UNITED STATES
            SECURITIES AND EXCHANGE COMMISSION
                  Washington, D.C.  20549

                         FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 
For the period ended September 26, 1998
                 or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 
    
For the transition period from          to

Commission file number          0-16088

           CERAMICS PROCESS SYSTEMS CORPORATION                      
       (Exact Name of Registrant as Specified in its Charter)

        Delaware                                   04-2832509          
(State or Other Jurisdiction                    (I.R.S. Employer
of Incorporation or Organization)               Identification No.)

111 South Worcester Street, P.O. Box 338, 
Chartley, Massachusetts                            02712  
(Address of Principal Executive Offices)         (Zip Code)                  
       
Registrant's Telephone Number, including Area Code: (508) 222-0614
Facsimile Number: 508-222-0220, E-Mail Address: info@alsic.com.

Former Name, Former Address and Former Fiscal Year if Changed
since Last Report:
Not Applicable.

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

             APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.  Number of shares of common stock outstanding as of 
October 21, 1998: 12,307,186





<PAGE> 2

               CERAMICS PROCESS SYSTEMS CORPORATION


                           Form 10-Q                                    

           For The Fiscal Quarter Ended September 26, 1998

                             Index



PART I:  FINANCIAL INFORMATION                               Page

         Item 1:  Consolidated Financial Statements          3-9
      
                  Consolidated Balance Sheets as of        
                  September 26, 1998 and December 27, 1997   3-4

                  Consolidated Statements of Operations
                  for the fiscal quarters and nine-month
                  periods ended September 26, 1998 and 
                  September 27, 1997                           5

                  Consolidated Statements of Cash Flows 
                  for the nine-month periods ended September
                  26, 1998 and September 27, 1997              6
                                                                
                  Notes to Consolidated Financial 
                  Statements                                 7-9
                          

         Item 2:  Management's Discussion and Analysis
                  of Financial Condition and Results of
                  Operations                               10-11


PART II: OTHER INFORMATION         

         Items 1-6                                            13


Signatures                                                    14








<PAGE> 3
PART I  FINANCIAL INFORMATION

                   ITEM 1  FINANCIAL STATEMENTS

                CERAMICS PROCESS SYSTEMS CORPORATION
                    Consolidated Balance Sheets
                                                                        
  
                                 September 26,       December 27,
                                         1998               1997
                                 ------------        -----------
ASSETS 

Current Assets:
  Cash                             $1,000,196         $  561,166
  Accounts receivable                 789,205            626,121
  Inventories                         307,553            123,325
  Prepaid expenses                      7,884             15,528
  Prepaid assets                        9,772              5,072
                                   ----------         ----------
     Total current assets          $2,114,610          1,331,212
                                   ----------         ----------

Property and equipment:
  Production equipment              1,540,339          1,470,253
  Furniture and office equipment      124,582             70,404
                                   ----------         ----------
                                    1,664,921          1,540,657
  Less accumulated depreciation
     and amortization                (952,384)          (967,161)
                                   ----------         ----------
     Net property and equipment    $  712,537            573,496
                                   ----------         ----------
Total Assets                       $2,827,147         $1,904,708
                                   ==========         ==========



See accompanying notes to consolidated financial statements.




<PAGE> 4
                 CERAMICS PROCESS SYSTEMS CORPORATION
                Consolidated Balance Sheets (continued)

                                   September 26,          December 27, 
                                           1998                  1997
                                   ------------           -----------
LIABILITIES AND STOCKHOLDERS'
 EQUITY (DEFICIT)

Current liabilities:
 Accounts payable                  $    107,055          $    154,657
 Accrued expenses                       138,638               677,109
 Deferred revenue                       147,347               163,430
 Notes payable                                -               206,962
 Current portion of convertible 
   notes payable:
          Related parties                     -               260,000
          Other                               -             1,610,000
 Current portion of obligations
   under capital leases                  45,722                42,205
                                   ------------          ------------
Total current liabilities               438,762             3,114,363

