<PAGE>  1
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-Q


[X]   Quarterly Report Pursuant to Section 13 or 15(d) of the        
       Securities Exchange Act of 1934
                                                            
For the period ended September 30, 1998     

or

[ ]   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 0-3035

                            COGNITRONICS CORPORATION
             (Exact name of registrant as specified in its charter)


            NEW YORK                            13-1953544       
(State or other jurisdiction of              (I.R.S. Employer
 incorporation or organization)               Identification No.)       

       3 Corporate Drive, Danbury, Connecticut        06810-4130
      (Address of principal executive offices)        (Zip Code)


                               (203) 830-3400
             Registrant's telephone number, including area code


        Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d)  of the Securities 
Exchange Act of 1934 during the preceding 12 months, and (2) has been subject 
to such filing requirements for at least the past 90 days.  Yes x     No   

        Indicate the number of shares outstanding of each of the issuer's 
classes of common stock, as of September 30, 1998.     

Common Stock, par value $0.20 per share -- 3,694,436 shares
<PAGE>  2
Part I, Item 1.
     
                  COGNITRONICS CORPORATION AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                           (dollars in thousands)

                                            September 30,       December 31,
                                                1998               1997    
                                            -------------       ------------
                                             (Unaudited)
                                                                           
ASSETS
CURRENT ASSETS                                                 
  Cash and cash equivalents                    $ 5,324           $ 4,188
  Marketable securities                          4,400             3,900
  Accounts receivable, net                       4,645             4,300
  Inventories                                    4,597             4,386
  Deferred income taxes                            809             1,023
  Other current assets                           1,066             1,050     
                                               -------           -------  
      TOTAL CURRENT ASSETS                      20,841            18,847
  
PROPERTY, PLANT AND EQUIPMENT, NET               1,336             1,223
GOODWILL, NET                                    1,398             1,648
DEFERRED INCOME TAXES                              758               769
OTHER ASSETS                                       640               636
                                               -------           -------     
                                               $24,973           $23,123
                                               =======           =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable                             $ 1,610           $ 2,378
  Accrued compensation and benefits              1,004             1,051
  Income taxes payable                             498               317
  Current maturities of debt                       111               114
  Other accrued expenses                           587             1,875
                                               -------           -------
      TOTAL CURRENT LIABILITIES                  3,810             5,735

LONG-TERM DEBT                                     185               111
OTHER NON-CURRENT LIABILITIES                    2,196             2,263

STOCKHOLDERS' EQUITY
  Common Stock, par value $.20 a
    share, authorized 10,000,000
    shares; issued 3,694,436
    and 3,667,351 shares                           739               733
  Additional paid-in capital                    13,502            13,209
  Retained earnings                              4,565             1,067
  Accumulated comprehensive income                 235                24 
  Unearned compensation                           (259)              (19)
                                               -------           -------  
      TOTAL STOCKHOLDERS' EQUITY                18,782            15,014
                                               -------           -------
                                               $24,973           $23,123  
                                               =======           =======
See Note to Condensed Consolidated Financial Statements.
<PAGE>  3
                   COGNITRONICS CORPORATION AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                (dollars in thousands, except per share amounts)


                                 Three Months Ended       Nine Months Ended
                                    September 30,            September 30, 
                                 ------------------       -----------------
                                   1998        1997         1998       1997 
                                   ----        ----         ----       ----
NET SALES                        $7,029      $7,245      $21,638    $22,438

COST AND EXPENSES:
  Cost of products sold           3,128       3,427        9,571     10,319
  Research and development          466         376        1,395      1,222
  Selling, general and 
     administrative               1,629       1,892        4,966      5,508  
  Amortization of goodwill           83          83          250        249
  Other (income) expense, 
     net                           (102)        (43)        (224)       (29)
                                 ------      ------      -------    -------
                                  5,204       5,735       15,958     17,269
                                 ------      ------      -------    -------
Income before income taxes        1,825       1,510        5,680      5,169

PROVISION FOR INCOME TAXES          711         569        2,181      2,110
                                 ------      ------      -------    -------
NET INCOME                        1,114         941        3,499      3,059

