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 July 31, 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:    0-28010

                                  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)

                                 (651) 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 August 31, 1999, the issuer had 5,470,596 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, 1999 and July 31, 1999                 2

          Statements of Operations - Three Months Ended July 31, 1999       3
             and 1998 and Period from June 27, 1984 (Inception) to
             July 31, 1999

          Statements of Cash Flows - Three Months Ended July 31, 1999       4
             and 1998 and Period from June 27, 1984 (Inception) to
             July 31, 1999


          Notes to Financial Statements                                     5


  Item 2. Management's Discussion and Analysis of Financial Condition       5
             and Results of Operations

  Item 3. Quantitative and Qualitative Disclosures About Market Risk        8

PART II. OTHER INFORMATION

  Item 1. Legal Proceedings                                                 8

  Item 2. Changes in Securities                                             8

  Item 3. Defaults Upon Senior Securities                                   8

  Item 4. Submission of Matters To A Vote of Security Holders               8

  Item 5. Other Information                                                 8

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

                                       1

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  Financial Statements

                                  Medwave, Inc.
                          (A Development Stage Company)
                                 Balance Sheets

<TABLE>
<CAPTION>

                                                                  April 30,             July 31,
                                                                     1999                 1999
                                                                -------------------------------------
                                                                (see note 2)           (unaudited)
<S>                                                                 <C>                   <C>
Assets
Current Assets:
      Cash and cash equivalents                                     $1,175,756            $1,635,438
      Short term investments                                         2,785,672             2,345,636
      Accounts receivable                                               31,069                22,883
      Inventories                                                      137,938               150,786
      Prepaid expenses                                                  75,714                44,304
                                                                -------------------------------------
Total current assets                                                 4,206,149             4,199,047

Investments                                                          1,838,918             1,216,898

Property and equipment:
      Research and development equipment                               237,136               231,085
      Office Equipment                                                 111,745               111,745
      Manufacturing and engineering equipment                           65,259                71,859
      Sales and marketing equipment                                     59,927                59,927
      Leasehold improvements                                            31,613                31,613
                                                                -------------------------------------
                                                                       505,680               506,229
      Accumulated depreciation                                        (435,274)             (438,786)
                                                                -------------------------------------
                                                                        70,406                67,443

Patents, net                                                            28,019                21,669
                                                                -------------------------------------
Total Assets                                                        $6,143,492            $5,505,057
                                                                =====================================

Liabilities and shareholders' equity
Current liabilities:
      Accounts payable                                               $ 176,496             $ 139,054
      Accrued payroll                                                   64,040                48,685
                                                                -------------------------------------
Total current liabilities                                              240,536               187,739

Shareholders' equity:
      Common Stock, no par value:
                 Authorized shares--50,000,000
                 Issued and outstanding shares - 5,436,596          16,294,620            16,294,620

      Unrealized gain/(loss) on investments                            (17,842)              (23,042)
      Deficit accumulated during the development stage             (10,373,822)          (10,954,260)
                                                                -------------------------------------
Total shareholders' equity                                           5,902,956             5,317,318
                                                                -------------------------------------

Total liabilities and shareholders' equity                          $6,143,492            $5,505,057
                                                                =====================================

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

</TABLE>
                                       2

<PAGE>

                                  Medwave, Inc.
                          (A Development Stage Company)

                            Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                   Period from
                                                                                                  June 27, 1984
                                                                                                   (Inception)
                                                        Three months ended July 31                     to
                                                   --------------------------------------
                                                             1999                   1998          July 31, 1999
                                                   --------------------------------------       ------------------
<S>                                                      <C>                   <C>                    <C>
Revenue:
      Net Sales                                          $ 40,183              $ 200,332              $ 1,215,667

Operating expenses:
      Cost of sales and product development                53,480                173,570                1,224,411
      Research and development                            298,679                270,670                7,149,628
      Sales and marketing                                 134,951                218,646                3,347,291
      General and administrative                          199,808                100,714                2,795,020
                                                   --------------------------------------       ------------------
Operating loss                                           (646,735)              (563,268)             (13,300,683)