Notes payable, less current portion           -               137,868
Obligations under capital
  leases less current portion           137,369               172,114
                                   ------------          ------------
Total Liabilities                       576,131             3,424,345
                                   ------------          ------------
Stockholders' Equity (Deficit)
Common stock, $0.01 par value.
  Authorized 15,000,000 shares;
  issued 12,307,186 shares at September
  26, 1998 and 7,824,528 shares
  at December 27, 1997                  123,072                78,246
                                                                     
Additional paid-in capital           32,655,329            30,464,833

Accumulated deficit                 (30,466,550)          (32,001,881)
                                   ------------          ------------
                                      2,311,851           (1,458,802)
Less treasury stock, at cost, 
  22,883 common shares at September
  27, 1997 and December 28, 1996        (60,835)              (60,835)
                                   ------------          ------------
Total stockholders' equity
  (deficit)                           2,251,016           (1,519,637)
                                   ------------          ------------
Total Liabilities and                                               
  Stockholders' Equity
  (Deficit)                        $  2,827,147          $  1,904,708
                                   ============          ============

See accompanying notes to consolidated financial statements.



<PAGE> 5
                CERAMICS PROCESS SYSTEMS CORPORATION
                Consolidated Statements of Operations

                            Fiscal Quarters Ended  Nine-Month Periods Ended
                           Sept. 26,     Sept. 27,    Sept. 26,    Sept. 27,
                               1998          1997         1998         1997
Revenue:                 ----------   -----------   ----------    ---------

Product sales           $ 1,260,767   $ 1,084,960  $ 3,679,916  $ 2,852,046
License agreements                -       130,333      740,750      285,667
                         ----------   -----------   ----------    ---------
Total revenue             1,260,767     1,215,293    4,420,666    3,137,713
                         ==========   ===========   ==========   ==========

Operating expenses:
  Cost of sales             798,503       607,137    2,259,571    1,707,839
  Selling, general, and
   administrative           162,961       121,287      486,163      387,865
                         ----------   -----------   ----------   ----------
Total operating expenses    961,464       728,424    2,745,734    2,095,704
                         ----------   -----------   ----------   ----------
Operating income            299,303       486,869    1,674,932    1,042,009

Other income (exp.), net     96,978       (52,328)     (11,575)    (176,125)

Income before taxes         396,281       434,541    1,663,357      865,884
                           ----------  ----------   ----------   ----------

Income taxes                 30,274             -      128,027            -

   Net income            $  366,007    $  434,541   $1,535,330   $  865,884
                         ==========    ==========   ==========   ==========
Net income per    
   basic common share   $      0.03    $     0.05   $     0.15   $     0.11     
                         ----------    ----------   ----------   ----------

Weighted average number 
   of basic common 
   shares outstanding    12,307,186     8,079,585    9,916,550    8,084,907   
                         ==========    ==========   ==========   ==========

Net income per
   diluted common share  $     0.03     $     0.04   $    0.13    $    0.08
                         ----------     ----------   ---------    ---------
Weighted average number
   of diluted common 
   shares outstanding    12,506,198     12,938,206  12,729,075   12,820,926
                         ==========     ==========  ==========   ==========

See accompanying notes to consolidated financial statements.


