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 quarterly period ended:     June 30, 1999

                                       OR

 ( )     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934
         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.)

100 Stierli Court, Mount Arlington, New Jersey               07856
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code:          (973) 398-2800

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: Common Stock, no par value, 9,875,417
shares outstanding at August 12, 1999.


Transitional Small Business Disclosure Format:    Yes                 No  X











<PAGE>


                      EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


PART I.  -- Financial INFORMATION                                      Page
                                                                   ------------


  Item 1.   Financial Statements


            Consolidated Balance Sheet at June 30, 1999
            (unaudited)                                                  3

            Consolidated Statements of Operations for three months
            ended June 30, 1999 and 1998 (unaudited)                     4

            Consolidated Statements of Operations for six months
            ended June 30, 1999 and 1998 (unaudited)                     5

            Consolidated Statements of Cash Flows for six months
            ended June 30, 1999 and 1998 (unaudited)                     6

            Notes to Consolidated Financial Statements (unaudited)     7-8


  Item 2.   Management's Discussion and Analysis or Plan of
            Operation                                                 8-13



PART II -- OTHER INFORMATION

  Item 1.   Legal Proceedings                                           13

  Item 2.   Changes in Securities and Use of Proceeds                   13

  Item 3.   Defaults Upon Senior Securities                             13

  Item 4.   Submission of Matters to a Vote of Secure                   13

  Item 5.   Other Information                                           13

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


  Signatures                                                            15

  Exhibit Index                                                         15




                                       2
<PAGE>




PART I. -- FINANCIAL INFORMATION

Item 1.  Financial Statements
                      EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                                                                       June 30,
ASSETS                                                                   1999
                                                             -------------------
Current assets:                                                      (unaudited)
   Cash and cash equivalents                                 $         1,060,046
   Accounts receivable, net of allowances for
        Doubtful accounts of $99,275                                   2,837,210
   Inventories                                                         2,217,731
   Prepaid expenses and other current assets                              90,636
                                                             -------------------
          Total current assets                                         6,205,623
Property and equipment, net                                            1,355,878
Intangible assets, net                                                   526,575
Other assets                                                              32,274
                                                             -------------------
          Total assets                                       $         8,120,350
                                                             ===================


LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                          $         1,168,865
   Payables due to related parties                                       504,515
   Accrued expenses                                                      379,360
   Deferred revenue                                                       95,188
   Customer deposits                                                      46,572
   Current portion of long-term debt                                      22,297
                                                             -------------------
          Total  current liabilities                                   2,216,797
   Long-term debt, less current portion                                  491,425
                                                             -------------------
          Total liabilities                                  $         2,708,222
                                                             -------------------
Commitments and contingencies
Shareholders' equity:
   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, 9,875,417 shares issued
         and outstanding                                                   9,875
   Additional paid-in capital                                         21,438,372
   Accumulated deficit                                              (16,036,119)
                                                             -------------------
          Total shareholders' equity                                   5,412,128
                                                             -------------------
          Total liabilities and shareholders' equity   $               8,120,350
                                                             ===================

        The accompanying notes are an integral part of these statements.


                                       3
<PAGE>





                      EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)


                                                 For the Three Months Ended
                                                 June 30,           June 30,
                                                   1999               1998
                                             ------------         --------------

Sales                                         $ 2,421,601         $    1,731,672
Cost of products sold                           1,071,901                902,663
                                             ------------         --------------
          Gross profit                          1,349,700                829,009

Operating costs and expenses:
   Sales and marketing expenses                 1,013,219                842,786
   General and administrative expenses            607,102                416,726
   Research and development expenses              608,110                328,191
                                             ------------        ---------------
          Loss from operations                   (878,731)             (758,694)

Interest income, net                               21,642                 66,254
                                             ------------        ---------------
          Net loss                            $  (857,089)       $     (692,440)
                                             =============       ===============

Basic loss per share                          $     (0.09)       $        (0.07)
                                             =============       ===============

Diluted loss per share                        $     (0.09)       $        (0.07)
                                             =============       ===============

Weighted average shares outstanding used
to compute basic and diluted loss per share      9,873,109             9,634,807
                                             =============       ===============













        The accompanying notes are an integral part of these statements.

