<PAGE 1>


                                                UNITED STATES
                              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 September 30, 1998

     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 small business issuer as specified in its charter)

<TABLE>
<S>                                                      <C>
PENNSYLVANIA                                             23-2161932
(State or other jurisdiction of                      (IRS Employer
Identification No.)
incorporation or organization)     
</TABLE>

                                            260 NEW YORK DRIVE
                               FORT WASHINGTON, PENNSYLVANIA 19034
                       (Address of principal executive offices) (Zip Code)
                                    
                                             (215) 646-7100
                      (Issuer's telephone number including area code)
                                    
                                                          N/A
  (Former name, former address and former fiscal year, if changed since last
            report)
                                    
Check mark whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 
12 months (or for such shorter period that the registrant was required to 
file such reports), and (2) has been subject to such filing requirements for 
the past 90 days.     X Yes    No 
           
State the number of shares outstanding of each of the issuers classes of common
equity, as of the latest practicable date:  as of September 30th 1998, there 
were outstanding 325,664,536 shares of the Issuer's Common Stock, $.0001 par
value.



<PAGE 2>
                                                                       
                                                 BIOSONICS, INC.
                                    
                                                         INDEX
                                    
<TABLE>
<S>                                                                           
       <C>
                                                                              
              Page
                                                                              
              Number

PART I FINANCIAL INFORMATION                                 

Item 1.Financial Statements                                 

Balance Sheets:                                             
September 30, 1998 and December 31, 1997                               3

Statements of Loss:                                         
Three and Nine Months Ended September 30, 1998 and 1997               
and the period from November 13, 1980 (Inception) to                   4
September 30, 1998                                                    

Statements of Deficit Accumulated:                          
Nine Months Ended September 30, 1998 and 1997 and 
the Period from November 13, 1980 (Inception) to 
September 30, 1998                                                            
       5

Statements of Cash Flows:                                   
Nine Months Ended September 30, 1998 and 1997 and 
the Period from November 13, 1980 (Inception) to 
September 30, 1998                                                            
        6 & 7

Statements of Shareholders' Equity - Paid-In-Capital:       
November 30, 1980 (Inception) to September 30, 1998                    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 and Use of Proceeds                            14

Item 6. Exhibits and Reports on Form 8-K                                      
  15

Signatures                                                                    
                15
</TABLE>


<PAGE 3>

                                                  BIOSONICS, INC.
                                 (A DEVELOPMENT STAGE ENTERPRISE)
                                                 BALANCE SHEETS
                                     

<TABLE>
<S>                                                          <C>              
  <C>
ASSETS                                                        
                                                                     Unaudited
 
                                                                   SEPTEMBER  
     DECEMBER 31,
                                                                     30, 1998 
               1997

Current assets                                                

Cash                                                                 $100     
            $260
Accounts receivable (net of allowance for                     
       doubtful accounts                                        2,909         
       2,630
       of $2,000 in 1998 and 1997)                                
Interest receivable                                                2,634      
          3,259
Inventory                                                         177,743     
         42,117
Notes Receivable                                                40,000        
      15,000
Advances to affiliate (net of allowance for                   
    doubtful accounts of $50,000 in 1998)            (10,020)               66,606
Prepaid expenses and other current assets                4,287                 3,000

TOTAL CURRENT ASSETS                                            217,653       
     132,872

Equipment, furniture and leaseholds, net of             11,809                13,820
       accumulated depreciation                                      
Deposits                                                                8,531 
                8,431

TOTAL ASSETS                                                      $237,993    
       $155,123

LIABILITIES AND SHAREHOLDERS' DEFICIT                         

Current Liabilities                                           

Notes payable, officer and affiliate                         $94,000          
    $99,000
Notes payable, other                                             213,000      
       148,000
Accrued payroll, officer                                         849,750      
       772,500
Accrued interest, officer and affiliate                        73,284         
       66,357
Accrued interest, other                                          218,692      
       198,738
Accounts payable and other accrued expenses          893,827              922,093
Advances from affiliates                                           62,450     
          62,450
Payments received from unissued debentures            187,000              187,000

