UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                               FORM 10-KSB

_ ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE 
ACT OF 1934 [Fee Required] For the fiscal year ended MAY 31, 1998
*    TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES 
EXCHANGE ACT OF 1934 [No Fee Required] For the transition period from 
___ to ____

Commission file number 0-11408
BIOSENSOR CORPORATION
________________________________________________________________________
         Minnesota                                      41-1427114
(State or other jurisdiction of                    (I.R.S. Employer
incorporation or organization)                     Identification No.)

6 Woodcross Drive
Columbia, SC                          			      29212	
 (Address of principal executive offices)				(Zip Code)

Issuer's telephone number         (803) 407-3044	

Securities registered pursuant to Section 12(b) of the Exchange Act:            
None	

Securities registered pursuant to Section 12(g) of the Exchange Act:            
None

                          				(Title of Class)
                      Common Stock $.05 par value	
				                          (Title of Class)

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		

Check if there is no disclosure of delinquent filers in response to Item 
405 of Regulation S-B contained in this form, and no disclosure will be 
contained, to the best of registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this 
Form 10-KSB or any amendment to this Form 10-KSB.	X	

The issuer's revenues for its most recent fiscal year were 	$1,929,000	
The aggregate market value of the voting stock held by non-affiliates as 
of August 7, 1998 (based upon the most recent trade price) was 
approximately $221,000.

At August 31, 1998, the number of shares outstanding of the registrant's 
preferred stock, $0.10 par value was 149,025.15 and common stock, $.05 
par value, was 2,843,055

DOCUMENTS INCORPORATED BY REFERENCE: None	

PART I

ITEM 1.  BUSINESS

General

Biosensor Corporation (the "Company" or "Biosensor") designs, 
manufactures and markets cardiac and pulmonary diagnostic equipment for 
physicians' offices, clinics and hospitals. The Biosensor ambulatory ECG 
("Holter") monitoring system consists of a patient-worn microprocessor 
based unit called the patient recorder, which monitors and records 
cardiac events. Patient recorder data is transferred in a three to five 
minute procedure to a personal computer (PC) based central station, 
located at the physician's office or healthcare facility.  The central 
station's computer presents cardiac performance data on a CRT or prints 
a hard copy for analysis by the physician.  The central computer can 
also be used for running many PC compatible computer programs for office 
management.  The Biosensor spirometry system uses software developed by 
the Company in conjunction with hardware purchased from another 
manufacturer (OEM).  The Company sells three other  PC compatible OEM 
products, an ambulatory blood pressure system, an ECG system, and an ECG 
stress system, and manufactures telemetry equipment for other medical 
equipment manufacturers. The Company's products are distributed in the 
United States primarily through independent manufactures' 
representatives.  Internationally, the products are marketed primarily 
through independent distributors.

Subsequent Events

On July 23, 1998, Biosensor acquired all of the outstanding shares of 
Carolina Medical, Inc. ("CMI"), a Minnesota corporation, pursuant to a 
Plan of Reorganization and Agreement (the "Plan") by and between the 
Company and CMI, dated May 29, 1998. The Company acquired 1,987,002 
shares of the CMI's Common Stock in exchange for 149,025.15 shares of 
its Series A Preferred Stock.  Each share of Series A Preferred Stock is 
convertible into 96 shares of the Company's Common Stock.  Each share of 
Series A Preferred Stock votes and participates in dividends and 
liquidations on an as-if-converted basis.  CMI was organized to 
facilitate the share exchange with the Company as a preliminary step to 
the share exchange.  Carolina Medical, Inc., a North Carolina 
corporation was recently merged with and into CMI.  CMI develops, 
manufactures, markets and services digital ultrasound imagers, 
electronic instruments for detecting circulatory system disorders and 
measuring the flow and pressure of blood, and cardiac monitoring 
systems. CMI has two subsidiaries: Braemar, Inc., and Advance Medical 
Products, Inc.  Braemar, Inc., a North Carolina corporation, is a 
wholly-owned subsidiary of CMI that develops, manufactures and markets 
tape recording devices for ambulatory ECG monitoring devices. CMI owns 
approximately 55% of the issued and outstanding common stock, and all of 
the issued and outstanding preferred stock, of Advanced Medical Product, 
Inc., a publicly held Delaware corporation, that develops, manufactures, 
and markets ambulatory ECG and blood pressure monitors.   For accounting 
purposes, the transaction became effective July 1, 1998.  Because the 
former CMI shareholders effectively control the Company after the 
transaction, the transaction will be recorded as a "reverse 
acquisition", whereby CMI will be deemed to have acquired Biosensor.  
The net assets of Biosensor acquired will be recorded at fair market 
value.  The historical financial statements of the Company prior to the 
acquisition will become those of CMI.  Subsequent to July 1, 1998, the 
financial statements will include the operations of the combined 
companies.

Biosensor's Board of Directors has also authorized the merger of a 
wholly owned subsidiary of the Company, which has not yet been 
organized, with and into Advanced Medical Products, Inc., subject to 
certain terms and conditions.  The Company and Advanced Medical 
Products, Inc. are currently negotiating a definitive agreement to 
combine their cardiac monitor businesses, and to do business as Advanced 
Biosensor Inc.

Products

A.  Holter Systems

In the event a 30 second ECG (aka EKG) is unable to tell the physician 
information needed about a potential cardiac condition, the physician 
may order a 24 hour patient worn ECG, called a Holter, ambulatory ECG, 
or long term ECG. The Holter monitor is used primarily to evaluate 
potential cardiac patient symptoms, to look for episodes where the blood 
supply to the heart may be compromised (ischemia), to evaluate cardiac 
risk in patients with suspected or overt cardiac disease, and to 
determine whether cardiac drugs and therapies used to reduce heart 
rhythm problems are performing properly.  Approximately 2.5 million such 
procedures are ordered annually in the United States.  The Company 
estimates approximately an equal number are ordered annually in 
international markets.  In the United States, the physician typically 
charges about $150 per test.  International reimbursement can vary from 
several dollars up to approximately $80 per test.  Reimbursements are 
gennerally sufficient for a private physician or health care facility to 
financially justify a small Holter system.  The Company believes its 
Holter systems have significant benefits over competitive offerings, 
including real time analysis technology using FLASH memory components, 
an easy to use PC compatible program, an attractive recorder size, 
documented accuracy, and an affordable price.

The Company's four versions of full disclosure monitoring systems are 
comprised of a patient recorder using the Argus ECG analysis algorithm 
and a central computer system and three software variations for report 
viewing and printing.  The full disclosure feature allows for storage 
and review of all 24 hours of the ECG data.  The Company's method of 
full disclosure ECG storage uses real time digital means, rather than 
the more traditional tape storage means.

Optional superimposition allows the operator to view the ECG data via 
screen display of one beat over its predecessor at high speeds, allowing 
24 hours of data to be reviewed in 30 minutes or less.

B. Spirometry System

The Company's spirometry system is used by physicians to measure lung 
capacity and function.  It uses PC compatible software developed by the 
Company to function in conjunction with hardware supplied by an outside 
vendors.  The package allows physicians to expand patient care by 
performing comprehensive pulmonary function tests from their office or 
clinic.  The spirometry system includes a unique feature set comprised 
of a patented, completely disposable sensor, which eliminates cleaning, 
chemical contamination, labor and the risk of spreading disease; a 
"sailboat race game" providing patient stimulation and involvement in 
testing; patient trending which allows physicians to see the patient 
progress over time; and built in help manuals to make operation easy.

