SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


For the Quarterly Period Ended                            Commission File Number
       OCTOBER 31, 1998                                           0-9922
       ----------------                                           ------



                          AMERICAN ELECTROMEDICS CORP.
--------------------------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in its Charter)

                DELAWARE                                        04-2608713
---------------------------------------------              ---------------------
(State or Other Jurisdiction of Incorporation              (IRS Employer ID No.)
             or Organization)

            13 COLUMBIA DRIVE, SUITE 5, AMHERST, NEW HAMPSHIRE 03031
--------------------------------------------------------------------------------
              (Address and Zip Code of Principal Executive Offices)


          Issuer's telephone number, including area code: 603-880-6300

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

      Securities registered pursuant to Section 12(g) of the Exchange Act:

                     COMMON STOCK, PAR VALUE $.10 PER SHARE
                     --------------------------------------
                                (Title of Class)



Indicate by check mark whether the Issuer (1) has filed all reports  required to
be filed by Section 13 or 15(d) of the  Exchange  Act during the past 12 months,
and (2) has been subject to such filing  requirements  for the past 90 days. 
YES _X_ NO___


As of December 13, 1998, there were outstanding 7,071,136 shares of the Issuer's
Common Stock, $.10 par value.





<PAGE>



                          AMERICAN ELECTROMEDICS CORP.


                                      Index
                                      -----


                                                                            Page
                                                                            ----
PART I - FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

       Consolidated Balance Sheets, October 31, 1998 and
         July 31, 1998.....................................................  3

       Consolidated Statements of Operations for the Three
         Months Ended October 31, 1998 and October 31, 1997................  4

       Consolidated Statements of Cash Flows for the Three
         Months Ended October 31, 1998 and October 31, 1997................  5

       Notes to Consolidated Financial Statements..........................  6

Item 2.  Management's Discussion and Analysis or Plan of Operation.........  7

PART II - OTHER INFORMATION

Item 1. Legal Proceedings................................................... 7

Item 6. Exhibits and Reports on Form 8-K.................................... 7

SIGNATURES.................................................................  8




                                       -2-

<PAGE>



PART I  -  FINANCIAL INFORMATION

Item 1.  CONSOLIDATED FINANCIAL STATEMENTS

                  AMERICAN ELECTROMEDICS CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                        OCTOBER 31,     JULY 31,
                                                           1998          1998
                                                         --------      --------
                                                       (Unaudited)
                                                              (Thousands)
Assets
Current Assets:
Cash and cash equivalents ..........................     $    181      $    396
Accounts receivable ................................        1,454         1,169
Inventories ........................................        2,346         1,951
Prepaid and other current assets ...................          342           223
                                                         --------      --------
  Total current assets .............................        4,323         3,739

Property and equipment .............................          838           794
Accumulated depreciation ...........................         (451)         (436)
                                                         --------      --------
                                                              387           358
Goodwill ...........................................        4,240         4,298
Patents ............................................        2,984         3,027
Other ..............................................           27            36
                                                         --------      --------
                                                         $ 11,961      $ 11,458
                                                         ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable ...................................     $  1,877      $  1,118
Bank debt ..........................................        1,791         1,033
Accrued liabilities ................................          538           723
Dividends payable ..................................          189            72
                                                         --------      --------
  Total current liabilities ........................        4,395         2,946

Stockholders' equity:
Series A Convertible Preferred stock, $.01 par
value;  Authorized - 1,000,000 shares;
Outstanding - 3,000 shares .........................        2,387         2,387
Common stock, $.10 par value; Authorized
- 20,000,000 shares; Outstanding - 7,071,136
shares at October 31, 1998 and 7,058,136
shares at July 31, 1998 ............................          707           705
Additional paid-in capital .........................       12,460        12,643
Retained deficit ...................................       (6,966)       (5,680)
Cumulative translation adjustment ..................         (161)         (249)
                                                         --------      --------
                                                            8,427         9,806

Deferred compensation ..............................         (861)       (1,294)
                                                         --------      --------
  Total stockholders' equity .......................        7,566         8,512
                                                         --------      --------
                                                         $ 11,961      $ 11,458
                                                         ========      ========

                             SEE ACCOMPANYING NOTES.


