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

                                    FORM 10-Q

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 1999

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
         SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________to______________________

Commission File Number              0-26972

                          SWISSRAY International, Inc.
             (Exact name of registrant as specified in its charter)

                New York                              16-0950197
    (State or other jurisdiction of              (I.R.S. Employer
     incorporation or organization)             Identification Number)

200 East 32nd Street, Suite 34-B, New York, New York                10016
(Address of principal executive offices)                         (Zip Code)

           New York (212) 545 0095    Switzerland 011 41 41 914 12 00
              (Registrant's telephone number, including area code)

                                       N/A
              (Former name, former address and former fiscal year,
                         if changed since last report)

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.
                                                 [x] Yes      [ ] No

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares  outstanding of each of the issuer's class of common stock,
as of the latest practicable date.

The number of shares  outstanding of each of the registrant's  classes of common
stock,  as of May 10, 1999 is  12,006,222  shares,  all of one class of $.01 par
value common stock.



                                        1


<PAGE>


                                TABLE OF CONTENTS
                                                                        Page
                                                                         No.
                                     PART I

Item 1.  Financial Statements                                          F1-F7

Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations        3-7

Item 3.  Quantitative and Qualitative Disclosures
                  About Market Risk                                    7

                                     PART II

Item 1.  Legal Proceedings                                             7-9

Item 2.  Changes in Securities and Use of Proceeds                     9

Item 3.  Defaults Upon Senior Securities                               9

Item 4.  Submission of Matters to a Vote of Security
                  Holders                                              9

Item 5.  Other Information                                             10

Item 6.  Exhibits and Reports on Form 8-K                              10

Signatures                                                             11





                                        2
<PAGE>
<TABLE>
<CAPTION>
                           SWISSRAY INTERNATIONAL INC.
                           CONSOLIDATED BALANCE SHEETS
                                     ASSETS
                                                                                            March 31,             June 30,
                                                                                                 1999                1998
                                                                                          (Unaudited)
                                                                                       --------------     ----------------
<S>                                                                                   <C>              <C>
CURRENT ASSETS
Cash and cash equivalents                                                              $   1,157,604   $        1,281,552
Accounts receivable, net of allowance for doubtful
accounts of $ 32,998 and $ 32,356                                                          2,125,109            2,584,651
Inventories                                                                                7,359,825            7,701,145
Prepaid expenses and sundry receivables                                                    1,994,043            1,501,909
                                                                                       --------------     ----------------
Total Current Assets                                                                      12,636,581           13,069,257
                                                                                       --------------     ----------------
PROPERTY AND EQUIPMENT, at cost, net of accumulated depreciation
of $ 903,911 and $ 581,077                                                                 6,250,621            6,010,378
                                                                                       --------------     ----------------
OTHER ASSETS
Loan receivable                                                                               17,093               20,005
Licensing agreement, net of accumulated amortization of                                    3,228,273            3,600,766
$ 1,738,302 and $ 1,365,809
Patents and trademarks, net of accumulated amortization of                                   207,184              230,614
$ 106,145 and $ 82,716
Software develompent costs, net of accumulated amortization of                               373,641              455,318
$ 205,116 and $ 121,892
Security deposits                                                                             30,591               38,280
Note receivable - long-term, net of allowance of $ 30,733 and $ 30,733                       513,643              513,643
Goodwill, net of accumulated amortization of $ 267,439 and $ 136,939                       1,665,836            1,796,336
Debt issance costs on convertible debentures, net of accumulated
amortization of $ 259,166 and $ 60,000                                                        51,834              180,000
                                                                                       --------------     ----------------
TOTAL OTHER ASSETS                                                                         6,088,095            6,834,962
                                                                                       --------------     ----------------
Total Assets                                                                             $24,975,297     $     25,914,597
                                                                                       --------------     ----------------
                                LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Current maturities of long-term debt                                                  $      183,638  $           233,746
Notes payable - banks                                                                      4,229,644            3,551,091
Notes payable - short-term                                                                 2,740,000                    -
Loan payable                                                                                 130,590              125,029
Accounts payable                                                                           4,979,380            5,030,449
Accrued expenses                                                                           1,221,184            2,365,450
Restructuring                                                                                500,000              500,000
Customer deposits                                                                             34,348              176,583
Due to stockholders and officers                                                                   -                2,206
                                                                                       --------------     ----------------
TOTAL CURRENT LIABILITIES                                                                 14,018,784           11,984,554
                                                                                       --------------     ----------------
CONVERTIBLE DEBENTURES                                                                    12,228,649            7,645,969
Conversion Benefit                                                                                 -             (315,327)
                                                                                       --------------     ----------------
Net Convertible Debentures                                                                12,228,649            7,330,642
                                                                                       --------------     ----------------
LONG-TERM DEBT, less current maturities                                                      323,631              440,674
                                                                                       --------------     ----------------
COMMEN STOCK SUBJECT TO PUT                                                                1,819,985            1,819,985
                                                                                       --------------     ----------------
STOCKHOLDERS' EQUITY