                                       4
<PAGE>






                      EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)


                                                      For the Six Months Ended
                                                      June 30,        June 30,
                                                        1999             1998
                                                 --------------   --------------

Sales                                            $    4,956,011   $    3,186,281
Cost of products sold                                 2,265,066        1,789,469
                                                 --------------   --------------
          Gross profit                                2,690,945        1,396,812

Operating costs and expenses:
   Sales and marketing expenses                       2,083,765        1,542,572
   General and administrative expenses                1,204,683          764,992
   Research and development expenses                  1,052,847          677,541
                                                 --------------   --------------
          Loss from operations                       (1,650,350)     (1,588,293)

Interest income, net                                     49,190         100,469
                                                 --------------   --------------
          Net loss                               $   (1,601,160)  $  (1,487,824)
                                                 ===============  ==============

Basic loss per share                             $        (0.16)  $       (0.17)
                                                 ===============  ==============

Diluted loss per share                           $        (0.16)  $       (0.17)
                                                 ===============  ==============

Weighted average shares outstanding used
to compute basic and diluted loss per share            9,872,765       8,622,983
                                                 ===============  ==============













        The accompanying notes are an integral part of these statements.

                                       5
<PAGE>






                      EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)


                                                        For the Six Months Ended
                                                        June 30,        June 30,
                                                          1999            1998
                                                      ------------    ----------
Cash flows from operating activities:
  Net loss                                            $ (1,601,160)  (1,487,824)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation and amortization                          141,560      140,543
  Changes in assets and liabilities:
    Increase in accounts receivable                       (531,712)    (633,939)
    (Increase) decrease in inventories                    (417,040)      210,644
    Decrease in prepaid and other current assets            61,259        32,660
    (Increase) decrease in other assets                    (12,851)       28,125
    Increase (decrease) in payables due to related parties 315,726      (52,151)
    Increase(decrease) in accounts payable                 396,226     (152,890)
    (Decrease) in accrued expenses, deferred
        revenue and customer deposits                     (205,983)    (174,319)
                                                      -------------  -----------
        Net cash used in operating activities         $ (1,853,975)  (2,089,151)
                                                      -------------  -----------

Cash flows from investing activities:
   Proceeds from maturity of investments                   729,351       862,011
   Patent costs                                                 --      (36,852)
   Capital expenditures                                   (667,983)    (191,048)
                                                       -----------   -----------
          Net cash provided by investing activities    $    61,368       634,111
                                                       -----------   -----------

Cash flows from financing activities:
   Net proceeds from equity offering                            --     4,661,708
   Proceeds from exercise of stock options                   6,000        29,925
   Net borrowings under note payable                       513,722            --
                                                       -----------    ----------
          Net cash provided by financing activities    $   519,722     4,691,633
                                                       -----------    ----------

Net (decrease) in cash and cash equivalents             (1,272,885)  (3,236,593)
Cash and cash equivalents, beginning of period           2,332,931       752,068
                                                       -----------   -----------
Cash and cash equivalents, end of period               $ 1,060,046     3,988,661
                                                       ===========   ===========



        The accompanying notes are an integral part of these statements.



                                       6
<PAGE>




                      EP MEDSYSTEMS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 1. Basis of Presentation The accompanying  unaudited consolidated financial
statements have been prepared in accordance with generally  accepted  accounting
principles  for  interim  financial  information  and  in  accordance  with  the
instructions  to  Form  10-QSB.  Accordingly,  they  do not  include  all of the
financial  information and footnotes required by generally  accepted  accounting
principles for complete financial statements. In the opinion of management,  all
adjustments (including normal recurring adjustments)  considered necessary for a
fair presentation have been included.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.

The results of operations for the respective interim periods are not necessarily
indicative  of the results to be expected  for the full year.  The  accompanying
unaudited  consolidated  financial statements should be read in conjunction with
the audited consolidated  financial statements and the notes thereto included in
the  Company's  Form 10-KSB for the year ended  December 31, 1998 filed with the
Securities and Exchange Commission.

Note 2. Net Loss Per Common  Share  Effective  for the year ended  December  31,
1997, the Company adopted Statement of Financial  Accounting  Standards No. 128,
"Earnings Per Shar" ("SFAS 128").  The Company'  basic and diluted  earnings per
share are equal, due to the exclusion of common stock  equivalents,  which would
make the earnings per share calculations anti-dilutive.