<PAGE> 6
                CERAMICS PROCESS SYSTEMS CORPORATION
                Consolidated Statements of Cash Flows
                                             
                                              Nine-Month Periods Ended
                                               Sept. 26,     Sept. 27, 
                                                   1998          1997
                                              ---------      --------
Cash flows from operating activities:
  Net income                                 $1,535,330     $ 865,884
  Adjustments to reconcile net income 
   to cash provided by (used in)
   operating activities:          
     Depreciation and Amortization              134,579        98,242
     (gain) on disposal of equipment            (53,000)       (1,610) 
Changes in assets and liabilities:
     Accounts receivable, trade                (115,084)     (215,955)
     Inventories                               (184,228)        9,524
     Prepaid expenses                             7,644       (6,102)
     Other current assets                        (4,700)             -
     Accounts payable                           (47,601)      107,184
     Accrued expenses                          (176,513)     (218,430)
     Deferred revenue                           (16,083)      (85,654)
                                              ---------      --------
       Net cash provided by   
        operating activities                   1,080,344       553,083
                                              ---------      --------
Cash flows from investing activities:
  Additions to property and equipment          (273,619)     (195,942)
  Disposal of property and equipment              5,000         1,610
  Deposits                                            -        (4,506)
                                               ---------     --------
    Net cash (used in) investing 
     activities                                 (268,619)     (198,838)
                                               ---------     --------
Cash flows from financing activities:
  Principal capital lease obligations           (31,229)       47,199
  Principal payments of Notes Payable          (344,830)      (54,664)
  Proceeds from issuance of common stock          3,364         3,927
                                              ---------      -------- 
    Net cash provided by (used in)
      financing activities                     (372,695)       (3,538)
                                              ---------      --------

Net increase in cash                            439,030       350,707
Cash at beginning of period                     561,166       113,331
                                              ---------     ---------
Cash at end of period                        $1,000,196     $ 464,038
                                              =========     =========

See accompanying notes to consolidated financial statements.




<PAGE> 7
               CERAMICS PROCESS SYSTEMS CORPORATION
            Notes to Consolidated Financial Statement
                          (Unaudited)

(1)  Nature of Business
------------------
     Ceramics Process Systems Corporation  (the `Company` or `CPS`) serves 
the wireless communications, satellite communications, motor controller and 
other microelectronic markets by developing, manufacturing, and marketing 
advanced metal-matrix composite and ceramic components to house, 
interconnect and thermally manage microelectronic devices.  The Company`s 
products are typically in the form of housings, packages, lids, substrates, 
thermal planes and heat sinks, and are used in applications where thermal 
management and or weight are important considerations.

     The Company`s products are manufactured by proprietary processes the 
Company has developed including the QuicksetTM Injection Molding Process 
(`Quickset Process`) and the QuickCastTM Pressure Infiltration Process 
(`QuickCast Process`).

     The Company was incorporated on June 19, 1984.

(2)  Interim Consolidated Financial Statements
     -----------------------------------------
     As permitted by the rules of the Securities and Exchange Commission 
applicable to quarterly reports on Form 10-Q, these notes are condensed and 
do not contain all disclosures required by generally accepted accounting 
principles.

     The accompanying financial statements for the fiscal quarters and nine 
month periods ended September 26, 1998 and September 27, 1997 are unaudited.  
In the opinion of management, the unaudited consolidated financial 
statements of CPS reflect all adjustments necessary to present fairly the 
financial position and results of operations for such periods.

      The consolidated financial statements include the accounts of CPS and 
its wholly-owned subsidiary, CPS Superconductor Corporation.  All ignificant 
intercompany balances and transactions have been eliminated.   The results 
of operations for interim periods are not necessarily indicative of the 
results to be expected for the full year.

<PAGE> 8
(3)  Net Income/Loss Per Common and Common Equivalent Share
------------------------------------------------------
     Basic EPS excludes the effect of any dilutive options, warrants or 
convertible securities and is computed by dividing income available to 
common stockholders by the weighted average number of common shares 
outstanding for the period.  Diluted EPS reflects the potential dilution 
that could occur if securities or other contracts to issue common stock were 
exercised or converted into common stock or resulted in the issuance of 
common stock that then shared in the earnings of the entity.  Diluted EPS is 
computed by dividing income available to common stockholders by the sum of 
the weighted average number of common shares and common share equivalents 
computed using the average market price for the period under the treasury 
stock method. 

