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

                                 FORM 10-Q

                                (Mark One)

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

                 FOR THE PERIOD ENDED SEPTEMBER 30, 1999.

                                    OR

      (   )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                  OF THE SECURITIES EXCHANGE ACT OF 1934
      FOR THE TRANSITION PERIOD  From_____________ to ______________


                       Commission File Number  0-935


                       AMPERSAND MEDICAL CORPORATION
          ------------------------------------------------------
          (Exact name of registrant as specified in its charter)


       Delaware                                     36-4296006
------------------------------                  --------------------
(State or Other Jurisdiction of                 (I.R.S. Employer
Incorporation or Organization)                  Identification No.)


414 North Orleans Street, Suite 305, Chicago, IL              60610
------------------------------------------------           -----------
(Address of Principal Executive Offices)                    (Zip Code)


            Registrant's Telephone Number, Including Area Code:
                              (312) 222-9550


                   900 North Franklin Street, Suite 210
                           Chicago, IL  60610
           ----------------------------------------------------
           (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 periods that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.  Yes  [ X ]   No [  ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by the court. Yes [  ]  No [  ]

                   APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.

Common Stock, $0.001 par value per share-----17,326,922 shares as of
November 12, 1999


<PAGE>


                                   INDEX

              AMPERSAND MEDICAL CORPORATION AND SUBSIDIARIES


PART I.     FINANCIAL INFORMATION

      Item 1.     Financial Statements (Unaudited)

                  Consolidated balance sheets --- September 30, 1999
                  and December 31, 1998

                  Consolidated statement of operations ---
                  Nine months ended September 30, 1999 and
                  the period March 16, 1998 (Inception) through
                  September 30, 1998 and three months ended
                  September 30, 1999 and September 30, 1998.

                  Consolidated statements of cash flows ---
                  Nine months ended September 30, 1999 and
                  for the period March 16, 1998 (Inception)
                  through September 30, 1998

                  Notes to consolidated financial statements ---
                  September 30, 1999

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

      Item 3.     Quantitative and Qualitative Disclosure of
                  Market Risk

Part II.    Other Information

      Item 1.     Legal Proceedings

      Item 2.     Changes in Securities and Use of Proceeds

      Item 3.     Defaults on Senior Securities

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

      Item 5.     Other Information

      Item 6.     Exhibits and Reports on Form 8-K



<PAGE>


PART I.     FINANCIAL INFORMATION

              AMPERSAND MEDICAL CORPORATION AND SUBSIDIARIES
                   (Formerly Bell National Corporation)
                        Consolidated Balance Sheet
             (Dollars in thousands, except per share amounts)

                                  ASSETS
                                  ------
                                            (Unaudited)
                                              Balance          Balance
                                           September 30,     December 31,
                                                1999            1998
                                           -------------     -----------
Current Assets:
  Cash and cash equivalents. . . . . . . .       $     5         $   700
  Accounts receivable. . . . . . . . . . .           296           --
  Inventories. . . . . . . . . . . . . . .            57           --
  Prepaid expenses . . . . . . . . . . . .           158              35
                                                 -------         -------
          Total current assets . . . . . .           516             735

  Fixed assets, net. . . . . . . . . . . .           182              88

Other assets:
  License, patents, and technology, net. .         1,173             746
  Capitalized software . . . . . . . . . .           110           --
  Acquisition escrow . . . . . . . . . . .         --                100
  Other. . . . . . . . . . . . . . . . . .            46              30
                                                 -------         -------
          Total assets . . . . . . . . . .       $ 2,027         $ 1,699
                                                 =======         =======
LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Accounts payable . . . . . . . . . . .       $ 1,243         $   588
    Customer deposits. . . . . . . . . . .            50           --
    Accrued payroll costs. . . . . . . . .           250              81
    Accrued expenses . . . . . . . . . . .           302              71
    Current maturities of notes payable -
      related party. . . . . . . . . . . .            75           --
    Current maturities of notes payable. .         1,045              75
                                                 -------         -------
          Total current liabilities. . . .         2,965             815

Notes payable - related party,
  less current maturities. . . . . . . . .           146             156

