<PAGE>

                    SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C.  20549

                               FORM 10-QSB

(Mark One)

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

For the quarterly period ended  SEPTEMBER 30, 1997

                                     OR

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

                       Commission file number 0-19567

                             CARDIAC SCIENCE, INC.                
    ----------------------------------------------------------------
    (Exact name of Small Business Issuer as specified in its charter)
                                     

                DELAWARE                                  33-046568
      -------------------------------                -------------------
      (State or other jurisdiction of                 (I.R.S. Employer
       incorporation or organization)                Identification No.)

      1176 MAIN STREET, SUITE C, IRVINE, CALIFORNIA           92614
      ---------------------------------------------         ----------
         (Address of principal executive offices)           (Zip code)

Issuer's telephone number, including area code:  (714) 587-0357 

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.
Yes  X    No       
    ---      ---

The number of shares of the Common Stock of the registrant outstanding as of 
November 4, 1997 was 4,528,728.

                                       1

<PAGE>

                             CARDIAC SCIENCE, INC.
                                     
                             INDEX TO FORM 10-QSB

                       PART I.  FINANCIAL INFORMATION

                                                                       PAGE NO.
                                                                       --------
Item 1.  Financial Statements:

         Consolidated Condensed Balance Sheets   
              September 30, 1997 (Unaudited) and
              December 31, 1996                                              3

         Consolidated Condensed Statements of Operations (Unaudited) 
              Three and nine months ended September 30, 1997
              and 1996                                                       4

         Consolidated Condensed Statements of Cash Flows (Unaudited)   
              Nine months ended September 30, 1997 and 1996                  5

         Consolidated Condensed Notes to Financial Statements (Unaudited)    6

Item 2.  Management's Discussion and Analysis of 
              Financial Condition and Results of Operation                  10

                       PART II.  OTHER INFORMATION
                                     
Item 1.  Legal Proceedings                                                  14

Item 2.  Changes in Securities                                              14

Item 3.  Defaults Upon Senior Securities                                    14

Item 4.  Submission of Matters to a Vote of Security Holders                14

Item 5.  Other Information                                                  14

Item 6.  Exhibits and Reports on Form 8-K                                   14

Signatures                                                                  15


                                       2

<PAGE>


ITEM 1.  FINANCIAL STATEMENTS
                                     
                             CARDIAC SCIENCE, INC.
                                       
                    CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                    (Unaudited)
                                                   SEPTEMBER 30,    DECEMBER 31,
                                                        1997            1996
                                                   -------------    ------------
<S>                                                <C>              <C>
                                    ASSETS

Current Assets:
Cash and cash equivalents                           $   797,785     $   413,311
Trade accounts receivable-net                           244,792              --
Inventory                                               197,236              --
Prepaid expenses                                         66,858          10,893
                                                    -----------     -----------
    Total current assets                              1,306,671         424,204

Equipment, at cost, net                                  56,039          24,647
Goodwill, net of amortization of $21,904                635,234              --
Other Assets                                              4,012           4,012
                                                    -----------     -----------
                                                    $ 2,001,956     $   452,863
                                                    -----------     -----------
                                                    -----------     -----------

                    LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Bank line of credit                                  $   42,125     $       --
Accounts payable and accrued expenses                   522,600         183,671
Note Payable                                             85,309             --
                                                    -----------     -----------
     Total current liabilities                          650,034         183,671
                                                    -----------     -----------

Stockholders' Equity:
Preferred Stock, $.001 par value; 1,000,000 
   shares authorized, -0- Issued and outstanding 
   at September 30, 1997 and  December 31, 1996              --              --

Common stock, $  0.001 par value, 20,000,000 
   shares authorized, 4,528,728 Issued and 
   outstanding at September 30, 1997 and 
   3,265,603 at December 31, 1996                         4,529           3,266

Common stock subscribed, 145,833 at 
   September 30, 1997 and 158,958 at
   December 31, 1996                                    250,000         268,000

Additional paid in capital                            6,859,080       4,952,981
Accumulated deficit                                  (5,761,687)     (4,955,055)
                                                    -----------     -----------
    Total stockholders' Equity                        1,351,922         269,192
                                                    -----------     -----------
                                                    $ 2,001,956     $   452,863 
                                                    -----------     -----------
                                                    -----------     -----------
</TABLE>