TOTAL CURRENT LIABILITIES                                          2,592,003  
        2,456,138

Shareholders' deficit                                         

Common stock - authorized 750,000,000 shares at               
 .0001 par value;                                                           
   Issued and outstanding 325,664,536 and               32,567                 30,797
307,964,536 shares at SEPTEMBER 30, 1998 
and December 31, 1997 respectively      
Capital in excess of par value                              13,094,751        
 12,548,020
Notes receivable from sale of stock                      (167,500)            
  (95,000)
Deficit accumulated during development stage    (15,313,828)       (14,784,832)
Total shareholders' deficit                                  (2,354,010)      
  (2,301,015)

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT                 $237,993          
 $155,123
</TABLE>
The accompanying note is an integral part of these financial statements


<PAGE 4>

                                            BIOSONICS, INC.
                              (A DEVELOPMENT STAGE ENTERPRISE)
                                       STATEMENTS OF LOSS
                                               (UNAUDITED)


<TABLE>
<S>                                                   <C>            <C>      
                                                             NINE  MONTHS ENDED
                                                             SEPTEMBER 30
                                                             1998            1997

Sales                                                     $7,705       $18,679
Cost of sales                                                993        
12,459    

GROSS PROFIT                                               6,712         
6,220     

Development stage expenses                                                    
   
Research and development costs                       0                0 
Professional fees                                      162,478      187,329 
Other development stage expenses             380,764      416,824 
TOTAL DEVELOPMENT STAGE EXPENSES              543,242      604,153 
Less: revenues from cost recovery program          -                - 

NET DEVELOPMENT STAGE EXPENSES                543,242        604,153  

Other Income                                                                  
   
Investment and other income                        7,534            4,288    
Gain on sale of fixed assets                              -                   
-     

TOTAL OTHER INCOME                                       7,534           
4,288   

NET LOSS                                                 $(528,996)    $(593,645)

LOSS PER COMMON SHARE                               ($.00)            ($.00)

                                                                              
   
</TABLE>

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

<PAGE 5>

                                            BIOSONICS, INC.
                              (A DEVELOPMENT STAGE ENTERPRISE)
                                STATEMENTS OF LOSS (CONTINUED)
                                               (UNAUDITED)

<TABLE>
<S>                                                   <C>            <C>      
             <C>
                                                             THREE  MONTHS
ENDED           11/13/80 (INCEPTION)
                                                             SEPTEMBER 30     
                   TO SEPTEMBER 30,
                                                             1998           
1997                    1998

Sales                                                     $   730       $
5,129                   $          871,845
Cost of sales                                               167          4,162
                              568,617

GROSS PROFIT                                                 563           
967                                303,228

Development stage expenses                                                    
   
Research and development costs                       0                0       
                      4,166,667
Professional fees                                           (46)         
54,740                          3,159,896
Other development stage expenses             119,196      129,279             
             9,177,798
TOTAL DEVELOPMENT STAGE EXPENSES              119,150      184,019            
             16,504,361
Less: revenues from cost recovery program          -                -         
                         118,082

NET DEVELOPMENT STAGE EXPENSES                119,150        184,019          
             16,386,279

Other Income                                                                  
   
Investment and other income                        2,862            2,071     
                        761,603
Gain on sale of fixed assets                              -                   
-                                    7,620

TOTAL OTHER INCOME                                       2,862           
2,071                              769,223

NET LOSS                                                $ (115,725)    $
(180,091)              $    (15,313,828)

LOSS PER COMMON SHARE                               ($.00)            ($.00)  
                       ($.05)
                                                                              
   
</TABLE>

<PAGE 6>
                                             BIOSONICS, INC.
                               (A DEVELOPMENT STAGE ENTERPRISE)
     STATEMENTS OF DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE
                                              (UNAUDITED)

<TABLE>
<S>                                      <C>           <C>           <C>
                                              NINE  MONTHS ENDED      11/13/80
(INCEPTION) 
                                               SEPTEMBER 30,               TO
SEPTEMBER 30,
                                                1998          1997            1998

BEGINNING BALANCE            $(14,784,832) $(13,918,378)    $        -      

NET LOSS                                   (528,996)        (593,645)       (15,313,828)

ENDING BALANCE                $(15,313,828) $(14,512,023)      $(15,313,828)
</TABLE>
The accompanying note is an integral part of these financial statements.

