<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 quarterly period ended June 30, 1997

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from ______ to _______.

                         Commission File Number: 0-11371
                                 BIOSONICS, INC.
             (Exact name of registrant as specified in its charter)


             Pennsylvania                                23-2161932

   (State or other jurisdiction of            (IRS Employer Identification No.)
    incorporation or organization)

                               260 New York Drive
                       Fort Washington, Pennsylvania 19034
               (Address of principal executive offices) (Zip Code)

                                 (215) 646-7100
               (Registrant's telephone number including area code)

                                       N/A
         (Former name, former address and former fiscal year, if changed
                               since last report)


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 (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 [ ]

Indicate the number of shares outstanding of each of the issuers shares of
common stock, as of the latest practicable date: as of JUNE 30th 1997, there
were outstanding 306,264,536 shares of the Registrant's Common Stock, $.0001 par
value.

________________________________________________________________________________

                                                              Page 1 of 14 pages
                                                     Exhibit Index is on Page 14
<PAGE>   2
                                 BIOSONICS, INC.

                                      INDEX
<TABLE>
<CAPTION>
                                                                                               Page
                                                                                             Number
                                                                                             ------
<S>                                                                                         <C>
PART I            FINANCIAL INFORMATION

Item 1.           Financial Statements

                  Balance Sheets:
                  June 30, 1997 and December 31, 1996                                             3

                  Statements of Loss:
                  Three and Six Months Ended June 30, 1997 and 1996 and the Period
                  from November 13, 1980 (Inception) to June 30, 1997                             4

                  Statements of Deficit Accumulated:
                  Six Months Ended June 30, 1997 and 1996 and the Period
                  from November 13, 1980 (Inception) to June 30, 1997                             5

                  Statements of Cash Flows:
                  Six Months Ended June 30, 1997 and 1996 and the Period
                  from November 13, 1980 (Inception) to June 30, 1997                         6 & 7

                  Statements of Shareholders' Equity - Paid-In-Capital:
                  November 30, 1980 (Inception) to June 30, 1997                             8 - 11

                  Note to Financial Statements                                                   12

Item 2.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                            13

PART II           OTHER INFORMATION

Item 1.           Legal Proceedings                                                              13

Item 2.           Changes in Securities                                                          13

Item 4.           Submission of Matters to a Vote of Security Holders                            14

Item 6.           Exhibits and Reports on Form 8-K                                               14

Signatures                                                                                       14
</TABLE>
<PAGE>   3
                                 BIOSONICS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                                 BALANCE SHEETS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------

                                                            ASSETS
                                                                                     Unaudited
                                                                                       JUNE 30         DECEMBER 31,
                                                                                        1997               1996
<S>                                                                                <C>                <C>
Current assets
   Cash (including interest bearing deposits
      of $10 in 1997 and 1996)                                                     $        260       $        260
   Accounts receivable (net of allowance for doubtful
    accounts of $2,000 in 1997 and 1996)                                                  8,829              8,196
   Inventory                                                                             63,725             64,271
   Prepaid expenses and other current assets                                              6,377                 25
                                                                                   ------------       ------------
           Total current assets                                                          79,191             72,752

Equipment, furniture and leaseholds, net
   of accumulated depreciation                                                           12,005             15,007
Deposits                                                                                  8,431              8,431
                                                                                   ------------       ------------
                Total assets                                                       $     99,627       $     96,190
                                                                                   ============       ============

                                          LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities
   Notes payable                                                                   $    243,000       $    288,000
   Accounts payable and accrued expenses                                              1,616,853          1,707,779
   Bonds unissued                                                                       187,000            187,000
   Proceeds for common stock unissued                                                         0             40,000
                                                                                   ------------       ------------
                Total current liabilities                                             2,046,853          2,222,779
                                                                                   ------------       ------------

Shareholders' deficit
      Common stock - authorized 750,000,000 shares at .0001 par value; issued
      and outstanding 306,364,536 and 287,863,936 shares at
      June 30, 1997 and December 31, 1996 respectively                                   30,636             28,787

   Capital in excess of par value                                                    12,468,180         11,763,002
   Notes receivable from sale of stock                                                 (115,000)
   Deficit accumulated during development stage                                     (14,331,042)       (13,918,378)
                                                                                   ------------       ------------
          Total shareholders' deficit                                                (1,947,226)        (2,126,589)
                                                                                   ------------       ------------
                Total liabilities and shareholders' deficit                        $     99,627       $     96,190
                                                                                   ============       ============

------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying note is an integral part of these financial statements.