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

                                       3

<PAGE>

                            CARDIAC SCIENCE, INC.
                                       
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                 (Unaudited)
                                     
<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED            NINE MONTHS ENDED
                                                   ------------------            -----------------
                                             SEPTEMBER 30,  SEPTEMBER 30,   SEPTEMBER 30,  SEPTEMBER 30,
                                                 1997           1996            1997           1996
                                             -------------  --------------  -------------  -------------
<S>                                          <C>            <C>             <C>            <C>
SALES                                          $  380,050        $   --       $  789,048     $      --
   Cost of Sales                                  238,088            --          447,535            --
                                              -----------    ----------       ----------    ----------
   Gross Profit                                   141,962            --          341,513            --

OPERATING EXPENSES:
   Research and development                       127,663        97,860          257,591       319,928
   Selling expenses                               100,059            --          215,252            --
   General and administrative                     279,080        74,526          671,839       293,990
                                              -----------    ----------       ----------    ----------

   LOSS FROM OPERATIONS                          (364,840)     (172,386)        (803,169)     (613,918)

   Interest income (expense) net                   (1,545)        8,248           (2,663)       32,097
                                              -----------    ----------       ----------    ----------
Loss before provision for income taxes           (366,385)     (164,138)        (805,832)     (581,821)
Provision for income taxes                            695           414              800           797
                                              -----------    ----------       ----------    ----------
Net loss                                      $  (367,080)  $  (164,552)     $  (806,632)  $  (582,618)
                                              -----------    ----------       ----------    ----------
Net loss per share                            $      (.10)  $      (.05)     $      (.23)  $      (.17)
                                              -----------    ----------       ----------    ----------

Number of shares used in the computation of
  loss per share (See Note 3)                   3,821,300     3,411,436        3,558,261     3,388,686
                                              -----------    ----------       ----------    ----------
</TABLE>

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

                                        4

<PAGE>

                            CARDIAC SCIENCE, INC.
                                     
               CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                 (Unaudited)
                                     
<TABLE>
<CAPTION>
                                                                   NINE MONTHS ENDED
                                                                      SEPTEMBER 30,
                                                                ------------------------
                                                                  1997           1996
<S>                                                             <C>           <C>
Cash flows from operating activities:
     Net loss for the period                                    $ (806,632)    $  (582,618)
                                                                -----------   ------------
Adjustments to reconcile net loss to net
    Cash used by operating activities:
      Depreciation and amortization                                 31,923          9,605
      Changes in operating assets and liabilities (net of
      Diagnostic Monitoring assets and liabilities acquired):
       Trade receivables                                          (115,217)            --
       Inventory                                                   (75,230)            --
       Prepaid expenses                                            (42,733)         1,343
       Accounts payable and accrued expenses                        60,626         (24,853)
                                                                -----------   ------------
                                                                  (140,631)        (13,905)
                                                                -----------   ------------
    Net cash used by  operating activities                        (947,263)       (596,523)
                                                                -----------   ------------
Cash provided by investing activities:
    Purchase of equipment                                          (24,069)             --
    Cash acquired in Diagnostic Monitoring acquisition              43,223              --
                                                                -----------   ------------
    Net cash provided by investing activities                       19,154              --
                                                                -----------   ------------
Cash provided by financing activities:
    Proceeds from line of credit                                    23,221              --
    Net proceeds from issuance of and subscription for Common
    Stock                                                        1,289,362          18,901
                                                                -----------   ------------
    Net cash provided by financing activities                    1,312,583          18,901
                                                                -----------   ------------
    Net increase (decrease) in cash and cash equivalents           384,474        (577,622)
    Cash and cash equivalents beginning of period                  413,311       1,177,806
                                                                -----------   ------------
    Cash and cash equivalents end of period                     $  797,785       $ 600,184
                                                                -----------   ------------
     Supplemental cash flow disclosures:
      Cash paid during the period for:
       Income taxes                                             $       --      $      797
       Interest                                                 $       --      $       --
      Non cash investing and financing activities
       On April 11, 1997, the Company acquired
        Diagnostic Monitoring (see note 2)                      $  600,000      $       --
        Accounts payable and accrued interest
         paid by issuance of common stock                       $       --      $   13,402

</TABLE>

       The accompanying notes are an integral part of the financial statements

                                        5

<PAGE>

                            CARDIAC SCIENCE, INC.

