FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

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

For quarterly period ended October 31, 1995

[ ] 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 0-11571

AEQUITRON MEDICAL, INC.
(Exact name of registrant as specified in its charter)

MINNESOTA 41-1359703
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

14800 28th Avenue North
Plymouth, Minnesota 55447
(Address of principal executive offices)
(Zip Code)

612/557-9200
(Issuer's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 and 15 (d) of the
Securities and 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

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

Common Stock, $.01 Par Value--4,885,700 Shares as of December 13,
1995

INDEX

AEQUITRON MEDICAL, INC.

Part I. Financial Information Page No.

Item 1. Financial Statements.

Condensed Consolidated Balance Sheets--
October 31, 1995 and April 30, 1995. 3-4

Condensed Consolidated Statements of
Income for the Six Months ended
October 31, 1995 and 1994. 5

Condensed Consolidated Statements of
Cash Flows for the Six Months ended
October 31, 1995 and 1994. 6

Notes to Condensed Consolidated Financial
Statements - October 31, 1995. 7

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-10

Part II. Other Information

Item 1. Legal Proceedings 11

Item 2. Changes in Securities 11

Item 3. Defaults Upon Senior Securities 11

Item 4. Submission of Matters to a Vote of
Security Holders 11-12

Item 5. Other Information 12

Item 6. Exhibits and Reports on Form 8-K 12

Signatures 13

Exhibit 11 Computation of Per Share Earnings 14

PART I. FINANCIAL INFORMATION

AEQUITRON MEDICAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

October 31, April 30,
1995 1995
(Unaudited)
ASSETS
Current Assets:
Cash $ 1,950,800 $ 4,986,800
Accounts receivable 7,424,600 4,311,200

Inventories 4,259,400 3,071,100
Prepaid expenses 501,200 336,100
Deferred income taxes 642,600 606,100
Total Current Assets $14,778,600 $13,311,300

Property and equipment
Buildings 676,200 652,600
Equipment 4,390,100 3,930,900
Leasehold improvements 32,600 26,800
5,098,900 4,610,300

Less allowances for depreciation (3,186,800) (2,901,400)
1,912,100 1,708,900

Other Assets
Goodwill, net of accumulated
amortization of $2,753,799 at
October 31, 1995 and $2,520,000
at April 30, 1995 3,716,700 1,789,500
Demonstration, evaluation and
rental equipment 1,222,300 1,133,600
Non-compete agreement 955,600 -
5,894,600 2,923,100

Total Assets $22,585,300 $17,943,300

AEQUITRON MEDICAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (CON'T)

October 31, April 30,
1995 1995
(Unaudited)

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
Note payable $ 307,100 $ -
Accounts payable 1,382,700 1,161,100
Employee compensation 888,800 1,104,900
Commissions payable 707,500 543,200
Other liabilities and accrued
expenses 1,326,900 1,075,000
Current maturities of long-term
debt 391,800 38,300
Income taxes payable 103,700 -
Total Current Liabilities 5,108,500 3,922,500

Long-term debt 2,090,200 64,000

Shareholders' Equity:
Preferred stock, no par value per
share; authorized 4,000,000;
issued and outstanding - none
Common stock, par value $.01 per
share; authorized 15,000,000
shares; issued October 31, 1995--
4,882,700 shares; April 30, 1995
-- 4,848,500 shares 48,800 48,500
Additional paid-in capital 5,925,800 5,933,700
Retained earnings 9,412,000 7,974,600
Total shareholders' equity 15,386,600 13,956,800

Total Liabilities & Shareholders'
Equity $22,585,300 $17,943,300

AEQUITRON MEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

SIX MONTHS ENDED OCTOBER 31,
1995 1994

OPERATING ACTIVITIES:
Net income $1,437,400 $ 920,700
Adjustments to reconcile to net
cash provided by (used in)
operating activities:
Depreciation 290,200 252,600
Amortization of goodwill and
other intangible assets 278,100 683,000
Provision for losses on
accounts receivable 47,500 44,500
Provision for deferred
income taxes (36,500) 29,700
Loss on sale of assets 200 -
Changes in operating assets
and liabilities:
Accounts receivable (2,863,100) (943,700)
Inventories 424,200 165,900
Rental equipment 22,100 24,200
Accounts payable 221,600 140,100
Other assets & liabilities (155,200) 226,000

NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (333,500) 1,543,000

INVESTING ACTIVITIES:
Purchases of property, plant
and equipment (252,700) (267,200)
Proceeds from disposal of equipment 500 3,300
Purchase of sleep diagnostic
product line (4,831,700) -

NET CASH USED IN INVESTING ACTIVITIES (5,083,900) (263,900)

FINANCING ACTIVITIES:
Repayments of short term debt (7,300) -
Proceeds from long term borrowings 2,500,000 -
Repayments of long term debt (103,700) (43,900)
Proceeds from exercise of stock options 124,500 110,200
Purchases & retirement of common stock (132,100) -

NET CASH PROVIDED BY FINANCING
ACTIVITIES 2,381,400 66,300

NET INCREASE (DECREASE) IN CASH (3,036,000) 1,345,400

CASH AT BEGINNING OF PERIOD 4,986,800 2,375,200
CASH AT END OF PERIOD $1,950,800 $3,720,600

AEQUITRON MEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)

Three Months Ended October 31, Six Months Ended October 31,
1995 1994 1995 1994

% of % of % of % of
Amount Sales Amount Sales Amount Sales Amount Sales

Net sales $9,708,500 100.0% $8,057,900 100.0% $19,270,600 100.0% $16,162,300 100.0%

Cost of sales 4,436,700 45.7% 3,685,200 45.7% 8,703,000 45.2% 7,322,600 45.3%
Gross profit 5,271,800 54.3% 4,372,700 54.3% 10,567,600 54.8% 8,839,700 54.7%

Operating Expenses:

Selling & marketing 2,010,900 20.7% 1,483,500 18.4% 3,852,500 20.0% 3,029,600 18.7%
General & admin. 1,348,700 13.9% 1,203,300 14.9% 2,921,000 15.2% 2,614,400 16.2%
Research & dev. 837,900 8.6% 1,241,300 15.4% 1,577,000 8.2% 1,803,400 11.2%
Interest 79,100 0.8% 17,200 0.2% 119,100 .6% 22,500 0.1%
Other income (98,400) (1.0)% (76,000) (0.9)% (183,700) (1.0)% (139,600) (0.5)%
Total 4,178,200 43.0% 3,869,300 48.0% $ 8,285,900 43.0% $ 7,330,300 45.7%

Income before
income taxes 1,093,600 11.3% 503,400 6.2% 2,281,700 11.8% 1,509,400 9.3%

Income taxes 380,900 4.0% 166,100 2.1% 844,300 (4.4)% 588,700 3.6%

Net income $ 712,700 7.3% $ 337,300 4.2% $ 1,437,400 7.4% $ 920,700 5.7%

Earnings per share:

Net income per share $.13 $.06 $.27 $.18

Weighted average
number of shares
outstanding 5,453,900 5,152,400 5,364,100 5,053,000

AEQUITRON MEDICAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

October 31, 1995

NOTE A--BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 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 six-month period ended October 31, 1995 are not
necessarily indicative of the results that may be expected for the
year ended April 30, 1996. For further information, refer to the
financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended April 30,
1995.

NOTE B--INVENTORIES

The major classes of inventories consist of the following:

October 31, April 30,
1995 1995

Raw Materials $2,579,000 $1,594,300
Work In Progress 1,224,100 854,500
Finished Goods 456,300 622,300
$4,259,400 $3,071,100

AEQUITRON MEDICAL, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of operations for the second quarter ended October 31,
1995, versus the second quarter ended October 31, 1994, and
analysis of financial condition as of October 31, 1995.