                                   
<TABLE>
<S>                                              <C>           <C>         <C>
                                                                              
                             11/13/80
                                                                NINE  MONTHS  
                   (INCEPTION)
                                                                ENDED SEPT 30 
                   TO SEPTEMBER
                                                                  1998        
    1997              30, 1998

Cash flows used in operating activities                      

NET LOSS                                                    $(528,996)       
$(593,645)     $(15,313,828)

Adjustments to reconcile net loss to net                     
cash used in operating activities                                             
     

Depreciation and amortization                             3,781               
4,503             389,676
Increase in allowance for doubtful accounts             -                     
  -                  52,000
Increase in reserve for inventory obsolescence          -                     
  -                  27,000
Loss on lease abandonment                                    -                
       -                  19,550
Gain on sale of fixed assets                                    -             
          -                   (7,620)
Common stock issued for services                      86,500             
39,500             671,559
Common stock options issued for services           13,250              14,398 
           190,928
Common stock issued for product rights                   -                    
   -                  12,501

Change in operating assets and liabilities                   
Accounts receivable                                            (279)          
     2,369                (4,909)
Inventory                                                     (135,626)       
        1,576            (204,743)
Interest receivable                                                625        
              -                  (2,634)
Prepaid expenses and other current assets           (1,287)              
(6,546)                (4,287)
Accrued payroll, officer                                     77,250           
    77,250              849,750
Accrued interest, officer and affiliates                   6,927              
   8,225              147,487
Accrued interest, other                                     19,954            
    18,998             218,692
Accounts payable and accrued expenses            (28,267)               
38,258             961,828
Advances from (to) affiliates                            133,288              
 (45,416)            202,452

TOTAL ADJUSTMENTS                                           176,116           
    153,115          3,519,230

NET CASH USED IN OPERATING ACTIVITIES              ($352,880)            
($440,530)      ($11,794,598)

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

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


<TABLE>
<S>                                                <C>         <C>          <C>
                                                                              
                               11/13/80
                                                                  NINE  MONTHS
ENDED            (INCEPTION)
                                                                  SEPTEMBER
30,                     TO SEPTEMBER 
                                                                   1998       
     1997                 30, 1998

Cash flows from investing activities 

Sale of fixed assets                                       $     -            
  $   -                  $10,825
Capital expenditures                                       (1,770)            
   -                   (371,096)
Issuance of note receivable                             (97,500)          
(15,000)            (142,500)
(Increase) decrease in deposits                          (100)                
  -                   (8,531)
Decrease in note receivable                                   -               
     -                    30,000
Decrease in capitalized patents                              -                
    -                    (45,690)
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES $(99,370)        $(15,000)   
        $(526,992)

Cash flows from financing activities                         
Proceeds for unissued debentures and 
      securities                                                $       -     
     $       -                 $498,000
Principal payments of note payable                    (102,000)       
(61,000)              (440,000)
Proceeds from issuance of note payable               162,000              -   
                 996,444
Increase in capitalized organization costs                    -               
    -                      (7,453)
Proceeds from issuance of preferred stock                  -                  
 -                  1,105,000
Proceeds from issuance of common stock             392,250         516,530    
      10,169,859
NET CASH PROVIDED BY FINANCING ACTIVITIES           $452,250       $455,530   
        $12,321,850

Net increase (decrease) in cash and                       (160)               
  -                         100
cash equivalents                                             

Cash and cash equivalents, beginning                     260               
260                           -   

Cash and cash equivalents, ending                       $100              
$260                      $100
      
</TABLE>
The accompanying note is an integral part of these financial statements.


