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

__________________________________

FORM 10-QSB

| |  | x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| |  | - |  | ---------------------------------------------------------------------------------------

# For the period ended September 30, 2005

| |  | o |  | 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: 0-50914

__________________________________

BIOTEL INC.
(Exact name of registrant as specified in its charter)

|Minnesota                       |  | 41-1427114          | 
|------------------------------- |  | ------------------- | 
|(State or other jurisdiction of |  | (I.R.S. Employer    | 
|incorporation or organization)  |  | Identification No.) | 

11481 Rupp Drive
Burnsville, MN 55337
(Address of principal executive offices, including zip code)

(952) 890-5135
(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yesx      
Noo

Indicate by check mark whether the registrant is shell company (as defined in
Rule 12b-2 of the Exchange Act)
Yeso      
Nox

The number of shares of registrants common stock, par value $0.01 per
share, outstanding as of September 30, 2005, was 2,649,827.

Transitional Small Business Disclosure Format (check one):
Yeso     
Nox

---

# BIOTEL INC.
INDEX
____________________________________

|        |  |            | Page Number
|------- |  | ---------- | -----------
|PART I  |  |            |            
|        |  | Item 1:    |            
|       
|        |  |            |            
|        |  |            |            
|        |  |            |            
|        |  |            |            
|       
|        |  | Item 2:    |            
|       
|        |  | Item 3:    |            
|       
|PART II | 
|       
|        |  | Item 1:    |            
|       
|        |  | Item 6:    |            
|       
|        |  | Signatures |            

i

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# Part I

# Item 1:    Financial Information

# BIOTEL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

|                                                      | September 30,2005Unaudited |  | June 30,2005Audited
|----------------------------------------------------- | -------------------------- |  | -------------------
|ASSETS                                               
|CURRENT ASSETS:                                       |                            |  |                    
|Cash and cash equivalents                             |                            |  | $                  
|Trade accounts receivable, net of allowance           |                            |  |                    
|for doubtful accounts of $74,312 and $70,205          |                            | 
|at September 30, 2005 and June 30, 2005, respectively |                            | 
|Inventories, net                                      |                            |  |                    
|Deferred tax asset                                    |                            |  |                    
|Other current assets                                  |                            |  |                    
|                                                      |                            |  |                    
|Total Current Assets                                  |                            |  |                    
|                                                      |                            |  |                    
|PROPERTY, PLANT & EQUIPMENT (Net)                     |                            |  |                    
|                                                      |                            |  |                    
|OTHER ASSETS:                                         |                            | 
|Goodwill                                              |                            |  |                    
|Other assets                                          |                            |  |                    
|                                                      |                            |  |                    
|Total Other Assets                                    |                            |  |                    
|                                                      |                            |  |                    
|                                                      |                            |  | $                  
|                                                      |                            |  |                    
|LIABILITIES AND STOCKHOLDERS EQUITY                  |                            | 
|CURRENT LIABILITIES:                                  |                            | 
|Revolving line of credit                              |                            |  | $                  
|Current portion of notes payable                      |                            |  |                    
|Trade accounts payable                                |                            |  |                    
|Accrued payroll and related liabilities               |                            |  |                    
|Deferred service contract revenue                     |                            |  |                    
|Other accrued expenses                                |                            |  |                    
|Accrued income taxes                                  |                            |  |                    
|                                                      |                            |  |                    
|Total Current Liabilities                             |                            |  |                    
|LONG-TERM LIABILITIES:                               
|Notes payable                                         |                            |  |                    
|                                                      |                            |  |                    
|Total Liabilities                                     |                            |  |                    
|                                                      |                            |  |                    
|STOCKHOLDERS EQUITY:                                 |                            | 
|Common stock, $.01 stated value; 10,000,000 shares   
|authorized; 2,649,827 shares issued                   |                            |  |                    
|Additional paid-in capital                            |                            |  |                    
|Retained earnings                                     |                            |  |                    
|                                                      |                            |  |                    
|Total Stockholders' Equity                            |                            |  |                    
|                                                      |                            |  |                    
|                                                      |                            |  | $                  
|                                                      |                            |  |                    

See notes to consolidated financial statements
which are an integral part of these financial statements.

