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
               APRIL  30, 1999                           0-9922
               ---------------                           ------


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


               DELAWARE                               04-2608713
              ----------                             ------------
     (State or Other Jurisdiction                 (IRS Employer ID No.)
     of Incorporation 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 June 10, 1999,  there were  outstanding  8,765,220  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, April 30, 1999 and
July 31, 1998  . . . . . . . . . . . . . . . . . . . . . . . . . .  3

Consolidated Statements of Operations for the Three and
Nine Months Ended April 30, 1999 and April 30, 1998. . . . . . . .  4

Consolidated Statements of Cash Flows for the Nine
Months Ended April 30, 1999 and April 30, 1998 . . . . . . . . . .  5

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

Item 2.   Management's Discussion and Analysis or Plan
of Operation   . . . . . . . . . . . . . . . . . . . . . . . . . . 10

PART II - OTHER INFORMATION

Item 2.   Changes in Securities  . . . . . . . . . . . . . . . . . 12

Item 5.   Other information  . . . . . . . . . . . . . . . . . . . 12

Item 6.   Exhibits and Reports on Form 8-K   . . . . . . . . . . . 12

SIGNATURES   . . . . . . . . . . . . . . . . . . . . . . . . . . . 13



























                                      -2-
<PAGE>

PART I  -  FINANCIAL INFORMATION

Item 1.  CONSOLIDATED FINANCIAL STATEMENTS

                 AMERICAN ELECTROMEDICS CORP. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                                                     April 30,   JULY 31,
                                                       1999       1998
                                                   ----------- -----------
                                                   (Unaudited)
          ASSETS                                         (Thousands)
          Current Assets:
          Cash and cash equivalents . . . . . . .      $  391       $  396
          Accounts receivable . . . . . . . . . .       1,486        1,169
          Inventories . . . . . . . . . . . . . .       1,778        1,951
          Prepaid and other current assets  . . .         223          223
                                                      -------      -------
            Total current assets  . . . . . . . .       3,878        3,739

          Property and equipment  . . . . . . . .         586          794
          Accumulated depreciation  . . . . . . .         (81)        (436)
                                                      -------      -------
                                                          505          358
          Goodwill . . . . . . . . . . . . . . .          722        4,298
          Patents  . . . . . . . . . . . . . . .        2,881        3,027
          Other  . . . . . . . . . . . . . . . .           30           36
                                                      -------      -------
                                                      $ 8,016      $11,458
                                                      =======      =======
          LIABILITIES AND STOCKHOLDERS' EQUITY
          Current Liabilities:
          Bank debt . . . . . . . . . . . . . . .      $1,143       $1,033
          Loans from related parties. . . . . . .         230           -
          Accounts payable  . . . . . . . . . . .       2,169        1,118
          Accrued liabilities . . . . . . . . . .         501          723
          Dividends payable . . . . . . . . . . .         363           72
                                                      -------      -------
            Total current liabilities . . . . . .       4,406        2,946

          Stockholders' equity:
          Preferred Stock, $.01 par value;
          Authorized -  1,000,000 shares;
           Series A Convertible Preferred-
            Outstanding - 2,830 shares
            at April 30, 1999 and 3,000 at
            July 31, 1998  . . . . . . . . . . . .      2,251        2,387
           Series B Convertible Preferred-
            Outstanding - 1,600 shares
            at April 30, 1999 and -0- at
            July 31, 1998  . . . . . . . . . . . .        965           -
          Common stock, $.10 par value;
           Authorized - 20,000,000 shares;
           Outstanding -8,692,854 shares at
           April 30, 1999 and 7,058,136
           at July 31, 1998 . . . . . . . . . . .         869          705
          Additional paid-in capital  . . . . . .      13,537       12,643
          Retained deficit  . . . . . . . . . . .     (13,255)      (5,680)
          Accumulated other comprehensive loss. .        (239)        (249)
                                                      -------      -------
                                                        4,128        9,806
          Deferred compensation . . . . . . . . .        (518)      (1,294)
                                                      -------      -------
               Total stockholders' equity . . . .       3,610        8,512
                                                      -------      -------
                                                      $ 8,016      $11,458
                                                      =======      =======
                            See accompanying notes.
                                      -3-
<PAGE>

