UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                    WASHINGTON, DC  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 first quarter period ended:     March 31, 1997
                          OR
 ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
     EXCHANGE ACT
     For the transition period from ________  to  __________

              Commission File Number:   0-28260

                     EP MEDSYSTEMS, INC.
   (Exact name of registrant as specified in its charter)

     New Jersey                         22-3212190
(State or other jurisdiction of         (I.R.S. Employer
incorporation or organization)          Identification No.)

58 Route 46 West, Budd Lake, New Jersey         07828
(Address of principal executive offices)     (Zip Code)

Registrant's telephone number, including area code:    (201)
691-6400

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.   X    Yes
No

Indicate  the number of shares outstanding of  each  of  the
issuer's   classes  of  common  stock,  as  of  the   latest
practicable  date:   Common Stock, no  par  value  7,599,917
shares outstanding at April 28, 1997.

PART I -- FINANCIAL INFORMATION
Item 1.  Financial Statements
             EP MEDSYSTEMS, INC. AND SUBSIDIARY
                 CONSOLIDATED BALANCE SHEETS
                                            December 31,     March 31,
ASSETS                                          1996           1997
Current assets:                                             (unaudited)
Cash and cash equivalents                  $   5,491,857  $   3,287,698
Short-term investments                         1,794,553      1,227,591
Accounts receivable, net                         671,503        744,198
Inventories                                      626,707        778,762
Prepaid expenses and other current assets        185,761        157,378
     Total current assets                      8,770,381      6,195,627
Long-term investments                          3,001,222      2,995,250
Investment in EchoCath, Inc.                     --           1,400,000
Property and equipment, net                      181,385        603,896
Intangible assets, net                           615,861        608,432
Other assets                                      31,000         31,000
     Total assets                          $  12,599,849  $  11,834,205

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:                                                   
Accounts payable                           $     238,764  $     410,062
Payables due to related party                     85,035        161,571
Accrued expenses                                 438,787        341,605
Deferred revenue                                  42,938         43,000
Customer deposits                                103,999         82,816
     Total liabilities                           909,523      1,039,054
Commitments and contingencies                                          
Shareholders' equity (deficit):                                        
Preferred Stock, no par value,                                   
     5,000,000 shares authorized, no                             
     shares issued and outstanding               --             --
Common stock, $.001 stated value,                                      
     25,000,000 shares authorized,                                     
     7,599,917 shares issued and                                       
     outstanding                                   7,600          7,600
Additional paid-in capital                    16,743,014     16,743,014
Accumulated deficit                          (5,060,288)    (5,955,463)
Total shareholders' equity (deficit)          11,690,326     10,795,151
Total liabilities and shareholders equity  $  12,599,849  $  11,834,205
                              
                              
The  accompanying  notes  are  an  integral  part  of  these statements.
                              
                              
                              
             EP MEDSYSTEMS, INC. AND SUBSIDIARY
            CONSOLIDATED STATEMENTS OF OPERATIONS
                         (unaudited)
                              
                                        For the Three Months Ended
                                         March 31,      March 31,
                                           1996           1997
                                                       
Product sales                         $     755,663  $     875,723
Revenue from catheter development           --             --
          Total revenues                    755,663        875,723
                                                                  
Operating costs and expenses:                                     
Cost of products sold                       357,259        522,824
Sales and marketing expenses                105,592        691,356
General and administrative expenses         280,301        359,029
Research and development expenses            61,252        343,453
Write-off of other assets                   100,000        --
     Loss from operations                 (148,741)    (1,040,939)
                                                            
Interest expense                           (18,548)          (624)
Interest income                             --             146,388
     Net loss                         $   (167,289)  $   (895,175)
                                                                  
Net loss per share                    $       (.03)  $       (.12)
                                                                  
Weighted average shares outstanding       5,789,654      7,599,917


The  accompanying  notes  are  an  integral  part  of  these statements.
                              
