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:  September 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 small business issuer 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, Mt. Arlington, New Jersey      07856
(Address of principal executive offices)          (Zip Code)

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

58 Route 46 West, Budd Lake, NJ 07828
(Former address of issuer)

Indicate by check mark whether the issuer (1) has filed  all
reports required to be filed by Section 13 or 15(d)  of  the
Securities  Exchange Act of 1934 during the 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,  7,599,917
shares outstanding at October 31, 1997.

Transitional Small Business Disclosure Format
Yes       No  X
PART I. -- FINANCIAL INFORMATION
Item 1.  Financial Statements
            EP MEDSYSTEMS, INC. AND SUBSIDIARIES
                 CONSOLIDATED BALANCE SHEETS
                                        December 31,    September 30
ASSETS                                      1996            1997
Current assets:                                         (unaudited)
   Cash and cash equivalents           $   5,491,857  $      890,700
   Short-term investments                  1,794,553       2,478,309
   Accounts receivable, net                  671,503       1,421,928
   Inventories                               626,707       1,494,084
   Prepaid expenses and other current assets 185,761         287,782
                                           ---------       ---------  
          Total current assets             8,770,381       6,572,803
Long-term investments                      3,001,222         --
Investment in EchoCath, Inc.                 --            1,400,000
Property and equipment, net                  181,385         662,177
Intangible assets, net                       615,861         582,604
Other assets                                  31,000         133,344
                                          ----------       ---------
          Total assets                 $  12,599,849  $    9,350,928
                                          ==========      ==========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:                                                
   Accounts payable                    $     238,764  $      564,001
   Payables due to related party              85,035         152,226
   Accrued expenses                          438,787         399,964
   Deferred revenue                           42,938          39,063
   Customer deposits                         103,999          75,322
                                             -------       ---------
          Total liabilities                  909,523       1,230,576
                                             -------       ---------
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 and 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)     (8,630,262)
                                         -----------     -----------
          Total shareholders' equity      11,690,326       8,120,352
                                         -----------     -----------
Total liabilities and shareholders'                                 
equity                                 $  12,599,849  $    9,350,928
                                          ==========       =========
                              
    The accompanying notes are an integral part of these statements.
                              
                              
            EP MEDSYSTEMS, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF OPERATIONS
                         (UNAUDITED)
                              
                                            For the Three Months
                                                    Ended
                                         September 30,  September 30,
                                             1996          1997
                                                        
Product sales                           $    433,461  $   1,321,013
Revenue from catheter development             -              -
                                             -------      ---------
          Total revenues                     433,461      1,321,013
                                             -------      ---------
Operating costs and expenses:                                      
   Cost of products sold                     270,959        654,010
   Sales and marketing expenses              178,372        850,563
   General and administrative expenses       273,665        340,035
   Research and development expenses         211,537        520,468
                                           ---------    -----------
          Loss from operations             (501,072)    (1,044,063)
                                                             
Interest expense                             (5,757)          (624)
Interest income                              173,488         65,768
                                           ---------      ---------
          Net loss                      $  (333,341)  $   (978,919)
                                           =========      =========
Net loss per share                      $      (.04)  $       (.13)
                                               =====          =====
Weighted average shares outstanding        7,581,167      7,599,917
                                          ==========      =========
 The  accompanying notes are an integral  part  of these statements.


                              
            EP MEDSYSTEMS, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF OPERATIONS
                         (UNAUDITED)
                              
                                          For the Nine Months Ended
                                        September 30,   September 30,
                                             1996          1997
                                        ------------ --------------
Product sales                           $  1,758,156  $   2,606,650
Revenue from catheter development            250,000         -
                                           ---------      ---------
          Total revenues                $  2,008,156  $   2,606,650
                                           ---------      ---------
Operating costs and expenses:                                      
   Cost of products sold                     936,765      1,545,418
   Sales and marketing expenses              447,560      2,326,589
   General and administrative expenses       831,021      1,133,998
   Research and development expenses         370,809      1,458,109
   Write off of other assets                 107,500         -
   Write-off of value of 1995 Warrants                             
   on retirement of 1995 Debentures           49,232         -
                                           ---------    -----------
          Loss from operations             (734,731)    (3,857,464)
                                                             