Stockholders' equity (deficit)
  Preferred Stock, $0.001 par value
  Authorized 5,000,000 shares;
    none issued and outstanding
  Common stock, $0.001 par value;
  Authorized 50,000,000 shares;
    Issued and outstanding 15,420,164
    shares . . . . . . . . . . . . . . . .         1,916           1,517
  Accumulated deficit. . . . . . . . . . .        (2,936)           (789)
  Accumulated comprehensive income -
    Cumulative translation adjustment. . .           (64)          --
                                                 -------         -------
          Total stockholders' equity (deficit)    (1,084)            728
                                                 -------         -------

          Total liabilities and Stockholders'
            equity (deficit) . . . . . . .       $ 2,027         $ 1,699
                                                 =======         =======


                The accompanying notes are an integral part
                of these consolidated financial statements.


<PAGE>


<TABLE>
                                               AMPERSAND MEDICAL CORPORATION AND SUBSIDIARIES
                                                    (Formerly Bell National Corporation)
                                              Consolidated Statement of Operations (Unaudited)
                                              (Dollars in thousands, except per share amounts)

<CAPTION>
                                                            For the Period
                                                            March 16, 1998
                                          Nine Months         (Inception)       Three Months       Three Months
                                              Ended             Through            Ended              Ended
                                          September 30,      September 30,      September 30,     September 30,
                                              1999               1998              1999               1998
                                          -------------     --------------      -------------     -------------
<S>                                       <C>               <C>                 <C>               <C>

Net Sales. . . . . . . . . . . . . .          $     912        $     --             $     370       $     --

Cost and Expenses
  Cost of goods sold . . . . . . . .                600              --                   289             --
  Research and development . . . . .                865                 31                351                34
  Selling, general, and administrative
    expenses . . . . . . . . . . . .              1,422                267                399               239
                                             ----------         ----------         ----------        ----------
                                                  2,887                298              1,039               263
                                             ----------         ----------         ----------        ----------
Operating loss . . . . . . . . . . .             (1,975)              (298)              (669)             (263)

Other income (expense)
  Interest (expense) - related party                (12)             --                     5             --
  Interest (expense) . . . . . . . .                (37)             --                   (23)            --
  Other, net . . . . . . . . . . . .               (123)             --                  (122)            --
                                             ----------         ----------         ----------        ----------
                                                   (172)             --                  (140)            --
                                             ----------         ----------         ----------        ----------
Loss before income taxes . . . . . .             (2,147)              (298)              (809)             (263)

Income taxes . . . . . . . . . . . .              --                 --                 --                --
                                             ----------         ----------         ----------        ----------
Net loss . . . . . . . . . . . . . .         $   (2,147)        $     (298)        $     (809)       $     (263)
                                             ==========         ==========         ==========        ==========
Basic and fully diluted net loss
  per common share . . . . . . . . .         $    (0.16)        $    (0.02)        $    (0.05)       $    (0.02)
                                             ==========         ==========         ==========        ==========
Weighted average number of
  common share outstanding . . . . .         13,091,814         12,000,000         14,729,534        12,000,000
                                             ==========         ==========         ==========        ==========

<FN>
                           The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>


<PAGE>


<TABLE>
                                               AMPERSAND MEDICAL CORPORATION AND SUBSIDIARIES
                                                    (Formerly Bell National Corporation)
                                              Consolidated Statement of Cash Flows (Unaudited)
                                                           (Dollars in thousands)

<CAPTION>
                                                                                            For the Period
                                                                                            March 16, 1998
                                                                        Nine Months           (Inception)
                                                                            Ended               Through
                                                                        September 30,        September 30,
                                                                            1999                 1998
                                                                        -------------       --------------
<S>                                                                    <C>                 <C>
Operating Activities:
  Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .          $  (2,147)                (298)
  Adjustments to reconcile net loss to net
   cash used in operating activities:
    Depreciation and amortization. . . . . . . . . . . . . . . . .                126                --
    Changes in assets and liabilities:
      Increase in accounts receivable. . . . . . . . . . . . . . .               (296)               --
      Increase in inventories. . . . . . . . . . . . . . . . . . .                (57)                --
      Increase in prepaid expenses . . . . . . . . . . . . . . . .               (123)                  (3)
      License, Patents, and technology . . . . . . . . . . . . . .                (20)                  (5)
      Decrease in other assets . . . . . . . . . . . . . . . . . .                 84                --
      Increase in accounts payable . . . . . . . . . . . . . . . .                655                  447
      Increase in customer deposits. . . . . . . . . . . . . . . .                 50                --
      Increase in accrued expenses . . . . . . . . . . . . . . . .                400                    2
                                                                             --------             --------
Net cash used in operating activities. . . . . . . . . . . . . . .             (1,328)                 143