Common stock                                                                                 117,114               41,426
Additional paid-in capital                                                                61,775,419           58,074,793
Treasury Stock                                                                              (540,000)                   -
Accumulated deficit                                                                      (61,225,915)         (50,481,713)
Accumulated other comprehensive loss                                                      (1,722,385)          (1,475,779)
Comment stock subject to put                                                              (1,819,985)          (1,819,985)
                                                                                       --------------     ----------------
TOTAL STOCKHOLDERS' EQUITY                                                                (3,415,752)           4,338,742
                                                                                       --------------     ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                               $24,975,297     $     25,914,597
                                                                                       ==============     ================
</TABLE>
                                       F1
<PAGE>



                                SWISSRAY INTERNATIONAL INC.
                           CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                  Three Months Ended
                                                                        March 31,
                                                                    1999       1998
                                                                              Restated
                                                                Unaudited     Unaudited
                                                          ---------------- -----------------
<S>                                                       <C>              <C>
NET SALES                                                    $  3,119,629      $  6,498,416
COST OF SALES                                                   2,435,147         5,330,190
                                                          ---------------- -----------------
GROSS PROFIT                                                      684,482         1,168,226
                                                          ---------------- -----------------

OPERATING EXPENSES
Officers and directors compensation                               167,195           134,277
Salaries                                                        1,103,721         1,333,463
Selling                                                           650,984           721,891
Research and development                                          463,546           763,373
General and administrative                                        670,699           726,440
Other operating expenses                                          417,596           845,610
Bad debts                                                               -               510
Depreciation and amortization                                     302,095           247,981
                                                          ---------------- -----------------
TOTAL OPERATING EXPENSES                                        3,775,836         4,773,545
                                                          ---------------- -----------------

LOSS BEFORE OTHER INCOME (EXPENSES)
  AND INCOME TAXES                                             (3,091,354)       (3,605,319)

Other income (expenses)                                           176,959          (955,347)
Interest expense                                                 (743,760)       (1,960,362)
                                                          ---------------- -----------------
OTHER INCOME (EXPENSES)                                          (566,801)       (2,915,709)
                                                          ---------------- -----------------

NET LOSS                                                      $(3,658,155)     $ (6,521,028)
                                                          ================ =================

LOSS PER COMMON SHARE
NET LOSS                                                        $   (0.72)           $(2.38)
                                                          ================ =================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING                                              5,087,116         2,744,155
</TABLE>
                                       F2
<PAGE>
                                  SWISSRAY INTERNATIONAL INC.
                             CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                       Nine Months Ended
                                                                            March 31,
                                                                         1999       1998
                                                                                  Restated
                                                                    Unaudited     Unaudited
                                                          ------------------- -----------------
<S>                                                           <C>                 <C> 
NET SALES                                                      $  13,220,776     $  17,800,994
COST OF SALES                                                     10,404,489        13,921,137
                                                          ------------------- -----------------
GROSS PROFIT                                                       2,816,287         3,879,857
                                                          ------------------- -----------------
OPERATING EXPENSES
Officers and directors compensation                                  564,089           384,824
Salaries                                                           3,168,298         3,260,232
Selling                                                            2,089,265         2,396,089
Research and development                                           1,307,135         2,185,855
General and administrative                                         1,381,517         1,610,038
Other operating expenses                                             978,603         1,110,008
Bad debts                                                              7,383           (24,536)
Depreciation and amortization                                        892,857           684,627
                                                          ------------------- -----------------
TOTAL OPERATING EXPENSES                                          10,389,147        11,607,137
                                                          ------------------- -----------------
LOSS BEFORE OTHER INCOME (EXPENSES)
  AND INCOME TAXES                                                (7,572,860)       (7,727,280)

Other income (expenses)                                             (182,037)         (799,202)
Interest expense                                                  (2,156,457)       (6,377,276)
                                                          ------------------- -----------------
OTHER INCOME (EXPENSES)                                           (2,338,494)       (7,176,478)
                                                          ------------------- -----------------
LOSS FROM CONTINUING OPERATIONS
  BEFORE EXTRAORDINARY ITEMS                                      (9,911,353)      (14,903,758)

Extraordinary income (expenses)                                     (832,849)         (304,923)
                                                          ------------------- -----------------

NET LOSS                                                      $  (10,744,202)     $(14,598,835)
                                                          =================== =================

LOSS PER COMMON SHARE
Loss from continuing operations                                        (2.09)            (6.17)
Extraordinary items                                                    (0.08)             0.13
                                                          ------------------- -----------------
NET LOSS                                                               (2.27)            (6.04)
                                                          =================== =================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING                                                 4,752,041         2,415,901
</TABLE>
                                       F3
<PAGE>
<TABLE>
<CAPTION>
                      SWISSRAY INTERNATIONAL INC.
                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                      Nine Months Ended
                                                                                          March 31,
                                                                                    1999              1998
                                                                                  Unaudited         Restated
                                                                                                    Unaudited
                                                                             ---------------    ---------------
<S>                                                                         <C>                 <C>  
CASH FLOWS FROM OPERATING ACTIVITES