1

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# BIOTEL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Unaudited

|                                    | For the three months endedSeptember 30,
|----------------------------------- | ---------------------------------------
|
|SALES AND SERVICES                  |                                        
|COST OF SALES AND SERVICES          |                                        
|                                    |                                        
|GROSS PROFIT                        |                                        
|                                    |                                        
|OPERATING EXPENSES                  |                                        
|Selling and administrative expenses |                                        
|Research and development            |                                        
|                                    |                                        
|Total operating expenses            |                                        
|                                    |                                        
|INCOME FROM OPERATIONS              |                                        
|                                    |                                        
|OTHER EXPENSE                      
|Interest expense                    |                                        
|Other expense                       |                                        
|                                    |                                        
|Total other expense                 |                                        
|                                    |                                        
|NET INCOME BEFORE                  
|PROVISION FOR INCOME TAXES          |                                        
|PROVISION FOR INCOME TAXES          |                                        
|                                    |                                        
|NET INCOME                          |                                        
|RETAINED EARNINGS                   |                                        
|BEGINNING OF PERIOD                 |                                        
|                                    |                                        
|END OF PERIOD                       |                                        
|                                    |                                        
|INCOME PER SHARE                   
|BASIC                               |                                        
|                                    |                                        
|DILUTED                             |                                        
|                                    |                                        

See notes to consolidated financial statements
which are an integral part of these financial statements.

2

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# BIOTEL INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited

|                                                            |  | For the three months endedSeptember 30,
|----------------------------------------------------------- |  | ---------------------------------------
|
|OPERATING ACTIVITIES                                        |  |                                        
|Net income                                                  |  |                                        
|Adjustments to reconcile net income to net cash             |  |                                        
|provided by operating activities                            |  |                                        
|Depreciation and amortization                               |  |                                        
|Deferred Income Tax                                         |  |                                        
|Increase in allowance for doubtful accounts                 |  |                                        
|Increase in inventory valuation allowance                   |  |                                        
|Net book value on disposal of fixed assets                  |  |                                        
|Changes in deferred and accrued amounts                     |  |                                        
|Trade accounts receivable                                   |  |                                        
|Prepaid expenses                                            |  |                                        
|Inventories                                                 |  |                                        
|Other assets                                                |  |                                        
|Trade accounts payable                                      |  |                                        
|Accrued payroll and related liabilities                     |  |                                        
|Other accrued expenses                                      |  |                                        
|Deferred service contract revenue                           |  |                                        
|Income taxes payable                                        |  |                                        
|                                                            |  |                                        
|Net cash provided by (used for) operating activities        |  |                                        
|                                                            |  |                                        
|INVESTING ACTIVITIES                                       
|Purchases of property and equipment                         |  |                                        
|                                                            |  |                                        
|Net cash used for investing activities                      |  |                                        
|                                                            |  |                                        
|FINANCING ACTIVITIES                                        |  |                                        
|Net change on line of credit                                |  |                                        
|Payments of long-term debt                                  |  |                                        
|                                                            |  |                                        
|Net cash provided for (used for) financing activities       |  |                                        
|                                                            |  |                                        
|Net increase (decrease) in cash and cash equivalents        |  |                                        
|CASH AND CASH EQUIVALENTS AS OF JUNE 30, 2005 and 2004      |  |                                        
|                                                            |  |                                        
|CASH AND CASH EQUIVALENTS AS OF SEPTEMBER 30, 2005 and 2004 |  |                                        
|                                                            |  |                                        

See notes to consolidated financial statements
which are an integral part of these financial statements.

3

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BIOTEL INC. AND SUBSIDIARIES
NOTES TOCONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1  BASIS OF PRESENTATION

The unaudited interim
consolidated financial statements and related notes have been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote disclosures normally included in complete financial statements
prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The
accompanying unaudited interim consolidated financial statements and related notes should be read in conjunction with the
consolidated financial statements and notes thereto included in the Form 10-KSB for the fiscal year ended June 30, 2005, filed by
Biotel Inc. (the Company) on September 28, 2005.

The information furnished
reflects, in the opinion of the management of the Company, all adjustments necessary for a fair presentation of the financial
results for the interim period presented. Interim results are subject to year end adjustments and audit by independent certified
public accountants.