RESULTS OF OPERATIONS

Net Sales

Net sales for the quarter ended October 31, l995, totaled
$9,708,500, which represents a 20.5% increase from the $8,057,900
in net sales reported for the comparable period of the prior year.
Sales of $19,270,600 for the current six month period represent a
19.2% increase from the $16,162,300 in net sales for the comparable
period of a year ago.

The increased sales are due mostly to the newly acquired sleep
diagnostic product line. In addition, sales increased in the
ventilator product line both domestically, as a result of a
concerted sales and marketing effort, and internationally, due to
larger than anticipated shipments to Germany-based Dragerwerk and
other customers. Sales of apnea monitors were less than expected.
Second quarter sales of the Company's subsidiary, Crow River
Industries, were at prior year levels. The Company expects
international sales to level off and sleep diagnostic product sales
to increase for the remainder of the fiscal year. The Company
believes sales in general should remain strong for the balance of
the fiscal year.

Cost of Sales

Gross margins as a percentage of net sales for the quarter ended
October 31, 1995, was identical to the 54.3% reported for same
period in fiscal 1994. For the six months ended October 31, 1995,
gross margins increased to 54.8% from 54.7% when compared with the
same period a year ago. Margin levels are expected to remain at
current levels for the balance of the fiscal year.
Operating Expenses

Selling and marketing expenses for the quarter ended October 31,
l995 increased $527,400, or 35.6%, over the second quarter of last
year, representing 20.7% of net sales for the quarter ended October
31, 1995, compared to 18.4% for the comparable quarter of last
year. On a year to date basis, selling and marketing expenses
increased $822,900 and represented 20.0% of net sales for the
current six months compared to 18.7% for the same period last year.
The significant increase in expenses reflects the change in selling
approach of the sleep diagnostics product line as this new product
line is sold through direct employee sales personnel in addition to
the current independent sales representatives. Sales and marketing
expenses as a percentage of sales are expected to remain at current
levels.

General and administrative expenses for the quarter ended October
31, l995, increased $145,400, or 12.1%, over the second quarter of
last year. As a percentage of sales, expenses for the quarter
decreased to 13.9%, from 14.9% for the same period last year. The
decrease as a percentage of sales reflects the effect of the 20.5%
increase in sales. On a year to date basis, general and
administrative expenses increased $306,600 and represent 15.2% of
net sales, compared to 16.2% for the comparable period last year.
The increase in expenses reflects the costs associated with the
addition of the sleep diagnostic product line including
amortization of goodwill, patents and covenants-not-to-compete,
additional insurance and employee benefits, and additions to the
human resources staff. General and administrative expenses are
expected to remain at current levels for the remainder of the
fiscal year.

Research and development expenses for the quarter ended October 31,
l995, decreased $403,400, or 32.5%, compared to the same period
last year. For the six months ended October 31, 1995, expenses
decreased $226,400, as compared to the first six months of fiscal
1995. As a percentage of net sales, expenses decreased to 8.6%
from 15.4% for the quarter, and 8.2% from 11.2% for the current six
month period. The decrease in research and development expense for
the quarter reflects a one-time charge expensed during the second
quarter of fiscal 1995. After taking into account such one-time
charge in fiscal 1995, research and development expenditures
experienced a net increase in fiscal 1996. Such increase results
both from the Company's commitment to growth through expanded new
product development efforts, and additional staff and expenses
associated with the sleep diagnostic product line. Research and
development expenditures may increase marginally for the balance of
the fiscal year as new product development projects continue.
Interest expense for the quarter ended October 31, l995, increased
by $61,900 from the second quarter of fiscal 1995. On a year to
date basis, interest expense increased $96,600, or 429.3%, from the
comparable period last year. The increase for the current quarter
and year to date is a direct result of an additional $2,500,000 in
long-term borrowings used to finance the acquisition of the sleep
diagnostic product line. Other income increased $22,400 from the
same period last year due to additional earnings on investments and
accounts payable discounts.

