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, 1997

                         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.)

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

Registrant's telephone number, including area code:
(973) 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 August 8, 1997.

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

PART 1.  -- FINANCIAL INFORMATION                         Page
                                                          
  Item 1.  Financial Statements                               
                                                              
  Consolidated Balance Sheets at June 30, 1997                
  (unaudited) and December 31, 1996                          3
                                                              
  Consolidated Statements of Operations for the three        4
  months ended June 30, 1997 and 1996 (unaudited)             
                                                              
  Consolidated Statements of Operations for the six           
  months ended June 30, 1997 and 1996 (unaudited)            5
                                                              
  Consolidated Statements of Cash Flows for the six           
  months ended June 30, 1997 and 1996 (unaudited)            6
                                                              
  Notes to Consolidated Financial Statements                  
  (unaudited)                                             7-10
                                                              
  Item 2.  Management's Discussion and Analysis of            
  Financial Condition and Results of Operations          10-18
                                                              
                                                              
PART II  -- OTHER INFORMATION
                                                              
  Item 5.  Other information                                18
                                                              
  Item 6.  Exhibits and Reports on Form 8-K                 19
                                                              
  Signatures                                                19
                                                              
  Exhibit Index                                             20
                                                              
  Exhibit 11.1 - Computation of Earnings per Share          21


                              
                              
PART I -- FINANCIAL INFORMATION
Item 1.  Financial Statements
             EP MEDSYSTEMS, INC. AND SUBSIDIARY
                 CONSOLIDATED BALANCE SHEETS
                                          December 31,     June 30,
ASSETS                                         1996          1997
Current assets:                                           unaudited
   Cash and cash equivalents              $  5,491,857  $  1,038,981
   Short-term investments                    1,794,553     1,000,000
   Accounts receivable, net                    671,503       590,773
   Inventories                                 626,707     1,490,497
   Prepaid and other current assets            185,761       338,952
                                             ---------     ---------
          Total current assets               8,770,381     4,459,203
                                             ---------     ---------
Long-term investments                        3,001,222     3,200,734
Investment in EchoCath, Inc.                    --         1,400,000
Property and equipment, net                    181,385       630,525
Intangible assets, net                         615,861       581,485
Other assets                                    31,000        87,697
                                            ----------    ----------
          Total assets                    $ 12,599,849  $ 10,359,644
                                            ==========    ==========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:                                                  
   Accounts payable                       $     238,764  $     692,559
   Payables due to related party                 85,035        125,321
   Accrued expenses                             438,787        301,253
   Deferred revenue                              42,938         44,125
   Customer deposits                            103,999         97,113
                                                -------      ---------
          Total liabilities                     909,523      1,260,371
                                                -------      ---------
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                              
 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)    (7,651,341)
                                            -----------    -----------
   Total shareholders' equity (deficit)      11,690,326      9,099,273
                                            -----------    -----------  
Total liabilities and shareholders'                                   
equity (deficit)                          $  12,599,849  $  10,359,644
                                             ==========     ==========
    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
                                         June 30,      June 30,
                                           1996          1997
                                         -------        -------
Product sales                        $   569,032        409,914
Revenue from catheter development        250,000            -
                                         -------        -------
      Total revenues                     819,032        409,914
                                         -------        -------

Operating costs and expenses:                                  
 Cost of products sold                   308,547        368,584
 Sales and marketing expenses            163,597        784,670
 General and administrative expenses     279,791        434,932
 Research and development expenses        98,020        594,187
 Write-off of other assets                 7,500            -
 Write-off of value of 1995 Warrants
   on retirement of 1995 Debentures       46,497            -
                                        --------    -----------
      Loss from operations              (84,920)    (1,772,459)
                                        --------    -----------

Interest expense                          19,933            624
Interest income                         (10,460)       (77,206)
                                        --------    -----------
      Net loss                       $  (94,393)    (1,695,877)
                                        ========    ===========

Net loss per share                   $    (0.02)         (0.22)
                                          ======         ======
Weighted average shares outstanding    5,930,046      7,599,917
                                       =========      =========

    The accompanying notes are an integral part of these statements.
                              