NOTE 2  INVENTORIES

As of September 30, 2005 and
June 30, 2005, inventories consist of the following:

|                                  | September 30,2005 |  | June 30,2005
|--------------------------------- | ----------------- |  | ------------
|Raw materials and supplies        |                   |  | $           
|Work in process                   |                   |  |             
|Finished Goods                    |                   |  |             
|Evaluation units and replacements |                   |  |             
|                                  |                   |  |             
|                                  |                   |  |             
|Valuation Allowance               |                   |  |             
|                                  |                   |  |             
|                                  |                   |  | $           
|                                  |                   |  |             

NOTE 3  WARRANTY RESERVE

The Company offers warranties
of up to a year to its customers depending on the specific product sold. The Companys warranties require it to repair or
replace defective products during the warranty period at no cost to the customer. The Company records a liability for estimated
costs that may be incurred under its warranties based on recorded sales. Although historical warranty costs have been within
expectations, there can be no assurance that future warranty costs will not exceed historical amounts. The Company periodically
assesses the adequacy of its recorded liability and adjusts the balance as necessary. At September 30, 2005 and June 30, 2005, the
warranty reserve totaled $87,708 and $79,062, respectively, and this amount is included in Other Liabilities. The following is a
reconciliation of the aggregate warranty liability as of September 30, 2005:

4

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NOTE 3  WARRANTY RESERVE (Continued)

|Balance, June 30, 2005                        |  |  | $ | 79,062  |  
|--------------------------------------------- |  |  | - | ------- | -
|Claims Paid                                   |  |  |   | (25,561 | )
|Additional warranties issued and revisions in
|estimates of previously issued warranties     |  |  |   | 34,207  |  
|                                              |  | 
|Balance, September 30, 2005                   |  |  | $ | 87,708  |  
|                                              |  | 

NOTE 4  STOCK OPTIONS

Biotel Inc. adopted an
incentive compensation plan for board designated personnel on November 15, 2001, by amending the Biosensor Corporation 1999
Incentive Compensation Plan. Options to purchase shares of the Companys common stock are granted at a price not less
than 100% of the fair market value of the common stock, as determined by the Board of Directors using the best available market
data, on the date the options are granted. As of September 30, 2005 and 2004, Biotel Inc. had 354,000 and 525,000 outstanding
options, respectively. Currently option prices range from $.375 to $2.00 per share with a weighted average remaining contract life
of 3.71 years. No options were exercised during the three months ended September 30, 2005 and 2004. Option vesting and expiration
is determined by the Board of Directors at the time they are awarded. No options may be awarded with an expiration greater than 10
years.

A summary of the activity
under the Companys plan is as follows:

|                              |  | Outstanding |  | Exercisable
|----------------------------- |  | ----------- |  | -----------
|
|Balance at June 30, 2004      |  |             |  | 324,000    
|Granted                       |  |             |  | (205,000   
|Balance at September 30, 2004 |  |             |  | 119,000    
|                              |  |            
|Balance at June 30, 2005      |  |             |  | 296,000    
|                             
|Balance at September 30, 2005 |  |             |  | 296,000    
|                              |  |            

5

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NOTE 5  EARNINGS PER SHARE OF COMMON STOCK

The weighted average number
of shares used in the computation of basic and diluted income per common share for the three months ended September 30, 2005 was
2,649,827 and 2,924,327, respectively, and for the three months ended September 30, 2004, was 2,576,827 and 2,842,982,
respectively.

NOTE 6  OPERATIONS AND INDUSTRY SEGMENTS

The Company reports on two
segments of business: OEM Medical Equipment Sales and Direct Medical Equipment Sales. The industry segment information corresponds
with the Companys different customer and product types and therefore complies with the requirements of SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information.

In calculating segment
information, certain corporate operating expenses incurred for the benefit of all segments are included on an allocated basis. The
corporate profit amount includes non-allocable general corporate expenses, interest expense and other income.