Cash used in investing activities:
  Purchase of technology . . . . . . . . . . . . . . . . . . . . .               (504)                (745)
  Capitalized software . . . . . . . . . . . . . . . . . . . . . .               (110)               --
  Net loss on disposal of fixed assets . . . . . . . . . . . . . .                 21                --
  Purchase of fixed assets . . . . . . . . . . . . . . . . . . . .               (144)                 (46)
                                                                             --------             --------

Net cash used in investing activities. . . . . . . . . . . . . . .               (737)                (791)

Cash flows from financing activities:
  Issuance of notes payable. . . . . . . . . . . . . . . . . . . .              1,045                  250
  Payment of notes payable . . . . . . . . . . . . . . . . . . . .                (10)               --
  Sale of equity . . . . . . . . . . . . . . . . . . . . . . . . .                399                  399
                                                                             --------             --------
Net cash provided by financing activities. . . . . . . . . . . . .              1,434                  649
                                                                             --------             --------



<PAGE>


                                               AMPERSAND MEDICAL CORPORATION AND SUBSIDIARIES
                                                    (Formerly Bell National Corporation)
                                        Consolidated Statement of Cash Flows (Unaudited) - Continued
                                                           (Dollars in thousands)



                                                                                            For the Period
                                                                                            March 16, 1998
                                                                        Nine Months           (Inception)
                                                                            Ended               Through
                                                                        September 30,        September 30,
                                                                            1999                 1998
                                                                        -------------       --------------

Net increase in cash and cash equivalents. . . . . . . . . . . . .               (631)                   1
Current translation adjustment . . . . . . . . . . . . . . . . . .                (64)               --
Cash and cash equivalents at beginning of period . . . . . . . . .                700                --
                                                                             --------             --------
Cash and cash equivalents at end of period . . . . . . . . . . . .           $      5                    1
                                                                             ========             ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the period for:
    Interest . . . . . . . . . . . . . . . . . . . . . . . . . . .           $   --                  --
    Income taxes . . . . . . . . . . . . . . . . . . . . . . . . .               --                  --






















<FN>
                           The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>


<PAGE>


              AMPERSAND MEDICAL CORPORATION AND SUBSIDIARIES

                Notes to Consolidated Financial Statements
                      (Unaudited September 30, 1999)


NOTE A.  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with instructions to Form 10-Q and
Article 10 of Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.  Operating
results for the nine-month period ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1999.

The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.

For further information, refer to the consolidated financial statements and
footnotes thereto included in the Bell National Corporation and
Subsidiaries' annual report on Form 10-K for the year ended December 31,
1998.

NOTE B.  OVERVIEW

On December 4, 1998, Bell National acquired InPath, LLC, at the time a
development-stage company engaged in the design and development of medical
instruments and related tests. In the acquisition, Bell National issued
4,288,790 shares of Common Stock and warrants to purchase 3,175,850 shares
of Common Stock to the members of InPath in exchange for their units of
membership interest in InPath and the senior executives of InPath assumed
management control of Bell National. The warrants were issued with the
right to convert subject to approval by stockholders' of an increase in the
authorized Common Stock of the Company. In conjunction with the
acquisition, certain stockholders of the Company, comprising holders of
more than 50% of the currently outstanding Common Stock of the Company,
agreed to vote their shares in favor of the increase in the number of
authorized shares of Common Stock of the Company, to elect a slate of
directors recommended by former InPath members and original Company
stockholders, and to appoint former InPath executive officers to executive
officer positions of the Company. After the transaction and conversion of
all warrants issued, the former members of InPath held approximately 50% of
the Common Stock then outstanding.