Currency translation 
 adjustment                         115                      211       (153)
                                 ------      ------      -------    -------
COMPREHENSIVE INCOME             $1,229      $  941      $ 3,710    $ 2,906
                                 ======      ======      =======    =======

Net Income Per Share:  
  Basic                            $.30        $.27        $.95        $.89
                                   ====        ====        ====        ====  
  Diluted                          $.28        $.24        $.87        $.80
                                   ====        ====        ====        ====
Weighted average number               
of outstanding shares:                
  Basic                       3,699,932   3,492,769   3,689,909   3,447,546
                              =========   =========   =========   =========
  Diluted                     3,981,683   3,989,330   4,003,108   3,835,054
                              =========   =========   =========   =========

See Note to Condensed Consolidated Financial Statements.
<PAGE>  4
                   COGNITRONICS CORPORATION AND SUBSIDIARIES
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                           (dollars in thousands)

                                                   Nine Months Ended  
                                                     September 30,  

                                                 1998            1997 
                                                 ----            ----
NET CASH PROVIDED BY OPERATIONS                $1,845          $3,238
                                               ------          ------

INVESTING ACTIVITIES
  Additions to property, plant and       
     equipment, net                              (409)           (332)
                                               ------          ------
   NET CASH USED BY INVESTING 
      ACTIVITIES                                 (409)           (332)
                                               ======          ======

FINANCING ACTIVITIES
  Purchases of marketable securities           (3,700)         (5,680)
  Sales of marketable securities                3,200           2,550
  Payment of debt                                (129)           (168)  
  Issuance of debt                                196             212
  Shares issued pursuant to employee
    stock plans, 4,751 and 100,728 shares          90             275    
                                               ------          ------
   NET CASH USED BY FINANCING ACTIVITIES         (343)         (2,811)
                                               ------          ------
EFFECT OF EXCHANGE RATE DIFFERENCES                43             (58)
                                               ------          ------
INCREASE (DECREASE) IN CASH 
    AND CASH EQUIVALENTS                        1,136              37
CASH AND CASH EQUIVALENTS- BEGINNING
    OF PERIOD                                   4,188           2,969
                                               ------          ------
CASH AND CASH EQUIVALENTS - END OF PERIOD      $5,324          $3,006
                                               ======          ======

INCOME TAXES PAID                              $1,460          $2,207
                                               ======          ======

INTEREST EXPENSE PAID                          $   41          $   40
                                               ======          ======
    
See Note to Condensed Consolidated Financial Statements. 

<PAGE>  5
         NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

                               September 30, 1998

The accompanying unaudited condensed consolidated financial statements have 
been prepared in accordance with generally accepted accounting principles for 
interim financial information and the instructions to Form 10-Q and Rule 10-01 
of Regulation S-X. Accordingly, they do not include all of the information and 
footnotes required by generally accepted accounting principles for complete 
financial statements. In the opinion of management, all adjustments 
(consisting of normal recurring accruals) considered necessary for a fair 
presentation have been included. Operating results for the three-month and 
nine-month periods ended September 30, 1998 are not necessarily indicative of 
the results that may be expected for the year ending December 31, 1998. The 
balance sheet at December 31, 1997 has been derived from the audited financial 
statements at that date. For further information, refer to the consolidated 
financial statements and footnotes thereto and the quarterly financial data 
included in the Company's Annual Report on Form 10-K for the year ended 
December 31, 1997.  

Certain amounts have been reclassified in the prior year for comparative 
purposes.