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

                                THREE MONTHS ENDED        NINE MONTHS ENDED
                                -------------------      --------------------
                                APRIL 30, APRIL 30,      APRIL 30,  APRIL 30,
                                 1999      1998           1999        1998
                               --------   --------       --------   --------
                                   (Thousands, except per share amounts)

    Net sales . . . . . . . . . $1,756     $1,495        $6,132       $5,095
    Cost of goods sold. . . . .  1,343      1,134         4,024        2,979
                                ------     ------        ------       ------
    Gross profit. . . . . . . .    413        361         2,108        2,116

    Selling, general and
     administrative . . . . . .  1,765      1,048         5,616        2,637
    Research and development. .     78         -            283           -
    Write-down of goodwill. . .  3,196         -          3,196           -
                                ------     ------        ------       ------
     Total operating expenses .  5,039      1,048         9,095        2,637
                                ------     ------        ------       ------

    Operating loss. . . . . . . (4,626)      (687)       (6,987)        (521)

    Other income (expenses):
     Loss on sale of
      audiometrics assets . . .    (98)        -            (98)          -
     Undistributed earnings
      of affiliate. . . . . . .     -         (21)            -           56
     Interest, net  . . . . . .   (114)       (19)         (197)        (137)
     Minority interest in
      affiliate . . . . . . . .     -          -             -           (85)
     Other  . . . . . . . . . .    (95)       (64)         (293)         (58)
                                 ------     ------        ------       ------
                                  (307)      (104)         (588)        (224)

    Loss before provision for
      income taxes  . . . . . . (4,933)      (791)       (7,575)        (745)
    Provision for income taxes.     -          -             -            (2)
                                 ------    -------       -------       ------
    Net loss. . . . . . . . . .$(4,933)    $ (791)      $(7,575)       $(747)
                                =======    =======       =======       ======

    Net loss attributable to
     common stockholders* . . .$(5,001)    $ (791)      $(7,898)       $(747)
                                =======    =======       =======       ======

    Weighted average number
     of common and
     common equivalent
     shares outstanding       7,806,813   5,404,146     7,413,750    4,002,804
                              =========   =========     =========    =========
    Loss per common and
     common equivalent share:
           Basic                 $ (.64)     $ (.15)       $(1.07)      $ (.19)
                                 ======      ======        ======       ======
           Diluted               $ (.64)     $ (.15)       $(1.07)      $ (.19)
                                 ======      ======        ======       ======

                            See accompanying notes.

 *    The three and nine months ended April 30,1999  includes the impact of
      $68,000 and $323,000, respectively, of dividends on Preferred Stock.

                                      -4-

<PAGE>

                  AMERICAN ELECTROMEDICS CORP.AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                                        NINE MONTHS ENDED
                                                        -----------------
                                                        APRIL 30,    APRIL 30,
                                                          1999         1998
                                                        ---------   ----------
                                                             (Thousands)
          OPERATING ACTIVITIES:
          Net loss                                     $ (7,575)       $(747)
          Adjustments to reconcile net loss
            to net cash used in operating activities:
            Depreciation and amortization                   435          265
            Deferred compensation                           964            -
            Undistributed earnings of affiliate               -          (56)
            Loss on sale of audiometrics assets              98            -
            Write-down of goodwill                        3,196            -
            Minority interest in affiliate                    -           85
            Changes in operating assets and liabilities:
              Accounts receivable                           (381)         189
              Inventories, prepaid and other current assets (209)        (775)
              Accounts payable and accrued liabilities       694         (233)
                                                          -------      -------
          Net cash used in operating activities           (2,778)      (1,272)

          INVESTING ACTIVITIES:
          Purchase of property and equipment, net           (246)        (267)
          Proceeds from sale of audiometrics assets          625            -
                                                          -------      -------
          Net cash provided by (used in)
           investing activities                              379         (267)