<PAGE 8>
                                          BIOSONICS, INC.
                     (A DEVELOPMENT STAGE ENTERPRISE)
            STATEMENT OF SHAREHOLDERS' EQUITY - PAID-IN CAPITAL
          NOVEMBER 13, 1980 (INCEPTION) TO SEPTEMBER  30, 1998  
                                           (UNAUDITED)


<TABLE>
<S>               <C>                               <C>            <C>        
     <C>
DATE STOCK                                           PRICE PER      AMOUNT    
  
 ISSUED            NUMBER OF SHARES        SHARE           RECEIVED      NOTES

  1/13/81            150,000,000                   0.0001              15,001 
     (A)
  1/31/81                4,400,000                   0.0250            110,000
      (B)
      1981                   400,000                   0.0250             
10,000       (C)
      1981              20,000,000                    0.0500         1,000,000
      (B)
      1982                     20,000                    0.4000              
8,000       (C)
      1982                     97,500                    0.2000            
19,500       (C)
      1982                1,000,000                     0.0600           
60,100       (D)
      1983                     52,500                    0.2000            
10,500       (C)
      1983                     75,000                    0.3050            
22,875       (E)
      1983                     25,000                    0.2350              
5,875       (E)
      1983                     20,000                    0.5000            
10,000       (C)
  12/29/83              7,300,000                    0.5000         3,650,000 
     (F)
       1984                        390                    1.0000              
    390       (G)
       1984                     5,948                     0.5000              
2,975       (G)
       1984                     1,000                     0.3750              
   375       (C)
       1984                   72,500                     0.2500            
18,125       (C)
       1984                     2,000                     0.3750              
   750       (H)
       1984                     4,000                     0.2500              
1,000       (C)
       1984                 350,000                     0.2000            
70,000       (C)
       1985                   26,500                     0.2810              
7,453       (C)
       1985                   20,000                     0.2500              
5,000       (H)
       1985                        500                     0.5000             
    250       (G)
       1985                     5,000                     0.3440              
1,719       (C)
       1985                         50                      1.0000            
       50       (G)
       1985                     2,000                     0.3750              
   750       (H)
       1985                     7,500                     0.1560              
1,172       (C)
       1986                     6,882                     0.5000              
3,472       (G)
       1986                   85,000                     0.1875            
15,938       (H)
       1986                   11,650                     0.2810              
3,276       (H)
       1986                 100,000                     0.2190            
21,875       (H)
       1986            10,665,000                     0.1810         1,929,737
      (I)
       1986                 202,000                     0.1560             
31,562       (H)

       1986                  70,000                        0.3130           
21,875       (H)
       1986                134,855                        0.2000           
26,939       (H)
       1987              7,613,551                       0.2000        
1,522,710       (G)
       1987                476,110                        0.2950          
140,478       (H)
       1987                  7,000                          0.1590            
1,113       (B)
       1987                 15,000                          0.3120            
4,687       (C)
       1987                240,000                         0.2000           
48,000       (B)
       1987                100,000                         0.2180           
21,875       (C)
</TABLE>
The accompanying note is an integral part of these financial statements.


<PAGE 9>
                                            BIOSONICS, INC.
                             (A DEVELOPMENT STAGE ENTERPRISE)
      STATEMENT OF SHAREHOLDERS' EQUITY - PAID-IN CAPITAL (CONTINUED)
                NOVEMBER 13, 1980 (INCEPTION) TO SEPTEMBER  30, 1998 
                                             (UNAUDITED)


<TABLE>
<S>               <C>                               <C>            <C>        
     <C>
DATE STOCK                                           PRICE PER      AMOUNT    
  
 ISSUED            NUMBER OF SHARES        SHARE           RECEIVED      NOTES

      1988                125,000                      0.2500           
31,250       (C)
      1988                  2,500                        0.2180              
547         (H)
      1988                 10,000                       0.2000            
2,000        (G)
      1988                100,000                      0.2500           
25,000       (B)
      1988              4,227,000                     0.2000           845,400
      (B)
      1988                 25,000                       0.1560            
3,906       (C)
      1988                 11,000                       0.0130              
143       (H)
      1989                400,000                      0.0800           
32,000       (B)
      1989                  3,000                        0.0938              
282       (H)
      1989                100,000                      0.0800            
8,000       (B)
      1990                 25,000                       0.0100              
250       (H)
      1990             20,311,000                    0.0100           203,110 
     (B)
      1990             10,500,000                    0.0100           105,000 
     (B)
      1991              1,100,000                     0.0100            11,000
      (B)
      1991                100,000                      0.0100            
1,000       (H)
      1991                 48,000                       0.0625            
3,000       (J)
       1991                 32,000                      0.0625            
2,000       (J)
       1991              1,100,000                    0.0100            11,000
      (J)
       1991              1,100,000                    0.0100            11,000
      (B)
       1991                400,000                     0.0100            
4,000       (C)
       1995                      0                          0.0000           
87,750       (Q)