                                       -3-



<PAGE>



                  AMERICAN ELECTROMEDICS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                          THREE MONTHS ENDED
                                                     ---------------------------
                                                     OCTOBER 31,    OCTOBER  31,
                                                        1998            1997
                                                     -----------    ------------
                                                         (Thousands, except 
                                                          per share amounts)


Net sales ........................................   $     2,150    $     1,830
Cost of goods sold ...............................         1,263          1,058
                                                     -----------    -----------
Gross profit .....................................           887            772

Selling, general and administrative ..............         1,922            687
Research and development .........................           128           --
                                                     -----------    -----------
  Total operating expenses .......................         2,050            687
                                                     -----------    -----------

Operating income (loss) ..........................        (1,163)            85

Other income (expenses):
  Interest, net ..................................           (17)           (78)
  Minority interest in affiliate .................          --              (85)
  Other ..........................................          (106)            58
                                                     -----------    -----------
                                                            (123)          (105)

Loss before provision for income taxes ...........        (1,286)           (20)
                                                     -----------    -----------
Net loss .........................................   $    (1,286)   $       (20)
                                                     ===========    ===========

Net loss attributable to common stockholders* ....   $    (1,403)   $       (20)
                                                     ===========    ===========

Weighted average number of common and
  common equivalent shares outstanding ...........     7,064,636      2,553,136
                                                     ===========    ===========

Net loss per share, basic and diluted ............   $      (.20)   $      (.01)
                                                     ===========    ===========




                             See accompanying notes.

*    The  quarter  ended  October 31,  1998  includes  the impact of $117,000 of
     dividends on Preferred Stock.

                                       -4-



<PAGE>



                  AMERICAN ELECTROMEDICS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                           THREE MONTHS ENDED
                                                         -----------------------
                                                         OCTOBER 31, OCTOBER 31,
                                                            1998        1997
                                                         ----------- -----------
                                                              (THOUSANDS)

OPERATING ACTIVITIES:
Net loss ...............................................   $(1,286)   $   (20)
Adjustments to reconcile net loss to net cash
  used in operating activities:
  Depreciation and amortization ........................       132         49
  Deferred compensation amortization ...................       432       --
  Minority interest in affiliate .......................      --           85
  Other ................................................      --           62
  Changes in operating assets and liabilities:
    Accounts receivable ................................      (206)       187
    Inventories, prepaid and other current assets ......      (402)       (88)
    Accounts payable and accrued liabilities ...........       532       (385)
                                                           -------    -------
  Net cash used in operating activities ................      (798)      (110)

INVESTING ACTIVITIES:
Purchase of property and equipment, net ................       (36)       (13)
                                                           -------    -------
Net cash used in investing activities ..................       (36)       (13)

FINANCING ACTIVITIES:
Principal payments on long-term debt ...................      --          (62)
Net proceeds from bank debt ............................       682       --
Issuance of common stock, net ..........................       (79)      --
Proceeds from exercise of stock options ................        15       --
                                                           -------    -------
  Net cash provided by (used in) financing activities ..       618        (62)
                                                           -------    -------

Effect of exchange rate changes on cash and cash
equivalents ............................................         1          3
                                                           -------    -------
Decrease in cash and cash equivalents ..................      (215)      (182)
Cash and cash equivalents, beginning of period .........       396        471
                                                           -------    -------
Cash and cash equivalents, end of period ...............   $   181    $   289
                                                           =======    =======




                             See accompanying notes.