          FINANCING ACTIVITIES:
          Principal payments on long-term debt                -          (265)
          Proceeds from long-term debt and bank
            line of credit                                    -           236
          Proceeds from issuance of common stock, net         -           994
          Net proceeds from bank debt                        157            -
          Net proceeds from related party debt               231            -
          Dividends paid                                     (15)           -
          Issuance of common stock, net                      485            -
            Issuance of preferred stock, net               1,498            -
          Proceeds from exercise of stock options             22          150
                                                           ------       ------
          Net cash provided by financing activities        2,378        1,115
                                                           ------       ------
          Effect of exchange rate changes on
            cash and cash equivalents                         16            1
          Decrease in cash and cash equivalents               (5)        (423)
          Cash and cash equivalents, beginning of period     396          533
                                                          -------      -------
          Cash and cash equivalents, end of period         $ 391        $ 110
                                                          =======      =======


          NON-CASH ACTIVITIES:
          Common stock issued in connection with
            consulting agreement                           $  188       $1,000
                                                          =======      =======
          Conversion of convertible subordinated
            debt into common stock                         $    -       $  720
                                                          =======      =======
          Common Stock issued in connection
            with acquisitions                              $    -       $  210
                                                          =======      =======
          Common stock issued under
            conversion provision of warrants               $   59       $    -
                                                          =======      =======

          Conversion of convertible preferred
            stock into common stock                        $  135       $    -
                                                          =======      =======

                            See accompanying notes.


                                      -5-

<PAGE>

                 AMERICAN ELECTROMEDICS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 APRIL 30, 1999
                                  (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 and nine month  periods  ended April
          30, 1999 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
          Accounting 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 changes in exchange rates from the date of acquisition
          of Rosch GmbH to April 30, 1999 have been  reported  separately as a
          component of stockholders' equity. The aggregate transaction gains and
          losses are insignificant.

          Comprehensive Income (Loss)

          Effective  August 1, 1998, the Company adopted  Statement of Financial
          Accounting  Standard  No. 130,  Reporting  Comprehensive  Income (SFAS
          130).  SFAS 130 establishes new rules for the reporting and display of
          comprehensive income or loss and its components, however, the adoption
          of this  statement  had no  impact  on the  Company's  net  income  or
          shareholders'  equity.  For the three and nine months ended April 30,
          1999,  the Company's only item of other  comprehensive  income was the
          foreign currency translation adjustment recognized in consolidation of
          its wholly-owned German subsidiary, Rosch GmbH. SFAS 130 requires such
          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 130.

          The foreign currency translation adjustment and comprehensive loss for
          the three months ended April 30, 1999 was $(49,000) and  ($4,982,000),
          respectively.  For the nine months ended April 30,  1999,  the foreign
          currency translation adjustment and comprehensive loss was $10,000 and
          ($7,565,000),  respectively.  As of April  30,  1999,  the  cumulative
          translation  adjustment and accumulated other  comprehensive  loss was
          ($239,000).

          Going Concern

          The  accompanying  financial  statements have been prepared on a going
          concern basis,  which  contemplates  the realization of assets and the
          satisfaction of liabilities in the normal course of business. As shown
          in the  financial  statements,  the Company has incurred net losses of
          $4,933,000  and  $7,575,000 for the three and nine month periods ended
          April 30, 1999, respectively. This and other factors indicate that the
          Company may be unable to continue as a going  concern for a reasonable
          period of time.

          The financial  statements do not include any  adjustments  relating to
          the  recoverability  of assets and  classification of liabilities that
          might be necessary should the Company be unable to continue as a going
          concern.  The Company's  continuation  as a going concern is dependent
          upon  its  ability  to  generate  sufficient  cash  flow to  meet  its
          obligations  on a timely  basis,  to obtain  additional  financing and
          ultimately to attain  profitability.  The Company  continues to pursue
          strategies to improve the  profitability of its current product lines,
          and is actively pursuing additional debt and equity financing.
                                      -6-
<PAGE>
          2.   DEBT

          In September 1998, the Company entered into a $505,000  line-of-credit
          with Guardian  Financial  Services,  Inc.  (owned by an officer of the
          Company).  This  line-of-credit is due on demand and bears an interest
          rate of 10% per annum. As of April 30, 1999,  $230,000 was outstanding
          under this  line-of-credit,  which  expired on February 28, 1999,  and
          remains  outstanding as a demand loan,  secured by  substantially  all
          tangible and intangible assets of the Company.