                              
              EP MEDSYSTEMS, INC. AND SUBSIDIARY
            CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (unaudited)

<TABLE>
<S>                                                      <C>             <C>
                                                            For the Three Months Ended
                                                             March 31,      March 31,
                                                               1996           1997
Cash flows from operating activities:                                                 
  Net loss                                                $   (167,289)  $   (895,175)
Adjustments to reconcile net income                                                   
 to net cash provided (used) by                                                       
 operating activities:                                                                
  Depreciation and amortization                                  43,410         34,111
  Write-off of other assets                                     100,000        --
  Amortization of premium or discount                                           
   on long-term and short-term investment                       --               5,972
                                                                                      
 Changes in assets and liabilities:                                                   
  (Increase) in accounts receivable                           (168,562)       (72,695)
  Decrease (increase) in inventories                              3,785      (152,055)
  Decrease in prepaid expenses and other current assets           8,433         28,383
  Decrease (increase) in intangible and other assets             22,499        (9,758)
  (Decrease) increase in due to related party                   (2,145)         76,536
  (Decrease) increase in accounts payable                      (24,910)        171,298
  (Decrease) in accrued expenses, deferred                                            
   revenue and customer deposits                              (107,382)      (118,303)
Net cash used in operating activities                         (292,161)      (931,686)
Cash flows from investing activities:                                                 
  Investment in EchoCath, Inc.                                  --         (1,400,000)
  Maturities of held to maturity investments                    --             487,096
  Proceeds from sale of available for sale securities           --              79,866
  Capital expenditures, net of disposals                       (18,245)      (439,435)
Net cash used in investing activities                          (18,245)    (1,272,473)
Cash flows from financing activities:                                                 
   Proceeds from debentures                                      50,000        --
   Proceeds from issuance of common stock                       500,000        --
   Payment of notes payable                                     (8,600)        --
Net cash provided by financing activities                       541,400        --
Net increase (decrease) in cash and cash equivalents            230,994    (2,204,159)
Cash and cash equivalents, beginning of period                   34,588      5,491,857
Cash and cash equivalents, end of period                  $     265,582  $   3,287,698

</TABLE>
The  accompanying  notes  are  an  integral  part  of  these statements.
                              
                              
             EP MEDSYSTEMS, INC. AND SUBSIDIARY
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         (unaudited)

Note 1.    Basis of Presentation

The accompanying unaudited consolidated financial statements
reflect   all   adjustments  (including   normal   recurring
adjustments) that management considers necessary to  present
fairly  the  Company's financial position as  of  March  31,
1997;  the results of operations for the three months  ended
March  31,  1997 and 1996; and the cash flows for the  three
months  then  ended.   The results  of  operations  for  the
respective interim periods are not necessarily indicative of
the results to be expected for the full year.  The unaudited
consolidated  financial  statements  should   be   read   in
conjunction   with   the   audited  consolidated   financial
statements  and the notes thereto included in EP MedSystems,
Inc.'s  Form  10-KSB filed with the Securities and  Exchange
Commission.

2.  Net Loss Per Common Share

Net  loss per share is computed by dividing net loss by  the
weighted average number of shares of common stock and common
stock  equivalents outstanding during the periods presented.
For  the  three  months ended March 31, 1997,  common  stock
equivalents  are excluded from the computation of  net  loss
per  share since their inclusion would be antidilutive.  For
periods prior to June 30, 1996, the weighted average  number
of  shares  is based upon Securities and Exchange Commission
Staff  Accounting Bulletin No. 83 ("SAB 83").   In  applying
SAB  83,  common  stock, stock options and  warrants  issued
during  the  twelve  months  preceding  the  initial  public
offering at prices below the initial public offering  price,
have   been  included  in  the  Company's  loss  per   share
computation,  using the treasury stock method,  even  though
they  were antidilutive.  Stock options issued prior to  the
twelve  months preceding the initial filing of  the  initial
public offering are excluded as they are antidilutive.

In  February, 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No.  128,
Earnings  Per Share (SFAS 128).  This Statement  establishes
standards  for computing and presenting earnings  per  share
and  applies  to publicly traded common stock  or  potential
common  stock.   SFAS is effective for financial  statements
for  both  interim and annual periods ending after  December
15, 1997 and early adoption is not permitted.  When adopted,
the  statement  will  require restatement  of  prior  years'
earnings  per share.  the Company will adopt this  statement
for its year ended December 31, 1997.

3.   Issuance of Common Stock

During  January,  1996, the Company  sold  an  aggregate  of
166,667  shares  of  Common Stock  to  two  investors  at  a
purchase  price of $3.00 per share.  The net  proceeds  from
the sale were $500,000.
On  June 21, 1996, the Company completed its initial  public
offering  of 2,500,000 shares of Common Stock at a  purchase
price  of  $5.50  per  share.  The  net  proceeds  from  the
offering  were  approximately $11,786,000  net  of  offering
costs.