Note 3.  Inventories
Inventories consist of the following:

                           June 30, 1999
                           -------------
   Raw materials            $    851,655
   Work in process                47,687
   Finished goods              1,318,389
                           -------------
                             $ 2,217,731
                           =============



Note 4.  Long-Term Debt

Effective June 30, 1999,  the Company  entered into two debt  agreements  with a
bank: a $2,000,000  revolving  line of credit  ("revolver")  and a $500,000 term
note.


                                       7
<PAGE>


The  proceeds  of the  revolver,  when drawn down are  intended  to fund  future
working capital needs.  Borrowings bear interest at either the bank's Prime Rate
plus 1/2% or LIBOR plus 3%. A facility  fee is payable  quarterly on the average
unused commitment at a rate of 3/4%.

The  purpose of the term note is to fund the  purchase  of 7,500  square feet of
manufacturing  and  warehouse  space at the  Company's  ProCath  subsidiary  and
building  improvements.  Interest is payable  monthly in arrears at either Prime
plus 3/4 or LIBOR plus 3 1/4%.  Principal is payable  commencing January 2000 in
48 equal  monthly  installments  under a 15 year  amortization  schedule  with a
balloon payment due in December 2004

The Company is required to maintain certain financial  ratios,  and meet certain
net worth and indebtedness tests. The debt is collateralized by a first priority
lien on all  corporate  assets.  The agreement  also  prohibits the Company from
incurring certain additional indebtedness, limits investments, advances or loans
and restricts  substantial asset sales, capital expenditures and cash dividends.

Item 2. Management's Discussion and Analysis or Plan of Operation

Overview

The Company was  incorporated  in New Jersey in January  1993 and  operates in a
single industry segment. The Company develops, manufactures, markets and sells a
line of  products  for  the  cardiac  electrophysiology  ("EP")  market  used to
diagnose,  monitor and treat irregular  heartbeats  known as arrhythmias.  Since
inception,  the Company has acquired technology,  has developed new products and
has  begun  marketing  various  electrophysiology  products,  including  the  EP
WorkMate  [registered]   electrophysiology  workstation,  the  EP-3  [trademark]
Stimulator,   diagnostic  electrophysiology  catheters,  internal  cardioversion
catheters and related disposable supplies.

The Company has  developed a new product for  internal  cardioversion  of atrial
fibrillation  known as the ALERT  [registered]  System,  which  uses a  patented
electrode catheter to deliver measured, variable, low energy electrical impulses
directly to the inside of the heart in order to convert atrial fibrillation to a
normal heart rhythm. The ALERT  [registered]  System is not approved for sale in
the United States,  but is currently  undergoing  clinical  trials.  The Company
intends to market a full family of internal  cardioversion  catheters around the
ALERT [registered] platform.

The Company has also developed an intracardiac ultrasound product line including
the  ViewMate  [trademark]  ultrasound  imaging  console and U-View  [trademark]
deflectable  intracardiac  imaging  catheter.  These  products  are  designed to
improve a  physician's  ability to  visualize  inside the chambers of the heart,
including  the  internal  anatomy of the heart.  The Company  believes  that the
ViewMate  [trademark]  and U-View  [trademark] may play an important role as new
and  effective  treatment  options are  developed  for the  treatment of complex
cardiac   arrhythmias,   including   ventricular   tachyarrhythmia   and  atrial
fibrillation.  The Company's  ultrasound  products are not approved for sale and
the  Company  does  not  anticipate  receiving  approval  to sell  the  ViewMate
[trademark] or U-View  [trademark] for at least several  months,  if approved at
all.

Forward-Looking Statements


                                       8
<PAGE>




This report contains certain statements of a forward-looking  nature relating to
such matters as  anticipated  financial and  operational  performance,  business
prospects, technological developments, results of clinical trials, new products,
research  and  development  activities  and similar  matters.  Stockholders  are
cautioned that such  statements are only  predictions  and that actual events or
results  may differ  materially.  In  evaluating  such  statements,  prospective
investors  should  specifically  consider  the  various  factors  effecting  the
industry and economy  generally,  as well as those identified in this report and
in  the  Company's   other  reports  filed  with  the  Securities  and  Exchange
Commission,  which could cause actual  results to differ  materially  from those
indicated by such forward-looking statements.