          3. PROFORMA FINANCIAL INFORMATION


          On May 5, 1998, the Company acquired all of the issued and outstanding
          capital stock of Dynamic Dental  Systems,  Inc.  ("DDS"),  for a total
          cost of  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.

          On  May  12,  1998,  the  Company  acquired  all  of  the  issued  and
          outstanding  capital  stock of Equidine  Systems,  Inc.  ("ESI") for a
          total cost of approximately  $2.6 million consisting of 600,000 shares
          of the Company's Common Stock.

          The acquisitions were accounted for as purchases and, accordingly, the
          operating  results of DDS and ESI have been  included in the Company's
          consolidated financial statements since the date of acquisition.

          The following  unaudited  proforma  consolidated  financial results of
          operations  for the three and nine months  ended April 30, 1998 assume
          the acquisitions of DDS and ESI occurred as of August 1, 1997.

                                        Three months ended  Nine months ended
                                           April 30, 1998     April 30, 1998
                                        ------------------  ----------------
          Net sales. . . . . . . . . . . .  $2,207,000         $6,888,000
          Net loss . . . . . . . . . . . .  (1,014,000)        (1,247,000)
          Loss per share; basic and diluted       (.15)              (.23)


          4.   EQUITY

          During the three  month  period  ended April 30,  1999,  the holder of
          Series  A  Convertible   Preferred  Stock  exercised  its  option  and
          converted 170 shares of the preferred stock into 234,390 shares of the
          Company's common stock.

          In April 1999, the Company retained American Financial  Communications
          ("AFC") as a corporate  communications and financial  consultant.  The
          consulting agreement expires in November 1999 and provides a total fee
          for AFC's  services of 200,000  shares of the Company's  common stock.
          The  Company  has valued the  shares at the fair  market  value on the
          effective  date of the  agreement,  which was $.94 per share,  and has
          recorded deferred  compensation totaling $188,000 to be amortized over
          the term of the agreement.

          In April 1999, the Company  closed two private  placements for a total
          of  590,000  shares of Common  Stock for  aggregate  net  proceeds  of
          $565,000,  to two "accredited  investors",  as such term is defined in
          Regulation D under the Securities Act.

          On  February  3,  1999,  the  Company  sold  1,600  shares of Series B
          Preferred  Stock  to  three  purchasers  for  $1,000  per  share or an
          aggregate  purchase  price of $1.6 million,  together with Warrants to
          purchase  up to 25,000  shares  of the  Company's  Common  Stock at an
          exercise  price of $3.00 per share and  exercisable  until January 31,
          2002.

          The Series B Preferred  Stock is  convertible  at any time after April
          30, 1999 into  shares of common  stock at a  conversion  rate equal to
          $1,000  divided  by the lower of (i) $2.00 or (ii) 75% of the  average
          closing  bid price for the  common  stock  for the five  trading  days
          immediately  preceding  the  conversion  date.  The  Company may force
          conversion of all ( and not less than all) of the  outstanding  shares
          of Series B Preferred Stock at any time after the first anniversary of
          the effective date of a registration statement covering the underlying
          shares of Common Stock. There is no minimum  conversion price.  Should
          the  bid  price  of the  Common  Stock  fall  substantially  prior  to
          conversion, the holders of the Series B Preferred Stock could obtain a
          significant  portion  of the  Common  Stock  upon  conversion,  to the
          detriment of the then holders of the Common Stock.
                                      -7-
<PAGE>
          The Series B Preferred  Stock has a  liquidation  preference of $1,000
          per share, plus any accrued and unpaid dividends,  and provides for an
          annual dividend equal to 5% of the liquidation  preference,  which may
          be paid at the election of the Company in cash or shares of its common
          stock.