      CONSOLIDATED CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                             SEPTEMBER 30, 1997
                                      

1.   ORGANIZATION AND OPERATIONS OF THE COMPANY
         
         Until the acquisition of Innovative Physician Services, Inc. d/b/a 
Diagnostic Monitoring ("Diagnostic Monitoring") on April 11, 1997 (see note 
2), Cardiac Science, Inc. ("Cardiac Science" or the "Company") was a 
development stage company engaged in the development of a line of 
non-surgical, non-invasive automatic external cardioverter defibrillator 
("AECD-Registered Trademark-") devices (the "Products") for the treatment of 
arrhythmias that lead to cardiac arrest. Diagnostic Monitoring develops, 
manufactures and distributes cardiac devices and supplies, primarily PC-based 
Ambulatory ECG ("Holter") systems and Holter recorders on a worldwide basis. 

    BASIS OF PRESENTATION AND CONTINUED EXISTENCE

         The consolidated condensed financial statements include the accounts 
of the Company and of its wholly-owned subsidiary, Diagnostic Monitoring. All 
inter-company accounts and transactions have been eliminated in 
consolidation. 
         
         From May 20, 1991 (inception) through September 30, 1997, the 
Company incurred losses of approximately $5.8 million. Recovery of the 
Company's assets is dependent upon future events, the outcome of which is 
indeterminable. Additionally, successful completion of the Company's 
development program and its transition, ultimately, to attaining profitable 
operations is dependent upon achieving a level of revenues adequate to 
support the Company's cost structure.  

         While the acquisition of Diagnostic Monitoring provides Cardiac 
Science with a revenue base, additional capital will be needed to fulfill the 
Company's research and product development goals. The Company  raised 
$1,500,000 (before offering costs) through a private placement of its Common 
Stock (see note 3).

         In the opinion of the Company's management, the accompanying 
consolidated condensed unaudited financial statements include all adjustments 
(which consist only of normal recurring adjustments) necessary for a fair 
presentation of its financial position at September 30, 1997 and results of 
operations and cash flows for the periods presented.  Although the Company 
believes that the disclosures in these financial statements are adequate to 
make the information presented not misleading, certain information and 
disclosures normally included in financial statements prepared in accordance 
with generally accepted accounting principles have been condensed or omitted 
and should be read in

                                       6

<PAGE>

conjunction with the Company's audited financial statements included in the 
Company's 1996 Annual Report on Form 10-K/A No.1.  Results of operations for 
the three and nine months ended September 30, 1997 are not necessarily 
indicative of results for the full year. 
         
2. ACQUISITION OF DIAGNOSTIC MONITORING 

          On April 11, 1997, the Company acquired from Raymond W. Cohen, the 
President and Chief Executive Officer of the Company, Diagnostic Monitoring, 
a Nevada corporation engaged in the sale of medical diagnostic equipment, 
particularly Holter technology, through a network of domestic and 
international distributors, for 5,714.285 shares of the Company's Series A 
Convertible Preferred Stock (the "Preferred Stock") plus a non-interest 
bearing promissory note (the "Note") in the principal amount of $100,000, 
payable in eighteen (18) equal consecutive monthly installments commencing 
upon the earlier of April 9, 1999 or the completion of an equity financing by 
the Company of not less than $2,000,000 of gross proceeds.  Each share of 
Preferred Stock is entitled to 1,000 votes per share; is convertible into 
1,000 shares of the Company's common stock, par value $0.001 per share (the 
"Common Stock"), at any time, and from time to time, at the holder's option, 
without the payment of any additional consideration, and automatically shall 
convert into 1,000 shares of Common Stock (subject to adjustment for any 
reverse stock split, etc.) upon there being a sufficient number of authorized 
but unissued shares of Common Stock to allow such conversion.   On September 
8, 1997, the Company effectuated a one-for-11.42857413 reverse stock split 
and the shares of Preferred Stock automatically converted into Common Stock.