                              4
                              
             EP MEDSYSTEMS, INC. AND SUBSIDIARY
            CONSOLIDATED STATEMENTS OF OPERATIONS
                         (unaudited)
                              
                                         For the Six Months Ended
                                          June 30,        June 30,
                                            1996            1997
                                          ---------       ---------
Product sales                        $    1,324,695  $    1,285,637
Revenue from catheter development           250,000           -
                                          ---------       ---------
     Total revenues                  $    1,574,695  $    1,285,637
                                          ---------       ---------
Operating costs and expenses:                                      
  Cost of products sold                     665,806         891,408
  Sales and marketing expenses              269,189       1,476,026
  General and administrative expenses       560,092         793,962
  Research and development expenses         159,272         937,640
  Write off of other assets                 107,500            -
  Write-off of value of 1995 Warrants
    on retirement of 1995 Debentures         46,497            -
                                            --------      ----------
     Loss from operations                  (233,661)     (2,813,399)
                                            -------       ---------
Interest expense                             38,481           1,248
Interest income                             (10,460)       (223,594)
                                           ---------     -----------
     Net loss                        $     (261,682)  $  (2,591,053)
                                           =========     ===========
Net loss per share                   $       (0.04)  $       (0.34)
                                             ======          ======
Weighted average shares outstanding       5,860,229       7,599,917
                                          =========       =========

    The accompanying notes are an integral part of these statements.
                              
                              5

              EP MEDSYSTEMS, INC. AND SUBSIDIARY
            CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (unaudited)
                                              For the Six Months Ended
                                               June 30,      June 30,
                                                1996           1997
Cash flows from operating activities:          ---------    -----------
  Net loss                                 $   (261,682)  $ (2,591,053)
  Adjustments to reconcile net income to net
    cash provided (used) by operating activities:
  Depreciation and amortization                  84,412         93,853
  Write-off of other assets                     107,500           -
  Amortization of premium or discount on
    long-term and short-term investments           -            28,078
  Write-off of value of 1995 Warrants on
    retirement of 1995 Debentures                 46,497           -
Changes in assets and liabilities:                                     
(Increase) decrease in accounts receivable      (607,015)       80,730
Decrease (increase) in inventories                16,986      (863,790)
Decrease (increase) in prepaid and other                               
current assets                                     9,438      (153,191)
Decrease (increase) in intangible and                                  
other assets                                      26,837       (56,695)
Increase in due to related party                 126,378         40,286
Increase in accounts payable                         306        453,795
(Decrease) in accrued expenses, deferred                               
revenue and customer deposits                   (94,589)      (143,233)
                                               ---------    -----------
Net cash used in operating activities          (544,932)    (3,111,220)
                                               ---------    -----------
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          (20,911)      (508,618)
Loan to Falfab                                   (7,500)           -
                                               ---------    -----------
Net cash used in investing activities           (28,411)    (1,341,656)
                                               ---------    -----------
Cash flows from financing activities:                                  
Repayment of debentures, net                    (62,500)         -
Net proceeds from issuance of common stock    12,843,551         -
Payment of notes payable                         (8,600)         -
                                              ----------    -----------
Net cash provided by financing activities     12,772,451         -
                                              -----------   ------------
Net increase (decrease) in cash and cash
equivalents                                   12,199,108    (4,452,876)

Cash and cash equivalents, beginning of period    34,588      5,491,857
                                              ----------    -----------
Cash and cash equivalents, end of period   $  12,233,696  $   1,038,981
                                              ==========    ===========

    The accompanying notes are an integral part of these statements.
                              
                              6
                              
             EP MEDSYSTEMS, INC. AND SUBSIDIARY
         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  and
Article  10  of Regulation S-X.  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 EP MedSystems, Inc.'s Form  10-KSB  for
the  year  ended December 31, 1996 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 and six months ended June 30,  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  128  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.  The  impact
of  SFAS 128 on the calculation of net loss per share is not
expected to be material.

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.

During  the  six months ended June 30, 1996, the holders  of
$1,025,000  face  amount  of  long  term  debt  (the   "1995
Debentures")  elected  to  exercise  warrants   (the   "1995
Warrants")  to  purchase 512,500 shares of common  stock  at
$2.00  per share in lieu of receiving cash repayment of  the
debentures.   On  June  30, 1996,  the  Company  repaid  the
remaining outstanding 1995 Debentures in the face amount  of
$112,500 in cash.  During July and August, 1996, the holders
of  the remaining 1995 Warrants to purchase 56,250 shares of
common stock at $2.00 per share.  Upon repayment of the 1995
Debentures,  the Company recorded a write-off  of   $46,497,
representing  the  unamortized  value  placed  on  the  1995
Warrants issued in connection with the 1995 Debentures.