At the Annual Meeting (the "Meeting") held on May 25, 1999, the
stockholders ratified the transactions related to the acquisition of
InPath, LLC, including the issuance of stock and warrants, and the election
of directors.  The stockholders also approved the merger of Bell National
into Ampersand Medical Corporation (the "Company"), its wholly owned
subsidiary organized under the laws of the State of Delaware, in order to
change its state of incorporation from California to Delaware and its name
from Bell National to Ampersand Medical Corporation.  As a result of the
merger approval, each outstanding share of Bell National common stock, with
the exception of 696,570 shares designated as "Class 4-B shares", which
were cancelled pursuant to the merger agreement, was converted into one
share of Ampersand Medical Corporation common stock and the separate
existence of Bell National ceased.  In addition, the 3,175,850 warrants
issued in the InPath acquisition transaction were each converted into one
share of Ampersand Medical Corporation common stock.  At the Meeting, the
stockholders also approved the adoption of the Ampersand Certificate of
Incorporation authorizing 50,000,000 shares of $0.001 par value common
stock and 5,000,000 shares of $0.001 par value preferred stock.


<PAGE>


Based upon the terms of the acquisition agreement, for financial reporting
and accounting purposes the acquisition has been accounted for as a reverse
acquisition whereby InPath is deemed to have acquired the Company. However,
the Company is the continuing legal entity and registrant for both
Securities and Exchange Commission filing purposes and income tax filing
purposes. Because the Company was a non-operating public shell company with
nominal assets and InPath was a private operating company, the acquisition
has been recorded as the issuance of stock for the net monetary assets of
the Company, accompanied by a recapitalization and no goodwill or other
intangible assets were recorded. Accordingly, the Consolidated Financial
Statements presented hereunder only include the operations of InPath from
March 16, 1998 (inception) and the operations of the Company from
December 4, 1998.

Prior to the above transactions, Bell National Corporation ("Bell
National") was originally incorporated in California on October 1, 1958.
Through 1985, its principal subsidiary was Bell Savings and Loan
Association ("Bell Savings"), a state chartered savings and loan
association. On July 25, 1985, the Federal Home Loan Bank Board appointed
the Federal Savings & Loan Insurance Corporation ("FSLIC") as receiver of
Bell Savings. At the same time, the assets of Bell Savings were transferred
to a new, unrelated, federally chartered mutual savings and loan
association, Bell Federal. The FSLIC's action followed shortly after a
determination that Bell Savings had a negative net worth. On August 20,
1985, Bell National filed a voluntary petition under Chapter 11 of the
Bankruptcy Code. A plan of reorganization was approved by the Bankruptcy
Court, and became effective June 29, 1987.

On June 15, 1990, Bell National purchased 100% of the Common Stock of Payne
Fabrics, Inc., a designer and distributor of decorative drapery and
upholstery fabrics, for a purchase price of $6,493,000 and the issuance of
stock appreciation rights. On August 4, 1997 Payne Fabrics, Inc. sold
substantially all of its assets and most of its liabilities related to the
business of designing and distributing decorative drapery and upholstery
fabrics to Westgate Fabrics, Inc. ("Westgate"), an unaffiliated third party
(the "Asset Sale"). The Asset Sale included the transfer to the buyer of
the use and rights to the Payne Fabrics name, accordingly, Payne Fabrics,
Inc., changed its name to PFI National Corporation ("PFI"). The Asset Sale
left PFI without any substantial assets and on August 4, 1997 all
operations were ceased. Bell National's other wholly-owned subsidiaries,
Bell Savings and Pacific Coast Holdings Insurance Company, had no
significant assets or liabilities. After the Asset Sale and before December
1998, the Company had no business operations and its only activities were
administrative.