                                       -5-

<PAGE>


                  AMERICAN ELECTROMEDICS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                OCTOBER 31, 1998
                                   (Unaudited)


1.   BASIS OF PRESENTATION

The accompanying  unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial information.  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  period  ended  October 31, 1998 are not
necessarily  indicative  of the results that may be expected for the year ending
July 31, 1999. For further  information,  refer to the financial  statements and
footnotes thereto included in the Company's annual report on Form 10-KSB for the
year ended July 31, 1998.

Foreign Currency Translation

The  financial   statements  of  the  Company's  foreign  subsidiary  have  been
translated into U.S. dollars in accordance with Statement of Financial Standards
No. 52,  Foreign  Currency  Translation.  All balance  sheet  amounts  have been
translated  using  the  exchange  rates in  effect at the  balance  sheet  date.
Statement of Operations  amounts have been  translated  using  average  exchange
rates.  The gains and losses  resulting  from the changes in exchange rates from
the date of  acquisition  of Rosch GmbH to October 31,  1998 have been  reported
separately as a component of stockholders equity.

The aggregate transaction gains and losses are insignificant.

2.   DEBT

In  September  1998,  the Company  entered  into a $500,000  line of credit with
Guardian  Financial  Services,  Inc. (owned by an officer of the Company).  This
line of credit bears an interest rate of 10% per annum.  As of October 31, 1998,
$75,000  was  outstanding  under  this line of credit,  which is  collateralized
essentially  by all of the assets of the  Company  including  an  assignment  of
patents and trademarks.

In  September  1998,  the Company  also entered into a Term Loan in an amount of
$600,000 due on November 25, 1998.  Interest is 10% per annum, and as of October
31,  1998,   there  was  $600,000   outstanding   under  this  loan,   which  is
collateralized by essentially all of the assets of the Company.

                                       -6-



<PAGE>

3.   ACQUISITIONS

On April 30,  1998,  the  Company  acquired  all of the issued  and  outstanding
capital stock of Dynamic Dental Systems, Inc. ("DDS"),  pursuant to an Agreement
and Plan of Merger, whereby DDS became a wholly-owned subsidiary of the Company.
DDS was  founded  in 1997 and is a  distributor  of digital  operator  hardware,
cosmetic-imaging  software,  intraoral  dental camera  systems and digital x-ray
equipment.  The  total  cost  of  acquisition  was  approximately  $3.2  million
consisting  primarily of 750,000 shares of the Company's Common Stock, valued at
an  aggregate  price of  $3,000,000  and $225,000 in cash.  The  purchase  price
exceeded the fair value of net assets  acquired by  approximately  $3.4 million,
which is being amortized on a straight-line basis over 15 years. The acquisition
has been accounted for as a purchase and, accordingly,  the operating results of
DDS have been included in the Company's  consolidated financial statements since
the date of acquisition.

On May 12, 1998, the Company acquired  Equidyne Systems,  Inc. ("ESI").  ESI was
founded in 1990 and is engaged in the  development of the INJEX(TM)  needle-free
drug injection  delivery  system,  which is designated to eliminate the risks of
contaminated  needle stick  accidents and the resulting cross  contamination  of
hepatitis,   HIV,  and  other  diseases.  The  total  cost  of  acquisition  was
approximately  $2.6 million consisting of 600,000 shares of the Company's Common
Stock.  The acquisition  has been accounted for as a purchase and,  accordingly,
the operating  results of ESI have been  included in the Company's  consolidated
financial statements since the date of acquisition.  The excess of the aggregate
purchase   price  over  the  fair  market  value  of  net  assets   acquired  of
approximately  $3.0  million,  which has been  allocated  to  patents,  is being
amortized over 15 years, the remaining life of the patent.

The following  unaudited proforma  consolidated  financial results of operations
for the quarter  ended October 31, 1997 assume the  acquisitions  of DDS and ESI
occurred as of August 1, 1997.