Net loss                                                                    $    (10,744,202)     $(14,598,835)
Adjustment to reconcile net loss to net
       cash used by operating activities
       Depreciation and amortization                                               1,000,667           719,075
       Provision for bad debts                                                           643           (89,075)
       Financing costs incurred                                                            -           338,948
       Issuance of common stock in lieu of
          interest payments                                                                -           140,448
       Interest expense on debt issuance cost and
         conversion benefit                                                        1,007,818         6,015,697
       Early extinguishment of  debt (gain)                                          832,849          (304,923)

       (Increase) decrease in operating assets:
       Accounts receivable                                                           458,899         2,038,072
       Inventories                                                                   341,319        (4,535,233)
       Prepaid expenses and sundry receivables                                      (492,132)         (287,096)
       Increase (decrease) in operating liabilities:
       Accounts payable                                                              (51,069)        1,357,429
       Accrued expenses                                                           (1,144,266)           88,337
       Customers deposits                                                           (142,235)         (170,436)
                                                                             ---------------    ---------------
NET CASH USED BY OPERATING ACTIVITIES                                             (8,931,709)       (9,287,592)
                                                                             ---------------    ---------------
CASH FLOW FROM INVESTING ACTIVITIES
       Acquisition of property and equipment                                        (563,077)       (1,505,207)
       Patents and trademarks                                                              -          (41,131)
       Other intangibles                                                              (1,546)         (184,760)
       Asset Purchase net of cash received                                                 -          (591,108)
       Security deposits                                                               7,689           (16,192)
       Loans receivable                                                                2,911            (2,578)
                                                                             ---------------    ---------------
NET CASH USED BY INVESTING ACTIVITIES                                               (554,023)       (2,340,976)
                                                                             ---------------    ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
       Proceeds from short-term borrowings                                        18,545,444             5,185
       Proceeds from long-term borrowings                                                  -           455,921
       Principal payment of short-term borrowings                                (11,024,348)       (1,974,718)
       Principal payment of long-term borrowings                                    (117,043)                -
       Issuance of common stock for cash                                           2,671,169        12,342,620
       Purchase of Treasury Stock                                                   (540,000)                -
       Payment to stockholders and officers                                           (2,207)          (70,590)
                                                                             ---------------    ---------------
CASH PROVIDED BY FINANCING ACTIVITIES                                              9,533,015        10,758,418
                                                                             ---------------    ---------------
EFFECT OF EXCHANGE RATE ON CASH                                                     (171,231)           77,468
                                                                             ---------------    ---------------
NET DECREASE IN CASH                                                                (123,948)         (792,682)
CASH AND CASH EQUIVALENT - beginning of period                                     1,281,552         3,091,307
                                                                             ---------------    ---------------
CASH AND CASH EQUIVALENTS - end of period                                   $      1,157,604     $   2,298,625
                                                                             ===============    ===============
                                       F4
</TABLE>
<PAGE>

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1999



         (1) The financial  statements included herein have been prepared by the
Registrant,  without  audit,  pursuant  to  the  rules  and  regulations  of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial  statements prepared in accordance with generally
accepted  accounting  principles have been condensed or omitted pursuant to such
rules and regulations, although the Registrant believes that the disclosures are
adequate to make the information presented not misleading.  It is suggested that
these condensed  consolidated  financial  statements be read in conjunction with
the financial  statements and notes thereto included in the Registrant's  annual
report on Form 10-K for the fiscal year ended June 30, 1998.

         (2)  In  the  opinion  of  management,   the   accompanying   unaudited
consolidated financial statements contain all adjustments,  consisting of only a
normal and recurring nature,  necessary to present fairly the financial position
of the  Registrant as of March 31, 1999 and the results of  operations  and cash
flows for the interim  period  presented.  Operating  results for the six months
ended  March  31,  1999 are not  necessarily  indicative  of the  results  to be
expected for the full year ending June 30, 1999.

         (3)      INVENTORIES
         Inventories are summarized by major classification as follows:
                                                  March 31,        June 30,
                                                 ---------------------------
                                                    1999             1998
                                                 ----------       ----------

Raw materials, parts and supplies                $6,588,837       $7,047,001
      Work in process                               123,720          160,064
      Finished goods                                647,268          494,080
                                                 ----------       ----------
                                                 $7,359,825       $7,701,145
                                                 ==========       ==========


         Inventories  are  stated at lower of cost or  market,  with cost  being
determined on the first-in,  first-out  (FIFO)  method.  Inventory  cost include
material, labor, and overhead.


                                       F5





<PAGE>



Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

         All references herein to the "Registrant" refer to Swissray 
International Inc. All references herein to the "Company" refer to Swissray 
International, Inc. and its subsidiaries.

CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         Statements in this  discussion  which are not  historical  facts may be
considered  forward looking  statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, including estimated cost savings to
be realized from restructuring activities and estimated proceeds from and timing
of facility sales. The words "believe," "expect," anticipate,"  "estimate",  and
similar  expressions  identify forward looking  statements.  Any forward looking
statements  involve  risks and  uncertainties  that could cause actual events or
results to differ,  perhaps materially,  from the events or results described in
the  forward  looking  statements.  Readers  are  cautioned  not to place  undue
reliance  on these  forward  looking  statements,  which  speak only as of their
dates.  The Company  undertakes no  obligation to publicly  update or revise any
forward  looking  statements,  whether  as a result of new  information,  future
events  or  otherwise.  Risks  associated  with the  Company's  forward  looking
statements include,  but are not limited to, risks associated with the Company's
history of losses and uncertain profitability, need for market acceptance of the
ddR Multi System,  reliance on a single  product,  reliance on large  customers,
risks  associated  with  the  Company's   international   operations,   currency
fluctuations,  the risk of new and different legal and regulatory  requirements,
governmental  approvals,  tariffs  and trade  barriers,  risks  associated  with
competition and technological  innovation by competitors,  dependence on patents
and proprietary  technology,  general economic  conditions and conditions in the
healthcare industry,  reliance on key management,  limited manufacturing history
with respect to the  ddR-Multi-  System,  dependence  on sole source  suppliers,
future capital needs and uncertainty of additional financing,  potential recalls
and product liability,  dilution, effects of outstanding convertible debentures,
limited public market,  liquidity,  possible volatility of stock price, recently
adopted new listing standards for NASDAQ securities and environmental matters.

The following discussion and analysis should be read in conjunction with the 
Consolidated Financial Statements, related notes and other information included 
in this quarterly report on Form 10-Q.

GENERAL

         At the recent annual  conference of the  Radiological  Society of North
America  (RSNA  98),  the  Company  announced  that  its  premier  product,  the
AddOn-Multi-System has been renamed ddR-Multi-System.  The recent name change is
much more in line with the overall system concept and strategy of the Company.

RESULTS OF OPERATIONS

         (a)      THREE-MONTH PERIOD ENDED MARCH 31, 1999 COMPARED TO THREE-
         MONTH PERIOD ENDED MARCH 31, 1998

         Net sales amounted to $3,119,629 for the three-month period ended March
31, 1999,  compared to $6,498,416,  an decrease of  $3,378,787,  or 52% form the
three-month  period  ended  March  31,  1999.  Net sales of  $6,498,416  for the
three-month period ended March 31, 1998 includes sales of the film and processor
business  of  Empower,  which  has  been  sold on June  30, 1998, of $1,608,002.
Net  sales  without  the film  and  processor  business  of  Swissray  Empower 
decrease for the three-month period ended March 31, 1999 by $1,770,785 or 27.3%.
This decrease  is manly  due to  the  fact  that  for  certain  products of its 
OEM-Business a new production badge had to be initialized with deliveries 
starting April 1999
                                       3
<PAGE>

         Gross  profit  decreased  by  $483,744  or  41.4% to  $684,482  for the
three-month  period  ended March 31, 1999 from  $1,168,226  for the  three-month
period  ended March 31,  1999.  Gross  profit as a  percentage  of net  revenues
increase to 21.9% for the  three-month  period ended March 31, 1999 from 18% for
the three-month period ended March 31, 1998.

         Operating  expenses decreased by $997,709,  or 20.9% to $3,775,836,  or
121% of net  revenues,  for the  three-month  period ended March 31, 1999,  from
$4,773,545,  or 73.5% of net revenues for the three-month period ended March 31,
1998.  The  principle  items  were  salaries  (net  of  officers  and  directors
compensation)  of  $1,103,721 or 35.4% of net sales for the  three-month  period
ended  March  31,  1999  compared  to  $1,333,463  or 20.5% of net sales for the
three-month period ended March 31, 1998 and general and administrative  expenses
of $670,699  or 21.5% of net sales for the  three-month  period  ended March 31,
1999 compared to $726,440 or 11.2% of net sales for the three-month period ended
March 31, 1998 Research and  development  expenses were $463,546 or 14.9% of net
sales for the  three-month  period ended March 31, 1999  compared to $763,373 or
11.7% of net sales for the three-month period ended March 31, 1998.

         Interest expenses decreased to $743,760 for the three month ended March
31, 1999 compared to $1,960,361  for the three month ended March 31, 1998.  This
decrease is primarily due the decrease of interest  expense for  amortization of
Debenture issuance cost and Conversion Benefit.


         (b)      NINE-MONTH PERIOD ENDED MARCH 31, 1999 COMPARED TO NINE-MONTH 
         PERIODS ENDED MARCH 31, 1998

RESULTS OF OPERATIONS

         Net sales amounted to $13,220,776 for the nine-month period ended March
31, 1999, compared to $17,800,997,  an decrease of $4,580,218, or 25.7% form the
nine-month  period  ended  March  31,  1998.Net  sales  of  $17,800,994  for the
nine-month  period ended March 31, 1998 includes sales of the film and processor
business  of  Empower, which  has  been  sold on June 30,  1998, of $5,557,8564.
Net  sales  without  the film and   processor  business  of Swissray  Empower 
increase for the nine-month  period ended March 31, 1999 by $977,638 or 8%.