Other income:
      Interest income                                      66,297                 77,678                1,473,181
      Other income                                         -                      -                     1,500,000
                                                   --------------------------------------       ------------------
Net loss                                               $ (580,438)            $ (485,590)            $(10,327,502)
                                                   ======================================       ==================

Net loss per share - Basic and diluted                    $ (0.11)               $ (0.09)                 $ (3.90)
                                                   ======================================       ==================
Weighted average number of common and
      common equivalent shares outstanding              5,436,596              5,384,396                2,646,469
                                                   ======================================       ==================

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

</TABLE>

                                       3
<PAGE>

                                  Medwave, Inc.
                          (A Development Stage Company)
                            Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                                                                   Period from
                                                                                                                  June 27, 1984
                                                                                 Three months ended July 31        (Inception)
                                                                                ----------------------------            to
                                                                                         1998          1997       July 31, 1999
                                                                                ----------------------------     -----------------
<S>                                                                                <C>           <C>                 <C>
Operating activities
Net loss                                                                           $ (580,438)   $ (485,590)         $(10,327,502)
Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation                                                                     10,907        19,373               631,642
      Amortization                                                                      6,350         6,349               114,348
      Loss on sale of equipment                                                        ---          ---                     7,375
      Issuance of Common Stock for consulting services                                 ---          ---                     3,413
      Changes in operating assets and liabilities:
         Accounts receivable                                                            8,186      (115,827)              (22,883)
         Inventories                                                                  (12,848)       47,812              (150,786)
         Prepaid expenses                                                              31,410        30,563               (44,304)
         Accounts payable and accrued expenses                                        (37,442)       21,073               139,054
         Accrued payroll and related taxes                                            (15,355)       (3,824)               48,685
                                                                                ----------------------------     -----------------
Net cash used in operating activities                                                (589,230)     (480,071)           (9,600,958)

Investing activities
Patent expenditures                                                                    ---          ---                  (136,017)
Purchase of investments                                                              (480,500)     (242,951)          (37,574,589)
Sales and maturity of investments                                                   1,537,357       260,373            33,990,857
Purchase of property and equipment                                                     (7,945)       (3,306)             (727,320)
Proceeds from sale of equipment                                                        ---            3,463                21,663
                                                                                ----------------------------     -----------------
Net cash used in investing activities                                               1,048,912        17,579            (4,425,406)

Financing activities
Net proceeds from issuance of Convertible Preferred Stock                              ---          ---                 4,848,258
Net proceeds from issuance of Common Stock                                             ---            4,500            10,813,544
                                                                                ============================     =================
Net cash provided by financing activities                                              ---            4,500            15,661,802
                                                                                ============================     =================

(Decrease) increase in cash and cash equivalents                                      459,682      (457,992)            1,635,438
Cash and cash equivalents at beginning of period                                    1,175,756     1,926,697             ---
                                                                                ============================     =================
Cash and cash equivalents at end of period                                         $1,635,438    $1,468,705            $1,635,438
                                                                                ============================     =================

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

</TABLE>

                                       4
<PAGE>

                                  Medwave, Inc.
                          (A Development Stage Company)

                          Notes To Financial Statements

                                  July 31, 1999


1.    Organization and Description of Business

      Medwave, Inc. (the "Company"), a development stage company, is engaged
      exclusively in the development, manufacturing and marketing of a
      proprietary, noninvasive system that continually monitors arterial blood
      pressure of adults, and in the development of related technology and
      products. Utilizing the Company's proprietary technology, the VASOTRAC(R)
      system monitors blood pressure continually, providing new readings
      approximately every 15 heartbeats. In 1997, the Company began development
      of a hand-held blood pressure measurement device. This hand-held device is
      based upon the technology used in the Vasotrac System.

2.    Basis of Presentation

      The financial information presented as of July 31, 1999 has been prepared
      from the books and records without audit. Financial information as of
      April 30, 1999 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-K for the fiscal year ended April 30, 1999.