C. Telemetry

Biosensor sells a telemetry transmitter and receiver to other medical 
equipment vendors, used for monitoring the ECG of patients in cardiac 
rehabilitation.  Telemetry is the process of radio transmitting, 
receiving and displaying physiologic signals including ECG from one or 
more remote patients to a nurses' station.
 
D.  OEM Distribution

The Company sells other diagnostic equipment to physicians, clinics and 
hospitals.  Such equipment includes stress testing equipment, ECG, and 
ambulatory blood pressure equipment.  This equipment is acquired from 
other manufacturers and re-sold.

Research and Development

Since its formation, the Company's research and development activities 
have been focused on developing  computerized cardiac monitoring systems 
capable of providing patient-worn heart monitoring, analysis, and 
reporting.  These products are currently on the market.  The Company's 
present research and development efforts are focused upon enhancing and 
improving existing systems and developing compatible diagnostic products 
such as the spirometry software and the ambulatory blood pressure 
software.  The Company currently employs one person in R&D, and engages 
outside consultants for specific projects.  The Company expended $ 
242,000 in 1998 and $289,000 in 1997 for research, development, and 
engineering activities, which consisted principally of the salaries and 
benefits of its employees and consultants.  

Manufacturing and Sources of Supply

The components which are included in the Company's monitoring systems 
are presently purchased from outside vendors, tested and incorporated 
into the system by Company personnel.  Components are available from 
multiple sources.  If the Company were unable to obtain certain 
components from one or more of its suppliers, the Company would be 
forced to seek comparable components from other suppliers.  The Company 
believes it would be able to acquire hardware components from alternate 
OEM suppliers should it become necessary.  The Company is in the process 
of outsourcing its manufacturing to Braemar Inc which maintains an ISO 
9001 certified manufacturing facility and has the capability to provide 
CE mark, an increasingly critical requirement for export of medical 
devices to Europe.

Marketing and Distribution

Healthcare reform in the United States, Germany, and in some Asian 
markets over the past few years has influenced the buying patterns of 
medical device end-users.  With this evolution, products used in this 
environment must be lower in price and more cost effective to operate, 
while remaining feature rich.  The Company believes this trend will 
continue, and that its products are well suited to the new environment.

Currently, the Company markets its products through independent 
manufacturers sales representatives in the United States, and 
distributors overseas.  Biosensor believes that its sales 
representatives can be effective in reaching the physicians office, 
clinics, and small to mid-sized hospitals; have specific knowledge of 
and contacts in particular markets; and enhance the quality and scope of 
the Company's sales and marketing efforts.  Pursuant to agreements with 
sales representatives and distributors, the sales force is prohibited 
from engaging in the promotion or sale of products that compete directly 
with the Company's products.

The Company has one employee sales manager and approximately 17 
independent sales organizations covering the United States.  In 
addition, it supports distribution activities in approximately 35 
international markets.  The Company employs two full-time sales and 
marketing personnel at its headquarters.  These employees work directly 
and in conjunction with sales representatives and distributors in 
marketing and selling to doctors, clinics, and hospitals.  The Company's 
marketing staff prepares advertising copy, full color sales brochures, 
sales bulletins, and reimbursement support documentation.

Competition

Holter Systems

Competition for sales of  ambulatory monitoring equipment can be 
described by dividing the market into two segments of approximately 
equal size based upon target customers and price considerations:

	1) Larger hospitals, clinic, and service companies.  These groups 
predominantly purchase 24 hour tape scanning and analysis equipment 
dependent upon technician operation.  Equipment for such users is priced 
in the $30,000 to $80,000 range, where volume justifies a significant 
capital outlay.  Del Mar Avionics Inc., Oxford, Marquette Electronics, 
Inc., Reynolds, Zymed, Inc.. and Spacelabs, Inc. are the principal 
domestic suppliers to this market segment.  Historically, these 
companies have represented more than half of industry sales revenues.  
End-users in this market have also demonstrated a willingness to 
consider purchasing lower priced (more cost-effective) systems.

	2)  Physician office and small hospital systems.  Physicians and 
small hospitals have a tendency to purchase more limited feature Holter 
systems in a price range of $6,000 to $25,000. Advanced Medical 
Products, Burdick, Custo, Diagnostic Monitoring, and Rozinn are among 
the companies that compete with Biosensor selling Holter systems to 
office based physicians and small hospitals.  Principally price, 
marketing coverage, ease-of-use and product features are the key 
attributes of the sales process.  In the United States, diminishing 
demand for equipment has resulted from office consolidation and 
transition into managed care in the physician office market.  This 
change may be temporary or permanent.  The physician office diagnostic 
equipment market is characterized by intense competition.  Several well 
established competing organizations with resources greater than the 
Company's have been successful at increasing their market share.

Spirometry

There are a number of companies producing spirometry systems for the 
office and clinic market including Burdick,  SpiroMetrics, QRS, and 
others. Many of these companies sell devices which perform only one 
function, while others offer multi-purpose personal computer based 
systems.  Biosensor's spirometry products sell for between $2,000 and 
$4,000 and are PC based companions to the the Company's Holter monitors. 

Telemetry 

The Company's analog telemetry  products are sold to other medical 
equipment manufacturers (OEM) and are used in cardiac rehabilitation 
product offerings.  This market is shifting from analog to digital 
technology that is generally being developed by the Company's customers.  
The Company believes that unique niches for the analog technology will 
continue to be available, but growth of this product line is not 
expected.  A matched pair, including a telemetry transmitter and 
receiver, sell for approximately $1,300.

Government Regulation

The diagnostic products sold by the Company are "devices" as defined in 
the Federal Food, Drug and Cosmetic Act (the "Act), and are subject to 
the FDA regulatory authority over the manufacturing, performance 
standards, patient registries, labeling and advertising thereof.  Under 
the Act, the FDA must determine the extent of control necessary to 
assure the safety and effectiveness of devices and must define those 
control levels by the promulgation of regulations and standards.  Under 
Section 510(k) of the Act, a medical device can be marketed if the FDA 
determines that the device is substantially equivalent to similar 
devices marketed prior to May 28, 1976.  All of the Company's products 
have FDA 510(K) regulatory clearance.  Action by the FDA does not, 
however, constitute approval by the FDA of the Company's products or 
pass upon their safety and effectiveness.  While the Company believes 
that regulatory clearance for certain diagnostic devices which are 
substantially equivalent to a device currently in commercial 
distribution, including products which the Company may in the future 
develop and market, may be obtained in less time and at a lower cost 
than certain other medical devices, there can be no assurance that 
regulatory agencies may not require lengthy clinical testing or other 
procedures that will involve time and substantial cost.  There can be no 
assurance that, even after such time and expenditures, regulatory 
clearance will be obtained.  A marketed product is subject to continual 
review, and later discovery of previously unknown problems can result in 
restrictions on a product's marketing, or withdrawal of the product from 
the market.

Distribution in Western Europe requires "CE" certification, and as of 
June 14, 1998 that certification requires compliance and testing under 
Medical Device Directives (MDD).  At May 31, 1998, the Company was in 
compliance with existing regulations and had filed its documents 
demonstrating compliance under the MDD. 