Net Income

Net income for the quarter ended October 31, l995 was $712,700
which represents a $375,400 increase compared with the same period
a year ago. The increase in net income for the quarter reflects
the benefit of an after tax charge of $305,000, or $.06 per share,
related to the termination of a license agreement for the same
quarter in fiscal 1995. Net income per share for the three months
and six months ended October 31, 1995 was $.14 and $.27 per share,
respectively, compared to $.06 and $.18 per share for the
comparable periods last year. The effective tax rate of 37% for
the six months ended October 31, 1995, was slightly lower than
recent historical levels due to increased earnings which reduced
the impact of non-deductible goodwill.

LIQUIDITY AND CAPITAL RESOURCES

Cash at October 31, 1995 was $1,950,800. Operating activities used
cash of $333,500 during the first six months ended October 31, 1995
compared to providing cash of $1,543,000 for the comparable prior
year six month period.

The reduction in operating cash flows resulted primarily from an
increase in accounts receivable of $2,863,100, due primarily to new
sleep diagnostic product sales and increases in other product
sales. The Company paid $4,831,700 for the purchase of the sleep
diagnostics product line from CNS, Inc. This purchase price was
financed by a long-term debt borrowing of $2,500,000, and the
balance in cash. The company used $103,700 to reduce long-term
debt and an additional $252,700 to purchase capital equipment.
Capital equipment expenditures for the balance of the fiscal year
are expected to be approximately $790,000.

The maturity date of the Company's line of credit is October 31,
1996. The Company believes that its internally generated funds and
existing borrowing potential will provide sufficient working
capital to meet its commitments for the foreseeable future.
PART II

Item 1. Legal Proceedings

There have been no material legal developments since the last
report by the Company.

Item 2. Changes in Securities

No changes have been made in any registered securities.

Item 3. Defaults on Senior Securities

No event constituting a default has occurred with respect to
any senior security of the Company.

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

The Company held its Annual Meeting on Tuesday, September 26,
1995.

Proxies for the Annual Meeting were solicited pursuant to
Regulation 14 under the Securities and Exchange Act of 1934.
The following persons were elected to serve as directors of
the Company, by the votes indicated, for a term of three
years.

Number of Number of
Nominee Votes For Votes Withheld

James B. Hickey, Jr. 4,389,191 277,074
Ervin F. Kamm, Jr. 4,389,191 277,074

There was no solicitation in opposition to management's
nominees as listed in the Company's proxy statement, and the
nominees were elected.

Lawrence A. Lehmkuhl and David B. Morse continue as directors
with terms expiring in 1996, and Mr. Gerald E. Rhodes
continues as a director with his term expiring in 1997.

The Shareholders approved the adoption of the 1995 Employee
Stock Purchase Plan with 3,453,776 shares voting in favor,
115,188 shares voting against, 26,820 shares abstained and
1,047,036 (broker non-votes) lacked authority to vote on this
matter.
The Shareholders also approved an amendment to the Company's
1988 Stock Option Plan to increase the number of authorized
shares from 1,100,000 to 1,600,000 with 2,486,308 shares
voting in favor of approval, 930,524 shares voting against,
33,675 shares abstained and 1,047,036 (broker non-votes)
lacked authority to vote on this matter.

In addition, the Shareholders approved an amendment to
increase the number of nonqualified stock options granted to
non-employee directors under the formula plan with 3,720,449
shares voting in favor of approval, 781,706 shares voting
against, and 33,609 shares abstained.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibit 11 is filed with this Form 10-Q.

(b) No reports on Form 8-K were filed during the quarter ended
October 31, 1995.
Pursuant to the requirements of the Securities and Exchange Act of
1934 the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

AEQUITRON MEDICAL, INC.
(Registrant)

Dated: December 13, 1995 By /s/ James B. Hickey, Jr.
James B. Hickey, Jr.
President and Chief
Executive Officer

Dated: December 13, l995 By /s/ William M. Milne
William M. Milne
Chief Financial Officer