         Gross profit  decreased by  $1,063,570,  or 27.4% to $2,816,287 for the
nine-month period ended March 31, 1999 from $3,879,857 for the nine-month period
ended March 31, 1998.  Gross profit as a percentage of net revenues  decrease to
21.3%  for the  nine-month  period  ended  March  31,  1999  from  21.8% for the
six-month period ended March 31, 1998.

         Operating expenses decreased by $1,217,990, or 10.5% to $10,389,147, or
78.6% of net  revenues,  for the  nine-month  period ended March 31, 1999,  from
$11,607,137,  or 65.2% of net revenues for the nine-month period ended March 31,
1998.  The  principle  items  were  salaries  (net  of  officers  and  directors
compensation) of $3,168,298 or 24% of net sales for the nine-month  period ended
March 31, 1999 compared to  $3,260,232 or 18.3% of net sales for the  nine-month
period ended March 31, 1998 and selling  expenses of  $2,089,265 or 15.8% of net
sales for the  nine-month  period ended March 31, 1999 compared to $2,396,089 or
13.5% of net sales for the  nine-month  period ended March 31, 1998 Research and
development  expenses were  $1,307,135  or 9.9% of net sales for the  nine-month
period ended

                                       4
<PAGE>



March 31, 1999 compared to  $2,185,855 or 12.3% of net sales for the  nine-month
period ended March 31, 1998.

         Interest  expenses  decreased to $2,156,457  for the  nine-month  ended
March 31, 1999 compared to $6,377,276 for the  nine-month  ended March 31, 1998.
This decrease is primarily due the decrease of interest expense for amortization
of Debenture issuance cost and Conversion Benefit.

         Loss on  extinguishment  of Debt was $832,849 for the nine-month  ended
March 31, 1999 compared to a gain of $304,923 for the nine-month ended March 31,
1998. The  extingushment  gain or loss resulted from  refinancing of Convertible
debentures.

FINANCIAL CONDITION

March 31, 1999 compared to June 30, 1998

         Total assets of the Company on March 31, 1999  decreased by $939,298 to
$24,975,298 from $25,914,597 on June 30, 1998,  primarily due to the decrease of
Other Assets.  Other Assets  decreased  $746,865 to $6,088,096 on March 31, 1999
from $6,834,961 on June 30, 1998. The decrease is primarily  attributable to the
amortization  of  the  licensing  agreement,   patents  &  trademark,   software
development  cost  and  the  goodwill.  Current  Assets  decreased  $432,676  to
$12,636,581 on March 31, 1999 from $13,069,257 on June 30, 1998. The decrease in
current assets is primarily  attributable to the decrease of Accounts receivable
of $459,542,  the decrease of inventory of $341,320 and the decrease in Cash and
cash  equivalents  of $123,948  which was  partially  offset by the  increase in
prepaid expenses and sundry receivables of $492,133. and of.

         On March 31, 1999,  the Company had total  liabilities  of  $28,391,050
compared to $21,575,856 on June 30, 1998. On March 31, 1999, current liabilities
were  $14,018,787  compared to $11,984,554 on June 30, 1998.  Working capital at
March 31, 1999 was $(1,382,203) compared to $1,084,703 at June 30, 1998.

CASH FLOW AND CAPITAL EXPENDITURES NINE MONTHS PERIOD ENDED MARCH 31, 1999
COMPARED TO NINE MONTHS PERIOD ENDED MARCH 31, 1998

         Cash used for operating  activities for the nine-months ended March 31,
1999 was $8,931,709  compared to $9,287,592 for the nine-months  ended March 31,
1998. Cash used for investing  activities was $554,023 for the nine-months ended
March 31, 1999 compared to $2,340,976 for the nine-months  ended March 31, 1998.
Cash flow from financing activities for the nine-months ended March 31, 1999 was
$9,533,015 compared to $10,758,418 for nine-months ended March 31, 1998.

         The Company  anticipates  that its use of cash will be substantial  for
the  foreseeable  future.  In  particular,  management  of the  Company  expects
substantial  expenditures  in  connection  with the  production  of the  planned
increase of sales,  the continuation of the  strengthening  and expansion of the
Company's marketing  organization and, to a lesser degree,  ongoing research and
development  projects.  The Company expects that funding for these  expenditures
will be  available  out of the  Company's,  future cash flow and/or  issuance of
equity and/or debt securities.  However, the availability of a sufficient future
cash  flow will  depend to a  significant  extent  on the  marketability  of the
Company's  ddR-Multi-System.  Accordingly,  the Company may be required to issue
additional  convertible  debentures or equity securities to finance such capital
expenditures and working capital requirements. There can be no assurance whether
or not such financing will be available on terms satisfactory to management.