Trade Secrets

Biosensor exclusively licenses its Argus ECG analysis algorithms used in 
the Holter monitor from CNS, Inc. for all medical applications except 
sleep applications.  With the exception of the Argus algorithms, the 
Company's software programs and systems are not protected by patents or 
registered copyrights, but instead the Company relies upon the law of 
trade secrets and the confidentiality provisions of its employment 
agreements.  The Argus algorithms are subject to copyright protection 
claimed by Washington University.  There are no patents or registered 
copyrights owned by Biosensor on its spirometry or ambulatory blood 
pressure software, but the products are covered by general US and 
foreign copyright laws.  The OEM hardware vendor has a patent which 
protects the disposable sensor, though the relationship with Biosensor 
is non-exclusive.  The Company believes that protection of its systems 
by patents or registered copyrights is less important than the 
knowledge, experience and creativity of the Company's product 
development and marketing staff in an industry characterized by rapid 
technological change.  There can be no assurance that competitors could 
not successfully duplicate the Company's proprietary software or the 
Argus algorithms.

Healthcare Reform

As a result of concerns about changes to the United States system of 
healthcare payments, a reduction in purchase levels by physicians has 
occurred.  These shifts are occurring in varying degrees in other parts 
of the world as well.  The Company believes that its competitors are 
also being affected by these factors.

Employees

As of May 31, 1998, the Company had 8 employees 7 of whom were full-
time.  No employees are represented by labor organizations and there are 
no collective bargaining agreements.  Employee relations are believed to 
be good.  The company plans some reductions in personnel in connection 
with the business combination detailed above (Item 1, Business, 
Subsequent Event).  No material costs are anticipated as a result of 
these reductions.

ITEM 2. PROPERTIES

The Company leases approximately 4,500 square feet of office space in 
Maple Grove, MN from a partnership controlled by an officer/stockholder.  
The lease requires approximate future noncancellable minimum annual 
lease payment of $54,000 through December 2003 plus a pro rata share of 
operating expenses.  The Company has also guaranteed the underlying debt 
on the property, which consists of a $1,100,000 term loan expiring 
January 2000. 

In connection with the business combination detailed above (Item 1, 
Business,  Subsequent Event), the Company intends to sub-lease the space 
occupied in Maple Grove, MN.  The Company is relocating employees, 
inventories, equipment and records to facilities in Burnsville, MN and 
Columbia, SC.  The Company has accrued approximately $70,000 at June 30, 
1998 in anticipation of various sub-leasing and/or lease termination 
costs.  In addition, the Company has negotiated a release from the loan 
guarantee on the Maple Grove property.  Under the Release from Loan 
Guarantee Agreement, the Company is responsible for the payment of 
closing costs in the required refinancing of the Mortgage, estimated at 
$17,000, and any interest rate differential over a three year period.  
For each one-percent increase in interest over present rates, the 
Company could be required to pay approximately $11,000 annually for up 
to three years.

ITEM 3.  LEGAL PROCEEDINGS

In September 1996, a jury verdict in the amount of $325,000, plus fees 
of $27,000, was awarded to a former vendor for its claim that the 
Company owed additional amounts under a 1988 software license agreement.  
This liability was fully accrued as of May 31, 1997.  In December 1997, 
the Company entered into a settlement agreement with this vendor to 
reduce the jury award to $200,000.  The remaining amount due under the 
agreement calls for annual payments of $25,000 through December 2002, 
with an additional $25,000 due December 1999.  In the event the Company 
defaults on any of the annual payments, the full judgment, less any 
amounts paid under the settlement agreement, will be reinstated.  

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The Company's common stock is traded on the Minneapolis Local Over-The 
Counter market.  The high and low bid prices for the common stock by 
fiscal quarter as reported by local market makers are presented below.  
The bid quotations represent prices between broker-dealers and do not 
include retail mark-ups, mark-downs, or commissions and do not 
necessarily represent actual transactions.

                         				    1998		           	      1997
QUARTER                   HIGH         LOW        HIGH          LOW

First Quarter           $0.250       $0.1875     $0.813        $0.563
Second Quarter         $0.1875        $0.125     $0.688        $0.281
Third Quarter           $0.125       $0.0625     $0.281        $0.281
Fourth Quarter         $0.3125       $0.0625     $0.374        $0.281

At August 31, 1998, the Company had approximately 400 shareholders of 
record.

The Company has not paid any cash dividends on its common stock.  The 
Company intends to retain any earnings it may generate to finance the 
development of its business and, accordingly, does not anticipate 
payment of any dividends in the foreseeable future.  


ITEM 6.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
	AND RESULTS OF OPERATIONS

Biosensor Corporations net sales totaled approximately $1,929,000 in 
fiscal 1998, compared with sales of $2,505,000 in fiscal 1997.  Sales 
decreased 23% from 1997 to 1998.  Sales in the U.S. in 1998 decreased by 
$116,000 while sales in international markets decreased by $428,000.  
The decreases in US and international sales are a result of continued 
competitive pressures and a diminished marketplace in the U.S. and 
certain European countries, largely as a result of healthcare reforms.  

Cost of products sold as a percentage of net sales was 51% in fiscal 
1998 and 49% in 1997. The increase in 1998 was due to reductions in 
average selling prices in reaction to a price competitive market 
environment.

Research, development and engineering expenses for fiscal year 1998 
decreased $47,000 compared to fiscal 1997.  The decrease in 1998 was due 
to personnel reductions, primarily from attrition. 

Sales and marketing expenses decreased by $40,000 from 1997 to 1998.  
The decrease resulted primarily from lower commissions paid to sales 
representatives on the lower level of  sales.  

General and administrative expenses were $347,000 in 1998 compared to 
$476,000 in 1997.  Decreases in personnel, and lower legal expenditures 
produced most of the $129,000 decrease in expenses in 1998. 

The Company had other income of $158,000 in 1998  primarily due to the 
settlement of a legal judgment as  described in Item 3 above.  As a 
result of the settlement of the liability for less than was recorded in 
1997, a reduction in liability of $152,000 was recorded as "other 
income" in the 1998 Statement of Operations.

Liquidity and Capital Resources

During 1998 the Company generated cash of $79,000 from operating 
activities.  The net loss of $108,000, and decrease in accrued expenses 
resulting from the settlement of litigation with a former vendor as 
described in Item 3 and above, were more than offset by decreases in 
accounts receivable of $156,000 and decreases in inventories of $97,000, 
and increases in accounts payable of $53,000.  The decrease in accounts 
receivable is due to lower fourth quarter sales, and improved collection 
efforts.  In response to the downturn in sales, the Company began a 
reduction in personnel and related expenses in March 1998, and reduced 
the amount of space occupied in its rented facilities.  Marketing 
activities were concentrated on selected foreign distributors in 
international markets that were not as directly affected by health care 
reform.  In addition, the Company increased its investigations into 
possible merger and acquisition opportunities that could provide for 
greater critical mass and improved manufacturing,  marketing, and sales 
efficiencies.   
 