         The total purchase price was estimated at $600,000, the fair market 
value of Preferred Stock issued. The fair market value of the Preferred Stock 
issued was estimated based on the trading value of the Common Stock less a 
30% discount to take into consideration the lack of the ability to trade and 
other features of the Preferred Stock.  The fair market value of the Note 
Payable represents the discounted value (at 11.25%) of the Note over 20 
months.

    The transaction was accounted for under the purchase method and the 
purchase price was allocated to the fair market value of the assets and 
liabilities acquired as follows:

          Cash                                   $  43,223
          Accounts receivable                      129,575
          Inventory                                122,006
          Other assets                              13,232
          Property and equipment                    17,341
          Goodwill                                 657,138
          Bank line of credit                      (18,903)
          Accounts payable and accrued expenses   (280,637)
          Note Payable                             (82,975)
                                                 ---------
          Preferred Stock Consideration          $ 600,000
                                                 ---------
                                                 ---------

The $657,138 goodwill resulting from the purchase price allocation is
being amortized over 15 years

                                       7

<PAGE>

using the straight-line method.

3.  PRIVATE PLACEMENT

         In January 1997, the Company entered into an advisory and consulting 
agreement (the "Sorbus Agreement") with Sorbus Asset Strategies, S.A., a 
Swiss company ("Sorbus").  Sorbus agreed, among other things, to locate, on a 
best efforts basis, potential investors to purchase shares of Common Stock, 
(the "Financing"). As a condition precedent to the Financing, the Sorbus 
Agreement provides, among other things, that the Company shall have obtained 
the approval of its Board of Directors and stockholders to amend the 
Company's Certificate of Incorporation (i) to effectuate effect a 
one-for-11.42857143 reverse stock split of the issued and outstanding shares 
of the common stock, (the "Reverse Split") and (ii) to reduce the number of 
authorized shares of Common Stock from 40,000,000 to 20,000,000 shares, (the 
"Stock Reduction"). On April 9, 1997, the Board of Directors of the Company 
unanimously approved the Reverse Split and the Stock Reduction.  Stockholders 
holding a majority of the issued and outstanding Common Stock and all of the 
Preferred Stock approved the Reverse Split and the Stock Reduction on May 15, 
1997.  The Financing was consummated on August 29, 1997 when the Company sold 
8,571,428 (750,000 post-Reverse Split) shares of Common Stock for $1,500,000 
in gross proceeds. 
         
         On September 8, 1997, the Company effectuated the Reverse Split and 
the Stock Reduction. The number of shares used in the computation of loss per 
share for the periods presented have been restated to reflect the Reverse 
Split.
         
4.  STATEMENT OF FINANCIAL ACCOUNTING STANDARDS- SFAS 128, SFAS 130
     AND SFAS 131

              In February 1997, the Financial Accounting Standards Board 
("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 128, 
Earnings Per Share".  SFAS No. 128 requires companies to adopt its provisions 
for fiscal years beginning after December 15, 1997 and requires restatement 
of all prior period earnings per share ("EPS") data presented.  Earlier 
application is not permitted.  SFAS No. 128 specifies the computation, 
presentation and disclosure requirements for EPS.  The implementation of SFAS 
No. 128 is not expected to have a material effect on the EPS data presented 
by the Company. 

              In June 1997, the FASB issued SFAS No. 130, "Reporting 
comprehensive Income". SFAS No. 130 is effective for fiscal years beginning 
after December 15, 1997 and requires restatement of earlier periods 
presented, established standards for the reporting and display of 
comprehensive income and its components in a full set of general purpose 
financial statements.  Comprehensive income is defined as the change in 
equity of a business enterprise during a period from transactions and other 
events and circumstances from nonowner sources.  The implementation SFAS No. 
130 is not expected to have a material effect on the Company's financial 
statement presentation.

                                       8

<PAGE>

              In June 1997, the FASB issued SFAS No. 131, "Disclosures About 
Segments of an Enterprise and Related Information".  SFAS No. 131 is 
effective for fiscal years beginning after December 15, 1997 and requires 
restatement of earlier periods presented, establishes standards for the way 
that a public enterprise reports information about key revenue-producing 
segments in the annual financial statements and selected information in 
interim financial reports.  It also establishes standards for related 
disclosures about products and services, geographic areas and major 
customers.  The Company intends to implement SFAS 131 in 1998 and does not 
anticipate that this new format will have a material effect on the Company's 
financial presentation.