4.   Inventories

Inventories consist of the following:
                                    December      March 31
                                      31,
                                      1996          1997
     Raw materials                  $ 173,936      $ 281,459
     Work in progress                  11,456         10,289
     Finished goods                   441,315        487,014
                                    $ 626,707      $ 778,762

5.   ProCath Building Purchase

During February, 1997, ProCath purchased approximately 7,500
square  feet of manufacturing, administrative and  warehouse
space,  including 2,500 square feet of space that was leased
by ProCath, for an aggregate purchase price of approximately
$364,000, including certain transaction costs.  The purchase
will  allow  for the expansion of the existing manufacturing
operations, provide for additional warehousing, shipping and
quality  assurance  activities and relocation  of  ProCath's
administrative  offices.  The lease on  ProCath's  remaining
2,500  square  feet of space expires in November,  1997  and
will not be renewed.

6.   EchoCath License

During   February,   1997,  the  Company  licensed   certain
technologies from EchoCath, Inc. ("EchoCath")  in  order  to
attempt to develop products which allow visualization of the
heart's  anatomy and visualization of catheters  inside  the
heart  through the use of  ultrasound rather than  by  using
fluoroscopy,  or  x-ray imaging.  The license  includes  all
rights  to  the EchoMark, EchoEye and ColorMark technologies
for  use  in  the field of electrophysiology.   The  license
excludes  use on permanently implantable defibrillators  and
pacemaker  leads.   EchoCath will also  transfer  its  510-K
approval on the EchoMark  EP catheter to the Company.

The  agreement  calls  for  the  Company  to  make  payments
totaling   $700,000,  in  four  installments,   as   certain
development milestones and initial sales are achieved on the
EchoMark   and EchoEye technologies.  Terms of  the  license
call for a royalty on net sales, including minimum royalties
of  $120,000 beginning in 1999 and increasing to $400,000 in
2005  and thereafter for the life of the applicable  patents
and  continuations.    The Company may  elect  to  not  make
minimum royalty payments and in such case, EchoCath can make
the  license non-exclusive or cancel the license and  return
the $700,000 milestone payments.  The Company also purchased
280,000  shares of newly issued 5.4% cumulative  convertible
preferred stock of EchoCath for $1.4 million in cash.  This
investment is stated at cost which approximates fair value
at March 31, 1997.

7.  Supplemental Statement of Cash Flow Information:

Supplemental Noncash Investing and Financing Activities:
Cash  paid  for interest was $624 and $17,062 for the  three
months ended March 31, 1997 and 1996, respectively.



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

The  following  is  management's discussion  of  significant
factors   that  affected  the  Company's  interim  financial
condition and results of operations.  This should be read in
conjunction  with Management's Discussion  and  Analysis  of
Financial  Condition and Results of Operations  included  in
the  Company's  Form  10-KSB filed with the  Securities  and
Exchange Commission.

This Report on Form 10-QSB contains certain statements of  a
forward  looking  nature relating to future  events  or  the
future  financial performance of the Company.  Such forward-
looking  statements  are only predictions,  and  the  actual
events  or  results may differ materially from  the  results
discussed  in the forward looking statements.  Factors  that
could  cause or contribute to such differences include,  but
are  not  limited to, risks regarding product demand,  sales
and  marketing, the success of new product developments  and
clinical  results  as well as those discussed  in  "Business
Considerations" of the Company's Form 10-KSB.

RESULTS OF OPERATIONS
Three months ended March 31, 1997 compared to three months
ended March 31, 1996

Total  revenues increased $120,120 (or 15.9%) from  $755,663
to $875,723 in the three months ended March 31, 1997.  Sales
of  the EP WorkMate increased by approximately $127,000 from
$361,000 to $488,000 as the product continues to gain market
acceptance
after  its  introduction  in late  1995.   The  Company  has
recently  hired a domestic direct sales and marketing  force
to  sell  all  of the Company's products and has  undertaken
efforts   to   strengthen  its  international   distribution
network.  The  Company has also terminated its relationships
with  all  of  its  domestic independent distributors.   The
Company  believes  that the change over from  a  distributor
based  sales  force to a direct sales force had a  temporary
adverse effect on sales during the third and fourth quarters
of  1996.   However,  the  Company also  believes  that  its
domestic  direct sales force has the potential  to  generate
greater  sales  in  the  future than the  Company  had  been
experiencing  through  the use of independent  distributors.
The  level of 1997 sales will depend significantly on  sales
of  the  EP WorkMate and the ability of the domestic  direct
sales  force to effectively market the EP WorkMate  and  the
Company's other products.