       1996              1,250,000                     0.0800          
100,000       (K)
       1996             11,375,000                    0.0286           325,000
      (K)
       1996             16,100,000                    0.0500           805,000
      (K)
       1996              1,300,000                     0.0100           
13,000       (L)
       1996             12,900,000                    0.0200           258,000
      (L)
       1996                300,000                      0.0300            
9,000       (M)
       1996                280,000                      0.0500           
14,000       (M)
       1996                400,000                      0.0800           
32,000       (M)
       1996                100,000                      0.0650            
6,500       (M)
       1996                250,000                      0.0850           
21,250       (M)
       1996           (15,368,820)                                            
   -0-       (N)
       1996                420,000                      0.0238           
10,000       (L)
       1996             11,150,000                    0.0200           223,000
      (L)
       1996                428,600                      0.0350           
15,000       (L)
       1996                250,000                      0.0400           
10,000       (L)
       1996              1,075,220                     0.0500           
53,761       (L)
       1996                350,000                      0.0258            
9,032       (J)
       1996              1,695,000                     0.0345           
59,175       (J)
       1996                 75,000                       0.0400            
3,000       (O)
       1996                200,000                      0.0500           
10,000       (B)
</TABLE>
The accompanying note is an integral part of these financial statements.

<PAGE 10>
                              BIOSONICS, INC.
                     (A DEVELOPMENT STAGE ENTERPRISE)
      STATEMENT OF SHAREHOLDERS' EQUITY - PAID-IN CAPITAL (CONTINUED)
           NOVEMBER 13, 1980 (INCEPTION) TO SEPTEMBER  30, 1998 
                                (UNAUDITED)


<TABLE>
<S>               <C>                               <C>            <C>        
     <C>
DATE STOCK                                           PRICE PER      AMOUNT    
  
 ISSUED            NUMBER OF SHARES        SHARE           RECEIVED      NOTES

     1996                         -                                  -        
   75,530       (Q)
     1997                550,000                      0.0500            27,500
      (M)
     1997                200,000                      0.0500            10,000
      (O)
     1997              5,000,000                     0.0100            50,000 
     (P)
     1997              1,000,000                     0.0200            20,000 
     (P)
     1997                      -                                     -        
   14,398       (Q)
     1997             11,130,600                    0.0500           556,529  
    (R)
     1997                500,000                      0.0500            25,000
      (P)
     1997                 40,000                       0.0500            
2,000       (M)
     1997                 80,000                       0.0200            
1,600       (L)
     1997              1,600,000                     0.0500            80,000 
     (R)
     1998              1,650,000                     0.0500            82,500 
     (R)
     1998                100,000                      0.0500             5,000
      (O)
     1998              2,730,000                     0.0500           136,500 
     (S)
     1998              1,100,000                     0.0500            80,000 
     (R)
     1998                      -                                     -        
   13,250       (Q)
     1998            (1,600,000)                               -              
-0-           (N)
     1998              1,600,000                      0.0500            80,000
      (M)
     1998              9,190,000                      0.0250           229,750
      (R)
     1998                 30,000                        0.0500            
1,500       (M)
</TABLE>
                                    
TOTAL SHARES - COMMON STOCK        325,664,536

TOTAL PAID-IN CAPITAL                                          $ 13,568,246 
LESS:   Notes Receivable for Stock Purchase                       167,500 
LESS:  Offering Expenses                                                 
473,495 

NET PAID-IN CAPITAL - COMMON STOCK                 $  12,927,251 
  The accompanying note is an integral part of these financial statements.

