
to a current status or to fund operations for any significant amount of time.


Management's plans discussed in the preceding paragraphs are subject to numerous
"risk  factors"   including  the   availability  of  capital  (which  is  needed
immediately) on acceptable terms and in an uncertain market,  the uncertainty of
success of  developments  under the Cardiac MRI  Initiative,  the uncertainty of
continued success of the Debt Reduction Program,  the risks and uncertainties of
any  new  technology  development  program,  competitive  factors,  the  limited
availability and difficulty in retention of competent  scientific and management
personnel,  uncertainties  related  to  existing  or new  potentially  competing
technologies,  necessary regulatory  approvals for products  contemplated by the
Cardiac MRI Initiative,  uncertainties of intellectual  property  protection for
new  technology,  difficulties  in  concluding  the  Elscint  Proposal  or other
potential license arrangements and other factors associated with the development
and  potential  growth  of a  business  from a new  technology.  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.


RESULTS OF OPERATIONS -

Operations in the quarter and nine months ended  November 30, 1998 resulted in a
net loss of approximately $279,000 and $855,000,  respectively. The loss results
principally   from  the  Cardiac  MRI  Initiative   development   activities  in
collaboration with the Mount Sinai School of Medicine.

Cost of the MSSM portion of the collaboration  were  approximately  $150,000 and
$450,000 of the net loss for the quarter and nine  months,  respectively,  ended
November   30,   1998.   In  May   1998,   the   Company   initiated   a  design
review/regulatory/contract   manufacturing  relationship  with  a  third  party.
Expenses  with such third party have totaled  approximately  $35,000 in the nine
months ended November 30, 1998. General and administrative expenses consisted of
executive,  administrative  and  business  development  consultants  as  well as
certain occupancy, storage and professional costs.

Operations in the quarter and nine months ended  November 30, 1997 resulted in a
net loss of approximately  $105,000 and $493,000.  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 a portion of the nine months ended November 30, 1997.  Their
payroll, which was accrued but not paid during the nine months, is the principal
cost in the  accompanying  Statement  of  Operations  for  1997.  Net loss  also
includes  the   reversal  in  the  nine  months  ended   November  30,  1997  of
approximately  $60,000  of  restructuring  charge as a result of the  return for
credit of inventory  which was written off to  restructuring  charge at February
28, 1997.


The Company's belief about its liquidity, financing plans and prospects, Elscint
Proposal and arrangements with Mount Sinai School of Medicine, the Developer, as
well as other information  contained in this report (including its prospects for
surviving as a going concern) are based upon present  conditions and anticipated
developments.  This  belief is further  based  upon  estimates  and  assumptions
including,  among other things,  completion of additional financing necessary to
fund the planned  activities,  timely and  successful  completion of development
milestones,  competitive  and  intellectual  property  factors,  cooperation  of
creditors and others with the Debt Reduction Program,  and successful efforts to
conclude an  arrangement  with Elscint or others,  among other  matters.  In the
event that the Company's  estimates and assumptions prove materially  incorrect,
the Company  does not  presently  have the  financial  resources to fund planned
operations.  The foregoing information  constitutes  forward-looking  statements
within the meaning of Section 21E under the Securities  Exchange Act of 1934, as
amended.

                                       11


<PAGE>


PART II - OTHER INFORMATION



ITEM 2. - CHANGES IN SECURITIES AND USE OF PROCEEDS

On October 25, 1998, the Company commenced a private  placement  offering of its
class A common stock to accredited  investors.  The private  placement  offering
calls for a minimum of $800,000  (5,333,333  shares) and a maximum of $1,200,000
(8,000,000  shares).  On January 7,  1999,  the  Company  received  proceeds  of
$222,500  (1,483,333  shares)  under the private  placement  offering  from nine
investors who agreed to waive the minimum necessary for closing.  The Company is
continuing its efforts to raise  additional  amounts under this  placement.  The
Company  plans to use the  proceeds of the  offering  to fund the  collaborative
development  effort with The  Cardiac  Institute  of the Mount  Sinai  School of
Medicine and for working capital.

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

         (b) The  Company  did not file  reports on Form 8-K during the  quarter
             ended November 30, 1998.






                                   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:  January  14,  1999            By: /s/ Daniel M. Mulvena
                ---                      ---------------------------------------
                                         Daniel M. Mulvena , Chairman of the
                                         Board of Directors, Chief Executive
                                         Officer  (Principal Executive Officer),
                                         Acting Treasurer (Principal Financial
                                         and Accounting Officer)




                                       12