Cost  of  products sold increased $165,565 (or  46.3%)  from
$357,259  to  $522,824.  Gross profit on product  sales  for
1996  was  $398,404  (or  52.7% as a percentage  of  product
sales), as compared with $352,899 (or 40.3%) for 1997.   The
decrease  in  gross profit percentage was partially  due  to
increased  labor  and  manufacturing  overhead  expenses  at
ProCath as the Company prepares to commence manufacturing of
the  ALERT products and due to discounts on sales of the  EP
WorkMate offered to electrophysiology research centers which
the  Company considered important in establishing  reference
accounts  for future sales of the EP WorkMate.   During  the
three months ended March 31, 1996, the Company realized high
gross  margins  on  the sale of certain disposable  products
which were not recurring in 1997.

Sales  and marketing expenses increased $585,764 (or 554.7%)
from  $105,592  to  $764,765 and as a  percentage  of  total
revenues from 14.0% to 78.9%.  Beginning in September, 1996,
the  Company  began  hiring a domestic direct  sales  force,
including several salaried sales and marketing managers  and
personnel.    The   effort  also  involved  increased   base
commissions  for  direct  sales  representatives,  increased
travel  and  lodging  and convention  related  expenses  and
increased  promotion expenses related to existing  products.
The Company expects sales and marketing expenses to increase
significantly  in 1997, as compared to 1996, as  the  direct
sales  force  will be in place for the entire  year  and  as
product  promotion associated with the direct  sales  effort
continues  to increase.  It is likely that the Company  will
incur  additional losses as a result of the increased  fixed
costs  associated  with  direct sales  until  such  time  as
sufficient  incremental sales are generated  to  cover  such
costs.   The Company cannot determine when or if that  level
of sales will be achieved.  Further, the Company has filed a
Pre-IDE  application  with  the FDA  and  expects  to  begin
clinical  trials  for  the ALERT System  during  the  second
quarter of 1997.  Although there can be no assurance of such
fact,  the Company anticipates that international  sales  of
the ALERT System will begin in 1997.  The Company expects to
incur additional expenses as a result of the introduction of
the  ALERT  System  for sale outside of the  United  States.
General  and  administrative expenses increased $85,036  (or
35.0%)  from  $242,872  to  $327,908  and  increased  as   a
percentage  of  total  revenues from 32.1%  to  37.4%.   The
dollar   increase  was  due  to  the  hiring  of  additional
administrative  personnel,  increased  use  of  professional
services,  including  legal  fees  associated  with  several
patent   filings,  and  increased  product   liability   and
directors  and  officers  insurance  expense.   The  Company
expects  general and administrative expense to  increase  in
future  periods  due to anticipated future  growth.   It  is
anticipated, however, that these expenses will decline as  a
percentage  of  total revenues at such  time  as  sufficient
incremental  sales are generated to cover such  costs.   The
Company  cannot determine when or if such incremental  sales
will be achieved.

Research  and  development expenses increased  $282,201  (or
460.7%) from $61,252 to $343,453 and as a percentage of  net
sales  from  8.1%  to  39.2%.   The  increase  was  due   to
significant    expenses   incurred   in   connection    with
preparations  for  manufacturing  of  the  ALERT   products,
including obtaining the CE Mark.  The Company also  realized
research  and development expenses related to the  licensing
and  development of the Spire technology for placement of  a
flexible   metallic   coating   on   its   electrophysiology
catheters,  hiring  of additional in-house  engineering  and
technical  support personnel and increased development  work
on  existing  products,  including  the  EP  WorkMate.   The
Company  expects that expenses related to the  ALERT  System
will  be  significant in 1997 and 1998 when clinical  trials
are  anticipated to commence.  The Company also expects that
other research and development expenses will increase as  it
continues   attempts  to  develop  new  products,  including
ultrasound  guided  catheters utilizing technology  licensed
from EchoCath in February, 1997 and catheters utilizing  the
Spire technology as well as ongoing improvements to existing
products.