                                       9

<PAGE>

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATION 

GENERAL

    The following discussion should be read in conjunction with the 
consolidated condensed financial statements and notes thereto appearing 
elsewhere in this Quarterly Report on Form 10-QSB.
    
    The Company is engaged in the development of non-invasive automatic 
defibrillator devices for the treatment of arrhythmias that lead to cardiac 
arrest. The Company commenced operations in May 1991. Until its acquisition 
of Diagnostic Monitoring in April 1997, its operations have consisted 
primarily of research and development activities and clinical FDA testing.

         Cardiac Science's Automatic External Cardioverter Defibrillator 
(AECD-Registered Trademark-) devices are designed to treat persons suffering 
from, or at high risk of, life-threatening arrhythmias (abnormal rhythms of 
the heart), such as ventricular tachycardia (dangerously rapid heart rate) 
and ventricular fibrillation (quivering of the heart), that lead to cardiac 
arrest. The AECD-Registered Trademark- products will continuously monitor a 
patient's cardiac activity, detect abnormalities within seconds, and 
automatically, without human interaction, via disposable defibrillator pads 
attached to the patient's chest, transmit electrical shock (defibrillation) 
to convert the patient's heart to a normal rhythm. Reducing time to 
defibrillation is widely recognized as the most effective way to increase 
survival from cardiac arrest.

         There are four AECD-Registered Trademark- devices under development 
by the Cardiac Science. The Company's initial product, the 
Powerheart-Registered Trademark- monitor-defibrillator for in-hospital use, 
received 510(k) clearance from the United States Food and Drug Administration 
in October 1997 to allow it to begin marketing its Powerheart-Registered 
Trademark- AECD-Registered Trademark- in the United States. The additional 
AECD-Registered Trademark- products under development include a 
Powerheart-Registered Trademark- bedside monitor-defibrillator for use in 
alternative care and nursing home institutions, a light-weight, ambulatory 
vest model which can be worn continuously by at-risk cardiac patients and a 
fully automatic public access defibrillator which can be used by first 
responders and other non-technical individuals outside of the hospital 
environment. 
         
         The Company's primary objective is to pioneer the commercialization 
of AECD-Registered Trademark- devices that obviate the need for human 
intervention to successfully treat arrhythmias that lead to cardiac arrest.  
The Company believes that the Products will be ideally suited for 
hospitalized and non-hospitalized patients temporarily at risk (periods 
ranging from days to months) of suffering cardiac arrest.  Through its 
investment in clinical research, the Company believes it has established 
competitive functional and technological advantages in the development of 
AECD-Registered Trademark- devices.  The Company has been issued one patent, 
and has one additional patent under exclusive license relating to its 
AECD-Registered Trademark- technology.

         In September 1997 the Company entered into a contract with RELA, 
Inc., a contract engineering and medical device manufacturer, to complete 
development and begin production of the Powerheart-Registered Trademark- 
commercial model, a process that may take up to nine months.  Upon completion 
of the commercial model, the Company plans to sell the Powerheart-Registered 
Trademark- through a strategic US distribution partner and overseas through 
it's existing international distribution network.

                                      10

<PAGE>

         Diagnostic Monitoring develops, manufactures and distributes cardiac 
devices and supplies, primarily PC-based Ambulatory ECG ("Holter") systems 
and Holter recorders on a worldwide basis. Sales are made through qualified 
domestic and international distributors, pursuant to strategic distribution 
agreements, and managed by Diagnostic Monitoring employees on a 
country-by-country basis. Distribution is currently in place with market 
coverage in 47 countries worldwide. In the United States, products are sold 
by distributors, as well as directly by Diagnostic Monitoring to hospitals, 
physicians, and medical centers at prices that reflect market conditions. 
Diagnostic Monitoring's products are primarily made in the United States. 
Certain products and components are subcontracted and manufactured to 
Diagnostic Monitoring's specifications.
         
