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 Quarterly Period Ended October 31, 1997; or

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

     For the transition period from ____________ to _____________


Commission File Number:    0-28010


                                  MEDWAVE, INC.
             (Exact name of registrant as specified in its charter)
    Minnesota                                                   41-1493458
(State or other jurisdiction of                                (IRS employer
incorporation or organization)                            identification number)
                            4382 Round Lake Road West
                          Arden Hills, Minnesota 55112
                    (Address of principal executive offices,
                                    zip code)

                                 (612) 639-1227
                    (Registrant's telephone number, including
                                   area code)

Indicate by mark  whether  the issuer (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 as 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 [ ]

As of  November  30,  1997,  the issuer  had  4,822,738  shares of Common  Stock
outstanding.
<PAGE>


                                  Medwave, Inc.

                                    Form 10-Q

                                      INDEX

                                                                         Page

PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

        Balance Sheets - April 30, 1997 and October 31, 1997                2

        Statements of Operations - Three Months Ended October 31, 1997      3
          and 1996, Six Months Ended October 31, 1997 and 1996, and 
          Period from June 27, 1984 (Inception) to October 31, 1997

        Statements of Cash Flows - Three Months Ended October 31, 1997      4
          and 1996, Six Months Ended October 31, 1997 and 1996,  and
          Period from June 27, 1984 (Inception) to October 31, 1997


        Notes to Financial Statements                                       5


Item 2. Management's Discussion and Analysis of Financial Condition         6 
          and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk          7

PART II. OTHER INFORMATION

Item 1. Legal Proceedings                                                   7

Item 2. Changes in Securities and Use of Proceeds                           8

Item 3. Defaults Upon Senior Securities                                     9

Item 4. Submission of Matters To A Vote of Security Holders                 9

Item 5. Other Information                                                   9

Item 6. Exhibits and Reports on Form 8-K                                    9

<PAGE>
                         PART I - FINANCIAL INFORMATION

                                  Medwave, Inc.
                          (A Development Stage Company)
                                 Balance Sheets
<TABLE>
<CAPTION>

                                                                                         April 30,           October 31,
                                                                                           1997                  1997
                                                                                      --------------------------------------
                                                                                      (see note 2)         (unaudited)
<S>                                                                                        <C>                 <C> 
Assets
Current Assets:
      Cash and cash equivalents                                                            $1,240,100          $  2,651,184
      Short term investments                                                                2,539,905               503,730
      Accounts receivable                                                                      41,986                64,893
      Inventories                                                                             114,467               159,037
      Prepaid expenses                                                                         81,182                 8,369
                                                                                      --------------------------------------
Total current assets                                                                        4,017,640             3,387,213

Investments                                                                                 1,298,658               797,344

Property and equipment:
      Research and development equipment                                                      237,561               241,710
      Office Equipment                                                                        121,193               118,690
      Manufacturing and engineering equipment                                                  68,262                71,582
      Sales and marketing equipment                                                            34,371                58,174
      Leasehold improvements                                                                   31,613                31,613
                                                                                      --------------------------------------
                                                                                              493,000               521,769
      Accumulated depreciation                                                               (336,320)             (356,364)
                                                                                      --------------------------------------
                                                                                              156,680               165,405

Patents, net                                                                                   78,818                66,118
                                                                                      ======================================
Total Assets                                                                               $5,551,796          $  4,416,080
                                                                                      ======================================

Liabilities and shareholders' equity Current liabilities:
      Accounts payable                                                                    $    78,390          $    149,233
      Accrued payroll                                                                          50,810                53,898
                                                                                      --------------------------------------
Total current liabilities                                                                     129,200               203,131

Shareholders' equity:
      Common Stock, no par value:
                 Authorized shares--50,000,000
                 Issues and outstanding shares -- 4,818,738 at                             12,764,703            12,767,703
                    April 30, 1997 and 4,822,738 at Oct 31, 1997
      Unrealized gain/(loss) on investments                                                   (24,919)               ---
      Deficit accumulated during the development stage                                     (7,317,188)           (8,554,754)
                                                                                      --------------------------------------
Total shareholders' equity                                                                  5,422,596             4,212,949
                                                                                      --------------------------------------