On January 4, 1999, the Company's wholly owned French subsidiary, Samba
Technologies, SARL, completed the acquisition of the Samba department of
Unilog Region SA.  The Samba department designs, develops and markets
software based products used in automated image cytometry and tele-medicine
applications including tele-pathology and tele-radiology. The purchase
price of the acquisition was approximately $580,000, of which $100,000 was
paid as a deposit on December 15, 1998.  At the time of the closing, Samba
Technologies entered into employment arrangements with the former Samba
department employees and assumed the day to day operations. Since the
acquisition, Samba has continued to develop and market the full line of
Samba products. The operations of Samba Technologies, SARL are included in
the consolidated financial statements for the nine months ended
September 30, 1999.



<PAGE>


The Company has incurred a significant operating loss since its inception.
The Company expects that significant on-going operating expenditures will
be necessary to successfully implement its business plan and develop,
manufacture and market its products. These circumstances raise substantial
doubt about the Company's ability to continue as a going concern.
Implementation of the Company's plans and its ability to continue as a
going concern depend upon its acquiring substantial additional financing.
Management's plans include efforts to obtain additional capital. The
Company was successful in raising approximately $1,370,000 during the first
nine months of 1999 to finance its operations, but, there can be no
assurance that the Company will succeed in raising additional capital in
the future. If the Company is unable to obtain adequate additional
financing or generate profitable sales revenues, management may be required
to curtail the Company's product development and other activities and may
be forced to cease operations.


NOTE C.  CAPITALIZED SOFTWARE

The Company's wholly owed subsidiary, Samba Technologies, Sarl., is engaged
in the design, development, and marketing of various imaging software
suites.  Samba has been actively selling its products since the early
1980's and has made continuous improvements and upgrades in the product.
In accordance with FASB Statement No. 86, Accounting for the Costs of
Computer Software To Be Sold, Leased, or Otherwise Marketed, the Company
capitalizes certain software production costs.  During the third quarter of
1999, the Company Capitalized $110,000 of software production costs and
will amortize those costs over the remaining estimated economic life of the
product.


NOTE D.  NOTES PAYABLE

In January, the Board of Directors authorized the Company to raise up to
$1,500,000 in debt or new equity to provide funding for current operations.
On March 1, 1999 the Company received $500,000 in cash from Seaside
Partners, L.P. in exchange for the issuance of a convertible note due
January 28, 2000 bearing interest at the rate of 6% per annum (the
"Notes"). The maturity date of the Note may be extended by the Company to
June 30, 2000. The Note and any accrued interest due thereon shall be
automatically converted by the Company into shares of Common Stock at a
conversion price of $0.33 per share. The conversion price may be lowered
based on certain circumstances related to the pricing of future debt or
equity offerings but may never be lowered below $0.20 per share.  The
automatic conversion provision of the Note is subject to the Company's
receipt of at least $5,000,000 from any additional debt or equity
offerings, excluding the $1,500,000 currently authorized by the Board.
Denis M. O'Donnell, who is a director of the Company, is a member and
manager of Seaside Advisors, L.L.C., a firm that provides investment
management services to Seaside Partners.

During April, May, and June of 1999, the Company received additional cash
totaling $470,000 from various investors including $75,000 from an
executive officer of the Company.  The cash was received in exchange for
the issuance of additional Notes with similar terms and conditions.


NOTE E.  ACQUISITION ESCROW

On March 8, 1999 the Company signed a Letter of Intent with AccuMed
International, Inc., to license the technology and intellectual property
related to the AcCell Cytopathology System, a series of automated
microscopy workstations, and to purchase certain related inventories and
manufacturing equipment. The license would have provided the Company with
the exclusive right to use, manufacture and sell products utilizing the
technology and IP in certain market segments and non-exclusive rights in
others. The Company deposited $100,000 in earnest money with AccuMed to
secure a "No-Shop" clause in the Letter of Intent. The Company has been
unable to resolve due diligence issues with AccuMed regarding the status of


<PAGE>


the technology, the final purchase price of inventories, and the market
segments to which exclusivity applied. Accordingly, formal negotiations on
finalization of the license were terminated and the earnest money escrow
was written off as a non-operating expense.  The Company continues to have
informal discussions with AccuMed on this product.


NOTE F.  STOCKHOLDERS EQUITY

During the first three weeks of June, the Company issued shares of common
stock purchased pursuant to warrants exercised by former InPath members.
In the aggregate, the Company issued 3, 175,850 shares of common stock for
the exercised warrants for an aggregate exercise price of $3,175.85.