<PAGE 11>
                                       BIOSONICS, INC.
                          (A DEVELOPMENT STAGE ENTERPRISE)
    STATEMENT OF SHAREHOLDERS' EQUITY - PAID-IN CAPITAL  (CONTINUED)
              NOVEMBER 13, 1980 (INCEPTION) TO SEPTEMBER  30 , 1998
                                          (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 offering.
(S)   Issued stock as payment for Inventory that was repurchased for previous
           Dry Mouth Center locations.


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


<PAGE 12>
                                            BIOSONICS, INC.
                           (A DEVELOPMENT STAGE ENTERPRISE)
                                 NOTE TO FINANCIAL STATEMENTS
                                       SEPTEMBER  30 , 1998



Note 1 - The unaudited financial statements presented herein have been
prepared in accordance with the instructions to Form 10-QSB 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, 1997.  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 September 30, 1998 may not be indicative of the results
that may be expected for the year ending December 31, 1998.





<PAGE 13>
ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF               
        OPERATIONS.  

PLAN OF OPERATIONS 

Biosonics, Inc. ("the Company" and "Biosonics") is preparing a marketing plan
for the Salitron (registered trademark) (dry mouth) device.  However this 
marketing plan will not go into effect until the necessary funding has been 
received, or Medicare reimbursement has been obtained or which there is no 
assurance.  The Company does have current inventory for the Salitron, and 
believes that it's  existing inventory is not obsolete and that the Company can
sell and ship such units after testing the equipment.   

Although approximately 46 private insurance carriers have reimbursed Biosonics
for the use of the Salitron (registered trademark) system and Medicaid
reimbursement has been obtained in four states, there is uncertainty as to 
whether third party payers will approve or continue to reimburse Biosonics for
the devices and whether reimbursement, if approved or continued, will be 
sufficient for purchasers of the Company's products.  On May 23, 1994, a 
proposed notice was published in the Federal Register by Health Care Financing 
Administration ("HCFA") that it intended to disapprove Biosonics' application
for Medicare reimbursement for the Salitron System.  In 1996, Biosonics met with
HCFA officials to urge a reevaluation of its intent to disapprove the Company's
request for reimbursement approval.  The Company continued its efforts with HCFA
and in October 1997 submitted additional data to HCFA.  During a Senate 
Appropriations Subcommittee Hearing in March 1998, the Administrator of HCFA 
stated that HCFA would be prepared to withdraw the 1994 notice.  On June 1, 1998
the Federal Register published a notice stating that the previous non-coverage
notice of 1994 was withdrawn and that a technical review of the Salitron was 
underway.  Since the non-coverage notice was withdrawn, Biosonics has contacted 
the four regional carriers with the information submitted regarding the Salitron
for their review.  In August the four regional carriers reviewed the information
and requested more time to review the medical literature on the Salitron as well
as any further information on electro-stimulation for dry mouth.  Information 
received from HCFA indicates that AHCPR (Agency for Health Care Policy and 
Research), which is processing the technical assessment of the Salitron, should 
have a report in November.

The Company has developed a marketing plan for the Cystotron (trademark)
product (Incontinence) which includes a six-month market study.  The purpose of
the study is to provide further data for physicians to assist them in deciding
whether to prescribe the Cystotron System for their patients.  The Company
intends to proceed with this marketing plan if and when the Company has received
sufficient funds for manufacturing the product.

<PAGE 14>
Biosonics is also planning to develop a strategy to market its products in the
international market.  The Company has initiated contact with various
companies in
the European market.  Further development of this plan will require engineering
aspects and the qualification of the European CE mark for importing into Europe.

Biosonics does not have any material commitments for capital expenditures,
although management is considering making capital expenditures during 1998 in
connection with the manufacturing of the Cystotron System, if funds become
available.  The extent of the development or testing, if any, of Biosonics' 
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
or that sufficient funds will be available.