Total liabilities and shareholders' equity                                                 $5,551,796          $  4,416,080
                                                                                      ======================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
                                  Medwave, Inc.
                          (A Development Stage Company)

                            Statements of Operations
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                                                    Period from
                                                                                                                    June 27, 1984
                                                                                                                     (Inception)
                                          Three months ended October 31          Six months ended October 31              to
                                        -----------------------------------  -------------------------------------
                                            1997               1996                1997               1996          October 31, 1997
                                        -----------------------------------  -------------------------------------  ---------------
<S>                                      <C>                <C>                 <C>                 <C>                <C>

Revenue:
  Net Sales                              $  106,087         $    4,995          $  292,796          $   4,995          $   365,738

Operating expenses:
  Cost of sales and product development     116,929              9,353             305,765              9,353              419,026
  Research and development                  304,698            238,439             581,355            414,459            5,169,087
  Sales and marketing                       307,543            126,159             560,071            199,559            1,208,348
  General and administrative                112,875            110,847             206,714            219,261            2,421,204
                                        -----------------------------------  -------------------------------------  ---------------
Operating loss                            ($735,958)         ($479,803)        ($1,361,109)         ($837,637)         ($8,851,927)

Other income:
  Interest income                            61,541             85,862             123,542            172,642              923,932
                                        ===================================  =====================================  ================
Net loss                                 $ (674,417)        $ (393,941)        $(1,237,567)         $(664,995)         $(7,927,995)
                                        ===================================  =====================================  ================

Net loss per share                       $    (0.14)        $    (0.08)        $     (0.26)         $   (0.14)         $     (3.45)
                                        ===================================  =====================================  ================
Weighted average number of common and
  common equivalent shares outstanding    4,821,265          4,808,533           4,819,995          4,765,375            2,299,794
                                        ===================================  =====================================  ================
</TABLE>

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

<PAGE>
                                  Medwave, Inc.
                          (A Development Stage Company)
                            Statements of Cash Flows
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                                                      Period from
                                                                                                                     June 27, 1984
                                                                                                                       (Inception)
                                             Three months ended October 31       Six months ended October 31                to
                                             --------------------------------  ----------------------------------      October 31,
                                                    1997              1996             1997               1996          1997
                                             --------------------------------  ----------------------------------    -------------
<S>                                           <C>               <C>             <C>                <C>                <C>    

Operating activities
Net loss                                      $   (674,417)     $   (393,941)   $  (1,237,567)     $     (664,995)    $(7,927,995)
Adjustments to reconcile net loss 
  to net cash used in operating 
  activities:
    Depreciation                                    19,703             5,628           37,433              16,516         514,316
    Amortization                                     6,349             7,254           12,699              16,951          69,898
    Loss on sale of equipment                          ---               ---              ---                 ---           7,375
    Issuance of Common Stock for 
      consulting services                              ---               ---              ---                 ---           3,413
    Changes in operating assets 
     and liabilities:
      Accounts receivable                           88,082            (4,995)         (22,907)            (4,995)         (64,893)
      Inventories                                   27,113          (101,267)         (44,570)          (116,420)        (159,037)
      Prepaid expenses                              38,355           (91,706)          72,813            (40,662)          (8,369)
      Accounts payable and accrued expenses        (38,921)          (20,294)          70,843            (44,924)         149,233
      Accrued payroll and related taxes              4,293             9,190            3,088             12,300           53,898
                                             --------------------------------  ---------------------------------- -----------------
Net cash used in operating activities             (529,443)         (590,131)      (1,108,168)          (826,229)      (7,362,161)