Interest  expense decreased $17,924 (or 96.6%) from  $18,548
to $624.  The decrease was due to the Company's repayment of
$1,137,500 face amount of 1995 Debentures in June, 1996  and
the  repayment of the $96,350 balance plus accrued  interest
payable   on  a  note  incurred  in  connection   with   the
acquisition  of  ProCath.  The Company does  not  expect  to
incur material interest expense in 1997.

Interest income during the three months ended March 31, 1997
was  $146,388 due to interest earned on the proceeds of  the
June, 1996 initial public offering.  The Company expects  to
continue  earning  interest on its  excess  cash  in  future
periods, but the amount of interest income will decrease  as
proceeds are utilized in the Company's business.

The  Company incurred a net loss $895,175 (or $.12 per share
based  on  7,599,917     shares outstanding)  in  the  three
months  ended  March 31, 1997 as compared with $167,289  (or
$.03 per share based on 5,789,654 shares outstanding) in the
comparable  period in 1996.  The increase in  net  loss  was
caused by the factors discussed above.

Liquidity and Capital Resources

On  June 21, 1996, the Company completed its initial  public
offering  of 2,500,000 shares of Common Stock at a  purchase
price  of  $5.50  per share, for aggregate net  proceeds  of
approximately $11,786,000 after deducting offering expenses.

Net  cash used in operating activities for the three  months
ended  March  31, 1997 was $931,686 as compared to  $292,161
for  the three months ended March 31, 1996.  The net use  of
cash  in  operations during 1997 was due  primarily  to  the
Company's  $895,175  net  loss  from  operations.   Accounts
receivable, net, increased by $72,695 in 1997 from  $671,503
to  $744,198  and  inventories increased by  $152,055,  from
$626,707  to $778,762 due to increased operating volume  and
activity.   Accounts payable and accrued expenses  increased
by  $74,116  from  $677,551  to $751,667  primarily  due  to
increased  inventory  purchases and  liabilities  associated
with  development activities.  Amounts payable to a  related
party increased by $173,685 from $85,035 to $161,571 due  to
the  receipt of a shipment of products close to the  end  of
the quarter.

During   February,   1997,  the  Company  licensed   certain
technologies  from EchoCath in order to attempt  to  develop
products  which  allow visualization of the heart's  anatomy
and 
visualization of catheters inside the heart through the  use
of ultrasound rather than by using fluoroscopy,  or  x-ray
imaging.   The license includes all rights to the  EchoMark,
EchoEye  and ColorMark technologies for use in the field  of
electrophysiology.  The license excludes use on  permanently
implantable  defibrillators and pacemaker  leads.   EchoCath
will  also  transfer  its  510-K approval  on  the  EchoMark
electrophysiology catheter to the Company.

The  agreement  calls  for  the  Company  to  make  payments
totaling   $700,000,  in  four  installments,   as   certain
development milestones and initial sales are achieved on the
EchoMark   and  EchoEye technologies.  The EchoCath  license
provides  for  a  royalty  on net sales,  including  minimum
royalties  of  $120,000 beginning in 1999 and increasing  to
$400,000  in  2005  and  thereafter  for  the  life  of  the
applicable patents and continuations.  The Company may elect
not  to  make  minimum royalty payments and, in  such  case,
EchoCath has the option to make the license non-exclusive or
cancel   the  license  and  return  the  $700,000  milestone
payments.   The  Company also purchased  280,000  shares  of
newly-issued EchoCath 5.4% cumulative convertible  preferred
stock  for $1.4 million in cash.  The Company's $1.4 million
investment  is intended to fund development of  the  EchoEye
technology.   Upon successful completion of its  development
projects,  the  Company may introduce ultrasound  technology
into its electrophysiology catheter line although there  can
be  no assurance that the Company will be successful in this
effort.