          The conversion  discount of the Series B Preferred Stock is considered
          to be an additional  preferred  stock dividend.  The maximum  discount
          available  of $533,000  has been  recorded as a reduction of preferred
          stock and an increase to additional paid-in capital.  As the preferred
          stock was not  convertible  until May 1, 1999,  the Company will fully
          recognize the additional  dividends at that date by recording a charge
          to income available to common stockholders.

          In December 1998,  certain holders of oustanding  warrants to purchase
          an  aggregate  of 1 million  shares of the  Company's  Common Stock at
          $1.00 per share,  exercised  their  rights  under the related  warrant
          agreements  to execute a cashless  exercise.  Upon  exercise  of these
          warrants,  the Company issued 589,828 shares of its Common Stock,  par
          value $.10.


          5. DIVESTITURES

          In January  1999,  the Company  announced  its  intention to focus its
          resources on the needleless  injection  system being  developed by its
          wholly-owned subsidiary,  ESI, and hired an investment banking firm to
          assist in the  marketing  and  selling  of the  Company's  audiometric
          business and Dynamic Dental Systems, Inc. (U.S. dental business).

          In April 1999,  the Company  sold certain  assets of its  audiometrics
          business  for  $625,000.  The  sale  was made  pursuant  to an  Assets
          Purchase Agreement whereby the purchaser obtained all of the Company's
          domestic audiometric inventory, as well as all trademarks, patents and
          other rights associated with the audiometrics business,  including the
          name "American  Electromedics".  As a result,  the Company  intends to
          effect a change in the name of the Corporation in the near future. The
          sale resulted in the recognition of a net loss of $98,000.


          To date, the Company's efforts to sell DDS have been unsuccessful, and
          based upon these results,  the Company has revised its estimates as to
          the ultimate  sale price which could be obtained for DDS. In addition,
          since its acquisition in April 1998, DDS has experienced a significant
          downturn in its gross revenues,  as well as gross profit margins,  and
          has incurred net losses  totaling $1.2  million,  including a net loss
          for the quarter  ended April 30, 1999 of $535,000.  These  results are
          due to a variety of factors including changes within the dental camera
          industry  and DDS'  competitors,  the adverse  affects of which became
          evident during the quarter ended April 30, 1999.

          Based  primarily  upon the factors  described  above,  management  has
          reviewed the  continuing  value of the goodwill  associated  with DDS,
          taking into  consideration  the revised  estimates  as to the expected
          sale price which could be  obtained  by selling  the  outstanding  DDS
          common  stock,  as well as the  expectation  that  DDS' net  operating
          results and cash flows during the period prior to such a sale will not
          likely  be  positive.   Based  upon  this  review,   the  Company  has
          written-off  the goodwill,  which had a book value net of  accumulated
          amortization of $3.2 million,  as a charge against  operations  during
          the fiscal quarter ended April 30, 1999.

          6. YEAR 2000

          The Year 2000 Issue is the result of computer  programs  being written
          using two digits rather than four to define the  applicable  year. Any
          of  the   Company's   computer   programs   or   hardware   that  have
          date-sensitive software embedded chips may recognize a date using "00"
          as the year 1900  rather  than the year 2000.  This 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.

          Based on recent  assessments,  the Company  determined that it will be
          required to modify or replace significant portions of its software and
          certain  hardware so that those  systems will  properly  utilize dates
          beyond  December 31, 1999.  The Company  presently  believes that with
          modifications  or  replacements  of  existing   software  and  certain
          hardware,  the Year 2000  Issue  can be  mitigated.  However,  if such
          modifications  and  replacements  are not made,  or are not  completed
          timely,  the Year  2000  Issue  could  have a  material  impact on the
          operations of the Company.
                                      -8-