Net sales ...............................................           $ 2,228,000
Net loss ................................................              (185,000)
Loss per share; basic and diluted .......................                  (.05)

4.   YEAR 2000

The Company has taken actions to make its systems,  products and  infrastructure
Year 2000  compliant  and expects the  transition  to be fully  completed by the
third quarter of Fiscal 1999. The Company is also beginning to inquire as to the
status of its key  suppliers  and vendors  with respect to the Year 2000 issues;
however,  there can be no  assurance  that a failure to  resolve  any such issue
would not have a material  adverse effect on the Company.  Management  believes,
based upon available information,  that it will be able to manage its total Year
2000 transition without any material adverse effect on its business  operations,
products or  financial  prospects.  Management  also  believes the total cost of
addressing the Year 2000 issue will not have a material  impact on the Company's
financial position.

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

RESULTS OF OPERATIONS

Net sales for the three month  period  ended  October 31, 1998 were  $2,150,000,
compared to $1,830,000  for the three month period ended  October 31, 1997.  The
increase in sales in fiscal 1999 was  attributable  to incremental  sales of the
intraoral dental camera system by the Company's new acquisition,  Dynamic Dental
Systems, Inc.

Cost of sales for the three month periods ended October 31, 1998 and October 31,
1997 were 58.7% and 57.8% of net sales, respectively.

Selling,  general and  administrative  expenses for the three month period ended
October 31, 1998 were $1,922,000,  compared to $687,000 for the comparable prior
year period. The increase reflects increased marketing and promotional  activity
and increased corporate activity as a result of aggressive corporate development
activity and  retention of senior level  executives.  The increase also includes
$433,000  of  amortization  of deferred  compensation  for  consultants  and for
options granted in connection with the acquisition of DDS and ESI.

Net loss for the three month  period  ended  October  31,  1998 was  $1,286,000,
compared to a net loss of $20,000, for the same period in the prior fiscal year.
The  increase  in net loss is the  result of  increased  sales  offset by higher
selling general and administrative costs.

LIQUIDITY AND CAPITAL RESOURCES

Working  capital of the Company at October 31, 1998 was  $(72,000),  compared to
$793,000 at fiscal year ended July 31, 1998.  The decrease of $865,000  reflects
primarily the net effect of operating losses.

The Company has  incurred net losses of  $3,674,000  for the year ended July 31,
1998 and $1,286,000 for the three month period ended October 31, 1998.  This and
other  factors,  such as working  capital  needed for the Company's  operations,
requires  additional  funding  beyond  that  which  the  Company  currently  has
available.

The Company  therefore will need to immediately  raise additional  capital.  The
Company is seeking  additional  capital through equity and/or debt placements or
secured  financing;  however,  no  assurance  can be given  that such  financing
arrangements  would be successfully  completed  immediately and, if so, on terms
not dilutive to existing stockholders.

As a result of the foregoing,  substantial doubt exists about the ability of the
Company to continue as a going concern. The accompanying financial statements do
not include any adjustments relating to the recoverability and classification of
asset carrying  amounts or the amount and  classification  of  liabilities  that
might result should the Company be unable to continue as a going concern.


PART II. - OTHER INFORMATION

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

There were no  reports  on Form 8-K filed  during  the  quarterly  period  ended
October 31, 1998.

Exhibits -

27.   Financial Data Schedule

                                       -7-

<PAGE>


                          AMERICAN ELECTROMEDICS CORP.

                                   SIGNATURES
                                   ----------

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

                                             AMERICAN ELECTROMEDICS CORP.
                                             ----------------------------


/s/ Thomas A. Slamecka                       Dated:   January 4, 1999
------------------------
Thomas A. Slamecka
Chairman of the Board


/s/ Michael T. Pieniazek                     Dated:   January 4, 1999
------------------------
Michael T. Pieniazek
President and
Chief Financial Officer



                                      -8-
<PAGE>

                                  EXHIBIT INDEX

Exhibit                Description
-------                -----------
  27                   Financial Data Schedule