Investing activities
Patent expenditures                                    ---               ---              ---            (27,157)        (137,858)
Purchase of investments                         (1,000,045)       (2,657,825)      (1,488,051)        (5,216,054)      (30,355,669)
Sales and maturity of investments                4,050,460         2,741,704        4,050,460          5,241,477        29,056,438
Purchase of property and equipment                 (29,743)          (19,186)         (46,157)           (58,650)         (702,651)
Proceeds from sale of equipment                        ---               ---              ---                ---            18,200
                                             --------------------------------  ---------------------------------- -----------------
Net cash used in investing activities            3,020,672            64,693        2,516,252            (60,384)       (2,121,540)

Financing activities
Net proceeds from issuance of Convertible 
  Preferred Stock                                      ---               ---              ---                ---         4,848,258
Net proceeds from issuance of Common Stock           3,000               ---            3,000            291,009         7,286,627
                                             --------------------------------  ---------------------------------- -----------------
Net cash provided by financing activities            3,000               ---            3,000            291,009        12,134,885
                                             --------------------------------  ---------------------------------- -----------------

(Decrease) increase in cash and cash 
   equivalents                                   2,494,229          (525,438)       1,411,084           (595,604)        2,651,184
Cash and cash equivalents at beginning 
   of period                                       156,955           698,955        1,240,100            769,121               ---
                                             ================================  ================================== =================
Cash and cash equivalents at end of period    $  2,651,184     $     173,517   $    2,651,184      $     173,517   $     2,651,184
                                             ================================  ================================== =================
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>

                                  Medwave, Inc.
                          (A Development Stage Company)

                          Notes To Financial Statements

                                October 31, 1997

1.   Organization and Description of Business

     Medwave,  Inc.  (the  Company) is a development  stage  enterprise  engaged
     exclusively  in  the   development,   manufacturing   and  marketing  of  a
     proprietary,  non-invasive system that continually  monitors arterial blood
     pressure of adults.

2.   Basis of Presentation

     The  financial  information  presented  as of  October  31,  1997  has been
     prepared from the books and records without audit. Financial information as
     of April 30, 1997 is based on audited  financial  statements of the Company
     but does  not  include  all  disclosures  required  by  generally  accepted
     accounting  principles.  In the  opinion of  management,  all  adjustments,
     consisting  only  of  normal  recurring  adjustments  necessary  for a fair
     presentation of the financial  information for the periods indicated,  have
     been included.  For further information  regarding the Company's accounting
     policies,  refer to the financial  statements and related notes included in
     the Company's  Annual Report on Form 10-KSB for the fiscal year ended April
     30, 1997.

ITEM 2. Management's  Discussion and Analysis of Financial Condition and Results
     of Operation

The following  discussion  should be read in conjunction  with, and is qualified
by, the Company's financial statements set forth in Item 1 of this Form 10-Q.

General

The  Company,  which was formed in 1984,  is a  development  stage  company that
currently employs sixteen full-time employees and two part-time employees. Since
its inception,  the Company has been engaged exclusively in the development of a
non-invasive,  blood pressure  measurement and monitoring system.  Utilizing the
Company's proprietary technology, the Vasotrac(R) system monitors blood pressure
continually,   providing  new  readings  about  every  fifteen  heartbeats.  The
continual, efficacious and non-invasive qualities of the Vasotrac(R) system make
it a new approach to blood pressure monitoring.

The  Company  has  incurred  an  accumulated  deficit of  $(8,554,754)  from its
inception  through  October  31,  1997.   Significant   additional  losses  from
development,  testing,  regulatory  compliance,  sales,  and other  expenses are
expected  to be  incurred  by the  Company at least  until it  emerges  from the
development stage.