On June 5, 1999 the Company issued 75,758 shares of common stock to a
private investor in exchange for $25,000 in cash.  During July, August, and
September 1999, the Company issued 865,126 shares of common stock to
various investors in exchange for $346,000 in cash.

EQUITY INCENTIVE PLAN:

At the Annual Meeting on May 25, 1999, the stockholders approved the
Ampersand Medical Corporation 1999 Equity Incentive Plan.  The Plan
provides for the grant of qualified and non-qualified stock options, stock
appreciation rights, restricted shares, performance units, and performance
shares to employees, directors, and independent consultants of the Company
with the potential to contribute to the success of the Company or its
subsidiaries.  General terms of the Plan are as follows:

EXERCISE PRICE.  Fair market value based on the average bid and asked
prices for a share of the Company's common stock on the Over The Counter
Bulletin Board for a specified number of consecutive trading days prior to
the grant date.

VESTING PERIOD.  Grants may be vested immediately or on varying schedules
not exceeding six years from the date of the grant.

SHARES AVAILABLE.  The maximum number of shares that may be issued under
the 1999 Plan is 2,000,000.

At the Board of Directors Meetings on May 27, 1999 and August 10, 1999, the
Board approved the grant of options to purchase 835,000 and 170,000 shares
respectively of common stock to various employees, directors, and
consultants.  The vesting period of the options varies from immediate to
six years from grant date and the exercise price of the options is
approximately $0.39 per share.

In addition, at the Board of Directors meeting on August 10, 1999, the
Board authorized the award of 100,000 shares of restricted stock to two
senior research consultants.  The vesting period of the restricted stock
awards varies from immediate to two years from the date of the award and
the consultants are required to continue their relationship with the
Company over the entire vesting period.  The value of the restricted stock
awards is approximately $41,000.

EMPLOYEE STOCK PURCHASE PLAN

At the Annual Meeting on May 25, 1999, the stockholders also approved the
Ampersand Medical Corporation 1999 Employee Stock Purchase Plan.  The
purpose of the Plan is to provide eligible employees with an opportunity to
increase their proprietary interest in the success of the Company by
purchasing stock from the Company on favorable terms and to pay for such
purchase through payroll deductions.  The Plan provides that employees may
purchase shares at 85% of fair market value.  The aggregate number of
shares available for purchase under the Plan is 200,000.  The Plan offering
periods begin July 1 and January 1 of each fiscal year.  As of
September 30, 1999 there was no activity in the Plan.




<PAGE>


NOTE G.  SUBSEQUENT EVENTS

Between October 4, 1999 and November 12, 1999, the Company issued 1,906,758
shares of common stock to various private investors in exchange for
$406,400 in cash.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS.

RESULTS OF OPERATIONS

     REVENUES AND EXPENSES.  See Note B to the Consolidated Financial
Statements at September 30, 1999 for background and historical information
on the Company. The Company had minimal operations during the first nine
months of 1998. The Company is primarily engaged in the design and
development of new products to serve the market for cancer screening. With
the exception of the products and services marketed by the Company's wholly
owned subsidiary, Samba Technologies, SARL, all other products have not as
yet been introduced to the market for sale. The Company's revenue for the
nine months ended September 30, 1999, amounting to $912,000, was derived
entirely from the sale of Samba products.  Samba product revenues for the
three months ended September 30, 1999 were $370,000, an increase of
$139,000 from the previous quarter.  The increase is the result of contract
completions falling unevenly from period to period.

Cost of sales, related entirely to Samba products, for the nine-month
period ended September 30, 1999 amounted to $600,000.  The amount for the
three-month period ended September 30, 1999 was $289,000, an increase of
approximately $135,000 reflecting the increase in quarterly revenues.

Research and development expenses were $865,000 for the 1999 nine-month
period. The costs represent contracted development and consulting services,
manufacturing design services, contract research, and in-house development
personnel, laboratory expense, and research administration.  R & D costs
for the three-month period ended September 30, 1999 were $351,000, an
increase of  $62,000 over the prior quarter.  The increase primarily
represents increased instrument development costs and laboratory research
activities at multiple sites offset by the capitalization of approximately
$110,000 of software development costs incurred by Samba Technologies.  The
Company incurred minimal research and development costs from its inception
through September 30, 1998.