6

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|                                   | Three months ended September 30, 2005
|---------------------------------- | -------------------------------------
|
|Domestic Revenues                  |                                      
|International Revenues             |                                      
|                                   |                                      
|Revenues from external customers   |                                      
|Intersegment revenues              |                                      
|Interest expense                   |                                      
|Income tax expense                 |                                      
|Depreciation and Amortization      |                                      
|Segment profit                     |                                      
|Goodwill                           |                                      
|Total segment assets               |                                      
|Purchase of property and equipment |                                      
|                                  
|                                  
|
|
|Domestic Revenues                  |                                      
|International Revenues             |                                      
|                                   |                                      
|Revenues from external customers   |                                      
|Intersegment revenues              |                                      
|Interest expense                   |                                      
|Income tax expense                 |                                      
|Depreciation and Amortization      |                                      
|Segment profit                     |                                      
|Goodwill                           |                                      
|Total segment assets               |                                      
|Purchase of property and equipment |                                      

7

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# Item 2:    Managements Discussionand Analysis of Financial Condition and Results of Operations

# Cautionary Statement

Statements included or
incorporated by reference in this Quarterly Report on Form 10-QSB which are not historical in nature are identified as
forward looking statements for the purposes of the safe harbor provided by Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Biotel cautions readers that forward looking
statements including, without limitation, those relating to our future business prospects, revenues, working capital, liquidity,
capital needs, interest costs, and income, are subject to certain risks and uncertainties that could cause actual results to
differ materially from those indicated in the forward looking statements. The risks and uncertainties include, but are not limited
to, economic conditions, product demand and industry capacity, competitive products and pricing, manufacturing efficiencies, new
product development and market acceptance, the regulatory and trade environment, and other risks indicated in filings with the
Securities and Exchange Commission.

# Critical Accounting Policies

The consolidated financial
statements of Biotel include the accounts of Biotel Inc. and its wholly-owned subsidiaries (collectively, Biotel).
Significant intercompany accounts and transactions are eliminated in consolidation.

Management uses estimates and
assumptions in preparing financial statements, including those assumed in computing the allowance for doubtful receivable
accounts, inventory valuation allowances and warranty reserves and deferred income tax valuation allowances. Those estimates and
assumptions may affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities, and
reported revenues and expenses. Actual results may vary from these estimates.

At times Biotel maintains
bank deposits in excess of federally insured limit. Management monitors the soundness of these financial institutions and believes
Biotels risk is negligible.

Biotel sells its products to
customers on credit in the ordinary course of business. A customers credit history is reviewed and must meet certain
standards before credit is extended. Biotel establishes an allowance for doubtful accounts based upon factors surrounding the
credit risk of specific customers, historical trends and other information.

Biotel follows the policy of
charging the costs of advertising, except for costs associated with direct response advertising, to operating expenses as
incurred. The costs of direct response advertising are capitalized and amortized over the period during which future benefits are
expected to be received.

Inventories are valued at
lower of cost (using the average and first-in first-out cost methods) or market.

Property, equipment and
leasehold improvements are recorded at cost. Depreciation is calculated using the straight-line or declining-balance methods over
estimated useful lives of three to 10 years for equipment, three to five years for automobiles and two to 31 years for leasehold
improvements.

For the year ended June 30,
2002, Biotel adopted SFAS No. 142, Goodwill and Other Intangible Assets. Goodwill arose from the acquisition of Braemar,
which was acquired during a previous accounting period. Goodwill is deemed to have an indefinite useful life and will no longer be
amortized but will be subject to impairment tests performed at least annually. During fiscal 2005 and 2004, Biotel performed the
required impairment tests of goodwill and determined the recorded goodwill had not been impaired.

Amounts billed to customers
for service contracts are recognized as income over the term of the agreements, and the associated costs are recognized as
incurred.

Biotel warrants its products
against defects in material and workmanship for 90 days for electromagnetic and ultrasound probes and one year for all other
manufactured equipment. An accrual is provided for estimated future claims. Such accruals are based on historical experience and
managements estimate of the level of future claims.

Revenues from product sales
are recognized at date of shipment.

8

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Research and development
costs are charged to operations as incurred. These costs are for proprietary research and development activities that are expected
to contribute to the future profitability of Biotel.

Income taxes are provided for
the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes.
Deferred taxes relate primarily to differences between financial and income tax reporting for the basis of inventory, accounts
receivable, property and equipment, and accrued liabilities. The deferred tax accounts represent future tax return consequences of
those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. Deferred
taxes may also be recognized for operating losses that are available to offset future taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected to be realized.