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 fourteen full-time employees and two part-time employees.
Since its inception, the Company has been engaged exclusively in the development
of devices for monitoring and devices for measuring blood pressure. Utilizing
the Company's proprietary technology, the Vasotrac(R) APM205 system monitors
blood pressure, providing new readings approximately every fifteen heartbeats.
The Company believes that the continual blood pressure readings and non-invasive
qualities of the Vasotrac system make it the most advanced approach to blood
pressure monitoring. In 1997, the Company began development of a hand-held blood
pressure measurement device. This hand-held unit is based on the technology used
in the Vasotrac system.

The Company has incurred an accumulated deficit of $10,954,260 from its
inception through July 31, 1999. 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.

                                       5

<PAGE>

The Company's success is dependent upon the successful development and marketing
of the Vasotrac system and/or related technology. However, there can be no
assurance that the Vasotrac system or related technology will be successfully
marketed or sold in sufficient quantities and at margins necessary to achieve or
maintain profitability.

In December 1997, the Company began developing a dealer sales network for
selling the Vasotrac system. The Company focused on building a dealer network,
so that the Company could seek nationwide sales coverage without the
commensurate increase in sales staff and cost that would occur if the same
coverage were sought by building the Company's own employee sales force. To
date, the Company has six dealers whose territories cover the central United
States and portions of the East Coast. The success of the Company's Vasotrac
system sales will depend upon the ability of dealers or sales representatives to
sell the Vasotrac system to the hospitals in their area. At this time, dealers
have not demonstrated that they will be successful. It appears that product
changes designed to make the product easier for clinicians to use will be
required before the Vasotrac system will be accepted in the market. In addition,
the Company is evaluating using a mix of dealers and of direct sales
representatives for sales of the Vasotrac System.

Feedback from the dealers and from clinicians indicates that many clinicians
find the Vasotrac system difficult to use and, therefore, requires significant
training. Sales time is increased because of the training required; therefore,
many of the dealers' sales employees and representatives do not dedicate the
time required to provide and sell the system. To alleviate this problem, the
Company is working on an enhanced Vasotrac system with "ease of use" as the
primary objective. The Company began beta testing the enhanced product in April
1999. Early beta test results indicated that additional product changes were
required. These changes have been made and the Company is continuing beta
testing. If the beta test is successful, the Company hopes to begin selling the
enhanced product by the end of September 1999. There can be no assurance that
the Company will be able to enhance the product on the timetable discussed
above, or that the product enhancements will resolve the ease of use issues the
clinicians and dealers have encountered. Furthermore, the Company has limited
distribution arrangements and there can be no assurance that the Company will be
able to implement or effectuate other such arrangements.

The Company's hand-held blood pressure device under development may have sales
potential both in the professional market (doctors, nurses, and medical
technicians) and in the consumer market. The Company does not have suitable
distribution channels for these potential markets and there can be no assurance
that the Company will be able to implement or effectuate suitable arrangements
for such markets. In May 1999, the Company filed a 510(k) submission with the
FDA for the Company's hand-held device for the professional market. In response
to information requested by the FDA, in September 1999 the Company re-filed its
510(k) submission with the FDA. The Company is uncertain as to the timing for
final FDA clearance. It is also possible that the FDA will not clear the
Company's submission or may require revision or additional clinical trials
before the hand-held device can be marketed by the Company.

For the Company to emerge from the development stage, it will 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 preliminarily estimates that these
additional employees will increase employee-related expenses in excess of
$700,000 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, cash equivalents, and short and long-term investments are being used
primarily to continue clinical testing of the Vasotrac system, for 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 $1,200,000 for research

                                       6
<PAGE>

and development. Specifically the funds are expected to be used to develop an
improved sensor and to sustain engineering support for manufacturing and for the
continued development of a hand-held unit. In addition, during the next year the
Company expects to spend approximately $200,000 for equipment, which would
include tooling for production manufacturing scale-up. Even assuming limited
sales, the Company believes that the Company's cash, cash equivalents, and short
and long-term investments will allow the Company to meet its cash requirements
for approximately one and a half years from July 31, 1999. If the development
process for the Company's products does not proceed as expected because
significant product design changes are required to achieve market acceptance,
unexpected difficulties are encountered in attaining cost-effective
manufacturability, the sales and marketing costs are higher than expected, or
the product is not accepted by the market place, 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 ended July 31, 1999 and
1998, respectively. The analysis of liquidity and capital resources compares
July 31, 1999 to April 30, 1999.