In a move that the Company believes will further improve liquidity and 
capital resources and provide better access to capital markets, on July 
23, 1998, Biosensor acquired in a reverse merger all of the outstanding 
shares of Carolina Medical, Inc. ("CMI"), a Minnesota corporation, 
pursuant to a Plan of Reorganization and Agreement (the "Plan") by and 
between the Company and CMI, dated May 29, 1998. (see Item 1, Business, 
Subsequent Events).  Carolina Medical, Inc. had raised $470,000 (net of 
costs) in May 1998 from a private placement of its common stock with two 
new investors.   In addition to CMI's operations in King, North 
Carolina, CMI owns Braemar Inc., a manufacturer of medical products 
similar to those manufactured by the Company, located in Minnesota, and 
control of Advanced Medical Products, Inc., a direct competitor of the 
Company located in South Carolina.  The Company and CMI  believe that 
cost savings of between $300,000 and $500,000 annually could potentially 
be realized by moving the manufacture of the Company's products to 
Braemar, Inc. and by combining the marketing, sales, customer service 
and administrative operations of the Company with similar operations of 
Advanced Medical Products, Inc., eliminating redundant costs.  A Plan of 
Reorganization and Merger between Biosensor and Advanced Medical 
Products has been approved by the Boards of Directors of both the 
Company and Advanced Medical Products, Inc.  A definitive agreement is 
being negotiated that would result in the consolidation of the Companys 
operations into Advanced Medical Products, the combination to be 
operated as Advanced Biosensor, Inc.  This would be expected to lead to 
increased sales, and cost savings in the range of those described above 
which, longer term, would be expected to have a positive affect on 
liquidity and capital resources.   Short term, Biosensors inventory and 
receivables could add to the borrowing base and therefore provide 
greater liquidity under a credit agreement in place between Advanced 
Medical Products Inc. and Emergent Financial Group, their asset based 
lender.    

Forward-Looking Statements

The Company may from time to time make written of oral "forward-looking 
statements", within the meaning of the Private Securities Litigation 
Reform Act of 1995, including statements contained in this Form 10KSB 
and in other documents filed by the Company with the Securities and 
Exchange Commission and in its reports to stockholders, as well as 
elsewhere.  "Forward-looking statements" are statements such as  those 
contained in projections, plans, objectives, estimates, statements of 
future economic performance, and assumptions related to any of the 
forgoing, and may be identified by the use of forward-looking 
terminology, such as "may", "expect", "anticipate", "estimate", "goal", 
"continued", or other comparable terminology.  By their very nature, 
forward-looking statements are subject to known and unknown risks and 
uncertainties relating to the Company's future performance that may 
cause the actual results, performance or achievments of the Company, or 
industry results, to differ materially from those expressed or implied 
in such "forward-looking statements".   Any such statement is qualified 
by reference to the following cautionary statements.  

The Companys business operates in highly competitive markets and is 
subject to changes in general economic conditions, competition, customer 
and market preferences, government regulation, the impact of tax 
regulation, foreigh exchange rate fluctuations, the degree of market 
acceptance of the products, the uncertainties of potential litigation, 
as well as other risks and uncertainties detailed elsewhere herein and 
from time to time in the Company's Securities and Exchange Commission 
filings.   
      
This Form 10KSB contains forward looking statements, particularly in the 
following sections:  "Business"; and "Management's Discussion and 
Analysis of Financial Condition and Results of Operations";   Actual 
results could differ materially from those projected in the forward 
looking statements as a result of known and unknown risks, 
uncertainties, and other factors, including but not limited to the 
timely and effective integration of the Biosensor's business and 
operations with the business and  operations of Carolina Medical and 
Advanced Medical Products and the achievment of expected operating 
synergies, market acceptance of the Company's products and services, 
changes in expected research and development requirements, the effects 
of changing economic conditions and business conditions generally, and 
changes in medical device markets as a result of health care reforms 
both domestically and internationlly.  The Company does not undertake 
and assumes no obligation to update any forward-looking statement that 
may be made from time to time by or on behalf of the Company. 

Year 2000 Impact Analysis

The Company has examined the effects that the year 2000 will have on the 
operation of its business and on the its customers use and acceptance of 
its products.  Biosensor believes that it has a plan in place that will 
eliminate or render immaterial any impact that the year 2000 will have 
on its business.  Internal accounting and preparation of monthly, 
quarterly and annual financial statements is currently performed on 
personal computers using accounting and inventory software obtained from 
Great Plains running on theMicrosoft DOS operating system software.  By 
the end of calendar 1998 the Company expects to upgrade to the latest 
version of Great Plains software running under Windows 95 or Windows 98 
at a total cost estimated to be less than $15,000.  This new software is 
Y2K compliant.  The Company's products use microprocessors and imbedded 
software, and data captured and stored by these products are processed 
by software provided to customers by the Company.  Calculations 
performed by the imbedded code in the Company's products and by 
processing software supplied by the Company do not utilize the year.  
The Company believes that all of its recorders currently being sold and 
those being serviced under waranty will be not be effected by a change 
in year from 1999 to 2000 or from 2000 to 2001.  

ITEM 7.  FINANCIAL STATEMENTS 

The Financial Statements are filed as part of this Annual Report on form 
10-KSB on pages sixteen (16) through twenty six (26).

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 
	AND FINANCIAL DISCLOSURE.

Not applicable.

PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; 
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

On July 23, 1998, Dr. Stephen L. Zuckerman resigned as a director 
of the Company and  five persons were appointed to serve as directors of 
the Company until the next annual meeting of shareholders.  The names 
and ages of the Company's directors and executive officers, and their 
principal occupations are set forth below.  

Name                     Age        Position        Term of Service From
L. John Ankney           69         Director              July 1998
David A. Heiden          50         Director              July 1998
C. Roger Jones           60         Director              July 1998
Ronald G. Moyer          62   President, CEO &Director    July 1998
Michael W. Oliver        45         Acting CFO            July 1998
B. Steven Springrose     49         Director                 1982
Spencer M. Vawter        61         Director              July 1998

Other Information Regarding the Officers and Directors:

Business Experience

L. John  Ankney has acted as independent consultant to several companies 
since 1993.  He served as President and Director from 1970 to 1993 for 
Transnational Electronic and Funding Corporation, an investment, venture 
capital, and management consulting company.   Mr. Ankney served as a 
director of Digilog, Inc. from 1974 to 1989.

David A. Heiden is currently Vice President of Sales for Video Display 
Corporation.  From 1989 until 1998 he was president and CEO of 
Urological Care America, Inc., a company that assisted urology practices 
in the managed care environment.  He served as President and CEO of 
Lithotripter Technologies of the Americas from 1985 to 1988.  Prior to 
that he was Vice President of Marketing and Sales for Dornier Medical 
Systems. 

C. Roger Jones has served as President and Chief Operating Officer of 
Carolina Medical since 1985.  From 1970 to 1985, he was Vice President 
of Sales and Marketing for Carolina Medical where he served in various 
other capicities since 1961.  He has served as Chairman for Eagle Golf 
Ball Company, Inc. since 1988.

Ronald G. Moyer  was appointed President, Chief Executive Officer, and 
Chairman of the Board of Biosensor on July 23, 1998.  He also has served 
as Chief Executive Officer and Chairman of  Advanced Medical Products, 
Inc.  since 1996  and was that company's President from 1996 until 
October 1997.  Since 1992 he has been the Chief Executive Officer and 
Chairman of Carolina Medical Inc., a manufacturer of medical 
instruments.  In 1991 and 1992 he was Director of Mergers and 
Acquisitions for Dominion Holdings Group, a Merchant Bank.  From 1989 to 
1991, he served as Chief Operating Officer of CXR Corporation, an AMEX 
listed public company.  Prior to that time since 1969 he was the 
President, Chief Executive Officer and Chairman of the Board of Digilog, 
Inc., a  publicly held  telecommunications  company.  He received a BS 
from Tri-State University in 1956, an MS in Aerospace Engineering from 
Drexel University in 1963 and completed the Harvard Business School 
Small Corporation Management Program in 1981.

Michael W. Oliver is the Acting Chief Financial Officer of the Company. 
He is President of The Oliver Group, a management consulting firm.  From 
1990 to 1997 he was Treasurer of Reichhold Chemicals.
He was Executive Vice President and CFO of The Harris Organization, a 
privately held holding company, from 1988 to 1990. He received his BA 
and MBA from the University of Pittsburgh.