FORWARD LOOKING STATEMENTS

All statements contained in this report that are not historical facts,
including but
not limited to the Company's plans for product development and marketing, are
based on current expectations.  These statements are forward-looking
(as defined in the U.S. Private Securities Litigation Reform Act of 1995 and
the Act) in nature and involve a number of risks and uncertainties.  Such
statements can be identified by the use of forward-looking terminology such as
"may", "will", "should", "expect", "anticipate", "believe", "estimate" or
"continue", or the negative thereof or other variations thereon or comparable
terminology.  Actual results may vary materially, as discussed herein.  The 
factors that could cause actual results to vary materially include: The 
availability of capital to finance the Company's operations on terms 
satisfactory to the Company; the availability of clearances or approvals of the
Company's products by federal, state and foreign governmental authorities; the
market acceptance of the Company's products; the availability of reimbursement 
by third part payors, including Medicare reimbursement; product liability 
claims; the availability of protection of the Company's patents and future 
litigation relating to protection of its patent, trade secret and know-how; the 
Company's dependence on Jack Paller, Chief Executive Officer; general business 
and economic conditions and competition from products that address the same or 
similar medical problems as those addressed by the Company's products; and other
risks that may be described from time to time in the reports that the Company 
will be required to file with the Commission.  The Company cautions potential 
investors not to place undue reliance on any such forward-looking statements.
            
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

Biosonics' primary sources of funds to date have been proceeds from the sale

<PAGE 15>
of its securities and investment income on such proceeds, including loans and
advances for securities purchased through private and public offerings. 
Biosonics will require additional funds estimated to be approximately $3.0
million to implement current manufacturing and marketing plans for the
Salitron and
Cystotron.  The Company will also require additional funds in the immediate 
future to maintain the operations of the Company.  Biosonics has initiated a 
private offering of securities to acquire the immediately required funds.   

The Company is currently preparing to relocate as well as update the office
and operations.  This has given the Company the ability to update all of their
computers, software applications, office machinery and other equipment
relating to the operations of the company.  The Company believes that
upgrading and installation of this equipment or software will also remedy 
problems relating to the year 2000 (Y2K) date conflicts.  Therefore no 
additional expense will be realized directly for the Y2K updating. 

Net development stage expenses for the nine and three months ended September
30, 1998 ($543,242 and $119,150, respectively) were lower then the comparable
periods of the prior year ($604,153 and $184,019, respectively) due to 
additional costs associated with certain secured filings that occurred during 
the prior year.  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 nine and three months ended September
30, 1998 ($162,524 and $(46), respectively) were lower than the comparable
periods on the prior year ($187,329 and $54,740, respectively) due to additional
costs associated with certain secured filings that occurred during the prior
year. 
For the 3 months ended September 30, 1998 there was a negative adjustment of
$30,000 due to a revised agreement with a consulting firm.

The Company's sales for the nine and three months ended September 30, 1998
($7,708 and $730, respectively) were lower as compared to the same period of the
prior year ($18,679 and $5,129, respectively).  The decrease in sales resulted
primarily from not having available funds to maintain a marketing program for 
the Salitron System. 

PART II     OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

None

ITEM 2.     CHANGES IN SECURITIES.

<PAGE 16>
Biosonics has effected a private placement of common stock to a limited number
of accredited investors for which it received subscriptions for an aggregate of
$302,250 or 12,090,000 shares of common stock at $.025 per share to
eighteen accredited investors for the 3 month period ended September 30, 1998.
These private sales were made pursuant to the exemption afforded under Section
4(2) and Regulation D under the Securities Act of 1933.

The Company also issued 30,000 shares of common stock at $.05 per share to an
individual as compensation for consulting.   This issuance was made pursuant to
the exemption afforded under Section 4(2) under the Securities Act of 1933.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

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

        *3.5   By-laws of Registrant, as amended.  (incorporated by reference
                  to Registrant's Annual Report on Form 10-K for the year
ended            
                  December 31, 1983 ["1983 Form 10-K"]).

        ?.?    New Space Lease 

          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: NOVEMBER 13      , 1998                    BY:      /S/JACK PALLER      
                   
           
                                                               Jack Paller,
President, Chairman and
                                                               Executive
Officer, Principal Financial     
                                                               Officer and
Principal Accounting
                                                                Officer and
Sole Director.