                                        3
<PAGE>   4
                                 BIOSONICS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                               STATEMENTS OF LOSS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                  SIX MONTHS ENDED             THREE MONTHS ENDED             11/13/80 (INCEPTION)
                                                       JUNE 30,                      JUNE 30,                      TO JUNE 30,
                                                       --------                      --------                      -----------
                                                 1997            1996         1997            1996           1997            1996
                                              ---------        --------    ----------     ----------      ----------     ----------
<S>                                       <C>             <C>              <C>            <C>            <C>           <C>
Development stage expenses
   Research and development costs         $           0   $           0    $        0     $        0     $ 4,166,053   $  4,144,553
   Professional fees                            132,588          37,000        77,448         18,044       2,885,075      2,659,437
   Other development stage expenses             287,545         220,238       142,377        122,835       8,453,103      7,661,558
                                            -----------      ----------    ----------     ----------   -------------   ------------
Total development stage expenses                420,133         257,238       219,825        140,879      15,504,231     14,465,548
   Less:  Revenues from cost recovery
         program                                 -               -              -              -             118,082        118,082
                                            -----------      ----------    ----------     ----------   -------------   ------------

Net development stage expenses                  420,133         257,238       219,825        140,879      15,386,149     14,347,466
                                            -----------      ----------    ----------     ----------   -------------   ------------

Sales                                            13,550          29,125         7,925         11,609         850,927        825,728
Cost of sales                                     8,297          16,166         4,893         13,111         553,282        530,943
                                            -----------      ----------    ----------     ----------   -------------   ------------

Gross profit                                      5,253          12,959         3,032        ( 1,502)        297,645        294,785
                                            -----------      ----------    ----------     ----------   -------------   ------------

Other income
   Investment and other income                    2,216              75         1,224           -            749,842        747,626
   Gain on sale of fixed assets                    -              -              -              -              7,620          7,620
                                            -----------      ----------    ----------     ----------   -------------   ------------

Total other income                                2,216              75         1,224           -            757,463        755,246
                                            -----------      ----------    ----------     ----------   -------------   ------------

Net loss                                    $(  412,664)     $( 244,204)   $( 215,569)    $( 142,381)  $( 14,331,042) $( 13,297,435)
                                            ===========      ==========    ==========     ==========   =============   ============

Loss per common share                            $(.001)         $(.001)       $(.000)        $(.000)         $(.047)       $(.054)
                                            ===========      ==========    ==========     ==========   =============   ============
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



    The accompanying note is an integral part of these financial statements.


                                        4
<PAGE>   5
                                 BIOSONICS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
           STATEMENTS OF DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE
                                   (UNAUDITED)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------

                                 SIX MONTHS ENDED                  11/13/80 (INCEPTION)
                                      JUNE 30,                          TO JUNE 30,
                            1997               1996               1997              1996
                       -------------      -------------       ------------       ------------
<S>                    <C>                <C>                 <C>                <C>
BEGINNING BALANCE      ($13,918,378)      ($13,053,231)        $     -           $     -



      NET LOSS           (  412,664)         (  244,204)       (14,331,042)       (13,297,435)
                       ------------       ------------        -----------        ------------


ENDING BALANCE         ($14,331,042)      ($13,297,435)       ($14,331,042)      ($13,297,435)
                       ============       ============        ============       ============

---------------------------------------------------------------------------------------------
</TABLE>
    The accompanying note is an integral part of these financial statements.






                                        5
<PAGE>   6
                                 BIOSONICS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------

                                                                  SIX MONTHS ENDED                 11/13/80 (INCEPTION)
                                                                      JUNE 30,                          TO JUNE 30,
                                                                      --------                          -----------
                                                              1997             1996                1997                1996
                                                           ---------        ---------           ---------           ---------
<S>                                                       <C>              <C>              <C>                 <C>
Cash flows used in operating activities
   Net loss                                                $(412,664)       $(244,204)       $(14,331.042)       $(13,297,435)
                                                           ---------        ---------        ------------        ------------