Biotel considers all highly
liquid short term investments purchased with an original maturity of three months or less to be cash equivalents.

# Overview

Biotel has been implementing
a strategy to expand its base of operations among medical companies who seek to outsource strategic items provided by various
Biotel companies. From its four operating subsidiaries located within the United States, Biotel supplies an array of products and
services to provide for the research, development, testing, and manufacturing needs of its customers.

Three Biotel business units,
Braemar, Inc., Carolina Medical, Inc. and Agility Centralized Research Services, Inc., sell medical devices, technology and
research services to medical companies. They design, manufacture, and test 24- and 48-hour Holter recorders, 30-day ECG event
recorders, tissue extraction components, and flow control devices; provide 24/7 clinical ECG research services and internet
technologies; complete FDA, CE, and other regulatory testing; and develop, test, and manufacture other custom medical devices.
These three subsidiaries form a base of products and services which Biotel believes are attractive to medical device and
pharmaceutical companies, allowing accelerated and improved research, development, testing, and manufacturing operations for its
customers.

Advanced Biosensor Inc., the
fourth business unit, sells maintenance services, Holter recorders manufactured by Braemar, diagnostic Holter software provided by
others and Holter supplies to hospitals and clinics.

These subsidiaries have
experienced improvements in their business activity as a result of marketing efforts to acquire new customers and to expand
relationships among current customers.

# Results of Operations

Biotels net revenues
for the fiscal quarter ended September 30, 2005, increased to $2,527,000, 1.4% above net revenues of $2,491,000 for the quarter
ended September 30, 2004. The increase was primarily due to increases in sales to OEM customers. In the quarters ended September
30, 2005 and 2004, 34.2% and 35.6%, respectively, of the Companys revenues were derived from two customers. The loss of any
one or more of these customers would have an immediate significant adverse effect on our financial results.

Gross profit margin was
$1,036,000 for the quarter ended September 30, 2005, 8.3% below the gross profit margin of $1,130,000 in the corresponding period
of fiscal 2005. Gross profit margin was marginally affected by increases in the cost of sales and services, which rose to
$1,491,000 (59.1% of sales) in the first quarter of fiscal 2006 versus $1,362,000 (54.7% of sales) in the first quarter of fiscal
2005.

Selling, general and
administrative expenses decreased to $524,000 (20.7% of sales) for the quarter ended September 30, 2005, compared to $667,000
(26.8% of sales) for the quarter ended September 30, 2004. Biotel has streamlined its management operations, resulting in
decreases in selling, general and administrative expenditures. These reductions relate to the elimination of executive and sales
management positions and the Companys decision to terminate sales of its Holter software as had been previously distributed
by Advanced Biosensor.

Research and development
expenditures for the three months ended September 30, 2005, were $221,000, 12.3% lower than the $252,000 expense in the three
months ended September 30, 2004. Despite the first quarter decrease in research and development expenditures versus the prior
fiscal year, Biotel is planning a substantial increase in research and development effort during fiscal year 2006.

9

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Interest expense increased to
$18,000 for the quarter ended September 30, 2005, compared to interest expense of $14,000 for the quarter ended September 30,
2004. The increase in interest expense was due to increasing interest rates and a higher average balance on the revolving line of
credit during the first quarter of fiscal 2006.

Net earnings for the fiscal
quarter ended September 30, 2005 were up 30.8% to $174,000 versus $133,000, in the first quarter ended September 30, 2004. Net
earnings for the quarter ended September 30, 2005 increased primarily as a result of reductions in expenses as described above.

# Off-Balance Sheet Arrangements

Biotel does not have any
off-balance sheet financing arrangements.

# Liquidity and Capital Resources

Working capital increased to
$2,113,000 at September 30, 2005, compared to $1,921,000 at June 30, 2005. Working capital was improved by a reduction in the
credit line balance to $149,000 on September 30, 2005, compared to a balance of $572,000 on June 30, 2005.

