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

                             FORM 10-QSB

(Mark One)
 X   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934
For the Quarterly Period Ended September 30, 1998
     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

Commission File Number 33-13058-C

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                           SURGIDYNE, INC.
           (Name of small business issuer in its charter)


            Minnesota                                58-1486040   
  (State or other jurisdiction of                 (I.R.S. Employer             
   incorporation or organization)              Identification Number)    

9909 South Shore Drive, Minneapolis, MN  55441
(Address of principal executive offices)

(612) 595-0665
(Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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

   7,017,085 shares of Common Stock, no par value, outstanding at
                          November 12, 1998

   Transitional Small Business Disclosure Format.      YES   X  NO
<PAGE>
                   PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                           SURGIDYNE, INC.

CONTENTS                                 PAGE

FINANCIAL STATEMENTS

  Balance sheets                            3
  Statements of operations                  5
  Statements of cash flows                  6
  Notes to financial statements             7
<PAGE>
SURGIDYNE, INC.
BALANCE SHEETS
                                           (Unaudited)
                                           September 30,    December 31,
                                                  1998            1997

ASSETS
Current Assets
 Cash                                        $   20,116      $   46,724
 Accounts receivable, less allowance for
  doubtful accounts of $4,200 in 1998 and 1997   51,901          43,024
 Inventories (Note 2)                           168,056         170,359
 Prepaid expenses                                 9,597          14,405

      Total current assets                      249,670         274,512

Furniture and Equipment, at cost (Note 3)       333,396         333,396
 Less accumulated depreciation                  320,235         315,441

      Total furniture and equipment              13,161          17,955

Other Assets
 Patents and trademarks, net of accumulated
   amortization of $16,454 in 1998 and
   $14,679 in 1997                                5,386           7,161
 Deposits                                         3,529           3,529

      Total other assets                          8,915          10,690

         Total assets                        $  271,746      $  303,157

See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
BALANCE SHEETS (Continued)

                                           (Unaudited)
                                           September 30,    December 31,
                                                1998           1997

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
 Notes payable to officers and
   directors (Note 4)                        $   10,000     $   10,000
 12% demand note payable                         11,646         11,646
 Non-interest bearing demand note
   payable (Note 4)                              35,546         35,546
 Accounts payable                                46,244         42,111
 Current maturities of long-term debt               251          3,129
 Accrued expenses                                34,886         38,243

      Total current liabilities                 138,573        140,675

Stockholders' Equity
 Series A Preferred stock, authorized
   1,600,000 shares; $400,000 liquidation
   preference                                   400,000        400,000
 Common stock, no par value; authorized 
   18,400,000 shares; issued and outstanding
   7,017,085 in 1998 and 1997                 4,472,042      4,472,042
 Accumulated deficit                         (4,738,869)    (4,709,560)

      Total stockholders' equity                133,173        162,482

         Total liabilities and stockholders'
           equity                            $  271,746     $  303,157

See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)

                              Sept. 30  Sept. 30    Sept. 30  Sept. 30
Three and Nine Months Ended     1998      1997        1998      1997  

Net sales                    $ 151,088 $ 112,913   $ 386,472 $ 363,921
Cost of goods sold             104,647    90,991     268,226   278,746

   Gross profit                 46,441    21,922     118,246    85,175

Operating expenses
  Research and development       3,959     4,888      17,977    15,886
  Sales and marketing            7,114     6,879      20,449    19,550
  General and administrative    32,521    31,283     109,468   106,333

   Total operating expenses     43,594    43,050     147,894   141,769

   Operating income (loss)       2,847   (21,128)    (29,648)  (56,594)

Other income (expense)
  Interest income                   85       345         559     1,245
  Interest expense              (1,001)   (1,077)     (3,277)   (3,246)
  Other                          2,297     2,581       3,057     4,689

   Net income (loss)         $   4,228 $ (19,279)  $ (29,309)$ (53,906)

   Net income (loss) per share $   .00  $   (.00)   $   (.00) $   (.01)

    Weighted average common
      shares outstanding     7,017,085 7,017,085   7,017,085 7,017,085

See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)

                                            Sept. 30,         Sept. 30,
Nine Months Ended                             1998              1997      

Cash Flows from Operating Activities
  Net loss                                 $ (29,309)        $ (53,906)
  Adjustments to reconcile net loss to net
   cash used in operating activities:
    Depreciation and amortization              6,569             7,122
    Changes in assets and liabilities:
      (Increase) decrease in:
       Accounts receivable                    (8,877)           47,458
       Inventories                             2,303             5,631
       Prepaid expenses                        4,808             8,892 
      Increase (decrease) in:
       Accounts payable and accrued expenses     776           (31,911)