The Company's success is dependent upon the successful development and marketing
of  the  Vasotrac(R)  system.  However,  there  can  be no  assurance  that  the
Vasotrac(R)  system  will  be  successfully   marketed  or  sold  in  sufficient
quantities and at margins  necessary to achieve or maintain  profitability.  The
Company is  conducting  a controlled  market  rollout of the  Vasotrac(R).  This
<PAGE>

controlled  market rollout is designed to provide the Company with user feedback
on the  Vasotrac(R).  The Company is using the  feedback  to make minor  product
enhancements.  The Company hopes to be ready for nationwide sales by April 1998.
This is highly dependent on the development process for the system, the scale-up
process, customer acceptance,  and distribution methods that become available to
the Company. This strategy also includes limited unit sales to larger healthcare
organizations  for  review  and trial  before any  significant  unit  orders are
considered by the customer.

As the Company emerges from the development  stage, its success will also depend
on its  ability  to  hire  additional  employees  for key  operating  positions,
including  sales and  marketing  positions.  Competition  for such  employees is
intense and there can be no  assurance  that the Company will be  successful  in
hiring such employees on acceptable  terms or when  required,  or in maintaining
the services of its present  employees.  The Company  estimates  that within the
next  twelve  months,  it  may  require  approximately  10  additional  persons,
including  two in the area of  general  and  administrative,  three in sales and
marketing,  two in research and  development,  and three in  manufacturing.  The
Company   preliminarily   estimates   that   these   employees   will   increase
employee-related  expenses in excess of $500,000  during the next twelve months.
However, such requirements are subject to change and are highly dependent on the
development  process  for  the  system,  including  the  manufacturing  scale-up
process, market acceptance, and the Company's distribution methods.

Cash and cash  equivalents,  and short and long-term  investments are being used
primarily  to continue  clinical  testing of the  Vasotrac(R)  system,  to begin
manufacturing  and  marketing,  to conduct any  additional  research and product
development efforts that may be necessary,  and to provide working capital. Over
the next twelve months,  the Company  expects to spend in excess of $500,000 for
research and  development,  including  amounts  expected to be spent on clinical
trials.  The funds are expected to be used to develop improved sensors and wrist
holders and to sustain  engineering  support for  manufacturing.  No significant
amount of equipment is expected to be required.  The Company  believes  that the
cash and cash  equivalents,  and short and long-term  investments will allow the
Company to meet its cash  requirements  for  approximately  fifteen  months from
October 31, 1997. If the development  process for the system does not proceed as
expected  because  significant  product  design  changes are required to achieve
market  acceptance  or  unexpected  difficulties  are  encountered  in attaining
cost-effective manufacturability,  the Company may require additional capital at
an earlier date.  Such capital may be sought through bank  borrowing,  equipment
financing,  equity financing,  and other methods.  The Company's financing needs
are subject to change  depending on, among other things,  market  conditions and
opportunities,  equipment or other asset-based  financing that may be available,
and cash flow from operations.  Any material favorable or unfavorable  deviation
from its anticipated expense could significantly affect the timing and amount of
additional financing that may be required. However, additional financing may not
be  available  when  needed  or,  if  available,  may not be on  terms  that are
favorable  to the  Company  or its  security  holders.  In  addition,  any  such
financing  could  result  in  substantial  dilution  to then  existing  security
holders.

Results of Operations

The results of operations compares the three months and six months ended October
31, 1997 and 1996, respectively. The analysis of liquidity and capital resources
compares October 31, 1997 to April 30, 1997.

Operating revenue was $106,087 and $4,995 for the quarter ended October 31, 1997
and 1996,  respectively.  Operating  revenue was $292,796 and $4,995 for the six
months ended October 31, 1997 and 1996 respectively. The Company commenced sales
in the second quarter of fiscal year 1997.

Cost of sales and product  development  was  $116,929 and $9,353 for the quarter
ended  October  31,  1997 and  1996,  respectively.  Cost of sales  and  product
development  was $305,765  and $9,353 for the six months ended  October 31, 1997
and 1996, respectively. The Company commenced sales during the second quarter of
fiscal year 1997.
<PAGE>

The Company incurred $304,698 and $238,439 for research and development expenses
for the  quarter  ended  October 31,  1997 and 1996,  respectively.  The Company
incurred $581,355 and $414,459 for research and development expenses for the six
months  ended  October  31,  1997  and  1996,  respectively.  The  research  and
development expense increase was primarily attributed to conducting a multi-site
clinical study on the accuracy of the Vasotrac(R) system.