4.   Inventories
Inventories consist of the following:
                                    December 31,     June 30
                                        1996           1997
                                    ------------   -----------
     Raw materials                  $ 173,936      $   212,617
     Work in progress                  11,456           10,423
     Finished goods                   441,315        1,267,457
                                      -------        ---------
                                    $ 626,707      $ 1,490,497
                                      -------        ---------

5.   ProCath Building Purchase
During  February, 1997, the Company purchased  approximately
7,500  square  feet  of  manufacturing,  administrative  and
warehouse  space, including 2,500 square feet of space  that
was  leased  by  the  Company's ProCath subsidiary,  for  an
aggregate   purchase   price  of   approximately   $370,000,
including certain transaction costs.  The Company is in  the
process  of completing improvements to the space to  prepare
it for its intended use.  The estimate for completion of the
improvements  is approximately $72,000.  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.

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.   The
preferred  stock is not a registered security  traded  on  a
public  exchange and therefore its fair value is not readily
determinable.   Accordingly,  the  shares  are   stated   at
historical cost.  Management has evaluated the security  for
impairment  and  as  a  result of  this  review,  management
believes that there is no impairment at June 30, 1997.

7.  Supplemental Statement of Cash Flow Information:
Supplemental Noncash Investing and Financing Activities:
During  the  six months ended June 30, 1996, the holders  of
$1,025,000  face  amount  of  long  term  debt  (the   "1995
Debentures")  elected  to  exercise  warrants   (the   "1995
Warrants")  to  purchase 512,500 shares of common  stock  at
$2.00  per share in lieu of receiving cash repayment of  the
debentures.

Cash  paid  for  interest  was $624,  $1,248,  $19,933,  and
$38,481 for the three and six months ended June 30, 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.   The  words
"believe",  "expect", "anticipate", and similar  expressions
identify  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 the following
paragraphs and in "Business Considerations" of the Company's
Form  10-KSB filed with the SEC.  Readers are cautioned  not
to place undue reliance on these forward looking statements,
which  speak  only  as  of  the date  of  this  report.   EP
MedSystems undertakes no obligation to publicly release  the
results of any revisions to these forward looking statements
that  may  be made to reflect events or circumstances  after
the  date  of  this report or to reflect the  occurrence  of
anticipated events.

OVERVIEW
The   Company  was  formed  in  January,  1993  to  develop,
manufacture,  market  and sell a range of  electrophysiology
products used to diagnose, monitor and treat certain cardiac
disorders.   Since  inception,  the  Company  has   acquired
certain  technology and related assets as  well  as  certain
marketing  rights,  has  developed  new  products  and   has
introduced  or  begun  marketing  various  electrophysiology
products,   including  the  EP  WorkMate   electrophysiology
workstation,   the   EP-3   computerized   electrophysiology
stimulator  and diagnostic electrophysiology catheters.   To
date, these products have generated limited revenue and  the
Company  has  accumulated a deficit of $7.65 million  as  of
June 30, 1997.

The  Company has also developed the ALERT System, which uses
a   proprietary  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. Although there can be no assurance
of  such fact, the Company anticipates that it will  make  a
limited  market  release of the ALERT  System  for  European
sales  during  the second half of 1997.  In  order  for  the
Company to market the ALERT System in the United States, the
Company  must obtain clearance approval from the  FDA.   The
Company  has  filed a Pre-IDE application with the  FDA  and
expects to file an IDE during the second half of 1997.  Upon
receipt  of FDA approval of the IDE submission, the  Company
expects  to  begin  clinical trials.  At the  earliest,  the
Company does not anticipate filing a PMA application for the
ALERT  System  for  at  least  six  months,  and  does   not
anticipate  receiving  a PMA for any such  system  until  at
least  one  to  three  years after such PMA  application  is
accepted for filing, if at all.

The  Company expects its operating losses to continue as  it
will  expend substantial funds for research and development,
clinical   trials   in  support  of  regulatory   approvals,
increased manufacturing capacity and expansion of sales  and
marketing activities.