      Net cash used in operating activities  (23,730)          (16,714)

Cash Flows from Investing Activities

  Capital expenditures                            -             (4,704) 

    Net cash used in investing activities         -             (4,704)

Cash Flows from Financing Activities

  Payments on capital leases payable          (2,878)           (2,317)

    Net cash used in financing activities     (2,878)           (2,317)

       Decrease in cash                      (26,608)          (23,735)

Cash:
  Beginning                                   46,724            66,941

  Ending                                   $  20,116         $  43,206

Supplemental Disclosures of Cash Flow
  Information Cash payments for interest   $     675         $     645

See Notes to Financial Statements.
<PAGE>
SURGIDYNE, INC.
NOTES TO FINANCIAL STATEMENTS

Note 1.  Financial Statements

The Balance Sheet as of September 30, 1998, the Statement of Operations for the
three and nine month periods ended September 30, 1998 and September 30, 1997,
and the Statement of Cash Flows for the nine month periods ended September 30,
1998 and September 30, 1997 have been prepared by the Company without audit.  In
the opinion of management, all adjustments (consisting solely of normal, 
recurring adjustments) necessary to present fairly the financial position at
September 30, 1998; the results of operations for the three and nine
month periods ended September 30, 1998 and September 30, 1997, and the statement
of cash flows for the nine month periods ended September 30, 1998 and September
30, 1997 have been made. The Balance Sheet at December 31, 1997 has been taken
from the audited financial statements at that date.  Results of operations for
the interim periods are not necessarily indicative of the full fiscal year.

Note 2  Inventories
Inventories consisted of the following:

                                 September 30,      December 31,
                                      1998              1997    

Component parts and
 subassemblies                      $  93,733         $  97,767
Work in process                        15,269            18,561
Finished goods                         79,054            64,031
Less obsolescence reserve             (20,000)          (10,000)

                                    $ 168,056         $ 170,359

Note 3.  Furniture and Equipment

Furniture and equipment consisted of the following:

                                  Sepember 30,      December 31,
                                      1998              1997    

Furniture, fixtures and
  equipment                         $ 232,244         $ 232,244
Tooling and molds                     101,152           101,152

                                    $ 333,396         $ 333,396

Note 4.  Notes Payable

Notes payable to related parties:  The Company has short-term notes payable
outstanding with a certain officer and director which bears interest at an
interest rate of prime plus two percent. The interest rate will be adjusted
every six months on June 30 and December 31.  Currently the interest rate is
10.25% annually.  The $10,000 is due in annual installments limited to 50% of
the audited net income each year until paid in full.

Other note payable: In 1995, the Company converted an accounts payable balance
of $35,546 into a non-interest bearing unsecured note payable due in a single
installment on January 1, 1997.  The Company did not pay-off the note on January
1, 1997 and as a result the note is due on demand.  

Note 5. Net Earnings/Loss Per Share

The Company has adopted "Statement of Financial Accounting Standards No. 128,
Earnings Per Share."  Statement No. 128 requires the presentation of earnings
per share by all entities that have common stock or potential common stock, such
as options, warrants and convertible securities, outstanding that trade in a
public market.  Those entities that have only common stock outstanding are
required to present basic earnings per-share amounts.  All other entities are
required to present basic and diluted per-share amounts.  Diluted per-share
amounts assume the conversion, exercise or issuance of all potential common
stock instruments unless the effect is to reduce a loss or increase the income
per common share from continuing operations.

As required by the Statement, the Company has restated all prior year per-share
information for the interim periods to conform to the Statement. Because the
Company has incurred a loss in three of the periods presented, the inclusion of
potential common shares would have an anti-dilutive effect.  In all periods
presented Basic and Diluted loss per share are the same.
<PAGE>
ITEM 2.  Management's Discussion and Analysis or Plan of Operations

Results of Operations 

Sales.  Sales revenues for the three and nine month periods ended September 30,
1998 were $151,088 and $386,472, respectively, or approximately 34% and 6% more
than sales for the same three and nine month periods in 1997.

The three month increase is attributed to increases from both the Company's
international product line revenue and contract manufacturing revenue.  These
increases were 72% and 117% respectively for the three month period ended
September 30, 1998.  The nine month increase is attributed to a 49% increase in
international product line revenues partially offset by a 26% decrease in
contract manufacturing revenues for the nine months ended September 30, 1998. 