<PAGE>

          The  Company's  plan to  resolve  the Year  2000  Issue  involves  the
          following   four   phases:   assessment,   remediation,   testing  and
          implementation.  To date, the Company has substantially  completed its
          assessment of all systems that could be significantly  affected by the
          Year  2000.  The  assessment  indicated  that  most  of the  Company's
          significant information technology systems will be affected, including
          its financial  information  system which includes its general  ledger,
          accounts payable,  billing and inventory  systems.  The assessment was
          also undertaken on the Company's products,  which are also at risk, as
          they utilize software and hardware (embedded chips) as well.  However,
          based on its review of its product  line,  the Company has  determined
          that most of the products it has sold and will continue to sell do not
          require  remediation  to be  Year  2000  compliant.  Accordingly,  the
          Company  does not  believe  that the Year  2000  presents  a  material
          exposure  as it  relates  to the  Company's  products.  The  Company's
          manufacturing processes consist principally of unautomated assembly of
          components  manufactured  by outside  third-parties.  The  Company has
          begun to gather  information  about the Year 2000 compliance status of
          its significant suppliers,  and will take appropriate steps to monitor
          their compliance on an ongoing basis.

          Regarding its information  technology exposures,  the Company utilizes
          an unmodified  off-the-shelf  software package, which is not year 2000
          compliant.  The Company has  purchased a year  2000-compliant  upgrade
          from its software vendor, which will provide full year 2000 compliance
          upon installation.  As the upgrade is also an unmodified off-the-shelf
          package, testing to ensure Year 2000 compliance will not be necessary.
          Implementation  will take  place as early as  possible,  no later than
          July 31, 1999.

          The Company does not presently  maintain  direct  interfaces  with any
          third-party  vendors.  The  Company  has made  various  queries of its
          significant  suppliers that do not share information  systems with the
          Company  (external  agents).  To date, the Company is not aware of any
          external agent with a Year 2000 issue that would materially impact the
          Company's  results of  operations,  liquidity,  or capital  resources.
          However,  the Company has no means of assuring  that  external  agents
          will be Year 2000 ready.  The inability of external agents to complete
          their  Year  2000  resolution   process  in  a  timely  fashion  could
          materially  impact  the  Company.  The  effect  of  non-compliance  by
          external agents is not determinable.

          The total cost of the Company's Year 2000 project is estimated at less
          than $5,000,  which will be funded through  operating  cash flows.  To
          date,  the Company has incurred  approximately  $3,000 of direct costs
          related to its Year 2000  project.  The  project  costs  will  consist
          principally  of the cost of new software,  which will be  capitalized.
          Management of the Company  believes it has an effective  plan in place
          to resolve the Year 2000 Issue in a timely manner. As noted above, the
          Company has not yet completed  all  necessary  phases of its Year 2000
          project.  In  the  event  that  the  Company  does  not  complete  any
          additional  phases,  the  Company  could be  unable  to take  customer
          orders,  manufacture and ship products,  invoice  customers or collect
          payments. In addition,  disruptions in the economy generally resulting
          from Year 2000  issues  could  also  materially  adversely  affect the
          Company.

          The Company  currently has no contingency  plans in place in the event
          it does not complete all phases of its Year 2000 project.  The Company
          plans to evaluate the status of  completion in July 1999 and determine
          whether such a plan is necessary.

                                      -9-
<PAGE>


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

          This Report  contains or refers to  forward-looking  information  made
          pursuant to the "safe  harbor"  provisions  of the Private  Securities
          Litigation  Reform  Act  of  1995.  That  information   covers  future
          revenues,  products and income and is based upon current  expectations
          that involve a number of business risks and  uncertainties.  Among the
          factors  that could cause  actual  results to differ  materially  from
          those expressed or implied in any  forward-looking  statement include,
          but are not  limited to,  technological  innovations  of  competitors,
          delays in product  introductions,  changes in health care  regulations
          and reimbursements, changes in foreign economic conditions or currency
          translation, product acceptance or changes in government regulation of
          the Company's  products,  as well as other factors  discussed in other
          Securities and Exchange Commission filings for the Company.