Interest expense                            (44,238)        (1,872)
Interest income                              183,948        289,362
                                           ---------    -----------
          Net loss                      $  (595,021)  $ (3,569,974)
                                           =========    ===========
Net loss per share                      $      (.09)  $       (.47)
                                               =====          =====
Weighted average shares outstanding        6,491,235      7,599,917
                                           =========      =========

 The  accompanying notes are an integral  part  of these statements.



            EP MEDSYSTEMS, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (UNAUDITED)
                              
                                             For the Nine Months Ended
                                             September 30,   September 30,
                                                 1996             1997
                                             --------------  -------------
Cash flows from operating activities:                                     
Net loss                                     $    (595,021)  $ (3,569,974)
Adjustments to reconcile net income to                                    
net cash provided by (used in) operating                                  
activities:                                                               
Depreciation and amortization                       124,670        156,148
Write-off of other assets                           107,500         -
Amortization of premium or discount on investments     -            32,225
Write-off of value of 1995 Warrants on                                    
retirement of 1995 Debentures                        49,232         -
Changes in assets and liabilities:                                        
(Increase) decrease in accounts receivable        (544,308)      (750,425)
(Increase) in inventories                          (63,471)      (867,377)
Increase in prepaid and current assets             (24,738)      (102,021)
Decrease (increase) in intangible and other assets  26,837       (123,594)
(Decrease) increase in due to related party       (185,903)         67,191
(Decrease) increase in accounts payable            (94,843)        325,237
(Decrease) in accrued expenses, deferred                                  
revenue and customer deposits                      (62,025)       (71,374)
                                                -----------    -----------
Net cash used in operating activities        $  (1,262,070)  $ (4,903,964)
                                                -----------    -----------
Cash flows from investing activities:                                     
Investment in EchoCath, Inc.                        -          (1,400,000)
Purchase of investments                         (9,975,031)         -
Maturities of held to maturity investments          -            1,487,096
Proceeds from sale of marketable securities         -              798,145
Capital expenditures, net of disposals             (46,706)      (582,434)
Loan to Falfab                                      (7,500)         -
                                               ------------      ---------
Net cash used in investing activities        $ (10,029,237)  $     302,807
                                               ------------      ---------
Cash flows from financing activities:                                     
Repayment of debentures, net                       (62,500)         -
Net proceeds from issuance of common stock       12,415,175         -
Payment of notes payable                          (109,250)         -
                                                 ----------      ---------
Net cash provided by financing activities    $   12,243,425  $      -
                                                 ----------      ---------
Net increase (decrease) in cash and cash            952,118    (4,601,157)
equivalents
Cash and cash equivalents, beginning of period       34,588      5,491,857
                                                    -------     ----------
Cash and cash equivalents, end of period     $      986,706  $     890,700
                                                    =======     ==========
 The accompanying notes are an integral part of these statements.

            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,  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 months ended September 30, 1996 and the three
and  nine  months  ended September 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 the Company's initial public offering,  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.  For the nine month  period
ended  September  30,  1996, the dilutive  effect  of  these
options  has been included in the loss per share calculation
through  June 30, 1996, the period during which the  initial
public  offering became effective, using the treasury  stock
method in accordance with SAB No. 83, even though they  were
anti-dilutive.   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
("EPS")   and  applies to publicly traded  common  stock  or
potential  common stock.  SFAS replaces the presentation  of
primary  EPS  with  a  presentation of basic  EPS  and  also
requires dual presentation of basic and diluted EPS  on  the
face  of  the  statement  of  operations.   Under  the   new
standard,  basic  EPS is computed based on weighted  average
shares  outstanding  and  excludes any  potential  dilution.
Diluted EPS reflects potential dilution from the exercise or
conversion  of  securities into common stock or  from  other
contracts  to  issue common stock, and  is  similar  to  the
currently required fully diluted EPS.  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 sales 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 nine months ended September 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 purchased 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.  LONG TERM INCENTIVE PLAN
During  July,  1997,  the  Board of  Directors  approved  an
amendment  to increase the number of shares of common  stock
issuable under the 1995 Long Term Incentive Plan by  300,000
shares  from 400,000 to 700,000. This amendment was approved
by  the  shareholders at the  Annual Meeting of Shareholders
held on October 30, 1997.
                              