                                       5
<PAGE>




         On August 31,  1998 the  Company  issued a  principal  aggregate  total
amount of $6,143,849 of 5% convertible  debentures  ("Convertible  Debentures"),
convertible into Common Stock of the Company at a conversion price of 82% of the
average  closing  bid  price  for the ten  trading  days  preceding  the date of
conversion as follows: (a) The Company issued $3,832,849 aggregate principal for
which the  Company  received  no cash;  investors  having  paid the  holders  of
$3,000,000 in Convertible  Debentures (originally issued in March 1998) together
with  25%  premium  and  accrued  interest;  and  (b ) the  Company  issued  new
Convertible  Debentures  convertible into shares of Company Common Stock.  After
deducing fees directly  attributable to such offering the Company received a net
amount of $ 2,000,000.  All  Convertible  Debentures  were issued to  accredited
investors as defined in Rule 501(a) of  Regulation D  promulgated  under the Act
("Regulation D") and the Company has received written  representations from each
investor to that effect. Any Convertible Debentures not so converted are subject
to mandatory  conversion by the Company on the 24th  anniversary  of the date of
issuance of the  Convertible  Debentures.  As of March 31,  1999 an  unconverted
balance of $5,784,421 remains outstanding.

         On October 6, 1998 the Company issued a principal  aggregate  amount of
$2,940,000 of 5% convertible debentures ("Convertible Debentures"),  convertible
into  Common  Stock of the Company at a  conversion  price of 82% of the average
closing bid price for the ten trading  days  preceding  the date of  conversion.
After  deducting  fees directly  attributable  to such offering  (including  the
Company's  repurchase  of 1,465,000  pre-split  shares of its common stock for a
cash  consideration  of  $540,000)  the  Company  received  a  net  amount  of $
2,100,000.  All Convertible  Debentures  were issued to accredited  investors as
defined in Rule 501(a) of  Regulation D promulgated  under the Act  ("Regulation
D") and the Company has received written  representations  from each investor to
that  effect.  Any  Convertible  Debentures  not so  converted  are  subject  to
mandatory  conversion  by the  Company  on the 24th  anniversary  of the date of
issuance of the Convertible  Debentures.  None of these  Convertible  Debentures
have been converted as of March 31, 1999.

         The  Registrant  received gross proceeds of $1,080,000 in December 1998
pursuant to promissory  notes  bearing  interest at the rate of 8% per annum for
the first 90 calendar days (through  March 13, 1999) with the Company having the
option to extend the notes for an additional 60 days with interest increasing 2%
per annum during the 60 day period.  The Company exercised its extension option.
As further  consideration  for the loan, the Company issued Lenders  Warrants to
purchase up to 50,000 shares of the Company's common stock exercisable, in whole
or in part,  for a period of up to 5 years at $.375  (the bid price for  Company
shares on the date of  closing).  The notes are secured by a second  mortgage on
land and building as well as certain  Company  inventory.  In the event that the
promissory  notes are not paid by their due date then the terms of a  Contingent
Subscription Agreement, Debenture and Registration Rights Agreement shall apply.
In that respect the  convertible  debentures are to bear interest at the rate of
5% per  annum  (payable  in  stock  or cash  at the  Company's  option)  and are
convertible,  at any time at the  lesser  of (a) 82% of the 10 day  average  bid
price for the 10 consecutive  trading days immediately  preceding the conversion
date or (b) $1.00 per share.  The  documents  also  provide for certain  Company
redemption  rights at  percentages  ranging  from 115% of the face amount of the
Debenture to 125% of the face amount of the debenture  dependent upon redemption
date, if any.

         On January 29, 1999 the Company issued a principal  aggregate amount of
$1,170,000 of convertible  debentures  ("Convertible  Debentures"),  convertible
into  Common  Stock of the Company at a  conversion  price of 82% of the average
closing  bid price for the ten trading  days  preceding  the date of  conversion
together with accrued interest of 3% for the first 90 days, 3.5% for 91-120 days
and 4% for 120 days and thereafter. After deducing fees directly

                                       6
<PAGE>



attributable to such offering the Company  received a net amount of $ 1,020,000.
All  Convertible  Debentures  were issued to accredited  investors as defined in
Rule 501(a) of Regulation D promulgated  under the Act  ("Regulation D") and the
Company has received written  representations from each investor to that effect.
Any Convertible  Debentures not so converted are subject to mandatory conversion
by  the  Company  on the  24th  anniversary  of  the  date  of  issuance  of the
Convertible Debentures. None of these Convertible Debentures have been converted
as of March 31, 1999.

         On March 2, 1999,  the Company  entered into a second  promissory  note
(contingent  convertible  debenture  financing)  with  the same  lenders  as the
December 1998  transaction  described  directly  above with terms and conditions
identical  to those set forth above  excepting  (a) gross  proceeds  amounted to
$1,110,000,  (b) the  initial due date of such notes are May 31,  1999,  (c) the
potential 60 day extension date on such  promissory  notes is July 30, 1999, (d)
the conversion  price is 80% of the 10 day average  closing bid price for the 10
consecutive trading days preceding  conversion date and (e) Warrants were issued
(similarly  exercisable  over 5 years) to purchase up to 50,000 shares of common
stock at 125% of the  average 5 day closing  bid price of the  Company's  common
stock  immediately  preceding  the date of closing  but in no event at less than
$1.00 per share.  In all other  respects the terms and conditions of each of the
documents  executed  with  respect to this  transaction  are  identical to those
described  above  with  respect to the  December  1998  promissory  notes in all
material respects.