   Adjustments to reconcile net loss to
     net cash used in operating activities
      Depreciation and amortization                            3,002            2,670             381,689             371,353
      Increase in allowance for doubtful accounts                  -                -               2,000               2,000
      Increase in reserve for inventory obsolescence               -                -              27,000              40,000
      Loss on lease abandonment                                    -                -              19,550              19,550
      Gain on sale of fixed assets                                 -                -              (7,620)             (7,620)
      Common stock issued for services                        29,500                -             573,459             458,209
      Common stock options issued for services                14,398                -             177,678                   -
      Common stock issued for interest                        10,000                -              10,000                   -
      Common stock issued for product rights                       -                -              12,501              12,501
      Change in
        Accounts receivable                                     (633)           4,802             (10,829)            (18,211)
        Inventory                                                546            4,195             (90,725)           (105,889)
        Prepaid expenses and other current assets             (6,352)          (3,347)             (6,377)            (12,198)
        Accounts payable and accrued expenses                (90,926)          95,884           1,882,378           1,855,531
                                                           ---------        ---------        ------------        ------------
          Total adjustments                                  (40,465)         104,204           2,970,704           2,615,226
                                                           ---------        ---------        ------------        ------------
   Net cash used in operating activities                   $(453,129)       $(140,000)       $(11,360,338)       $(10,682,209)
                                                           ---------        ---------        ------------        ------------

Cash flows from investing activities
   Sale of fixed assets                                     $      -         $      -        $     10,825        $     10,825
   Capital expenditures                                            -                -            (363,305)           (363,305)
   Issuance of note receivable                                     -                -             (30,000)            (30,000)
   (Increase) decrease in deposits                                 -                -              (8,431)             (8,431)
   Decrease in note receivable                                     -                -              30,000              30,000
   Decrease in capitalized patents                                 -                -             (45,690)            (45,690)
                                                           ---------        ---------        ------------        ------------
   Net cash provided (used) in investing activities        $       -         $      -        $   (406,601)       $   (406,601)
                                                           =========        =========        =============       ============
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>


    The accompanying note is an integral part of these financial statements.

                                                                6
<PAGE>   7
                                 BIOSONICS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                      STATEMENTS OF CASH FLOWS (CONTINUED)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------


                                                                  SIX MONTHS ENDED                     11/13/80 (INCEPTION)
                                                                      JUNE 30,                             TO MARCH  31,
                                                                      --------                             -------------
                                                               1997              1996                1997                 1996
                                                            ---------         ---------          -----------         ------------

<S>                                                        <C>               <C>               <C>                  <C>
Cash flows from financing activities
   Proceeds for bonds unissued                                    $ -              $  -         $    190,000         $    190,000
   Repayments for bonds unissued                                    -                 -               (3,000)              (3,000)
   Proceeds for common stock unissued                         239,530                 -              550,530              271,000
   Principal payments of note payable                         (45,000)         (225,000)            (352,000)            (297,000)
   Proceeds from issuance of note payable                           -                 -              834,444              789,444
   Decrease in capitalized organization costs                       -                 -               (7,453)              (7,453)
   Proceeds from issuance of preferred stock                        -           365,000            1,105,000              965,000
   Proceeds from issuance of common stock                     258,599                 -            9,449,678            9,181,079
                                                            ---------         ---------         ------------         ------------
Net cash provided by financing activities                   $(453,129)        $ 140,000         $ 11,767,199         $ 11,089,070
                                                            ---------         ---------         ------------         ------------

Net increase (decrease) in cash and cash equivalents                -                 -                  260                  260
Cash and cash equivalents, beginning                              260               260                    -                    -
                                                            ---------         ---------         ------------         ------------
Cash and cash equivalents, ending                           $     260         $     260         $        260         $        260
                                                            =========         =========         ============         ============

Schedule of noncash financing transactions:
   Issuance of common stock from Loan Receivable:           $ 115,000         $       -         $    115,000         $          -
                                                            =========         =========         ============         ============


---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

    The accompanying note is an integral part of these financial statements.


                                        7
<PAGE>   8
                                 BIOSONICS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
               STATEMENT OF SHAREHOLDERS' EQUITY - PAID-IN CAPITAL
                 NOVEMBER 13, 1980 (INCEPTION) TO JUNE 30, 1997
                                   (UNAUDITED)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------