Capital expenditures, net of disposals, were $439,435 during
the three months ended March 31, 1997 as compared to $18,245
in  the  three  month  period ended  March  31,  1996.    In
February, 1997, ProCath purchased approximately 7,500 square
feet  of manufacturing, administrative and warehouse  space,
including 2,500 square feet of space that was under lease by
ProCath,  for  an aggregate purchase price of  approximately
$386,000, including certain transaction costs.  The purchase
will  allow  for  the  expansion of ProCath's  manufacturing
operations, provide for additional warehousing, shipping and
quality  assurance  activities and relocation  of  ProCath's
administrative  offices.  The lease on  ProCath's  remaining
2,500  square  feet of space expires in November,  1997  and
will  not  be  renewed.  The Company also  purchased  a  new
exhibition  booth  for use at industry  trade  shows  during
1997.

In  1995,  the Company purchased a $100,000 note  receivable
payable  by  Falfab  L.L.C.,  a United  Kingdom  angioplasty
catheter  manufacturer ("Falfab"), accruing interest  at  8%
and  maturing  on July 15, 1996.  The Company  became  aware
that  Falfab would be unable to repay such indebtedness  and
wrote-off the $100,000 note receivable in March, 1996.

During  the  three months ended March 31, 1996, the  Company
issued 166,667 shares of common stock for $500,000 in  cash,
or $3.00 per share, and collected a $50,000 note receivable.

The  Company  plans to finance its capital needs principally
from  existing capital resources, which the Company believes
will be sufficient to fund its operations through 1997.  The
Company expects to incur substantial expenditures to further
the  development and commercialization of its products.   To
achieve  this,  the  Company may  need  to  seek  additional
financing.   There  can  be  no  assurance  that  additional
funding will be available when needed or on terms acceptable
to the Company.

PART II.  OTHER INFORMATION
Item 6.   Exhibits and Reports on Form 8-K
          (a)  Exhibits
               The following exhibits will be filed as part
of this Form 10-QSB:

          Exhibit 11.1 * Computation of Earnings Per Share
          Exhibit 27   * Financial Data Schedule (SEC only)
                       * Filed herewith

          (b)  Reports on Form 8-K
               No reports on Form 8-K were filed during the
               quarter ended March 31, 1997

                         SIGNATURES

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


                         EP MEDSYSTEMS, INC.
                        (Registrant)


Date: May 8, 1997   By:   /s/  David A. Jenkins
                               David A. Jenkins,
                    President and Chief Executive Officer

                    By:   /s/  James J. Caruso
                               James J. Caruso,
                    Vice President and Chief Financial
                    Officer
                    (Principal Financial and Accounting
                    Officer)



                    EXHIBIT INDEX

Exhibit                                              Method of
Number       Description of Exhibit                  Filing
                                                     
11.1         * Statement regarding Calculation       EDGAR
               of Shares Used in Computing             
               Net Loss Per Share                      
                                                     
27           * Financial Data Schedule (SEC only)    EDGAR
                                                     
             * Filed herewith                        

                                                            
                                                            
                                                Exhibit 11.1
                     EP MEDSYSTEMS, INC.
       STATEMENT OF COMPUTATION OF EARNINGS PER SHARE

                                       Three Months Ended
                                           March 31,
                                      1996           1997
Net loss                         $     167,289  $     895,175
                                                             
Weighted average shares outstanding:
Common stock (1)                     4,518,667      7,599,917
Stock options (2) (3)                  909,055        --
Warrants      (2) (3)                  361,932        --
                                     5,789,654      7,599,917
                                                             
Historical net loss per share    $       (.03)  $       (.12)
                                                             

(1)  260,167  shares of common stock were issued  within  12
months preceding the filing of the registration statement at
prices   lower  than  the  initial  public  offering  price.
Pursuant  to  Staff Accounting Bulletin No. 83  such  shares
have  been included in the weighted average number of shares
outstanding  for  the three month periods  ended  March  31,
1996.

(2)    Options   and  warrants  at  909,055   and   361,932,
respectively,  were  granted at  prices  below  the  initial
public offering price.  The dilutive effect of these options
have  been  included in the earnings per  share  calculation
using  the treasury stock method in accordance with SAB  No.
83 for the three month period ended March 31, 1996.

                                     Options        Warrants
Options issued within one year       1,324,000        568,750
Proceeds from exercise           $   2,282,200  $   1,137,500
Public offering price                  / $5.50        / $5.50
Treasury stock                         414,945        206,818
Incremental shares                     909,055        361,932

(3)   Options  and  warrants have  been  excluded  from  the
calculation of earnings per share for the three months ended
March 31, 1997, because they are anti-dilutive.