          RESULTS OF OPERATIONS

          Net sales for the three and nine month  periods  ended  April 30, 1999
          were $1,756,000 and $6,132,000,  respectively,  compared to $1,495,000
          and  $5,095,000  for the three and nine month  periods ended April 30,
          1998.  The  increase in sales in fiscal 1999 was  attributable  to the
          acquisitions of DDS and ESI in May 1998,  partially offset by the loss
          of sales from the audiometrics business unit whose assets were sold in
          April 1999.

          Cost of sales for the three and nine  month  periods  ended  April 30,
          1999 were  76.5% and 65.6%,  compared  to 75.9% and 58.5% of net sales
          during the same  periods in the prior year.  The increase in cost as a
          percentage  of sales can be  attributed  to changes in the product mix
          which  included  sales from DDS in fiscal 1999.  The intraoral  dental
          camera and related product lines in the U.S.  generally  produce lower
          gross margins than the Company's other product lines.

          Total  operating  expenses for the three and nine month  periods ended
          April 30, 1999 were $5,039,000 and $9,095,000,  respectively, compared
          to $1,048,000 and  $2,637,000  for the comparable  prior year periods.
          The 1999  amounts  include a  non-cash  charge of  approximately  $3.2
          million   representing  a  write-off  of  the   unamortized   goodwill
          associated  with  DDS.  As  discussed  in  Note 5 to the  consolidated
          financial statements,  this write-off was based primarily upon revised
          estimates  as to the  expected  sale price  which could be obtained by
          selling the  outstanding  DDS common  stock,  as well as the  expected
          financial  results of DDS for the period  prior to such a sale.  These
          revised  estimates  were based upon the Company's  efforts to sell DDS
          during the three month period  ended April 30,  1999,  as well as DDS'
          recent  operating  results.  The 1999 amounts  also reflect  increased
          marketing,  promotional,  and  development  activity,  as a result  of
          including the selling,  general and administrative expenses of DDS and
          ESI,  acquired in May 1998.  The increase also  includes  $132,000 and
          $964,000  for the three and nine month  periods  ended April 30, 1999,
          respectively,   for   amortization   of  deferred   compensation   for
          consultants   and  for  options   granted  in   connection   with  the
          acquisitions  of DDS and ESI.  This  amortization  for the nine months
          ended April 30, 1999 relates  primarily  to the deferred  compensation
          recognized in connection with the Company's  consulting agreement with
          Liviakis  Financial  Communications,  which is fully  recognized as of
          March 15, 1999.

          Net loss for the three and nine month  periods  ended  April 30,  1999
          were $4,933,000,  or $.64 per common share,  and $7,575,000,  or $1.07
          per common share, compared to net loss of $791,000, or $.15 per share,
          and  $747,000,  or $.19 per  share for the same  periods  in the prior
          fiscal year. The decrease in net results is primarily  attributable to
          the $3.2  million  write-off  of  goodwill  and the  $98,000  net loss
          recognized on the sale of the audiometrics business during the quarter
          ended  April  30,  1999,  as well  as  increased  selling,general  and
          administrative costs and decreased gross margins.


          LIQUIDITY AND CAPITAL RESOURCES

          Working  capital  (deficit)  of the  Company  at  April  30,  1999 was
          $(528,000),  compared to $793,000 at fiscal year ended July 31,  1998.
          The  $1,321,000  decrease in working  capital  primarily  reflects the
          effect of operating losses,  partially offset by the proceeds received
          from the private  placements of Series B Convertible  Preferred  Stock
          and common stock (see Note 4) and the proceeds  received from the sale
          of the  audiometrics  business  unit (see Note 3) during  the  quarter
          ended April 30, 1999.

                                      -10-
<PAGE>
          The Company has  incurred  net losses of  $4,933,000  and  $7,575,000,
          respectively,  for the three and nine month  periods  ended  April 30,
          1999, as well as a net loss of $3,674,000  for the year ended July 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  must
          immediately raise additional capital.