         On March 26,  1999 the Company  entered  into a third  promissory  note
(contingent convertible debenture financing) with terms and conditions identical
to those set forth in the March 2, 1999  promissory  note financing  referred to
directly  above  excepting  (a) the  lender is  different,  (b)  gross  proceeds
amounted to  $550,000,  (c) the initial due date of such note is June 25,  1999,
(d) the potential 60 day extension  date on such  promissory  note is August 24,
1999, (e) Warrants were issued (similarly  exercisable over 5 years) to purchase
up to 27,500  shares of common  stock at 125% of the  average 5 day  closing bid
price of the Company's  common stock  immediately  preceding the date of closing
but in no event at less than $1.00 per share.  In all other  respects  the terms
and  conditions  of  each  of  the  documents  executed  with  respect  to  this
transaction  are identical to those described in the above  referenced  March 2,
1999 transaction.

EFFECT OF CURRENCY ON RESULTS OF OPERATIONS

         The  result  of   operations   and  the   financial   position  of  the
Company'ssubsidiaries  outside of the United  States is reported in the relevant
foreign currency (primarily in Swiss Francs) and then translated into US dollars
at  the  applicable  foreign  exchange  rate  for  inclusion  in  the  Company's
consolidated  financial  statements.  Accordingly,  the results of operations of
such  subsidiaries as reported in US dollars can vary  significantly as a result
of changes in currency  exchange  rates (in particular the exchange rate between
the Swiss Franc and the US dollar).

Item 3. Quantitative and Qualitative Disclosures About Market Risk

         Not Applicable

                                     PART II

Item 1.  Legal Proceedings

A. On or about October 3, 1997,  the Registrant  and Swissray  Healthcare,  Inc.
were served with a complaint  by a company  engaged in the business of providing
services related to imaging equipment  alleging that defendant received benefits
from breach of fiduciary duties and contract obligations and misappropriation of
trade secrets by certain former employees

                                       7
<PAGE>



of such  competitor.  Such company also obtained a temporary  restraining  order
against the Registrant and Swissray  Healthcare,  Inc. On November 10, 1997, the
Court denied a Motion for a preliminary injunction and the temporary restraining
order was  vacated.  On December  1, 1997 and  January  30, 1998 the  Registrant
answered  the  Complaint  and  Amended  Complaint  respectively  by denying  the
allegations  contained  therein.  The  Plaintiff  in such action (on December 2,
1997)  filed a Motion  to  reargue  and  renew its  prior  denied  Motion  for a
Preliminary Injunction and such Motion was (by Order and Decision dated June 17,
1998)  denied.  The Company  denied the  allegations,  vigorously  defended  the
litigation and thereafter  settled such litigation and all  outstanding  matters
with respect thereto in July 1998 for $60,000.

B. Dispute with Gary J. Durday  ("Durday"),  Kenneth R. Montler  ("Montler") and
Michael  E.  Harle  ("Harle").  On July 17,  1998,  two legal  proceedings  were
commenced by Swissray,  and two of its subsidiaries against Durday,  Montler and
Harle. Harle and Montler are former Chief Executive Officers of Swissray Medical
Systems Inc.  and  Swissray  Healthcare  Inc.,  respectively,  and Durday is the
former  Chief  Financial  Officer of both of those  companies.  Each of them was
employed  pursuant  to an  Employment  Agreement  dated  October  17,  1997.  In
addition,  these  three  individuals  were  owners of a  company  by the name of
Service  Support  Group LLC  ("SSG"),  the assets of which were sold to Swissray
Medical Systems Inc. pursuant to an Asset Purchase Agreement dated as of October
17,  1997.  whereby  Messrs.  Durday,  Montler and Harle  received,  among other
consideration,  33,333  shares of Swissray's  common stock,  together with a put
option entitling these individuals to require Swissray to purchase any or all of
such shares at a purchase  price equal to $45.00 per share (on or after June 30,
1998 and until April 16, 1999,  subject to certain  adjustments set forth in the
Asset Purchase Agreement).

         On July 17,  1998,  Swissray  and its  subsidiaries,  Swissray  Medical
Systems Inc. and Swissray  Healthcare Inc.  commenced an arbitration  proceeding
before the American Arbitration Association in Seattle,  Washington (Case No. 75
489 00196 98)  alleging  that  Messrs.  Durday,  Montler and Harle  fraudulently
induced  Swissray and its  subsidiaries to enter into the above referenced Asset
Purchase Agreement and otherwise  breached that Agreement.  The relief sought in
the arbitration  proceeding was the recovery of damages  suffered as a result of
this alleged wrongful conduct and a rescission of the put option provided for in
the Asset Purchase Agreement. Messrs. Durday, Montler and Harle responded to the
allegations  made  in the  arbitration  proceeding  and  asserted  counterclaims
against  Swissray  and its  subsidiaries  claiming  a  breach  by them of  their
obligations under the Asset Purchase Agreement and other relief. The arbitration
took place in Seattle on January 8-10, 1999; the proceeding concluded on January
27, 1999 after the submission of post-hearing  briefs. On February 23, 1999, the
Arbitrator  issued  his  ruling,  awarding  Messrs.  Durday,  Montler  and Harle
$1,500,000  and  ordering  them to  surrender  all  rights to  33,333  shares of
Swissray  common  stock.  On February  26, 1999,  Swissray and Swissray  Medical
Systems  Inc.  filed a petition in Supreme  Court,  New York  County  (Index No.
99/104017) to vacate the above referenced arbitration award.