The Company is experiencing a resurgence of international sales due to obtaining
the CE mark allowing the Company's product line to be marketed in participating
European nations.  The CE mark certification accompanied with a new pricing
structure has allowed the Company's European distributors to competitively
market the Company's product line.  As a result the Company is experiencing
increases on Discrete Drain revenues, which increased 9% and 29% respectively
for the three and nine month periods ended September 30, 1998 and Bulb Evacuator
Kit revenues, which increased 118% and 26% respectively for the three and nine
months ended September 30, 1998.

The nine month decrease in contract manufacturing revenues is a result of the
completion of a contract with a major Original Equipment Manufacturer (OEM)
customer in the second quarter of 1997. 

Gross profit.  Gross profit expressed as a percentage of sales increased from
approximately 19% for the three month period ended September 30, 1997 to
approximately 31% for the same period in fiscal 1998 due primarily to increases
in product and OEM sales resulting in a more efficient overhead absorption for
the period. 

Gross profit expressed as a percentage of sales increased from approximately 23%
for the first nine months of fiscal 1997 to approximately 31% for the same
period in 1998 for the same reason. 

Operating Expenses.  Operating expenses were comparable for the three month
period ended September 30, 1997 and the same period in 1998.  Operating expenses
increased from $141,769 for the nine month period ended September 30, 1997 to
$147,894 for the same period in 1998.  The nine month increase was primarily
attributed to increases in outside services due to the audit expenses to obtain
the CE Mark certification required for international marketing of the Company's
product line to the European community.

The Year 2000

The Year 2000 ("Y2K") issue is the result of computer programs using a two-digit
format, as opposed to four digits, to indicate the year.  Such computer systems
will be unable to interpret dates beyond the year 1999, which could cause a
system failure or other computer errors, leading to disruptions in operations.
In 1998, the Company developed a program  for Y2K issues.  Phase I is to
identify those systems with which the Company has exposure to Y2K issues.  Phase
II is the development and implementation of action plans to be Y2K compliant in
all areas by June 30, 1999.  Phase III, to be completed by September 30, 1999,
is the final testing of each major area of exposure to ensure compliance.  The
Company has identified three major areas determined to be critical for
successful Y2K compliance:  (1) financial and informational system applications,
(2) manufacturing applications and (3) third-party relationships. 

The Company, in accordance with Phase I of the program has conducted an internal
review of all systems and is receiving contract bids from software and hardware
suppliers for the replacement or upgrade of required systems to limit exposure
to Y2K issues.  Replacement and upgrades are scheduled for completion in July
1999.  In the manufacturing area the Company is in the process of identifying
areas of exposure.  In the third-party area, the Company is in the process of
contacting most of its major third parties.

The Company has estimated that no more than $10,000 in costs will be incurred in
connection with the financial system Y2K compliance.  The Company has yet to
determine what costs, if any, will be incurred in connection with the
manufacturing and third-party areas. 

Liquidity and Capital Resources

At September 30, 1998 the Company had working capital of $111,097 compared to
$133,837 at December 31, 1997.

Cash flows used in operating activities for the first nine months of fiscal 1998
were $23,730, primarily due to the net loss of $29,309 combined with an increase
in accounts receivable of $8,877, partially offset by decreases in inventories
and prepaid expenses of $2,303 and $4,808 respectively.  

The Company is planning to expand its line of related wound drainage products by
sourcing new products from low cost manufacturers.  These products are expected
to be available for marketing during the first quarter of 1999.  These efforts
will require additional debt and/or equity financing for inventory and marketing
expenses in 1999.

Long-term liquidity is dependent upon the attainment of the short-term factors
discussed above accompanied with continued growth in sales volumes that generate
profitable operations.  Continued increases in sales volumes for the remainder
of 1998 and into the first quarter of 1999, depend largely on increased business
from contract manufacturing, and increased sales from existing products.
<PAGE>
PART II.  OTHER INFORMATION

ITEM 6.  Exhibits and Reports on Form 8-K
         (b)    Reports on Form 8-K
                No reports on Form 8-K were filed during the nine month period
                  ended September 30, 1998.

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                             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.

SURGIDYNE, INC.
 (Registrant)

Date  November 12, 1998                      /s/ Vance D. Fiegel             
                                             Vance D. Fiegel
                                             President and Principal Accounting
                                             Officer