Inventories (in thousands):
                                      September 30,        December 31,
                                          1998                 1997     
                                      -------------        ------------
Finished and in process                 $3,512               $3,450     
Materials and purchased parts            1,085                  936
                                        ------               ------
                                        $4,597               $4,386
                                        ======               ======

Other Non-Current Liabilities (in thousands):
                                      September 30,        December 31,
                                          1998                 1997   
                                      -------------        ------------
Accrued supplemental pension plan       $  644               $  667      
Accrued deferred compensation              317                  324     
Accrued pension expense                    615                  670     
Accrued other post-retirement  
   benefit liability                       796                  778
                                        ------               ------
                                         2,372                2,439
    Less current portion                   176                  176
                                        ------               ------
                                        $2,196               $2,263
                                        ======               ======
Common Stock

During the three months ended September 30, 1998, the Company granted 26,000 
shares of common stock under the Restricted Stock Plan and recorded $260,000 
of unearned compensation expense.  In addition, during this period, in order 
to satisfy statutory withholding requirements arising from the vesting of 
common stock granted under the Restricted Stock Plan in 1995, 3,666 shares of 
common stock were returned to the Company.  For the nine months ended 
September 30, 1998 and 1997, 4,751 and 100,728 options were exercised.
<PAGE>  6
Income Per Share

In computing basic earnings per share, the dilutive effect of stock options 
and warrants are excluded; whereas, for dilutive earnings per share, they are 
included.

Comprehensive Income

As of January 1, 1998, the Company adopted Statement of Financial Accounting Sta
ndards ("SFAS") No. 130, Reporting Comprehensive Income.  SFAS No. 130 
established new rules for the reporting of comprehensive income and its 
components; however, the adoption of this Statement had no impact on the 
Company's net income or shareholders' equity.  SFAS No. 130 requires  foreign 
currency translation adjustments, which prior to adoption were reported 
separately in shareholders' equity, to be included in other comprehensive 
income.  Prior year financial statements have been reclassified to conform to 
the requirements of SFAS No. 130.

Recently Issued Accounting Pronouncements

The Financial Accounting Standards Board has issued Statement of Financial 
Accounting Standards No. 131, Disclosure About Segments of an Enterprise and 
Related Information; No. 132, Employers Disclosures About Pensions and Other 
Postretirement Benefits; and No. 133, Accounting for Derivative Instruments 
and Hedging Activities.  The Company has not yet adopted these standards. 
Management does not anticipate that the adoption of these standards will have 
a significant effect on earnings or the financial position of the Company.

Contingencies

In 1993, class action lawsuits were filed against the Company and certain of 
its officers alleging securities law violations in connection with the 
purchase of the Company's common stock by members of the class during the 
period from October 29, 1992 through March 11, 1993. The plaintiffs sought 
unspecified damages and related costs. The Company has denied any fault or 
wrongdoing in this matter.  On January 28, 1998, the plaintiffs and the 
defendants and their insurer signed a Memorandum of Understanding  to settle 
this litigation, which provides for the payment of an aggregate of $2.3 
million by the defendants and their insurer and the complete release of all 
claims by the plaintiffs against the defendants and all other persons who were 
directors or officers of the Company during the class period.  In the year 
ended December 31, 1997, the Company expensed its share of the proposed 
settlement related to this litigation.  In February 1998, the Company 
deposited into an escrow account, pending the Court's approval of the 
settlement, its share of the proposed settlement, $.8 million.  On April 14, 
1998, the parties entered into a Stipulation of Settlement providing for the 
settlement of this litigation.  On September 11, 1998, the Court issued an 
Order and Final Judgement approving the settlement.

<PAGE>  7
Item 2.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Net income was $1,114,000 and $3,499,000, respectively, for the three and 
nine-month periods ended September 30, 1998 versus $941,000 and $3,059,000, 
respectively, in the prior year periods.


Consolidated sales for the quarter ended September 30, 1998 decreased $.2 
million (3%) from the prior year period to $7.0 million due to a sales 
decrease of $.6 million in the Company's UK distributorship operations offset, 
in part, by higher sales by domestic operations.  For the nine-month period of 
1998, sales decreased $.8 million (4%) from the prior year period due to a 
$1.2 million decrease in direct sales of the domestic operations offset, in 
part, by higher sales of the UK distributorship operations.  The domestic 
sales decrease for the nine-month period was primarily due to the inclusion in 
the 1997 period of a $1 million order to a North American telephone company to 
replace existing equipment.


Research and development expenses increased versus the prior year periods  by 
$90,000 (24%) and $173,000 (14%) in the three and nine-month periods, 
respectively, ended September 30, 1998 primarily due to higher personnel 
expenses.