         In addition to the above referenced  arbitration  proceeding,  Swissray
and its  subsidiaries  commenced an action against Messrs.  Durday,  Montler and
Harle which is currently  pending in the Supreme Court of the State of New York,
County of New York,  alleging that these  individuals  breached the  obligations
undertaken by them in their respective Employment Agreements.  Further,  Messrs.
Durday,  Montler and Harle  commenced an action in state court in Pierce County,
Washington,  and asked that Court to  adjudicate  the issues raised in the above
referenced New York State Court action.  Swissray filed applications in both the
Washington and New York  litigations  urging that,  because the action was first
filed in New York, the New York court,  rather than the Washington court, should
decide where the litigation

                                       8
<PAGE>



should  proceed.  Messrs.  Durday,  Montler  and Harle  initially  opposed  that
position and urged the  Washington  State court to  adjudicate  all issues,  but
subsequently  withdrew their opposition to Swissray's  application and consented
to a stay of all further  proceedings in the Washington State court action until
after  the New York  court  had  reached  a  decision  as to  whether  it or the
Washington court is the proper forum for litigation of the parties' dispute. The
New York court has not yet rendered a decision on this issue.

         It is  Swissray's  management's  intention  to  contest  these  matters
vigorously since Swissray believes that its claims are meritorious,  and that it
has meritorious  defenses to the claims asserted  against them,  notwithstanding
the above referenced arbitration ruling.

Item 2. CHANGES IN 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

         As indicated in the Company's  Form 10-K for fiscal year ended June 30,
1998, the Company held a Special  Meeting of Stockholders on August 31, 1998, at
which time Company stockholders were asked to consider and act upon proposals to
(1) reverse stock split the currently  issued and outstanding  shares of Company
Common  Stock on the basis of no less than 1 : 4 and no  greater  than 1 for 10;
the exact number,  (if any) within such  parameter to be determined by the Board
of  Directors in its  discretion  and (2)  authorize  the creation of a class of
Preferred  Stock.  The  number of shares of Common  Stock  voted at the  Special
Meeting  approximated  75 % of all issued and  outstanding  securities as of the
record  date  and  approximately  88 % of  those  shares  voted  in favor of the
aforesaid  reverse  stock  split  proposal  (while the Company did not receive a
sufficient  number of affirmative votes for the creation of a class of Preferred
Stock).

         At a Special Meeting of the Board of Directors on September 21, 1998, a
reverse stock split on the basis of 1 for 10 was approved with an effective date
of October 1, 1998.

         The  Company has  tentatively  established  that its Annual  Meeting of
Stockholders will be held on July 22, 1999 and in that regard intends to utilize
the record date of June 10, 1999 and a mailing  date of June 21,  1999.  In that
regard, Proxy, Notice of Meeting,  Proxy Statement and exhibits thereto have all
been preliminarily filed with the Securities and Exchange Commission.

Item 5. OTHER INFORMATION

         On  March  29,  1999 the  Company  entered  into a one year  Consulting
Agreement  (with  option to extend  for an  additional  period of one year) with
Liviakis  Financial  Communications,  Inc.  In  accordance  with the  terms  and
conditions of the Consulting Agreement, the Consultant agreed to provide certain
specified  consulting  services in a diligent and thorough  manner in return for
which and as full and complete compensation thereunder,  the Company is required
to  compensate  the  Consultant  through its  issuance and delivery of 3,000,000
shares of the  Company's  restrictive  common  stock.  As regards such shares of
common stock,  Consultant has agreed that  throughout the period of time that it
retains beneficial  ownership of all or any portion of such shares that it shall
(a) vote such shares in favor of Ruedi G.

                                       9
<PAGE>



Laupper continuing to maintain his current  position(s) with the Company and (b)
give Ruedi G. Laupper and/or his designee the right to vote Consultant's  shares
at all Company shareholder  meetings. In the event that the Company, in its sole
discretion,  exercises  its option to extend  the  Agreement  for an  additional
period of one year,  remuneration  for such second year has been set at $630,000
to be paid in  restrictive  shares of Company  common  stock (with the number of
shares to be determined based upon the ten day average closing bid price for the
ten consecutive  trading days preceding March 29, 2000).  The foregoing does not
purport  to set  forth  each  of  the  terms  and  conditions  of the  aforesaid
Consulting  Agreement  but  rather is  designed  to  summarize  what  management
considers to be pertinent portions thereof.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits   - NONE

         (b) Reports on Form 8-K   - NONE





                                       10
<PAGE>



                                                    SIGNATURES



         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                             SWISSRAY INTERNATIONAL, INC.

                                             By: /s/  RUEDI G. LAUPPER
                                             ---------------------------------
                                             Ruedi G. Laupper, Chairman of the
                                             Board of Directors, President and
                                             Chief Executive Officer

Date:  May 10, 1999




                                       11