       DATE STOCK                                  PRICE
        ISSUED           NUMBER OF SHARES          PER SHARE          AMOUNT RECEIVED           NOTES
     ----------          ----------------          ---------          ---------------           -----
<S>                     <C>                       <C>                <C>                       <C>
       1/13/81              150,000,000               $.0001             $   15,001              (A)
       1/31/81                4,400,000                .025                 110,000              (B)
          1981                  400,000                .025                  10,000              (C)
          1981               20,000,000                .05                1,000,000              (B)
          1982                   20,000                .40                    8,000              (C)
          1982                   97,500                .20                   19,500              (C)
          1982                1,000,000                .06                   60,100              (D)
          1983                   52,500                .20                   10,500              (C)
          1983                   75,000                .305                  22,875              (E)
          1983                   25,000                .235                   5,875              (E)
          1983                   20,000                .50                   10,000              (C)
      12/29/83                7,300,000                .50                3,650,000              (F)
          1984                      390               1.00                      390              (G)
          1984                    5,948                .50                    2,975              (G)
          1984                    1,000                .375                     375              (C)
          1984                   72,500                .25                   18,125              (C)
          1984                    2,000                .375                     750              (H)
          1984                    4,000                .25                    1,000              (C)
          1984                  350,000                .20                   70,000              (C)
          1985                   26,500                .281                   7,453              (C)
          1985                   20,000                .25                    5,000              (H)
          1985                      500                .50                      250              (G)
          1985                    5,000                .344                   1,719              (C)
          1985                       50               1.00                       50              (G)
          1985                    2,000                .375                     750              (H)
          1985                    7,500                .156                   1,172              (C)
          1986                    6,882                .50                    3,472              (G)
          1986                   85,000                .1875                 15,938              (H)
          1986                   11,650                .281                   3,276              (H)
          1986                  100,000                .219                  21,875              (H)
          1986               10,665,000                .181               1,929,737              (I)
          1986                  202,000                .156                  31,562              (H)
          1986                   70,000                .313                  21,875              (H)
          1986                  134,855                .20                   26,939              (H)
          1987                7,613,551                .20                1,522,710              (G)
          1987                  476,110                .295                 140,478              (H)
          1987                    7,000                .159                   1,113              (B)
          1987                   15,000                .312                   4,687              (C)
          1987                  240,000                .20                   48,000              (B)
          1987                  100,000                .218                  21,875              (C)


-----------------------------------------------------------------------------------------------------
</TABLE>

    The accompanying note is an integral part of these financial statements.


                                        8
<PAGE>   9
                                 BIOSONICS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
         STATEMENT OF SHAREHOLDERS' EQUITY - PAID-IN CAPITAL (CONTINUED)
                 NOVEMBER 13, 1980 (INCEPTION) TO JUNE 30, 1997
                                   (UNAUDITED)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------


      DATE STOCK                                 PRICE
         ISSUED          NUMBER OF SHARES        PER SHARE             AMOUNT RECEIVED           NOTES
      ----------         ----------------        ---------             ---------------           -----
<S>                     <C>                     <C>                   <C>                      <C>
           1988                 125,000                .25                    31,250              (C)
           1988                   2,500                .218                      547              (H)
           1988                  10,000                .20                     2,000              (G)
           1988                 100,000                .25                    25,000              (B)
           1988               4,227,000                .20                   845,400              (B)
           1988                 25,000                 .156                    3,906              (C)
           1988                 11,000                 .013                      143              (H)
           1989                400,000                 .080                   32,000              (B)
           1989                  3,000                 .0938                     282              (H)
           1989                100,000                 .080                    8,000              (B)
           1990                 25,000                 .010                      250              (H)
           1990             20,311,000                 .010                  203,110              (B)
           1990             10,500,000                 .010                  105,000              (B)
           1991              1,100,000                 .010                   11,000              (B)
           1991                100,000                 .010                    1,000              (H)
           1991                 48,000                 .0625                   3,000              (J)
           1991                 32,000                 .0625                   2,000              (J)
           1991              1,100,000                 .010                   11,000              (J)
           1991              1,100,000                 .010                   11,000              (B)
           1991                400,000                 .010                    4,000              (C)
           1995                 -                                             87,750              (Q)
           1996              1,250,000                 .08                   100,000              (K)
           1996             11,375,000                 .0286                 325,000              (K)
           1996             16,100,000                 .05                   805,000              (K)
           1996              1,300,000                 .01                    13,000              (L)
           1996             12,900,000                 .02                   258,000              (L)
           1996                300,000                 .03                     9,000              (M)
           1996                280,000                 .05                    14,000              (M)
           1996                400,000                 .08                    32,000              (M)
           1996                100,000                 .065                    6,500              (M)
           1996                250,000                 .085                   21,250              (M)
           1996            (15,368,820)                                      - 0  -               (N)
           1996                420,000                 .0238                  10,000              (L)
           1996             11,150,000                 .02                   223,000              (L)
           1996                428,600                 .035                   15,000              (L)
           1996                250,000                 .04                    10,000              (L)
           1996              1,075,220                 .05                    53,761              (L)
           1996                350,000                 .0258                   9,032              (J)
           1996              1,695,000                 .0345                  59,175              (J)
           1996                 75,000                 .04                     3,000              (O)
           1996                200,000                 .05                    10,000              (B)
           1996                 -                                             75,530              (Q)