B. Steven Springrose serves as the Company's Vice President, Chief 
Technology Officer, and Director, and served as President, Chief 
Executive Officer and Chairman of the Company from its inception in 1982 
until July 1998.  Mr. Springrose also served as Chief Financial Officer 
until July, 1998.  From 1973 to 1976 Mr. Springrose was involved in the 
design , development, manufacture and marketing of medical products.  He 
developed new product concepts as a biomedical engineer at Medtronic, 
Inc. (1973-1974), and held operations, management and product 
development engineering positions at Minntech Corporation (1974-1976).  
Mr. Springrose was employed at Cardiac Pacemakers, Inc. from 1976 
through 1982 in various marketing capacities prior to founding the 
Company. 

Spencer M. Vawter is President and CEO of Carmile Products, Inc,, a 
developer and marketer of software automation products for the chemical 
laboratory.  Previously, Mr. Vawter served as President and/or CEO of 
several urology, ultrasound and medical companies, including Mentor 
Urology, Avalon Technology, Biosound, and various divisions of 
Boehringer Mannheim. Mr. Vawter also was Senior Vice President of Bio-
Dynamics, Director of Medical Instrumentation for the American Medical 
Association..  Mr. Vawter holds a BA degree from Franklin College and an 
MSc from DePaul University.

ITEM 10.  EXECUTIVE COMPENSATION

The following table sets forth the indicated compensation paid and/or 
accrued to the Company's Chief Executive Officer for the years 
indicated.  No other executive officer of the Company received salary 
and bonus in excess of $100,000 during the fiscal year ended May 31, 
1998.

                                             Long Term Compensation
                   Annual Compensation         Awards      Payouts
                                  Other                                All
Name and                          Annual  Restricted                   Other
Principal                         Compen-   Stock              LTIP    Compen- 
Position    Year   Salary  Bonus  sation   Award(s)  Options  Payouts  sation
                    ($)     ($)    ($)       ($)     SARs(#)    ($)      -
B. Steven
Springrose  1998  $100,000    -      -        -         -        -       -
CEO and     1997  $100,000    -      -        -         -        -       -
CFO         1996  $ 99,000 $27,000   -        -         -        -       -

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table presents information provided to the Company  as to 
the beneficial ownership of the Company's common stock as of August 7, 
1998 by (i) persons holding 5% or more of such stock; and (ii) all 
officers and directors as a group:

                       Common Stock             Percent of
Beneficial Owner       Beneficially Owned       Outstanding Shares (1)
B. Steven Springrose       896,000(2)                  31.7%

Officers and Directors     896,000(3)                  31.7%
as a Group (1 persons)

(1)  See Item 1, Business, Subsequent Event.
(2)  Includes 35,000 shares owned jointly with Mr. Springroses 
spouse and 6,000 shares held for the benefit of Mr. 
Springroses children, as to which shares he disclaims 
beneficial interest.
(3)  Does not include 70,576 shares held by a partnership in which 
Dr. Zuckerman is a general partner and currently holds a .5% 
interest, and 10,000 shares which may be acquired within 60 
days of the date hereof pursuant to the exercise of stock 
options.  Dr. Zuckerman was a Director prior to  July 23, 
1998. (see Item 9, Directors, Executive Officers, Promoters 
and Control Persons) 

The Following table presents information provided to the Company  as to 
the beneficial ownership of the Companys Series A Preferred Stock as of  
August 7, 1998 by (i) persons holding 5% or more of such stock; and (ii) 
all officers and directors as a group:

                           Preferred Stock        Percent of
Beneficial Owner           Beneficially Owned     Outstanding Shares (1)
Ronald G. Moyer               48,471.75(2)             32.5%
C. Roger Jones                19,012.50(3)             12.8%

Officers and Directors        67,484.25(4)             45.3%
as a Group
(2 persons)

(1) Preferred stock issued July 23, 1998.  See Item 1, Business, 
Subsequent Event.
(2) Each share of series A preferred stock is convertible into 96 
shares of common stock and carries  the corresponding voting rights.  
Preferred stock owned beneficially by Ronald G. Moyer is convertible into 
4,653,288 shares of common stock.  If all outstanding preferred 
shares were converted into common stock, Ronald G. Moyer would 
own 27.1% of the common stock then outstanding.
(3) Each share of series A preferred stock is convertible into 96 
shares of common stock and carries  the corresponding voting rights.  Preferred 
stock owned beneficially by C. Roger Jones is convertible into 
1,825,200 shares of common stock.  If all outstanding preferred 
shares were converted into common stock, C. Roger Jones would 
own 10.6% of the common stock then outstanding. 
(4)  If all outstanding preferred shares were converted into 
common stock, all officers and directors as a group would own  
7,374,488 shares of common stock or 43% of the total then outstanding.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company has an operating lease for office space with Springrose 
Partners. L.L.P. a limited partnership in which B. Steven Springrose, 
the registrant's current Director and former CEO and CFO and his spouse 
are the owners.  The lease runs through December 2003.  Approximate 
future noncancelable minimum lease payments of $54,000 are required 
under the lease.  In addition, the lease provides that the registrant 
pay a pro rata share of building operating expenses and required a 
deposit of $18,000.  The registrant has also guaranteed the underlying 
debt on the property.  The debt consists of a $1,100,000 five year term 
loan expiring in January 2000.  Subsequent to May 31, 1998 the Company 
has obtained a release from that guarantee (Item 2, Properties).

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K
                             
                                                             Page No. or
                                                             Incorporation by
Exhibit No.     Description                                  Reference to

3.1             Restated Articles of Incorporation                  *
3.2             Amended Bylaws                                      *
10.1            Agreement between the Company and Washington 
                University  (this agreement expired March 1993)     *
10.4            Stock purchase agreement between the Company and 
                Norwest Growth Fund, Inc.                           *
10.5            Biosensor Corporation Incentive Stock Option Plan   *
10.9            License agreement with CNS, Inc.                    **
10.10           Line of Credit agreement with First Bank National 
                Association dated May 6, 1994                       ***
10.11           Agreement with Marcom Inc.                          ***
10.12           Line of Credit Agreement with First Bank National 
                Association dated May 25, 1995 as amended August 2, 
                1995.                                               ****
10.13           Line of Credit Agreement with Norwest Bank, 
                National Association dated April 7, 1997            *****
10.14           Lease agreement with Springrose Partners LLP 
                dated April 7, 1997                                 *****

* Incorporated by reference to the corresponding exhibit in the Company's Form 
  S-18      Registration Statement (No. 2-86322C).
** Incorporated by reference to the corresponding exhibit in the Company's Form 
  10K	      Filed on August 29, 1989.
*** Incorporated by reference to the corresponding exhibit in the Company's 
  Form 10K-SB	   Filed on August 26, 1994
**** Incorporated by reference to the corresponding exhibit in the Company's 
  Form 10K-SB    Filed on August 26, 1996
***** Incorporated by reference to the corresponding exhibit in the Company's 
  Form 10K-SB    Filed on August 25,1997

Form 8-K
There were no filings on form 8-K in the fourth quarter of 1998.  A form 
8-K was filed by the Company on July  28,  1998 regarding the merger 
with Carolina Medical (see above Item 1, Business, Subsequent Event)


SIGNATURES

In accordance with Sections 13 or 15(d) of the Exchange Act, the 
Registrant caused this reoprt to be signed on its behalf by the 
undersigned, thereunto duly authorized.