         RESULTS OF OPERATIONS

    For the three and nine months ended September 30, 1997, the Company had 
revenues of $380,050 and $789,048, and a net loss of $367,080 and $806,632, 
respectively, compared to no revenues and a net loss of $164,552 for the 
three month period ended September 30, 1996 and no revenues and a net loss of 
$582,618 for the nine month period ending September 30, 1996. 

    Revenues generated for the quarter and nine months ended September 30, 
1997 are attributable to the sale of products by its subsidiary, Diagnostic 
Monitoring. Gross profit on sales for the quarter ending September 30, 1997 
was 37% and gross profit for the nine months ending September 30, 1997 was 
43%.  Sales of Diagnostic Monitoring's Windows 95-Registered Trademark- 
compatible Holter software and systems, Holter Recorder products, and related 
Holter supplies represented 82% of the Company's total revenue. Sales of 
Spirometers accounted for 8.5% and PC-based Electrocardiographs accounted for 
5.0%. Export sales of Diagnostic Monitoring's products to international 
countries represented 71% of the Company's revenue, with the balance of sales 
coming from within the United States. 
    
    The increased loss for the quarter and nine months ended September 30, 
1997 is primarily attributable to increased operating costs offset by an 
increase in gross margins.

    Research and development expenses increased to $127,663 and decreased to 
$257,591, respectively, for the three and nine months ended September 30, 
1997, from $97,860 and $319,928, respectively, for the three and nine months 
ended September 30, 1996. The increase in research and development expenses 
for the quarter ending September 30, 1997 was due to pre-production costs 
associated with the commercialization of the Company's initial 
AECD-Registered Trademark-product, the Powerheart-Registered Trademark-.  The 
decrease for the nine month period ending September 30, 1997 is related to 
decreased overall expenses for initial research, engineering and clinical 
tests for the Powerheart-Registered Trademark- product.  

    General and administrative expenses increased to $279,080 and $671,839, 
respectively, for the three and nine months ended September 30, 1997, from 
$74,526, and $293,990 for the three and nine months ended September 30, 1996, 
primarily due to increased professional fees, increases in personnel and 
related costs, and moving costs.

                                      11

<PAGE>

    Sales and marketing expenses for the three and nine months ended 
September 30, 1997 were $100,059 and $215,252, respectively, compared to no 
expenses in the three and nine months ending September 30, 1996 reflecting 
the marketing efforts for Diagnostic Monitoring's products.

    Interest income (expense) net, decreased to ($1,545) and ($2,664) 
respectively, for the three and nine months ended September 30, 1997, from 
$8,248 and $32,097 for the same period in the prior year, due to the decrease 
in investable cash as a result of expenditures for operations and the 
interest expense inputed on the note payable resulting from the Diagnostic 
Monitoring acquisition.

LIQUIDITY AND CAPITAL RESOURCES
    
    At September 30, 1997, the Company had cash and cash equivalents of 
$797,785 and working capital of $656,637 as compared to cash and cash 
equivalents of $413,311 and negative working capital of $240,533 at December 
31, 1996.  Cash of $947,263 was used for operations, and cash of $19,154 and 
$1,312,583 was provided by investing and financing activities respectively.  
Cash provided by financing activities relate mainly to the Financing as 
described in Note 3 to the Financial Statements.
    
    In April 1997, the Company acquired Diagnostic Monitoring, a corporation 
involved in the worldwide distribution of cardiac devices and supplies.  The 
acquisition of Diagnostic Monitoring provides Cardiac Science with a revenue 
base, however, additional capital will be required to finance the Company's 
research and product development plans.

    On August 29, 1997, the Company consummated a private placement of 
8,571,428 (750,000 post-reverse split) shares of common stock, par value 
$0.001 per share to various foreign investors pursuant to Regulation S 
promulgated under the Securities Act of 1933, as amended.  The gross proceeds 
of the offering totaled $1,500,000.

      The Company expects to incur substantial additional operating losses as 
a result of expenditures related to the marketing and sales support 
functions, research and product development activities, completion and 
initiation of clinical trials for current and future products and costs 
associated with the development of a commercial model and pre-production 
costs for the Powerheart-Registered Trademark- product.  The timing and 
amounts of these expenditures will depend upon many factors, some of which 
are beyond the Company's control, such as the results of clinical trials, the 
requirements for and time required to obtain approval of 510(k) applications 
or other regulatory approvals, the progress of the Company's research and 
development programs, and market acceptance of the Company's products.