Selling, general and administrative expenses decreased by $263,000 (14%) and 
$542,000 (10%), respectively, for the three-month and nine-month periods when 
compared to the comparable periods of the prior year primarily due to lower 
personnel costs (commissions and bonuses) in the domestic operations.

Other (income) expense in the current periods is primarily interest income.  
Included in the prior year nine-month period was a charge of $76,000 to write 
down the Company's building in the UK, which was for sale, to net realizable 
value. 
 
Under Statement of Financial Accounting Standards No. 109, the Company has 
recognized future tax benefits that management believes will be realized.  In 
order to realize this benefit, the Company, exclusive of the results of its UK 
distributorship operations, Dacon Electronics Plc, will have to generate 
pretax income of $5 million.  The current deferred tax benefit of $.8 million 
is primarily attributable to inventory provisions and the recognition of such 
expense, for tax purposes, is, in large measure, within the control of the 
Company and the provision for the class action settlement which reverses this 
year.  The non-current tax benefit, $.8 million, primarily relates to deferred 
compensation and benefit plans and, as such, would be recognized over a long 
period of time.  The Company's U.S. pretax income was $4.8 million for the 
nine months ended September 30, 1998 and $5.3 million, $.8 million and $1.0 
million for the years ended December 31, 1997, 1996 and 1995, respectively.  
Based on this, management anticipates that the Company will generate 
sufficient taxable income in the future to realize these benefits.

<PAGE>  8
Liquidity and Sources of Capital

Working capital and the ratio of current assets to current liabilities 
increased to $17.0 million and 5.5:1 at September 30, 1998 compared to $13.1 
million and 3.3:1 at December 31, 1997.  The improvement in 1998 is mainly due 
to the Company's results of operations for the nine months ended September 30, 
1998.

The Company modified its line of credit agreement with a bank, increasing its 
credit limit to $6 million.  Borrowings under this agreement are subject to 
various financial covenants, due on demand, based on the amount of eligible 
accounts receivable and inventory, as defined, and secured by substantially 
all the Company's assets.

During the remainder of 1998, the Company anticipates purchasing $.3 million 
of equipment and incurring increased research and development expenditures.  
Management believes that its cash and cash equivalents and the cash flow from 
operations in 1998 will be sufficient to meet these needs.


Impact of Year 2000

The Year 2000 issue relates to possible failures in computer systems and 
computer driven equipment due to the rollover to the year 2000.

Internal Systems

The Year 2000 problem could result in a system failure or miscalculations 
causing disruptions of operations, including, among other things, a temporary 
inability to process transactions, send invoices, or engage in similar normal 
business activities.  The Company has determined that it will be required to 
modify or replace significant portions of its business application software so 
that its computer systems will function properly with respect to dates in the 
year 2000 and thereafter.  The Company presently believes that with 
modifications to existing software, conversions to new software and 
replacement of certain hardware, the Year 2000 will not pose significant 
operational problems for its computer systems.  However, if such modifications 
and conversions are not made, or are not completed timely, the Year 2000 issue 
could have a material impact on the operations of the Company.  The Company 
anticipates the completion of all modifications and/or changes to software and 
hardware by March 1999.

Vendors

The Company has initiated formal communications with all of its significant 
suppliers to determine the extent to which the Company is vulnerable to 
suppliers' failure to remediate their own Year 2000 issues.  The Company is 
not aware of any vendor with a Year 2000 problem that will not be corrected 
prior to January 1, 2000, that would materially impact the Company's results 
of operations, liquidity or capital resources. 

Products

Currently, the products the Company ships are Year 2000 compliant; however, 
the Company has sold in the past products that could be impacted.  For the 
impacted products, the Company has made, or will make,  available, at a cost,  
upgrades that, among other things, correct this problem.
<PAGE> 8
The Company will utilize both internal and external resources to reprogram, or
replace, and test the software for Year 2000 modifications.  The Company 
anticipates that expenditures for these programs will not exceed $.1 million.