BIOSENSOR CORPORATION



Ronald G. Moyer
President and Chief Executive Officer

Date: August 31, 1998

In accordance with the Exchange Act, this report has been signed below 
by the following persons on behalf of the Registrant and in the 
capacities and on the date indicated:


_______________________
Ronald G. Moyer           President, Chief Executive      August 31, 1998
                          Officer, and Director 
                          (Principal Executive Officer)


_______________________
Michael Oliver            Chief Financial Officer         August 31, 1998
                          (Acting)


_______________________
L. John Ankney            Director                        August 31, 1998


_______________________
David A. Heiden           Director                        August 31, 1998


_______________________
C. Roger Jones            Director                        August 31, 1998


_______________________
B. Steven Springrose      Director                        August 31, 1998


_______________________
Spencer M. Vawter         Director                        August 31, 1998



INDEPENDENT AUDITOR'S REPORT


To the Stockholders and Board of Directors
Biosensor Corporation
Minneapolis, Minnesota

We have audited the accompanying balance sheets of Biosensor Corporation 
as of May 31, 1998 and 1997, and the related statements of operations, 
stockholders' equity, and cash flows for the years then ended.  These 
financial statements are the responsibility of the Company's management.  
Our responsibility is to express an opinion on these financial 
statements based on our audits.  

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

In our opinion, the financial statements referred to above present 
fairly, in all material respects, the financial position of Biosensor 
Corporation as of May 31, 1998 and 1997, and the results of its 
operations and its cash flows for the years then ended, in conformity 
with generally accepted accounting principles.

As discussed in Note 8, on July 23, 1998, the Company acquired all of 
the outstanding shares of Carolina Medical, Inc. (CMI),  through the 
issuance of approximately 149,000 shares of preferred stock.  As a 
result of that transaction, the shareholders of CMI effectively control 
the Company.


McGladrey & Pullen, LLP


Minneapolis, Minnesota
June 23, 1998 (except for Note 8, as to
    which the date is July 23, 1998)


BIOSENSOR CORPORATION 

BALANCE SHEETS
May 31, 1998 and 1997

ASSETS                                                 1998           1997
Current Assets
  Cash                                             $   77,115     $   4,739 
  Accounts receivable, less allowance 
    for doubtful accounts of $17,000 in 1998 
    and $111,000 in 1997                              244,604       400,262 
  Inventories:
    Raw materials and component parts                  95,196       118,664 
    Work in process                                    14,372        50,015 
    Finished goods                                     99,762       138,586 
  Prepaid expenses and other                           18,648        54,822 
                    Total current assets              549,697       767,088 

Deposits (Note 5)                                      18,000        18,000 

Property and Equipment, at cost
Manufacturing and engineering equipment               201,847       219,164 
Office furniture and equipment                        155,735       149,149
                                                      357,582       368,313 

Less accumulated depreciation                         322,670       308,853 
                                                       34,912        59,460 
                    Total assets                   $  602,609       844,548 


See Notes to Financial Statements.



LIABILITIES AND STOCKHOLDERS EQUITY
                                                        1998          1997
Current Liabilities
  Trade accounts payable                           $  103,060     $  50,246 
  Accrued expenses: 
    Current portion of accrued litigation costs        25,000       352,000 
    Commissions                                         5,782        15,492 
    Compensation                                       43,311        48,872 
    Warranty                                           43,790        30,618 
    Other                                              17,004         1,221 
                    Total current liabilities         237,947       498,449 

Accrued Litigation Costs (Note 7)                     125,000             0

Commitments and Contingencies (Notes 5, 7, and 8)

Stockholders Equity (Notes 3 and 8)
  Preferred stock $0.10 par value; authorized 150,000
    shares; No shares issued and outstanding in 1998 
    and 1997                                                -             -
  Common stock, $0.05 par value; authorized 4,850,000 
    shares; Issued and outstanding 2,843,055 shares 
    in 1998 and 2,823,055 shares in 1997              142,153       141,153 
  Additional paid-in capital                        2,941,447     2,940,447 
  Accumulated deficit                              (2,843,938)   (2,735,501)
                    Net stockholder's equity          239,662       346,099 

                                                  $   602,609   $   844,548 


See Notes to Financial Statements.




BIOSENSOR CORPORATION 

STATEMENTS OF OPERATIONS
Years Ended May 31, 1998 and 1997

                                                      1998           1997
Net sales (Note 4)                                $  1,929,037  $  2,504,907 

Costs and expenses (Note 5):
  Cost of products sold                                991,170     1,235,205 
  Research, development, and engineering               242,644       289,286 
  Sales and marketing                                  610,738       650,467 
  General and administrative                           347,258       476,133 
                                                     2,191,810     2,651,091 

                    Operating loss                    (262,773)     (146,184)

Nonoperating income (expense):
  Other income (expense), primarily litigation 
    (Note 7)                                           158,151      (353,761)
  Interest expense                                      (3,815)       (2,587)
  Interest income                                            0         2,593  
                    Net loss                        $ (108,437)   $ (499,939)

Basic and diluted net loss per share                $    (0.04)   $    (0.17)
Weighted-average shares outstanding                  2,824,863     2,820,877 


See Notes to Financial Statements.



BIOSENSOR CORPORATION 

STATEMENTS OF STOCKHOLDERS EQUITY
Years Ended May 31, 1998 and 1997

                                     Additional
                          Common     Paid-In        Accumulated
                          Stock      Capital        Deficit          Total

Balance, May 31, 1996   $ 140,403    $2,940,447     $(2,235,562)   $ 845,288 
  Issuance of 15,000 
  shares upon 
    Exercise of stock 
    option                    750             -               -          750 
  Net loss                      -             -        (499,939)    (499,939)
Balance, May 31, 1997     141,153     2,940,447      (2,735,501)     346,099 
  Issuance of 20,000 
  shares upon 
    Exercise of stock 
    option                  1,000         1,000               -        2,000 
Net loss                        -             -        (108,437)    (108,437)
Balance, May 31, 1998  $  142,153    $2,941,447     $(2,843,938)   $ 239,662 


See Notes to Financial Statements.



BIOSENSOR CORPORATION 

STATEMENTS OF CASH FLOWS
Years Ended May 31, 1998 and 1997

                                                       1998          1997
Cash Flows From Operating Activities
  Net loss                                        $  (108,437)   $  (499,939)
  Adjustments to reconcile net loss to net 
    cash provided by (used in) operating 
    activities:
      Depreciation                                     25,347         32,347 
      Exchange of property and equipment                7,815              0
      Bad debt expense                                      0         99,000 
      Changes in assets and liabilities:
        Accounts receivable                           155,658        106,274 
        Inventories                                    97,935          1,111 
        Prepaid expenses and other                     36,174        (37,659)
        Accounts payable                               52,814       (115,812)
        Accrued expenses                             (188,316)       279,437 
        Other                                               0         (6,796)
                    Net cash provided by (used in) 
                      operating activities             78,990       (142,037)


Cash Flows From Investing Activities
  Purchase of property and equipment                  (8,614)        (18,471)
  Proceeds from the sale of property and equipment                     1,075 
                    Net cash used in investing 
                      activities                      (8,614)        (17,396)

Cash Flows From Financing Activities
  Stock options exercised                              2,000             750 
                    Net cash provided by financing 
                      activities                       2,000             750 

                    Increase (decrease) in cash       72,376        (158,683)

Cash 
  Beginning of year                                    4,739         163,422 
  End of year                                       $ 77,115       $   4,739 

Supplemental Disclosures of Cash Flow Information
  Cash paid for interest                            $  3,815       $   2,587 


See Notes to Financial Statements.