RESULTS OF OPERATIONS

Six months ended June 30, 1999 compared to six months ended June 30, 1998

Sales  increased  $1,770,000  (or 56%) in the six months  ended June 30, 1999 as
compared to the prior period in 1998. The majority of the increase in revenue in
the quarter resulted from increased sales of the EP WorkMate [registered], which
represented  a substantial  percentage  of sales during the six-month  period in
1999.  The Company  also  realized  increased  sales of certain of its  catheter
products during the period.

The level of sales for the remaining  six months of 1999 will depend  materially
on  sales of the EP  WorkMate  [registered]  and  diagnostic  catheters  and the
ability  of the  Company's  direct  sales  force and  network  of  international
independent  distributors to effectively  market and sell the Company's existing
products.  The ALERT [registered] System is currently undergoing clinical trials
and is not approved for sale in the United States. The ALERT [registered] System
has been introduced for sale in Europe.  However,  the Company cannot accurately
determine  the sales level of the ALERT  [registered]  System for the  remaining
quarters in 1999 at this time or when it will be  available at all in the United
States.  The  Company  expects the ALERT  [registered]  System to  contribute  a
greater proportion of revenues in the second half of 1999 and beyond.

Cost of products  sold  increased  $476,000  (or 27%) due to the 56% increase in
sales for the six months  ended June 30, 1999 as compared to 1998.  Gross profit
on sales for the six months  ended  June 30,  1999 was  $2,691,000  (or 54% as a
percentage  of sales),  as compared with  $1,397,000  (or 44% as a percentage of
product  sales) for the  comparable  period in 1998.  The  Company  realized  an
increase in gross profit on sales of existing products during first half of 1999
primarily due to increased sales of the EP WorkMate,  which  currently  yields a
higher gross margin than certain of the Company's  other  products.  The Company
hopes to improve  its  overall  gross  profit  percentage  as sales of the ALERT
[registered]  System and other catheter products increase,  which may offset the
fixed costs associated with maintaining a catheter manufacturing operation.

Sales and marketing  expenses  increased  $541,000 (or 35%),  but decreased as a
percentage of revenue from product sales from 48% to 42% in the six months ended
June 30,  1999 as compared to 1998.  The dollar  increase  during the first half
1999 was  primarily due to the impact of increase in  personnel,  travel,  trade
show related expenses, product promotion and


                                       9
<PAGE>




physician   educational   materials  in  support  of  its  sales  efforts.   The
international  distribution  network is currently  supported by a team of direct
international  sales and marketing  professionals,  international field clinical
engineers and administrative support personnel.

General and administrative  expenses increased $440,000 (or 57%) but remained at
24% of sales in the six months  ended June 30,  1999 as  compared  to 1998.  The
increase during the first half of 1999 was due to increased personnel, occupancy
and other administrative costs necessary to support the increased operations. It
is  anticipated  that these  expenses may decline as a percentage of revenues as
incremental sales are generated.

Research and development  expenses  increased $375,000 (or 55%), but remained at
21% of sales in the six months  ended June 30, 1999 as compared to 1998.  During
the  six  months  ended  June  30,  1999,  the  Company  incurred  research  and
development  expenses in connection with ongoing development efforts on existing
products,  including the EP WorkMate  [registered],  costs  associated  with the
clinical trials for the ALERT [registered]  System,  development costs and costs
of preparing regulatory submissions for the new ultrasound imaging product line,
as well as costs  associated  with several new products under  development.  The
Company expects that research and development expenses are likely to increase in
future  periods,   in  part  due  to  ongoing  expenses  related  to  the  ALERT
[registered]  System clinical  trials,  new product  development  activities and
regulatory applications aimed at gaining approval to sell other new products.

The net loss for the six months ended June 30, 1999 was  $1,601,000  as compared
to a net loss of $1,488,000  during the comparable period in 1998. The basic and
diluted  loss per share for the six  months  ended  June 30,  1999 was $0.16 per
share versus $0.17 per share in 1998.

Liquidity and Capital Resources

Since inception, the Company's expenses have exceeded its sales, resulting in an
accumulated deficit of approximately $16,036,000 at June 30, 1999.