Selling, general, and administrative expenses for the 1999 nine-month
period were $1,422,000, consisting primarily of administrative and sales
salaries, legal and professional fees related to the Company's merger,
public filings, pending equity financing, and acquisitions. SG & A expenses
for the three-month period ended September 30, 1999 were $399,000, a
decrease of $160,000 over the prior quarter.  The decrease was primarily
the result of the non-recurring legal and other costs associated with the
Company's annual meeting held at the end of May 1999.  The selling,
general, and administrative expenses for the period from inception through
September 30, 1998 were $267,000 ($239,000 for the three months ended
September 30, 1998), and consist primarily of legal costs related to start-
up and license negotiations, travel related to acquisitions and equity
funding, and contributions to professional organizations representing
individuals in healthcare fields where the Company's products might be
marketed.

Other income and expenses for the 1999 nine-month period were $172,000,
consisting primarily of $49,000 in interest expense related to various
notes payable, the write-off of $100,000 representing the earnest money
deposit related to the terminated license negotiations with AccuMed
International, Inc, and the write-off of approximately $21,000 in net value
of leasehold improvements related to the termination of an office lease.
The two written-off amounts also account for the increase of $116,000 in
other expenses for the three-month period ended September 30, 1999 over the
prior quarter.



<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

The Company's primary cash requirements are research and development
expenses for its InPath products, overall day to day operations and
administration, and the funding of acquisitions of other companies or
technologies related to its product strategy.

During the nine months ended September 30, 1999, the Company had negative
cash flow of approximately $631,000. Of this amount, approximately $504,000
was used to make the final payment on the purchase of the Samba department
of Unilog Regions, SA on January 4, 1999. Samba Technologies, SARL, a
wholly owned subsidiary of the Company, assumed the operations of the Samba
department from that day forward.

In March 1999, the Company signed a Letter of Intent with AccuMed
International, Inc. to license technology related to the AcCell
Cytopathology System. In addition the Company agreed to purchase certain
inventories and related manufacturing equipment. The Company deposited
$100,000 in escrow with AccuMed to secure a "No-Shop" clause in the
agreement.  The Company has been unable to resolve due diligence issues
with AccuMed regarding the status of the technology, the final purchase
price of inventories, and the market segments to which exclusivity applied.

Accordingly, formal negotiations on the finalization of the license were
terminated and the earnest money escrow was written-off as a non operating
expense.

In March 1999, the Company received $500,000 in cash from Seaside Partners,
L.P., a hedge fund, and issued Seaside Partners a $500,000 convertible
note, which will automatically convert into approximately 1,515,000 shares
of Common Stock, subject to certain contingencies having been met.  Denis
M. O'Donnell, who is a director of the Company, is a member and manager of
Seaside Advisors, L.L.C., a firm that provides investment management
services to Seaside Partners.

During April, May, and June 1999, the Company received $470,000 in cash
from various private investors including $75,000 from an executive officer
of the Company, and issued convertible notes to those investors with terms
and conditions similar to the Seaside Note.

In late June 1999 the Company sold 75,758 shares of restricted common stock
to a private investor for $25,000 in cash.  During July, August and
September 1999, the Company sold 865,126 shares of restricted common stock
to several private investors for $346,000 in cash.

During October and November 1999, the Company sold 1,906,758 shares of
restricted common stock to several private investors for $406,400 in cash.

The Board of Directors has authorized management to continue to seek
additional sources of funding through strategic partnerships or additional
private placements of equity.

The operation of the Company has been, and will continue to be, dependent
upon management's ability to raise operating capital in the form of debt or
equity. The Company has incurred a significant operating loss since its
inception. The Company expects that significant on-going operating
expenditures will be necessary to successfully implement its business plan
and develop, manufacture and market its products. These circumstances raise
substantial doubt about the Company's ability to continue as a going
concern. There can be no assurance that the Company will be able to obtain
additional capital to meet its current operating needs, or to complete
pending or contemplated licenses or acquisitions of technologies. If the
Company is unable to raise sufficient adequate additional capital, or
generate profitable sales revenues, management may be forced to
substantially curtail product research and development and other activities
and may be forced to cease operations.