RESULTS OF OPERATIONS
Three months ended June 30, 1997 compared to three months
ended June 30, 1996

Total  revenues decreased $409,118 (or 50.0%) from  $819,032
to  $409,914 in the three months ended June 30,  1997.   The
decrease  in  sales in the second quarter of  1997  resulted
from  lower than expected sales of the EP WorkMate   caused,
in  part, by a delay in the release of a software update and
a new catheter interface box.  Shipments of the new features
are  expected to begin during the third quarter of 1997  and
all  existing EP WorkMate customers will be upgraded to  the
new  components.  Beginning in September, 1996, the  Company
began hiring 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 terminated its relationships with  all
of  its domestic independent distributors.  During 1997, the
Company  has  added several sales representatives,  clinical
engineers  and  support personnel in  Europe.   The  Company
believes that the change over from a distributor based sales
force  to  a direct sales force has had a temporary  adverse
effect  on  sales.  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.   During  the
three  months  ended  June 30, 1996,  the  Company  recorded
revenue   of  $250,000  from  the  development  of  catheter
technology  for  a  third party which was not  recurring  in
1997.

Cost  of  products sold increased $60,037  (or  19.5%)  from
$308,547 to $368,584.  Gross profit on product sales for the
three months ended June 30, 1996 was $260,485 (or 45.8% as a
percentage  of product sales), as compared with $41,330  (or
10.0%)  for  1997.  The decrease in gross profit  percentage
was  due  to  lower sales of the EP WorkMate  and  increased
labor  and fixed manufacturing overhead expenses at  ProCath
as  the  Company prepares to commence manufacturing  of  the
ALERT  products.   During the three months  ended  June  30,
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 $621,073 (or 379.6%)
from  $163,597  to  $784,670 and as a  percentage  of  total
revenues  from  20.0%  to 191.4%.  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  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 file an  IDE
and to begin clinical trials for the ALERT System during the
second half of 1997.  Although there can be no assurance  of
such  fact,  the  Company anticipates that it  will  make  a
limited  market  release of the ALERT  System  for  European
sales  during the second half of 1997.  The Company  expects
to incur additional sales and marketing expenses as a result
of  the introduction of the ALERT System for sale outside of
the United States.

General  and administrative expenses increased $155,141  (or
55.4%)  from  $279,791  to  $434,932  and  increased  as   a
percentage  of  total revenues from 34.2%  to  106.1%.   The
dollar   increase  was  due  to  the  hiring  of  additional
administrative  personnel,  increased  use  of  professional
services, 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  $496,167  (or
506.2%) from $98,020 to $594,187 and as a percentage of  net
sales  from  12.0%  to  145.0%.  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 technology for placement of  a  flexible
metallic   coating   on  its  electrophysiology   catheters,
preliminary   development  efforts  of   ultrasound   guided
products,  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 and  catheters  utilizing  the
flexible   electrode   technology   as   well   as   ongoing
improvements to existing products.

Interest  expense  decreased $19,309 from $19,933  to  $624.
The   decrease  was  due  to  the  Company's  repayment   of
$1,137,500 face amount of 1995 Debentures in June, 1996, the
repayment  of  the balance of a note incurred in  connection
with the acquisition of ProCath and the balance of a $50,000
short  term  note.   The Company does not  expect  to  incur
material interest expense in 1997.

Interest income during the three months ended June 30,  1997
was  $77,206 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 of $1,695,877 (or $.22  per
share based on 7,599,917    shares outstanding) in the three
months ended June 30, 1997 as compared with $94,363 (or $.02
per  share  based  on 5,930,046 shares outstanding)  in  the
comparable  period in 1996.  The increase in  net  loss  was
caused by the factors discussed above.

RESULTS OF OPERATIONS
Six months ended June 30, 1997 compared to six months ended
June 30, 1996

Total revenues decreased $289,058 (or 18.4%) from $1,574,695
to  $1,285,637 in the six months ended June 30,  1997.   The
decrease  in sales for the six month period ended  June  30,
1997  resulted  from lower than expected  sales  of  the  EP
WorkMate   caused, in part, by a delay in the release  of  a
software update and a new catheter interface box.  Shipments
of  the new features are expected to begin during the  third
quarter of 1997 and all existing EP WorkMate customers  will
be  upgraded to the new components.  Beginning in September,
1996,  the Company began hiring 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   terminated    its
relationships   with   all  of  its   domestic   independent
distributors.   During 1997, the Company has  added  several
sales   representatives,  clinical  engineers  and   support
personnel  in Europe.  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.  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.
During  the  six  months ended June 30,  1996,  the  Company
recorded revenue of $250,000 from catheter  development  for
a third party which was not recurring in 1997.