     Until the Company achieves sustained profitability through increased 
sales (including the sale of the Powerheart-Registered Trademark- product) 
and cost containment, it will remain dependent upon its ability to obtain 
outside financing either through the issuance of additional shares of its 
common or preferred stock or through borrowing.  Based on the Company's 
current business plan, working capital should be sufficient to enable the 
company to meet its obligations through the second quarter of 1998.  There 
are no assurances that the Company will be successful in obtaining the 
additional financing required to sustain its operations.  The condensed 
consolidated financial statements do not give effect to any adjustments

                                      12

<PAGE>
    
that might be necessary if the Company were unable to meet its obligations or 
continue as a going concern. 
    
FORWARD LOOKING STATEMENTS
    
    The Company desires to take advantage of certain provisions of the 
Private Securities Litigation Reform Act of 1995 that provide a "safe harbor" 
for forward looking statements made by or on behalf of the Company.  Except 
for the historical information contained herein, the matters discussed herein 
are forward looking statements.  The forward looking statements contained in 
this Quarterly Report on Form 10-QSB are subject to various risks, 
uncertainties and other factors that could cause actual results to differ 
materially from the results anticipated in such forward looking statements.  
Included among the important risks, uncertainties and other factors are those 
hereinafter discussed, the accuracy of which is necessarily subject to risks 
and uncertainties.
    
     Few of the forward looking statements in this Quarterly Report on Form 
10-QSB deal with matters that are within the unilateral control of the 
Company.  There is substantial regulation of the manufacture and sale of 
medical products, including many of the Company's products, by governmental 
agencies in the United States and foreign countries.  These government 
agencies often have considerable discretion in determining whether and when 
to approve the marketing of the Company's products that have not yet received 
such approval.

     The availability of equity and debt financing to the Company is affected 
by, among other things, domestic and world economic conditions and the 
competition for funds.  Rising interest rates might affect the feasibility of 
debt financing that is offered. Potential investors and lenders will be 
influenced by their evaluations of the Company and its products and 
comparisons with alternative investment opportunities. 

     Many of the Company's competitors have greater financial resources and 
technical capabilities than the Company, which may enable such competitors to 
design and produce superior products or to market their products in a manner 
that achieves commercial success even in the face of technical superiority on 
the part of the Company's products.

     The Company's patents may not offer effective protection against 
competitors.  Competitors may be able to design around the Company's patents 
or employ technologies not covered by such patents.  In addition, the 
Company's patents may be challenged, and even if such patents are upheld, the 
diversion of financial and human resources associated with patent litigation 
could adversely affect the Company. The Company may be found to be violating 
the patents of others and forced to obtain a license under such patents or 
modify the design of its products.

     Rapid technological developments are expected to continue in the 
industries in which the Company competes.  The Company may not be able to 
develop, manufacture and market products which meet changing user 
requirements or which successfully anticipate or respond to technological 
changes in a cost-effective and timely manner.

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<PAGE>

                           CARDIAC SCIENCE, INC.
                                      
                        PART II.  OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

         None.

Item 2.  CHANGES IN SECURITIES

         None.

Item 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         
         None. 

Item 5.  OTHER INFORMATION

         None.

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a) Exhibit 11 -- Computation of Per Share Information.
         b) The Company filed a report on Form 8-K dated September 9, 1997 
            with the Commission relating to the sales of equity securities 
            pursuant to Regulation S promulgated under the Securities Act 
            of 1933, as amended.

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<PAGE>

                                 SIGNATURES
                                      
     In accordance with the requirements of the Securities Exchange Act of 
1934, the issuer caused this report to be signed on its behalf by the 
undersigned, hereunto duly authorized.
                                       
    
                                       CARDIAC SCIENCE, INC.
    
    
Date: November 4, 1997                 /s/  RAYMOND W. COHEN
                                       ---------------------
                                       Raymond W. Cohen 
                                       President, 
                                       Chief Executive Officer and 
                                       Chief Financial Officer


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