The Company incurred $307,543 and $126,159 for sales and marketing  expenses for
the quarter ended October 31, 1997 and 1996, respectively.  The Company incurred
$560,071 and $199,559 for sales and marketing  expenses for the six months ended
October 31, 1997 and 1996 respectively. The sales and marketing expense increase
was attributable to the hiring of additional sales associates and an increase in
travel expenses as the Company continues the sales rollout of the Vasotrac(R).

The Company  incurred  $112,875  and  $110,847  for  general and  administrative
expenses  for the quarter  ended  October 31, 1997 and 1996,  respectively.  The
Company incurred $206,714 and $219,261 for the six months ended October 31, 1997
and 1996 respectively. For the six months ended October 31, 1997 compared to the
six months ended  October 31, 1996,  the decrease in general and  administrative
expenses was primarily attributable to lower insurance expenses.

Interest  income was $61,541 and $85,862 for the quarter  ended October 31, 1997
and October 31, 1996,  respectively.  Interest  income was $123,542 and $172,642
for the six months ended  October 31, 1997 and 1996  respectively.  The decrease
reflects lower cash, cash  equivalents,  and short and long-term  investments as
the Company increases the cost of rolling out the Vasotrac(R) system.

Liquidity and Capital Resources

The Company's cash, cash equivalents,  and short- and long-term investments were
$4,154,557 and $5,078,663 at October 31, 1997 and April 30, 1997,  respectively.
The Company  incurred  cash  expenditures  of $529,443  for  operations  for the
quarter ended October 31, 1997.

With the cash and cash  equivalents,  and short and long-term  investments,  the
Company  believes that sufficient  liquidity is available to satisfy its working
capital  needs for  approximately  fifteen  months from  October 31,  1997.  The
Company has no significant capital expenditure commitments.

ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk
   Not applicable.

PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS
   Not applicable.
<PAGE>

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

Use of proceeds for the period ending:  October 31, 1997
(1)      Effective Date:                      November 9, 1995
         SEC File Number:                     33-96878C

(2)      Offering Date:                       November 9, 1995

(4)(ii)  Managing Underwriter:                Miller, Johnson & Kuehn, Inc.
(4)(iii) Title of Security:                   Common Stock
(4)(iv)  Amount Registered:                    1,610,000
         Aggregate Offering Price:            $8,050,000
         Amount Sold:                          1,610,000
         Aggregate Offering Price Sold:       $8,050,000
(4)(v)   Underwriting Discount and Commissions:      $   805,000
         Expenses paid to or for underwriters:       $   194,169
         Other expenses:                             $   217,263
         Total expenses:                             $ 1,216,432
         All 4(v) are direct or indirect payments to others
(4)(vi)  Net offering proceeds:               $6,833,568
<TABLE>
<CAPTION>
(4)(viii)Temporary Investments (specify)
<S>      <C>                                        <C>                                                     <C>

         Construction of Plant, building and        (A) Direct or indirect payments to directors,
         Facilities                                  officers, general partners of issuer or their
                                                    associates, to persons owning ten percent
                                                    (10%) or more of any class of equity securities
                                                    of the issuer and to affiliates of the issuer:          None
                                                    (B)  Direct or indirect payment to others:              $     31,613

         Purchases and installation of              (A) Direct or indirect payments to directors,
         machinery and equipment                    officers, general partners of issuer or their
                                                    associates, to persons owning ten percent
                                                    (10%) or more of any class of equity securities
                                                    of the issuer and to affiliates of the issuer:          None
                                                    (B)  Direct or indirect payment to others:              $    211,504

         Reserve Asset Management Account:          (A)  Direct or indirect payments to directors,
                                                    officers, general partners of issuer or their
                                                    associates, to persons owning ten percent
                                                    (10%) or more of any class of equity securities
                                                    of the issuer and to affiliates of the issuer:          None
                                                    (B)  Direct or indirect payment to others:              $  1,799,706
<PAGE>