Cost  of  products sold increased $225,602 (or  33.9%)  from
$665,806 to $891,408.  Gross profit on product sales for the
six  months ended June 30, 1996 was $658,889 (or 49.7% as  a
percentage of product sales), as compared with $394,229  (or
30.7%)  for  1997.  The decrease in gross profit  percentage
was  partially due to lower sales of the EP WorkMate  in the
second  quarter  of  1997  and  increased  labor  and  fixed
manufacturing  overhead expenses at ProCath as  the  Company
prepares  to  commence manufacturing of the ALERT  products.
During  the  six  months ended June 30,  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  $1,206,837   (or
448.3%)  from $269,189 to $1,476,026 and as a percentage  of
total   revenues  from  17.1%  to  114.8%.    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 file an  IDE
and  begin  clinical trials for the ALERT System during  the
second half of 1997.  Although there can be no assurance  of
such  fact,  the  Company anticipates that it  will  make  a
limited  market  release of the ALERT  System  for  European
sales  during the second half of 1997.  The Company  expects
to incur additional sales and marketing expenses as a result
of  the introduction of the ALERT System for sale outside of
the United States.

General  and administrative expenses increased $233,870  (or
41.8%)  from  $560,092  to  $793,962  and  increased  as   a
percentage  of  total  revenues from 35.6%  to  61.8%.   The
dollar   increase  was  due  to  the  hiring  of  additional
administrative  personnel,  increased  use  of  professional
services, 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  $778,368  (or
488.7%) from $159,272 to $937,640 and as a percentage of net
sales  from  10.1%  to  72.9%.   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 technology
for   placement  of  a  flexible  metallic  coating  on  its
electrophysiology catheters, preliminary development efforts
of ultrasound guided products, 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 flexible electrode  technology  as
well as ongoing improvements to existing products.

Interest  expense decreased $37,233 from $38,481 to  $1,248.
The   decrease  was  due  to  the  Company's  repayment   of
$1,137,500 face amount of 1995 Debentures in June, 1996, the
repayment  of  the balance of a note incurred in  connection
with the acquisition of ProCath and the balance of a $50,000
short  term  note.   The Company does not  expect  to  incur
material interest expense in 1997.

Interest  income during the six months ended June  30,  1997
was  $223,594 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 of $2,591,053 (or $.34  per
share  based on 7,599,917    shares outstanding) in the  six
months  ended  June 30, 1997 as compared with  $261,682  (or
$.04 per share based on 5,860,229 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  six  months
ended  June 30, 1997 was $3,111,220 as compared to  $544,932
for the six months ended June 30, 1996.  The net use of cash
in operations during 1997 was due primarily to the Company's
$2,591,053  net loss from operations.  Accounts  receivable,
net,  decreased by $80,730 in 1997 from $671,503 to $590,773
due   to  lower  second  quarter  1997  sales.   Inventories
increased  by $863,790, from $626,707 to $1,490,497  due  to
the   purchase  of  components  to  manufacture  the   ALERT
Companion  and  ALERT Catheter in preparation  for  clinical
trials  and  the expected limited market release in  Europe.
The  Company will be required to provide the ALERT Companion
to  clinical centers participating in the trials.  Inventory
of EP WorkMate and EP-3 Stimulators increased as a result of
a  delay  in  the  release of a software update  and  a  new
catheter  interface box.  Shipments of the new features  are
expected to begin during the third quarter of 1997  and  all
existing EP WorkMate customers will be upgraded to  the  new
components.   Prepaid  expenses  and  other  current  assets
includes  new  company and product brochures, prepaid  trade
show  fees,  prepaid insurance and value added tax,  customs
and  duties  on the import of EP WorkMate systems  into  the
United Kingdom for demonstration and evaluation by potential
customers.  Accounts payable and accrued expenses  increased
by  $316,261  from  $677,551 to $993,812  due  to  increased
inventory purchases and accrued liabilities associated  with
development activities.  Amounts payable to a related  party
increased  by $40,286 from $85,035 to $125,321 due increased
purchases of products from HiTronics Designs Inc.

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 $508,618 during
the six months ended June 30, 1997 as compared to $20,911 in
the  six  month  period ended June 30, 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 $370,000,
including certain transaction costs.  The Company is in  the
process  of completing improvements to the space to  prepare
it for its intended use.  The estimate for completion of the
improvements  is approximately $72,000.  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 Company also purchased  a  new
exhibition  booth  for use at industry  trade  shows  during
1997.   The  Company  does  not have  any  material  capital
commitments at this time.