                                  Fiscal               Nine month
                               Quarters Ended         Periods ended
                            Sept. 26,   Sept. 27,   Sept. 26,  Sept. 27,
                               1998        1997        1998       1997
                          -----------  ----------  ----------  ----------
Basic EPS Computation:
Numerator:
  Net income                 $366,007    $434,541  $1,535,330    $865,884

Denominator:
  Weighted average
  common shares
  outstanding              12,307,186   8,079,585   9,916,550   8,084,907

Basic EPS                       $0.03       $0.05       $0.15       $0.11

Diluted EPS Computation:
Numerator:
  Net income                 $366,007    $434,541  $1,535,330    $865,884
  Interest on 
    convertible debt                0      56,293      87,290     103,043
                            ---------    --------   ---------   ---------
  Total net income           $366,007    $490,834  $1,622,620    $968,927

Denominator:
  Weighted average 
    common shares
    outstanding            12,307,186   8,079,585   9,916,550   8,084,907
  Stock options               199,012     190,739     214,349     161,637
  Convertible debt                  0   4,667,882   2,598,176   4,574,382
                           ----------   ---------  ----------  ----------
  Total Shares             12,506,198  12,938,206  12,729,075  12,820,926

Diluted EPS                     $0.03       $0.04       $0.13       $0.08

<PAGE> 9
(4) Newly Issued Accounting Changes
-------------------------------
     The Company has adopted Financial Accounting Standards Board Statement 
No. 130 (`FAS 130`) `Reporting Comprehensive Income` effective for fiscal 
years beginning after December 15, 1997. FAS 130 establishes standards for 
reporting and display of comprehensive income and its components in a full 
set of general-purpose financial statements.  FAS 130 requires that all 
components of comprehensive income shall be reported in the financial 
statements in the period in which they are recognized.  Furthermore, a total 
amount for comprehensive income shall be displayed in the financial 
statement where the components of other comprehensive income are reported.  
The Company has no items of comprehensive income, and therefore net income 
is equal to comprehensive income. 

     Financial Accounting Standards Board Statement No. 131 (`FAS 131`) 
`Disclosure about Segment of an Enterprise and Related Information` is 
effective for financial statements issued for periods beginning after 
December 15, 1997.  FAS 131 requires disclosures about segments of an 
enterprise and related information regarding the different types of business 
activities in which an enterprise engages and the different economic 
environments in which it operates.

     The Company does not believe that the implementation of FAS 131 will 
have a material impact on its financial statements.

(5)  Inventory
     ---------
     Inventories consist of the following:

                          September 26,        December 27,
                               1998                1997 
                             ---------          ----------

 Raw materials               $ 137,504          $   11,097
 Work in process               170,049             112,228
                             ---------          ----------
                             $ 307,553          $  123,325
                             =========          ==========

(6)  Accrued Expenses
     ----------------
     Accrued expenses consist of the following:

                          September 26,        December 27,
                               1998                1997
                             ---------          ----------
Accrued legal and 
 accounting                  $  22,500          $   33,190
Accrued interest                     -             526,294
Accrued payroll                 79,885             108,242
Accrued rent and utilities       9,451              11,077
Accrued other                   26,801            (  1,694)
                             ---------          ----------
                             $ 138,637          $  677,109
                             =========          ==========

<PAGE> 10

ITEM 2       MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL

             CONDITION AND RESULTS OF OPERATIONS
     
     This Quarterly Report on Form 10-Q contains forward-looking statements 
that involve a number of risks and uncertainties. There are a number of 
factors that could cause the Company`s actual results to differ materially 
from those forecasted or projected in such forward-looking statements.  
Readers are cautioned not to place undue reliance on these forward-looking 
statements which speak only as of the date hereof.  The Company undertakes 
no obligation to publicly release the results of any revisions to these 
forward-looking statements which may be made to reflect events or changed 
circumstances after the date hereof or to reflect the occurrence of 
unanticipated events.
 