          On January 5, 1999, the Company  announced its intention to change the
          Company's business strategy and direction in order to focus all of its
          resources   on   ESI,   and   the   continued   development   of   the
          INJEX(TM)System.  To affect this change,  the Company has sold certain
          assets of its  audiometrics  business unit, and plans to sell its U.S.
          dental  business  unit  (DDS).  These  sales  will  likely  provide  a
          reduction in the Company's  expected  short-term working capital needs
          as a result of eliminating  the operating  losses those business units
          have been incurring.  In addition, the Company continues to seek other
          sources of  additional  working  capital  through  equity  and/or debt
          placements  or secured  financing.  No assurance can be given that the
          Company's  plans  to  sell  its  U.S.  dental  business  unit  will be
          successfully  achieved, or that such other financing arrangements will
          be obtained.  Further,  no  assurance  can be given that such sales or
          financing  arrangements  would be  successfully  completed  within the
          necessary  time frame 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.

                                      -11-
<PAGE>

          PART II. - OTHER INFORMATION

          Item 2.   CHANGES IN SECURITIES

          During the three months  ended April 30, 1999,  the holder of Series A
          Convertible   Preferred   Stock   exercised  its  conversion   rights,
          converting  an  aggregate  of 170  shares  of the  preferred  stock to
          234,390 shares of the Company's Common Stock.

          In February  1999,  the Company  closed a private  placement  of 1,600
          shares of Series B Convertible  Preferred Stock to three purchasers at
          a purchase price of $1,000 per share,  or an aggregate  purchase price
          of $1.6  million,  together  with  Warrants  to  purchase up to 25,000
          shares of the Company's  Common Stock at an execise price of $3.00 per
          share.

          In April 1999,  the Company  issued 200,000 shares of its common stock
          as a fee for the  retention of a financial  consultant.  Also in April
          1999, the Company closed two private  placements of a total of 590,000
          shares  of the  Common  Stock  with two  "accredited  investors".

          The issuance of the foregoing shares of Common and Preferred Stock was
          claimed exempt from the  registration  requirements  of the Securities
          Act of 1933, as amended, by reason of Section 4(2) thereof.

          Item 5.   OTHER INFORMATION

          On April 8, 1999, the Company sold certain  assets of its  audiometric
          business to Maico  Diagnostic  GmbH ("Maico"),  a German company,  for
          $640,000.  The sale was in  furtherance  of the  Company's  intention,
          announced on January 5, 1999,  to focus all of its business  resources
          on the development,  manufacture and marketing of the needle-free drug
          injection system of its  wholly-owned  subsidiary,  Equidyne  Systems,
          Inc.,  and was made pursuant to an Assets  Purchase  Agreement,  dated
          April 8, 1999, by and between the Company, the Company's  wholly-owned
          subsidiary, Rosch Medizintechnik GmbH ("Rosch GmbH") and Maico.

          Item 6.   EXHIBITS AND REPORTS ON FORM 8-K

          The  Company  filed a report on Form 8-K for an event on  February  3,
          1999 to  report  that  the  Company  sold  1,600  shares  of  Series B
          Convertible   Preferred  Stock,  in  a  private   plavement  to  three
          purchasers,  for $1,000 per share or an  aggregate  purchase  price of
          $1.6  million,  together with Warrants to purchase up to 25,000 shares
          of the Company's Common Stock at an exercise price of $3.00 per share.


          Exhibits -

          10.1 Assets  Purchase  Agreement,  dated April 8, 1999, by and between
               the Company, Rosch GmbH and Maico Diagnostic GmbH

          27. Financial Data Schedule

                                      -12-
<PAGE>

                                   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.



          Dated:  June 15, 1999            /s/ Thomas A. Slamecka
                                               --------------------
                                               Thomas A. Slamecka
                                               Chairman (Principle
                                               Executive Officer)


          Dated:  June 15, 1999            /s/ Michael T. Pieniazek
                                               ---------------------
                                               Michael T. Pieniazek
                                               Chief Financial Officer
                                              (Principle Financial Officer)


                                      -13-
<PAGE>

                                 EXHIBIT INDEX


Exhibit             Description
-------             -----------
 10.1               Assets Purchase Agreement,  dated April 8, 1999, by and
                    between the Company, Rosch GmbH and Maico Diagnostic GmbH

 27                 Financial Data Schedule