Biosensor Corporation

NOTES TO FINANCIAL STATEMENTS

Note 1:  Nature of Business and Significant Accounting Policies

Nature of business:  Biosensor Corporation (the Company) is engaged in 
the development, manufacture, and marketing of diagnostic equipment for 
physicians' offices, clinics, and hospitals throughout the U.S., Europe, 
and Asia.  The 24-hour ambulatory cardiac monitoring, EKG telemetry, 
pulmonary function, EKG, and ambulatory blood pressure systems operate 
independently or in unison on an IBM compatible office computer.  The 
Company also manufactures cardiac monitors for OEM distributors.

The Company had sales to foreign customers of approximately $669,000 and 
$1,039,000 in 1998 and 1997, respectively.  Accounts receivable of 
$116,512 and $297,057 were recorded at May 31, 1998 and 1997, 
respectively.

A summary of the Company's significant accounting policies follows:

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

The Company maintains its cash in bank deposit accounts which, at times, 
may exceed federally insured limits.  The Company has not experienced 
any losses in such accounts.

Inventories:  Inventories are carried at the lower of cost or market 
determined under the first-in, first-out (FIFO) method. 

Depreciation:  Depreciation of property and equipment is computed using 
straight-line and accelerated methods over the following useful lives:

	 	                                           Years 
	Manufacturing and engineering equipment 	     3-5  
	Office furniture and equipment 	              5-7  

Income recognition:  Revenues and expenses are recorded using the 
accrual basis of accounting for both financial reporting and income tax 
purposes.  Revenue is recognized at the time of delivery to distributors 
or customers.  The Company markets its products through a sales staff 
and through independent domestic and international distributors on 
credit terms it establishes with individual distributors and customers.  
However, revenues are not accrued if collection thereof is not 
reasonably assured or the customer has an unconditional right of return. 

Income taxes:  Deferred taxes are provided on a liability method, 
whereby deferred tax assets are recognized for deductible temporary 
differences and operating loss and tax credit carryforwards.  Deferred 
tax liabilities are recognized for taxable temporary differences.  
Temporary differences are the differences between the reported amounts 
of assets and liabilities and their tax bases.  Deferred tax assets are 
reduced by a valuation allowance when, in the opinion of  management, it 
is more likely than not that some portion or all of the deferred tax 
assets will not be realized.  Deferred tax assets and liabilities are 
adjusted for the effects of changes in tax laws and rates on the date of 
enactment.

Accrued warranty:  The products manufactured by the Company are sold 
with a one-year warranty.  The Company accrues warranty costs based upon 
historical experiences and current conditions.  The Company also offers 
an extended warranty to its customers, under which revenues are 
initially deferred and recognized to match the expected related costs 
incurred over the extended warranty period.  Expense for work performed 
under the extended warranties are recognized as incurred.  As of May 31, 
1998 and 1997, the amount of accrued warranty costs were $3,486 and 
$4,668, respectively, and deferred warranty revenue was $40,304 and 
$25,950, respectively.

Net income (loss) per share:  The Company adopted Statement of Financial 
Accounting Standards No. 128 (SFAS No. 128), Earnings Per Share, which 
supersedes APB Opinion No. 15.  SFAS No. 128 requires the presentation 
of earnings per share by all entities that have common stock or 
potential common stock, such as options, warrants, and convertible 
securities, outstanding that trade in a public market.  Basic per share 
amounts are computed, generally, by dividing net income or loss by the 
weighted-average number of common shares outstanding.  Diluted per share 
amounts assume the conversion, exercise, or issuance of all potential 
common stock instruments unless the effect is antidilutive, thereby 
reducing a loss or increasing the income per common share.  The Company 
initially applied Statement No. 128 for the year ended May 31, 1998, and 
as required by the statement, has restated the per share information for 
the prior year to conform to the statement.  As described in Note 3, at 
May 31, 1998 and 1997, the Company had options outstanding to purchase a 
total of 75,000 and 85,000 shares of common stock, respectively, at a 
weighted-average exercise price of approximately $0.17 and $0.12, 
respectively.  However, because the Company has incurred losses in 1998 
and 1997, the inclusion of those potential common shares in the 
calculation of diluted loss per share would have an antidilutive effect.  
Therefore, basic and diluted loss per share amounts are the same in 1998 
and 1997.  

Issued but not yet adopted standard:  The FASB has issued Statement No. 
131, Disclosures About Segments of an Enterprise and Related 
Information.  Statement No. 131 establishes standards for the manner in 
which a publicly held enterprise reports certain information about 
operating segments of their business.  The information required to be 
disclosed for an entity's operating segments not only consists of 
financial information, but also certain related disclosures of the 
segment's products and services, geographic areas, and major customers.  
Statement No. 131 will become effective for the Company's year ending 
May 31, 1999; however, the impact on disclosures is not anticipated to 
be significant.   

Note 2:  Income Taxes

A reconciliation of federal statutory income taxes to the Company's 
effective tax provision is as follows:
                                      	 	                 May 31 	  
                                                    1998  	        1997 
Computed "expected" federal tax expense 
(benefit) at statutory rates 	                  $  (37,900)  	$  (175,000) 

State income taxes, net of federal benefit 	 	      (7,600)       (38,700) 

Effect of net operating losses with no 
current benefit                              	 	    45,500 	      213,700 
	  	                                            $ 	      -    $ 	       -

Net deferred taxes included the following at May 31, 1998 and 1997:

                                           	 	       1998 		       1997 
Deferred tax assets                             $ 1,009,000 	 $   975,000 
Valuation allowance for deferred tax assets 	    (1,009,000) 	   (975,000)
Net 	                                           $ 	       - 	 $ 	       -

Deferred tax assets are comprised of the following at May 31, 1998 and 
1997:

                                           	 	       1998  		      1997 
Loss carryforwards 	                            $   865,000 	 $   689,000 
Accrued litigation 	 	                               51,000       120,000 
Tax credit carryforwards 	 	                         58,000 	      85,000 
Accrued compensation 	 	                             14,000 	      16,000 
Warranty accrual 	 	                                 15,000 	      10,000 
Allowance for doubtful accounts 	 	                   6,000 	      38,000 
Other, net 	 	 	 	                                        -        17,000 
Subtotal 	 	                                      1,009,000 	     975,000 
	 	 	 	 	 
Valuation allowance for deferred tax assets 	    (1,009,000) 	   (975,000) 
Net	 	                                          $ 	       -	   $ 	      -

At May 31, 1998, the Company has approximately $2,471,000 of net 
operating loss (NOL) carryforwards available to offset future taxable 
income and approximately $59,000 of tax credit carryforwards to offset 
future federal income tax liabilities.  These carryforwards expire as 
follows:

Years ending May 31: 	     Net Operating Loss          Tax Credit 	
 	 	 
	1999  	                    $         0 	              $   48,000 
	2000  	 	                      846,000         	          11,000 
	2001  	 	                      516,000             	 	         0
	2002  	 	                      236,000 	             	         0
	2003  	 	                      113,000 	 	                     0
	2004  	 	                      128,000             	 	         0
	2010  	 	                      186,000 	             	         0
	2011  	 	 	 	                        0                         0
	2012  	 	                       56,000 	             	         0  
	2013  	 	                      390,000 	             	         0
	 	                          $2,471,000 	              $   59,000 

The merger (see Note 8) will limit the annual availability of the NOL 
carryforwards.