         Marketing & Manufacturing:                 (A)  Direct or indirect payments to directors,
                                                     officers, general partners of issuer or their
                                                    associates, to persons owning ten percent
                                                    (10%) or more of any class of equity securities
                                                    of the issuer and to affiliates of the issuer:          $   324,754
                                                    (B)  Direct or indirect payment to others:              $ 1,681,569

         Research & Development:                    (A)  Direct or indirect payments to directors,
                                                    officers, general partners of issuer or their
                                                    associates, to persons owning ten percent
                                                    (10%) or more of any class of equity securities
                                                    of the issuer and to affiliates of the issuer:          $   227,493
                                                    (B)  Direct or indirect payment to others:              $ 1,544,669

         General & Administrative:                  (A)  Direct or indirect payments to directors,
                                                    officers, general partners of issuer or their
                                                    associates, to persons owning ten percent
                                                    (10%) or more of any class of equity securities
                                                    of the issuer and to affiliates of the issuer:          $   194,581
                                                    (B)  Direct or indirect payment to others:              $   817,679
</TABLE>
<PAGE>

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         a) On  September  25,  1997,  the  Company  held its annual  meeting of
         shareholders.  The Company's  shareholders  elected the following  four
         persons as  directors,  each to serve until the next annual  meeting of
         shareholders or until their successor is elected and qualified:

Election of Directors                  Votes For             Votes Withheld
---------------------------------- --- ----------------- --- -------------------
G. Kent Archibald                         4,068,610                 2,050
Norman Dann                               4,066,610                 4,050
Jeffrey W. Green                          4,068,610                 2,050
Jerry E. Robertson                        4,066,610                 4,050

         b) A proposal to set the number of  directors  at four was adopted by a
         vote of 4,055,966  shares in favor,  with 3,100 shares against,  11,594
         shares abstaining and no broker non-votes.

         c) The shareholders approved a 300,000 increase in the number of shares
         reserved for issuance  under the Amended and Restated Stock Option Plan
         by a vote of 2,438,424  shares in favor,  with 430,470 shares  against,
         20,393 shares  abstaining,  and 1,181,373 shares  represented by broker
         non-votes.

ITEM 5.  OTHER INFORMATION

Safe Harbor  Statement  under the Private  Securities  Litigation  Reform Act of
1995:  Statements  in this  filing,  and  elsewhere,  which look forward in time
involve  risks  and  uncertainties  which  may  affect  the  actual  results  of
operations. The following important factors, among others, have affected and, in
the  future,  could  affect the  Company's  actual  results:  resistance  to the
acceptance of new  biotechnology  and medical  monitoring  products,  the market
acceptance  of the  Vasotrac(R)  system,  hospital  budgeting  cycles,  and  the
possibility of adverse findings or negative commentary from clinical researchers
or other users of the product.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (A)      EXHIBITS:
                  EXHIBITS DESCRIPTION
                       11  Statement regarding Computation of Earnings Per Share
                       27  Financial data schedule

         (B)      REPORTS ON FORM 8K:
                       No reports on Form 8-K were filed by the Company  during
                       the quarter ended October 31, 1997


<PAGE>


                                   SIGNATURES

In accordance with 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.

Date:    December 15, 1997      Medwave, Inc.

                                By:      /s/ G. Kent Archibald
                                         G. Kent Archibald
                                         President and Chief Executive Officer

                                         /s/ Mark T. Bakko
                                         Mark T. Bakko
                                         Chief Financial Officer

<PAGE>

                                  EXHIBIT INDEX


                                  MEDWAVE, INC.

                                    FORM 10-Q

                                FOR QUARTER ENDED
                                OCTOBER 31, 1997


Exhibit No.          Description
-----------          -----------
11                   Statement regarding Computation of Earnings Per Share

27                   Financial Data Schedule (filed in electronic format only)