Operating revenue was $40,200 and $200,300 for the quarter ended July 31, 1999
and 1998, respectively. The operating revenue decrease was attributed to the
Company's focus on the beta testing of its enhanced Vasotrac, as previously
described.

Cost of sales and product development was $53,500 and $173,500 for the quarter
ended July 31, 1999 and 1998, respectively. The cost of sales and product
development decrease was attributed to decreased unit sales. The costs
associated with the Company's hand-held unit and enhanced Vasotrac system are
reflected in the Company's research and development expense.

The Company incurred $298,700 and $270,700 for research and development expenses
for the quarter ended July 31, 1999 and 1998, respectively. The research and
development expense increase was attributed to the Company's continued research
and development of an enhanced Vasotrac system with the focus on "ease of use"
issues and the ongoing development of the hand-held device.

The Company incurred $135,000 and $218,600 for sales and marketing expenses for
the quarter ended July 31, 1999 and 1998, respectively. The sales and marketing
expense decrease was primarily attributable to a decrease in the number of sales
personnel employed by the Company as the Company focused on the beta testing of
the enhanced Vasotrac.

The Company incurred $199,800 and $100,700 for general and administrative
expenses for the quarter ended July 31, 1999 and 1998, respectively. The
increase in general and administrative expenses was primarily attributable to
fees paid to the Company's investment banking firm retained to explore strategic
alternatives for the Company and its shareholders.

Interest income was $66,300 and $77,700 for the quarter ended July 31, 1999 and
July 31, 1998, respectively. The decrease reflects lower cash, cash equivalents,
and short and long-term investments as the Company uses its investment accounts
to fund operations.


                                       7
<PAGE>


Liquidity and Capital Resources

The Company's cash, cash equivalents, and short-and long-term investments were
$5,197,972 and $5,800,346 at July 31, 1999 and April 30, 1999, respectively. The
Company incurred cash expenditures of $589,230 for operations for the quarter
ended July 31, 1999.

With the Company's cash, cash equivalents, and short and long-term investments,
the Company believes that sufficient liquidity is available to satisfy its
working capital needs for approximately one and a half years from July 31, 1999.
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.

ITEM 2.  CHANGES IN SECURITIES
   Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
   Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   Not applicable.

ITEM 5.  OTHER INFORMATION

Statements made in this report that are stated as expectations, plans,
anticipations, prospects or future estimates or which otherwise look forward in
time are considered "forward-looking statements" and involve a variety of risks
and uncertainties, known and unknown, which are likely to affect the actual
results. The following factors, among others, as well as factors discussed in
the Company's other filings with the SEC, have affected and, in the future,
could affect the Company's actual results: resistance to the acceptance of new
medical products, the market acceptance of the Vasotrac system or other products
of the Company, hospital budgeting cycles, the possibility of adverse or
negative commentary from clinical researchers or other users of the Company's
products, the Company's success in creating effective distribution channels for
its products, the Company's ability to scale up its manufacturing process, and
delays in product development or enhancement or regulatory approval.
Consequently, no forward-looking statement can be guaranteed and actual results
may vary materially.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (A)      EXHIBITS:
                  EXHIBITS DESCRIPTION
                        27  Financial data schedule

         (B)      REPORTS ON FORM 8K:
                        No reports on Form 8-K were filed by the Company during
                        the quarter ended July 31, 1999

                                       8
<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:    September 13, 1999               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


                                       9

<PAGE>


                                  EXHIBIT INDEX


                                  MEDWAVE, INC.

                                    FORM 10-Q

                                FOR QUARTER ENDED
                                  JULY 31, 1999




Exhibit No.          Description


27                    Financial Data Schedule (filed in electronic format only)







                                       10