Note 3:   Stock Options 

The Company has a stock option plan that permits the granting of 
incentive stock options meeting the requirements of Section 422 of the 
Internal Revenue Code of 1986, as amended, and nonqualified options 
which do not meet the requirements of Section 422.  The plan has 250,000 
shares available for grant.  Option prices shall be determined by the 
Company at the date the option is granted and shall not be less than the 
fair market value of the common stock of the Company on the grant date.  
Options become exercisable as determined at the date of the grant by the 
Board of Directors.  Options expire ten years after the date of grant 
unless an earlier expiration date is set at the time of the grant.

The Company has adopted the disclosure-only provisions of Statement of 
Financial Accounting Standards No. 123, Accounting for Stock-Based 
Compensation.  Accordingly, no compensation cost has been recognized for 
the stock option plan.  Had compensation cost for the Companys stock 
option plan been determined based on the fair value at the grant date 
for stock options consistent with the provisions of Statement of 
Financial Accounting Standards No. 123, the Companys net loss and basic 
and diluted loss per share would have changed to the pro forma amounts 
indicated below:

                                              	   	Years Ended May 31 
	 	 	                                            1998             1997  	
Net loss, as reported 	                      $ (108,437)     $ (499,939) 
Net loss, pro forma 	 	                        (111,422)       (501,072) 
Basic and diluted loss per share, as reported 	 	 (0.04)  	       (0.17) 
Basic and diluted loss per share, pro forma 	 	   (0.04) 	        (0.17) 

The fair value of each option grant is estimated on the date of the 
grant using the Black-Scholes option pricing model with the following 
weighted-average assumptions used for grants in 1998 and 1997:

	 	                                               Years Ended May 31 
                                                1998             1997  	
Expected dividend yield 	 	 	 	                     0               0
Expected stock price volatility 	 	            155.92%              0  	
Risk-free interest rate 	 	                       6.3%  	 	         0
Expected life of options                       2 years              0
Weighted-average fair value of options 
  granted during the year 	                  $	  0.15         $ 	   0



Additional information relating to all outstanding options as of May 31, 
1998 and 1997, is as follows:
                   	 	         1998 	  		 	               1997 	
		                               Weighted Average           Weighted Average
                        Shares   Exercise Price     Shares  Exercise Price
Options outstanding, 
 beginning of year 	    85,000 	   $ 	   0.12  	    105,000 	 $ 	 0.10 
Options granted 	 	     45,000 	     	   0.21    	        0          0  
Options exercised 	    (20,000) 	        0.10  	    (15,000)	 	   0.05 
Options surrendered 	  (35,000)      	   0.12    	   (5,000) 	    0.05 
Options outstanding, 
 end of year 	     	    75,000 	   $ 	   0.17    	   85,000 	 $   0.12 
Options exercisable 
 at year end 	 	        41,750 	   $ 	   0.14 	      51,250 	 $   0.11 
Weighted-average fair 
 value of options granted 
 during the year 	 	 	             $ 	   0.13 	 	 	           $ 	    0
	 	 	 	 	 	 	 	 	 	 

The following table summarizes information about stock options 
outstanding at May 31, 1998:

                  	 	 	 	Options Outstanding 	 	   Options Exercisable 
                              Weighted- 
                              Average     Weighted-                 Weighted-  
Range of     Number Out-     Remaining    Average      Number       Average
Exercise     Standing at     Contractual  Exercise  Exercisable at  Exercise
Prices       May 31, 1998    Life(Years)   Price      May 31, 198     Price

$0.0625 - 
  $0.28 	      75,000 	 	        4 	       $ 0.17   	 	 41,750        $0.14  


Note 4:  Export Sales

The Company's export sales are principally to Europe and Asia and 
totaled approximately 35 and 41 percent of net sales for the years ended 
May 31, 1998 and 1997, respectively.

Note 5:  Related-Party Lease

The Company leases its office facility from a partnership controlled by 
an officer/stockholder of the Company.  The lease requires approximate 
future noncancelable minimum annual lease payments of $54,000 through 
December 2003, and the payment of a pro rata share of building operating 
expenses.  The Company has also guaranteed the underlying debt on the 
property, which consists of a $1,100,000 term loan expiring January 
2000.  Total approximate rent expense for the years ended May 31, 1998 
and 1997, was $126,000 and $73,000, respectively, of which approximately 
$88,000 in 1998 was with the related party.  During 1998 the Company 
amended their lease agreement, which resulted in cancellation costs of 
approximately $20,000. 

Note 6:  Employee Benefit Plan 

The Company has a 401(k) profit sharing plan covering all employees who 
meet the age and service requirements of the plan.  Employees may make 
elective contributions and the Company, at the discretion of the Board 
of Directors, has the option of making a matching contribution each 
year, up to 25 percent of the employees contribution.  No matching 
contributions were made for the year ended May 31, 1998.  The Company 
made matching contributions of approximately $2,400 in 1997.  

Note 7:  Litigation

In September 1996, a jury verdict in the amount of $352,000 was awarded 
to a former vendor for its claim that the Company owed additional 
amounts under a 1988 software license agreement.  This liability was 
full accrued in 1997 and recorded in other expense.  In December 1997, 
the Company entered into a settlement agreement with this vendor to 
reduce the jury award to $200,000.  The remaining amount due under the 
agreement calls for annual payments of $25,000 through December 2002, 
with an additional $25,000 due December 1999.  In the event the Company 
defaults on any of the annual payments, the full judgment, less any 
amounts paid under the settlement agreement, will be reinstated.  The 
reduction in the liability of $152,000 is recorded in other income in 
1998.

Note 8:  Subsequent Event

On July 23, 1998, Biosensor acquired all of the outstanding shares of 
Carolina Medical, Inc. (CMI), pursuant to a Plan of Reorganization and 
Agreement by and between Biosensor and CMI, dated May 29, 1998.  
Biosensor acquired all shares of CMIs common stock in exchange for 
149,025.15 shares of Biosensor's Series A preferred stock.  Each share 
of Series A preferred stock is convertible into 96 shares of Biosensor 
common stock.  Each share of Series A preferred stock votes and 
participates in dividends and liquidations on an as-if-converted basis.  
The holders of the Series A preferred stock now have voting power equal 
to approximately 83 percent of the voting power of all issued and 
outstanding shares of Biosensors capital stock.  

For accounting purposes, the transaction became effective July 1, 1998.  
Because CMI effectively controls the Company after the transaction, the 
transaction will be recorded as a "reverse acquisition," whereby CMI 
will be deemed to have acquired Biosensor.  The net assets of Biosensor 
acquired will be recorded at fair market value.  The historical 
financial statement, of the Company prior to the acquisition will become 
those of CMI.  Subsequent to July 1, 1998, the financial statements will 
include the operations of the combined companies.

In connection with the merger, Biosensor was released from the corporate 
guarantee on a $1.1 million loan for the facility partially occupied by 
the Company (see Note 5).  However, Biosensor agreed to reimburse the 
related partnership owning the building for any increase in interest 
costs resulting from the refinancing of the partnership's debt through 
December 31, 2002.  The rate of interest on the building debt is 
variable (currently 8.125 percent).  This debt is due January 1, 2000.  
For every 1 percent increase in the interest rate above 8.125 percent, 
the additional annual cost to the Company would be approximately 
$11,000.