Results of Operations - Third Fiscal Quarter of 1998 Compared to Third 
Fiscal Quarter of 1997
----------------------

	Total revenue increased 4% in Q3 1998 compared to Q3 1997.  Revenue 
from product sales increased 16% in Q3 1998 compared to Q3 1997.  No revenue 
was earned from license agreements in Q3 1998 compared to revenue from 
license agreements of $130 thousand earned in Q3 1997.
 
	The growth in product revenue in Q3 1998 compared to Q3 1997 was 
primarily due to increased shipments of the Company's metal-matrix 
composites for use in wireless telecommunication applications. Unit 
shipments in Q3 1998 were 26% higher than unit shipments in Q3 1997, and 15% 
higher than unit shipments in Q2 1998.

     Total operating expenses in Q3 1998 were $961 thousand, a 32% increase 
over operating expenses of $728 thousand in Q3 1997. Of the $233 thousand 
increase in operating expenses in Q3 1998 compared to the Q3 1997, $192 
thousand related to cost of sales and $41 thousand related to selling, 
general and administrative expenses.  

     Gross margins for Q3 1998 were negatively affected by the decision in 
late May of a major customer to reduce inventories.  This decision resulted 
in reduced shipments of the Company`s products to that customer in June, 
July and part of August, which reduced gross margins for the quarter as 
overhead expenses were spread over a smaller production base.  In addition, 
no revenue from licence agreements was earned in Q3 1998 whereas revenue of 
$130 thousand was earned from license agreements in Q3 1997.

     Income taxes in Q3 1998 were $30 thousand compared to $0 in Q3 1997.

     The cumulative effect of these revenues and costs resulted
in net income of $366 thousand, or $0.03 per basic share, $0.03 per diluted 
share, in Q3 1998, compared to net income of $435 thousand, or $0.05 per 
basic share, $0.04 per diluted share in the Q3 1997.


<PAGE> 11

Results of Operations - First Nine Months of 1998 Compared to First Nine 
Months of 1997
--------------

	Total revenue increased 41% in the first nine months of 1998 compared 
to the first nine months of 1997.  Revenue from product sales increased 29% 
in the first nine months of 1998 compared to the first nine months of 1997.  
Revenue from license agreements increased 159% in the first nine months of 
1998 compared to the first nine months of 1997.
 
	The growth in product revenue in the first nine months of 1998 
compared to the first nine months of 1997 was primarily due to increased 
shipments of the Company's metal-matrix composites for use in wireless 
telecommunication applications. Unit shipments in the first nine months of 
1998 were 65% higher than unit shipments in the first nine months of 1997.

     Total operating expenses in the first nine months of 1998 were $2.75 
million, a 31% increase over operating expenses of $2.10 million in the 
first nine months of 1997.  The increase in operating expenses is primarily 
attributable to the increased unit shipments, and additional personnel in 
sales and marketing.   Of the $650 thousand increase in operating expenses 
in the first nine months of 1998 compared to the first nine months of 1997, 
$552 thousand related to cost of sales and $98 thousand related to selling, 
general and administrative expenses.  

     Gross margins on product sales for the first nine months of 1998 were 
39% compared to 40% for the first nine months of 1997.  Gross margins on 
product sales in Q1 1998 were higher than Q1 1997 as a result of higher unit 
volumes, however, gross margins on product sales in Q2 and Q3 1998 were 
lower than Q2 and Q3 1997 due to the decision in late May of a major 
customer to reduce inventories which resulted in lower than planned 
shipments of the Company`s products to that customer in June, July and part 
of August, increasing unit costs as as overhead expenses were spread over a 
smaller production base.  

     Income taxes in the first nine months of 1998 were $128 thousand 
compared to $0 in the first nine months of 1997.