------------------------------------------------------------------------------------------------------
</TABLE>

    The accompanying note is an integral part of these financial statements.


                                        9
<PAGE>   10
                                 BIOSONICS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
         STATEMENT OF SHAREHOLDERS' EQUITY - PAID-IN CAPITAL (CONTINUED)
                 NOVEMBER 13, 1980 (INCEPTION) TO JUNE 30, 1997
                                   (UNAUDITED)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------


       DATE STOCK                                 PRICE
          ISSUED          NUMBER OF SHARES        PER SHARE           AMOUNT RECEIVED           NOTES
       ----------         ----------------        ---------           ---------------           -----
<S>                       <C>                     <C>                 <C>                       <C>
            1997                550,000                 .05                  27,500              (M)
            1997                200,000                 .05                  10,000              (O)
            1997              5,000,000                 .01                  50,000              (P)
            1997              1,000,000                 .02                  20,000              (P)
            1997                 -                                           14,398              (Q)
            1997             11,130,600                 .05                 556,529              (R)
            1997                500,000                 .05                  25,000              (P)
            1997                 40,000                 .05                   2,000              (M)
            1997                 80,000                 .02                   1,600              (L)
</TABLE>


<TABLE>
<S>                                         <C>                       <C>
TOTAL SHARES - COMMON STOCK                 306,364,536
---------------------------                 ===========

TOTAL PAID-IN CAPITAL                                                 $  12,972,311
---------------------
LESS:   Notes Receivable for Stock Purchase                                 115,000
----
LESS:  Offering Expenses                                                    473,495
----                                                                  -------------

NET PAID-IN CAPITAL - COMMON STOCK                                    $  12,383,816
----------------------------------

-----------------------------------------------------------------------------------------------------
</TABLE>

    The accompanying note is an integral part of these financial statements.


                                                                10
<PAGE>   11
                                 BIOSONICS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
         STATEMENT OF SHAREHOLDERS' EQUITY - PAID-IN CAPITAL (CONTINUED)
                 NOVEMBER 13, 1980 (INCEPTION) TO JUNE 30 , 1997
                                   (UNAUDITED)

--------------------------------------------------------------------------------


NOTES

(A) $1 additional was paid on stock certificate #3.

(B) Cash purchases.

(C) Represents stock issued in consideration for services rendered. The value
    assigned was based on the fair market value of the stock on the date the
    transaction was authorized.

(D) 1,000,000 common stock warrants were issued to the underwriter, Monarch
    Funding Corporation, at par value ($.0001). On November 15, 1982, these
    warrants were exercised at $.06 per share.

(E) Represents stock issued in consideration for services rendered and $7,500
    cash. The value assigned was based on the fair market value of the stock on
    the date the transaction was authorized.

(F) Stock issued as part of unit offering. Each unit consisted of 2 shares
    common stock, 2 Series "A" warrants and 1 Series "B" warrant. No separate
    value was assigned to the warrants.

(G) Issued pursuant to the exercise of warrants described in (F).

(H) Issued pursuant to the employee incentive stock bonus plan.

(I) Issued as part of an offering completed March 26, 1986 for cash and
    redemption of warrants described in (F).

(J) Liabilities converted to common stock.

(K) Preferred Stock transferred to Common Stock as per agreement.

(L) Issued stock for monies received during time when common stock was not able
    to be issued.

(M) Issued stock as payment for services rendered.

(N) Shares contributed by IMRCH.

(O) Issued stock as payment for interest on loans received.

(P) Issued pursuant to exercising stock purchase option.

(Q) Stock Options granted.

(R) Issued pursuant to a Private Placement Agreement

--------------------------------------------------------------------------------

    The accompanying note is an integral part of these financial statements.