Cash and cash equivalents
were $22,000 at September 30, 2005, a slight increase of $5,000 from the balance of $17,000 at June 30, 2005. The ratio of current
assets to current liabilities (current ratio) increased to 2.3 for the period ended September 30, 2005 from 1.9 for
the period ended June 30, 2005.

Accounts receivable decreased
to $1,559,000 at September 30, 2005, compared to $2,132,000 at June 30, 2005, as a result of strong collections made in the
quarter ended September 30, 2005.

During the three months ended
September 30, 2005, $34,000 of capital equipment was purchased versus $236,000 in the three months ended September 30, 2004.
Equipment purchases in connection with the acquisition of Agility were responsible for the higher level of purchases in the first
quarter of fiscal 2005. Biotel primarily invests in molds, tooling and fixtures for custom components used in its product lines.
Levels of capital investment are expected to vary from year to year.

Inventory increased to
$1,653,000 for the period ended September 30, 2005, compared to $1,468,000 for the period ended June 30, 2005. Inventory increases
are due in part to increasing revenues and to new product introductions. Biotels subsidiaries manage inventories to provide
safety stock and product flow for customers while controlling the amount of inventory.

Current liabilities decreased
to $1,658,000 at September 30, 2005, compared to $2,166,000 at June 30, 2005. The decrease was primarily due to the decrease of
$423,000 in the balance of the revolving line of credit.

Long term liabilities were
reduced to $442,000 at September 30, 2005, compared to $450,000 at June 30, 2005. In addition to payments of existing long term
debt, the net effects of the reclassification of portions of long term debt and short term debt reduced long term liabilities by
$8,000.

As of September 30, 2005,
stockholders equity had increased to $3,032,000, an increase of 6.1% from $2,858,000 at June 30, 2005. The increase in
stockholders equity was principally the result of the increase in retained earnings.

Management believes that
present cash balances, internally generated funds and its credit line should provide sufficient working capital to meet present
and projected needs for the coming 12 months, including principal payments required under present debt instruments. There is no
assurance that Biotel will be successful in obtaining additional working capital if more is required.

10

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# Item 3:    Controls and Procedures

(a)    As of September 30, 2005 an evaluation was
performed by Biotels Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of
the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of
1934). Based upon, and as of the date of, that evaluation, the President and Chief Financial Officer concluded that the
registrants disclosure controls and procedures were effective.

(b)    Changes in internal
controls.   There were no significant changes in Biotels internal controls or in other factors that could
significantly affect these controls subsequent to the date of their evaluation. There were no significant deficiencies or material
weaknesses, and therefore there were no corrective actions taken.

# Part II

Item 1.    Legal Proceedings.   The
litigation involving Biotel and Carroll L. Turner, the former president of two of Biotels wholly-owned subsidiaries,
Advanced Biosensor, Inc. and Carolina Medical, Inc., has been settled. The matter, reported by Biotel in its June 6, 2005 Report
on Form 8-K, was dismissed from Minnesota State District Court with prejudice on October 27, 2005. Biotel paid $25,000
to resolve the litigation, which amount included $21,000 of accrued vacation pay owed to Mr. Turner.

Item 2.    Unregistered Sales of Equity
Securities and Use of Proceeds.   Not applicable.

Item 3.    Defaults Upon Senior
Securities.   Not applicable.

Item 4.    Submission of Matters to a Vote
of Security Holders.   Not applicable.

Item 5.    Other
Information.   Not applicable.

# Item 6.    Exhibits

| | Listing of Exhibits:
| | --------------------

| | 31.1 |  | Certification
of Chief Executive Officer.
| | ---- |  | -----------------------------------------

| | 31.2 |  | Certification
of Chief Financial Officer.
| | ---- |  | -----------------------------------------

| | 32.1 |  | Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------

11

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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.

|                          |                                              |             |  |                            | 
|------------------------- | -------------------------------------------- | ----------- |  | -------------------------- | 
|                          |                                              | BIOTEL INC.
|Date:   November 10, 2005 |                                              | By:         |  | /s/   B. Steven Springrose | 
|                          |                                             
|                          | Its:   Chief Executive Officer and President |            
|Date:   November 10, 2005 |                                              | By:         |  | /s/   Judy E. Naus         | 
|                          |                                             
|                          | Its:   Chief Financial Officer               |            

12

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