The Company  entered  into two  financing  arrangements  in March of 1999 with a
bank: a $2,000,000 revolving line of credit and a $500,000 term loan. Management
believes  that its current  liquidity  position  will be  sufficient to meet the
needs of the Company  until at least June 30, 2000.  In the event that it cannot
generate additional capital funds during the remaining half of 2000, the Company
believes that it can reduce non-core related  expenditures,  which will allow it
to continue in its operations for a significant period.

Net cash used in  operating  activities  for the six months  ended June 30, 1999
decreased  $235,000  (or  11%)  as  compared  to  1998.  The  net use of cash in
operations  during first quarter 1999 was  primarily  due to the Company's  loss
from  operations.  Payables  to related  parties  increased  $316,000  due to an
increase in purchases of components for the Alert [registered] System.  Payments
to related parties are made on terms similar to those of other suppliers.




                                       10
<PAGE>



Capital  expenditures,  were  $668,000  during  first half 1999 as  compared  to
$191,000 in first half 1998.  During  February  1999,  the Company  purchased an
additional 7,500 square feet of manufacturing and warehouse space at ProCath for
a purchase  price of  approximately  $400,000.  Costs to  prepare  the space for
intended  use are  estimated to be  $100,000.  This  purchase was financed via a
$500,000  term loan  executed  subsequent  to December  31,  1998.  The purchase
provided  for  expansion of the existing  manufacturing  operations,  additional
warehousing,  shipping  and  quality  assurance  activities  and  relocation  of
ProCath's administrative offices.

Net borrowings under note payable  increased  $514,000 as compared to first half
1998 due  primarily to the proceeds the Company  received from the $500,000 term
loan.

As of the date of this  Report on Form  10-QSB,  the  Company  does not have any
other  material  commitments  for  capital  expenditures.  However,  the Company
expects  to  purchase  capital  equipment  and to expand its  manufacturing  and
assembly  capabilities  as it continues to grow.  The Company  leases office and
manufacturing space and certain office equipment under operating leases.

During  February  1997,  the Company  licensed the rights to several  ultrasound
technologies  from  EchoCath,  for use in the  field of  electrophysiology.  The
agreement with EchoCath calls for the Company to make payments  totaling up to a
maximum of $700,000, in four installments, as certain development milestones and
initial sales are achieved on the EchoMark and EchoEye technologies.  One of the
milestones  calls  for a  $400,000  payment  payable  upon the  completion  of a
development  program for the  EchoEye.  This  milestone  was only payable in the
event that the  development  was completed by September 30, 1998. To the best of
the  Company's  knowledge,  the  milestone  was not  achieved  and no  milestone
payments are accrued or payable to EchoCath as of June 30, 1999.

The Company  expects its  operating  losses to continue in the near future as it
will continue to expend substantial funds for research and development, clinical
trials in support of regulatory approvals,  increased manufacturing capacity and
expansion  of sales and  marketing  activities.  The amount and timing of future
losses will be  dependent  upon,  among  other  things,  increased  sales of the
Company's  existing  products,  clinical  approval and market  acceptance of the
ALERT [registered]  System and  developmental,  regulatory and market success of
new  products  under  development.  There  can be no  assurance  that any of the
Company's  development  projects will be successful  or that if  development  is
successful,  that the products will  generate any sales.  Based upon its current
plans and projections,  the Company believes that its existing capital resources
will be sufficient to meet its  anticipated  capital needs for at least the next
twelve months.

Year 2000 Readiness

The Year 2000 issue could affect  computers,  software and other equipment used,
operated or maintained by the Company. The Company has substantially completed a
review of its internal computer programs and systems to ensure that the programs
and systems will be Year 2000 compliant.  The Company  presently  believes that,
based on current  plans and efforts to date,  its internal  programs and systems
will be Year 2000 compliant in a timely manner.

                                       11
<PAGE>


The Year 2000 issue can also affect  products sold by the Company,  particularly
the EP WorkMate [registered] and ALERT [registered]  Companion.  The Company has
performed  an  assessment  of its  products  and,  as a result  of this  review,
believes that it has  substantially  identified  and resolved the potential Year
2000 issues with these products.  However,  the Company also believes that it is
not  possible to determine  with  complete  certainty  that all Year 2000 issues
affecting  the Company's  products have been  identified or corrected due to the
complexity  of these  products and the fact that these  products  interact  with
other third party  products or operate on computer  systems  which are not under
the Company's control.