                                       11
<PAGE>   12
                                 BIOSONICS, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                          NOTE TO FINANCIAL STATEMENTS
                                 JUNE 30 , 1997

--------------------------------------------------------------------------------


Note     1 - The unaudited financial statements presented herein have been
         prepared in accordance with the instructions to Form 10-Q and do not
         include all of the information and note disclosures required by
         generally accepted accounting principles. These statements should be
         read in conjunction with the financial statements and notes thereto
         included in the Company's Form 10-K annual report for the year ended
         December 31, 1996. In the opinion of management, these financial
         statements include all adjustments, consisting only of normal recurring
         adjustments, necessary to summarize fairly the Company's financial
         position and results of operations. The results of operations for the
         nine-month period ended June 30, 1997 may not be indicative of the
         results that may be expected for the year ending December 31, 1997.

--------------------------------------------------------------------------------



                                       12
<PAGE>   13
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

Liquidity and Capital Resources

Biosonics' primary sources of funds to date have been proceeds from the sale of
its securities and investment income on such proceeds, including loans and
advances for security purchases through offerings.

During this reported period, Biosonics has issued Common Stock shares as
follows: (a) 11,130,600 shares at $.05 per share for a private placement
agreement, (b) 40,000 shares at $.05 per share for payment of services to an
individual, and (c) 500,000 shares at $.05 per share was issued to one investor
in exercise of stock options, for which the company received a promissory note
in the principal amount of the purchase price and for which such shares are
being held as collateral. All shares issued are restricted subject to
registration requirements of the Securities Act of 1933 or an exemption from
such requirements such as Rule 144 of the SEC.

The Company does not have any material commitments for capital expenditures,
although the Company may make capital expenditures during 1997 in connection
with the manufacture of the Cystotron Systems, if funds are available. The
extent of the development or testing, if any, of the Company's other devices
will depend on the availability of funds, and there is no assurance that
development or testing of the devices will occur or be successful.

Results of Operations

Net development stage expenses for the six and three months ended June 30, 1997
($420,133 and $219,826 respectively) were higher than those for the comparable
periods of the prior year ($257,238 and $140,879 respectively) due to funds
spent on consulting services, and expenses relating to Biosonics' participation
in the Medical Device Industry conference, also the preparation of Cystotron
devices and consulting fees regarding the engineer hired to prepare Biosonics
for manufacturing the Cystotron devices. Other development stage expenses
include primarily salaries, rent, supplies, transfer agent fees, manufacturing,
marketing, public relations and travel expenses. The Company's professional fees
for the six and three months ended June 30, 1997 ($132,588 and $77,448
respectively) were higher than professional fees for the comparable period of
the prior year ($37,000 and $18,044 respectively) due to legal and accounting
fees regarding numerous Securities and Exchange Commission filings as well as an
additional $60,000 of consulting expenses incurred. The Company's sales for the
six and three months ended June 30, 1997 were ($13,550 and $7,925 respectively)
as compared to ($29,125 and $11,609 respectively) for the same period of the
prior year. The decrease in sales resulted primarily from not having available
funds to continue the marketing program for its SALITRON System.

PART II        OTHER INFORMATION

ITEM 1.        LEGAL PROCEEDINGS

None

ITEM 2.        CHANGES IN SECURITIES.

During this reported period, Biosonics has issued Common Stock shares as
follows: (a) 11,130,600 shares at $.05 per share for a private placement
agreement, (b) 40,000 shares at $.05 per share for payment of services to an
individual, (c) 500,000 shares at $.05 per share was issued to one investor in
exercise of stock options, for which the company received a promissory note in
the principal amount of the purchase price and for which such


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shares are being held as collateral. All shares issued are restricted subject to
registration requirements of the Securities Act of 1933 or an exemption from
such requirements such as Rule 144 of the SEC.

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

None

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K

         (a)   Exhibits:
               *3.1   Articles of Incorporation as amended (Registrant's
                      Quarterly Report on Form 10-Q for the quarter ended
                      September 30, 1996).

               3.5    By-laws of Registrant, as amended.

               27     Financial Data Schedule

         (b)   Reports on Form 8-K:

               None


------------------------------------
*        Incorporated by reference



                                   SIGNATURES

         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 thereunder duly authorized.

                              BIOSONICS, INC.


Date: August  13 , 1997       By:    /s/Jack Paller
             ----                 --------------------

                              Jack Paller, President, Chairman and Executive
                              Officer, Principal Financial Officer and Principal
                              Accounting Officer and Sole Director.


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