In  1995,  the Company purchased a $100,000 note  receivable
payable   by  Falfab  L.L.C.,  a  United  Kingdom   catheter
manufacturer  ("Falfab"),  accruing  interest  at   8%   and
maturing  on  July  15,  1996.   During  1996,  the  Company
advanced an additional $7,500 to Falfab.  Falfab was  unable
to  repay  such  indebtedness and the Company wrote-off  the
$107,500 note receivable in 1996.

Net  cash  provided by financing activities was  $12,772,451
for  the  six  months  ended  June  30,  1996  and  included
approximately $12,327,000 net proceeds of the initial public
offering (before deducting approximately $536,000 of  unpaid
offering expenses classified as current liabilities at  June
30,  1996),  $500,000  from the sale of  166,667  shares  of
common  stock  at $3.00 per share in January, 1996  and  the
proceeds  of  the exercise of 12,500 common  stock  options.
During  June, 1996, the Company repaid $112,500 face  amount
of  1995 Debentures.  The holders of $1,025,000 face  amount
of  1995  Debentures elected to exercise  1995  Warrants  to
purchase  512,500 shares of common stock at $2.00 per  share
in lieu of receiving cash repayment of the debentures.

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 the  next
twelve  months.   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 5.  Other information.

Additional Factor That May Impact Future Operations -
Clinical Trials

In  order for the Company to market the ALERT System in  the
United  States,  the Company must obtain clearance  approval
from  the  FDA.  The Company has filed a Pre-IDE application
with  the  FDA and expects to file an IDE during the  second
half  of  1997.   Upon receipt of FDA approval  of  the  IDE
submission,  the  Company expects to begin clinical  trials.
Clinical  data is needed in order to demonstrate the  safety
and   efficacy   of  this  products  under  applicable   FDA
regulatory guidelines.  There can be no assurance  that  the
ALERT   or  any  of  the  Company's  other  products   under
development will prove to be safe and effective in  clinical
trials  under  applicable  United  States  or  international
regulatory  guidelines or that additional  modifications  to
the  Company's products will not be necessary.  In addition,
the  clinical  trials may identify significant technical  or
other  obstacles to be overcome prior to obtaining necessary
regulatory or reimbursement approvals.

If  the ALERT System does not prove to be safe and effective
in  clinical trials or if the Company is otherwise unable to
commercialize   the  product  successfully,  the   Company's
business,  financial  condition and  results  of  operations
could be materially adversely affected.

The Company anticipates that the ALERT System clinical trial
will be completed by early calendar 1998.  At the conclusion
of  the  clinical trials, the Company plans to  file  a  PMA
application for approval to market the ALERT System  in  the
United  States.  At  the  earliest,  the  Company  does  not
anticipate  receiving  a PMA for any such  system  until  at
least  one  to  three  years after such PMA  application  is
accepted for filing, if at all.

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 June 30, 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: August 14, 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)





                             19

                    EXHIBIT INDEX

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




























                             20
                                                Exhibit 11.1
                     EP MEDSYSTEMS, INC.
       STATEMENT OF COMPUTATION OF EARNINGS PER SHARE

                       Six Months Ended          Three Months Ended
                           June 30,                   June 30,
                       1996          1997         1996         1997
                     --------     ---------      -------     ---------
Net loss          $   261,862  $  2,591,053   $   94,393  $  1,695,877
                      =======     =========       ======     =========

Weighted average shares outstanding:
Common stock (1)    4,589,242     7,599,917    4,659,059     7,599,917
Stock options (2)(3)  909,055        --          909,055        --
Warrants (2)(3)       361,932        --          361,932        --
                    ---------     ---------    ---------     ---------
                    5,860,229     7,599,917    5,930,046     7,599,917
                    =========     =========    =========     =========
Historical net                                                        
loss per share    $     (.04)  $      (.34)  $     (.02)  $      (.22)
                        =====         =====        =====         =====

(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 and six month periods  ended  June
30, 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 and six month periods ended June 30, 1996.

                               Options        Warrants
                               -------        --------
   Options issued within      1,324,000        568,750
   one year                   ---------        -------

   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  and  six
months ended June 30, 1997, because they are anti-dilutive.