     The cumulative effect of these revenues and costs resulted
in net income of $1,535 thousand, or $0.15 per basic share, $0.13 per 
diluted share, in the first nine months of 1998, compared to net income of 
$865 thousand, or $0.11 per basic share, $0.08 per diluted share in the 
first nine months of 1997.

Financial Condition
-------------------
     The Company`s financial condition and liquidity improved as of the end 
of Q3 1998 compared to year-end 1997 as a result 1) operations generating 
cash,  2) elimination of debt in Q1 and Q2 1998 as note holders converted 
the Company`s subordinated convertible notes into common stock and the 
Company retired all nonconvertible debt by making payment of principal and 
accrued interest in full, and 3) receipt of licensing revenues. 


<PAGE> 12

     The Company`s cash balance at September 26, 1998 was $1,000 thousand 
compared to $561 thousand at December 27, 1997.

     Inventories increased to $307 thousand at September 26, 1998 from $123 
thousand at December 27, 1997. Raw material inventory increased to $138 
thousand from $11 thousand, and work in process inventory increased to $170 
thousand from $112 thousand over the same period.  Management believes the 
increase in raw material inventory and work in process inventory is 
appropriate to support the increased production volume.

     Accounts Receivable increased to $789 thousand at September 27, 1998 
from $626 thousand at December 27, 1997.  This change resulted from 
fluctuations in timing of specific customer requirements, and, in the 
opinion of management, does not reflect any inherent seasonality in the 
business. 

     The Company financed its working capital requirements during the third 
fiscal quarter of 1998 with funds generated by operations.  Management 
considers cash flow from operations and available cash to be adequate to 
meet its working capital requirements for the for the foreseeable future.

Year 2000 Issue
---------------
     The Company has identified three areas of possible exposure to Year 
2000 problems:  1) Application programs (financial, CAD/CAM and management 
information programs) used by the company, 2) Embedded programs in 
production and analytical equipment used by the Company, and 3) Programs 
used by vendors, customers and other third parties with whom the Companies 
does business.

     The Company has completed an assessment of its exposure in each of 
these three areas and has developed a plan and timetable to address issues 
identified.  The assessment indicated the area of greatest risk is the area 
of application programs.  In the process of addressing the Year 2000 issue, 
the Company has concurrently sought to upgrade certain computer systems to 
provide greater functionality.  In the first nine months of 1998, the 
Company purchased and installed new financial, accounting, and selected 
manufacturing computer systems which are Year 2000 compliant and which 
provide greater functionality. For the application programs which the 
Company does not intend to replace but which are not currently Year 2000 
compliant, the Company has identified patches and upgrades which the company 
will be implementing through the first half of 1999.

     Regarding the second area, the Company is testing production and 
analytical equipment one machine at a time to determine where Year 2000 
problems exist, and to implement upgrades and or manual workarounds for 
problems identified.  The Company's timetable calls for completion of this 
process by the end of the first half of 1999.  If upgrades or manual 
workarounds are not possible for certain equipment, the Company believes it 
can replace the capital equipment in an orderly manner without disrupting 
production.  The Company does not currently believe any capital equipment 
will need to be replaced, but there is no guarantee this will be the case.  
The Company does not believe the cost of upgrades and or manual workarounds 
will be material, but there is no guarantee this will be the case.


<PAGE> 13
     Regarding the third area, the Company is interviewing vendors and 
customers to determine their exposure to Year 2000 issues.  The Company has 
not yet established a contingency plan in the event of noncompliance by its 
customers and vendors.

                              PART II OTHER INFORMATION


Item 1 through Item 5:         None


Item 6: Exhibits and Reports on Form 8-K

(a) Exhibits:

(b)  Reports on Form 8-K:   None


                            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 thereunto duly authorized.  


                            Ceramics Process Systems Corporation
                                          (Registrant)

Date: 	November 10, 1998           /s/Grant C. Bennett  
                                        Grant C. Bennett
                                        President and Treasurer
                                        (Principal Executive
                                        Officer)