<PAGE>


The Company's internally used computer equipment is Year 2000 compliant.
The software suites and systems currently sold by Samba are also Year 2000
compliant. Older installations of the Samba software suite may not be Year
2000 compliant, and Samba has been contracted by some customers to upgrade
their systems to Year 2000 compliance. Samba is obligated under maintenance
contracts with other customers to insure that their systems are Year 2000
compliant, and Samba believes that the revenue derived from those
maintenance contracts is sufficient to cover the cost of bringing the
systems into compliance. The Company does not anticipate that it will incur
any material costs related to compliance with Year 2000 issues.


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

Certain statements throughout this report are forward looking.  These
statements are based on the Company's current expectations and involve many
risks and uncertainties.  Some of these risks and uncertainties are factors
that affect all international businesses, while others are specific to the
Company and the areas of the medical products industry in which it
operates.

The factors below in some cases have affected and could affect the
Company's actual results, causing results to differ, possibly materially,
from those expressed in this report's forward-looking statements.  These
factors include: economic conditions; technological advances in the medical
field; demand and market acceptance risks for new and existing products,
technologies, and healthcare services; the impact of competitive products
and pricing; manufacturing capacity; new plant start-ups; U.S. and
international regulatory, trade, and tax policies; product development
risks, including technological difficulties; ability to enforce patents;
and unforeseen foreign regulatory and commercialization factors.

Currency fluctuations are also a significant variable for global companies,
especially fluctuations in local currencies where hedging opportunities are
unreasonably expensive or unavailable.  If the value of the U.S. dollar
strengthens relative to the currencies of the countries in which the
Company markets or intends to market its products, the Company's ability to
achieve projected sales and net earnings in such countries could be
adversely affected.

The Company believes that its expectations with regard to forward-looking
statements are based upon reasonable assumptions within the bounds of its
knowledge of its business and operations, but there can be no assurance
that the actual results or performance of the Company will conform to any
future results or performance expressed or implied by such forward-looking
statements.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk inherent in the Company's financial instruments is the
potential loss in fair value arising from adverse changes in interest
rates.  The Company does not engage in any hedge transactions or use any
derivative financial instruments to reduce its exposure to interest rate
changes since all of the Company's indebtedness is financed at fixed rates.

At September 30, 1999, the carrying amount of the Company's debt
instruments approximated their value.  In addition, as of September 30,
1999, the Company was not exposed to any material foreign-currency,
commodity-price, equity-price or other type of market or price risk. The
Company's wholly owned subsidiary conducts the majority of its operations
in Europe using the EURO and local European currencies.


<PAGE>


PART II.  OTHER INFORMATION

     ITEM 1.  LEGAL PROCEEDINGS

          None


     ITEM 2.  CHANGES IN SECURITIES

     During July, August, and September 1999, the Company sold 865,126
shares of common stock to several private investors for a total cash sales
price of $346,000.  The parties relied on the exemption contained in
Section 4 (2) of the Act to exempt the shares from registration under the
Act. The Company did not engage in any general solicitation or advertising
in connection with the sale.  The private investors were "accredited
investors" under the Act and were given access to the types of information
that registration would disclose.


     ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None.


     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     Exhibits.  The following exhibits are filed herewith:

     EXHIBIT NUMBER     DESCRIPTION
     --------------     -----------

          27            Financial Data Schedule.

     Reports on Form 8-K

     None.




<PAGE>


                                SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                        AMPERSAND MEDICAL CORPORATION

                        /s/ Leonard R. Prange
                        ------------------------------
                        Leonard R. Prange
                        President and Chief Financial
                        Officer and principal Accounting Officer




Date.  November 15, 1999




<PAGE>


                               EXHIBIT INDEX



               EXHIBIT NUMBER               DESCRIPTION
               --------------               -----------

                    27                      Financial Data Schedule.