The Company  believes  that its greatest  Year 2000 risk for  disruption  to its
business is the potential  noncompliance of third parties.  In this regard,  the
Company has  initiated  communications  with its vendors,  major  customers  and
service  providers  in order to  determine  the  extent to which  the  Company's
business is vulnerable to the third parties'  failure to make their systems Year
2000 compliant. Since the Company has no control over the actions of these third
parties,  there can be no assurance that these third parties will resolve any or
all Year 2000  issues.  Any failure of these third  parties to resolve Year 2000
issues in a timely manner could have a material  adverse effect on the Company's
financial condition and results of operations.

The  Company  currently  does  not have a  contingency  plan in the  event  that
particular  systems,  including the systems of material third  parties,  are not
Year 2000  compliant.  It is intended  that such a plan will be  developed if it
becomes clear that the Company is not going to achieve its scheduled  compliance
objectives.   Although  no  assurance  can  be  given  that  there  will  be  no
interruption  of  operations  as a result of the Year 2000  issue,  the  Company
believes  and  assuming  that third  parties  with whom the Company has material
business  relationships  successfully remediate their own Year 2000 issues) that
it has reasonably  assessed its systems in order to ensure that the Company will
not suffer any  material  adverse  effect from the Year 2000  issue.  Though the
Company has used and will continue to use internal resources to resolve its Year
2000 issues,  the Company may retain third party  consultants  to assist in this
regard.

Costs  specifically  associated  with  Year  2000  compliance  are  expensed  as
incurred.  To date, the Company has not spent a material amount on this project.
The Company does not expect the total costs relating to Year 2000  compliance to
have a material  effect on the  Company's  results of  operations  or  financial
condition.  However,  the total costs that the Company will incur in  connection
with the Year 2000 issue will be influenced  by (i) its ability to  successfully
identify Year 2000 issues, (ii) the nature and amount of programming required to
remediate the issues,  (iii) the related labor and/or  consulting costs for such
remediation  and (iv) the  ability of third  parties  with whom the  Company has
business  relationships  to  successfully  address their own Year 2000 concerns.
These and other  unforeseen  factors could have a material adverse effect on the
Company's results of operations or financial condition.

                                       12
<PAGE>




PART II.   OTHER INFORMATION

Item 1.  Legal Proceedings.

During October 1997, the Company filed a lawsuit against  EchoCath in the United
States  District  Court for the  District  of New Jersey  alleging,  among other
things,  that  EchoCath  made  fraudulent  misrepresentations  and  omissions in
connection  with the prior  sale of  $1,400,000  of its  preferred  stock to the
Company.

EchoCath filed an answer to the complaint, denying the allegations and asserting
a counterclaim against the Company seeking its costs and expenses in the action.
EchoCath also filed a motion to dismiss the complaint.  During October 1998, the
complaint  was  dismissed by the District  Court.  The Company is appealing  the
decision.  The Company  believes that  EchoCath's  counterclaim  and request for
reimbursement  of its costs and  expenses  is without  merit.  As a result,  the
Company  has not accrued for such costs and  expenses at June 30,  1999.  In the
opinion of management, the ultimate resolution of the counterclaim will not have
a material  adverse  impact of the Company's  financial  condition or results of
operations.  The Company cannot determine the outcome of the EchoCath litigation
at this time.

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


                                       13
<PAGE>







     (a)   Exhibits

               The following exhibits will be filed as part of this Form 10-QSB:

               Exhibit 27            Financial Data Schedule (SEC filing only)



     (b)   Reports on Form 8-K

               None




                                       14
<PAGE>







                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the Registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


                                     EP MEDSYSTEMS, INC.
                                    -------------------
                                        (Registrant)


Date: August 12, 1999          By:  /s/  David A. Jenkins
                                    ---------------------
                                    David A. Jenkins
                                    President and Chief Executive Officer

Date: August 12, 1999          By:  /s/  Joseph M. Turner
                                    ---------------------
                                    Joseph M. Turner
                                    Vice President and Chief Financial Officer
                                    (Principal Financial and Accounting Officer)

<PAGE>




                                  EXHIBIT INDEX


Exhibit
Number                      Description of Exhibit
----------                  ---------------------------


Exhibit 27                  Financial Data Schedule
                            (SEC filing only)



                                       15