The Company currently has no contingency plans in place in the event it does 
not complete all phases of the Year 2000 program.  The Company plans to 
evaluate the status of completion in March 1999 and determine whether such a 
plan is necessary.  If such a plan is necessary, it would consist of manual 
and computer work-arounds and increased inventory levels.

The costs of the project and the date on which the Company believes it will 
complete the Year 2000 modifications are based on management's best estimates, 
which were derived utilizing numerous assumptions of future events, including 
the continued availability of certain resources, third party modification 
plans and other factors.  However, there can be no guarantee that these 
estimates will be achieved and actual results could differ materially from 
those anticipated.  Furthermore, the Company cannot estimate or predict the 
potential adverse consequences, if any, that could result from a third party's 
failure to effectively address the issue.


Certain Factors That May Affect Future Results

From time to time, information provided by the Company, statements made by its 
employees or information included in its filings with the Securities and 
Exchange Commission (including this Form 10-Q) may contain statements which 
are not historical facts, so-called "forward-looking statements".  These 
forward-looking statements are made pursuant to the safe harbor provisions of 
the Private Securities Litigation Reform Act of 1995.  The Company's actual 
future results may differ significantly from those stated in any 
forward-looking statements.  Forward-looking statements involve a number of 
risks and uncertainties, including, but not limited to , product demand, 
pricing, market acceptance, litigation, risk of dependence on significant 
customers, third party suppliers and intellectual property rights, risks in 
product and technology development and other risk factors detailed in this 
Quarterly Report on Form 10-Q and in the Company's other Securities and 
Exchange Commission filings.



PART II


Item 1.  Legal Proceedings

In 1993, purported class action lawsuits were filed against the Company and 
certain of its officers as follows:

          1. Michael Germano v. Cognitronics Corporation and Matthew J.
     Flanigan in the United States District Court, District of Connecticut,
     dated March 15, 1993;

          2. Barry L. Bragger and Eve Gerber vs. Matthew J. Flanigan
     and Cognitronics, Inc. in the United States District Court, District
     of Connecticut dated March 16, 1993; and


          3. John M. Mitnick, on behalf of himself and all other similarly
     situated v. Cognitronics Corp., Matthew J. Flanigan and G. Sullivan 
<PAGE>  9
     in the United States District Court for the Northern District of
     Georgia, Atlanta Division, dated March 15, 1993.

These actions were consolidated in the United States District Court in 
Connecticut and a consolidated amended complaint was filed on July 8, 1993.  
The consolidated lawsuit alleges securities law violations in connection with 
the purchase of the Company's common stock by members of the classes during 
the period from October 29, 1992 through March 12, 1993 (the "Class Period").  
The plaintiffs sought unspecified damages and related costs.  The Company has 
denied any fault or wrongdoing in this matter.  On January 28, 1998, the 
plaintiffs and the defendants and their insurer reached an agreement to settle 
this litigation, which provides for the payment of an aggregate of $2.3 
million by the defendants and their insurer and the complete release of all 
claims by the plaintiffs against the defendants and all other persons who were 
directors or officers of the Company during the Class Period.  In the year 
ended December 31, 1997, the Company expensed its share of the proposed 
settlement related to this litigation.  In February 1998, the Company 
deposited into an escrow account, pending the Court's approval of the 
settlement, its share of the proposed settlement, $.8 million.  In April 1998, 
the parties submitted to the Court a Stipulation of Settlement.  On September 
11, 1998, the Court issued an Order and Final Judgement approving the 
settlement.


Item 6.Exhibits and reports on Form 8-K

(a) Index to Exhibits

    Exhibits
    10.1 First Modification to Commercial Revolving Promissory Note and 
Commercial Revolving Loan and Security Agreement (attached as exhibit 10.1 to 
this Quarterly Report on Form 10Q)

    27   Financial Data Schedule for the nine months ended September 30,
1998.

(b) No reports on Form 8-K were filed during the current quarter.


SIGNATURE


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



                                      COGNITRONICS CORPORATION
                                              Registrant


                                        
Date:  November 16, 1998                 By    /s/ Garrett Sullivan
                                         Garrett Sullivan, Chief Financial
                                               and Accounting Officer