5.   INVENTORIES
Inventories consist of the following:
                               December 31,    September 30
                                  1996             1997
                               ---------        ---------
     Raw materials             $ 173,936        $ 210,006
     Work in progress             11,456           12,388
     Finished goods              441,315        1,271,690
                               ---------      -----------
                               $ 626,707      $ 1,494,084
                               =========      ===========

6.   INVESTMENT SECURITIES
The  Company  accounts  for  its  investment  securities  in
accordance with Statement of Financial Accounting  Standards
No.  115,  "Accounting for Certain Investments in  Debt  and
Equity    Securities."    This   Statement   requires    the
classification  of  debt  and  equity  securities  based  on
whether  the  securities  will  be  held  to  maturity,  are
considered  trading  securities or are available  for  sale.
Classification  within  these  categories  may  require  the
securities  to be reported at their fair market  value  with
unrealized gains and losses included in current earnings  or
reported as a separate component of stockholders' equity.

As  of  September 30, 1997, all of the Company's investments
have   been   classified  as  available  for   sale.   These
investments  are stated at market, which approximates  their
amortized  cost,  and  consist  of  corporate  bonds.    The
maturities  of  the investments range from August,  1998  to
September,  2000.   At December 31, 1996, certain  of  these
investment  securities were classified as held  to  maturity
and   as   such,  were  stated  at  amortized  cost,   which
approximated market.

Short-term and long-term investments held to maturity are as
follows:
                                          December 31,     September 30,
                                              1996             1997
                                          -----------      ------------

 Held to maturity securities:
                                   
 Short-term investments                                          
                                                                   
   U.S   government   agency obligations  $    $1,496,725    $     -
   
 Long-term investments                                    
                                                            
   Corporate bonds                        $    $3,001,222    $     -
                                          ---------------    ------------
 Total  held to  maturity securities      $    $4,497,947    $     -
                                          ---------------    ------------


The Company's available for sale securities are as follows:

Available for sale securities:      December 31,     September 30
                                        1996            1997
                                   ------------     ------------
   Corporate preferred stocks      $   297,828       $     -
                                                            
   Corporate bonds                        -            2,478,309
                                       -------         ---------
Total available for sale securities    297,828         2,478,309
                                       =======         =========

7.   PROCATH BUILDING PURCHASE
During  February, 1997, the Company purchased  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  a  purchase  price  of
approximately  $370,000, including  transaction  costs.  The
Company  completed improvements to the space to  prepare  it
for  its  intended use at an aggregate cost of approximately
$85,000.   The  purchase  provides  for  expansion  of   the
existing  manufacturing operations, additional  warehousing,
shipping and quality assurance activities and relocation  of
ProCath's administrative offices.

8.   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.

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.  During September, 1997, the  Company
became  aware that EchoCath may have been having  cash  flow
difficulties and that EchoCath could face delisting  of  its
common  stock from the NASDAQ Small Cap Stock Market  if  it
did  not  maintain net equity in excess of  $1,000,000.  

On October  7, 1997, the Company filed a lawsuit 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 sale
of  $1.4  million  of its preferred stock  to  the  Company.
EchoCath has not yet filed a response to the lawsuit.

On  October 30, 1997, EchoCath announced that it had entered
into  a  license  and development agreement with  Medtronic,
Inc. which included a $1,000,000 investment by Medtronic  in
Class  A common stock of EchoCath and an $800,000 prepayment
of  license  fees.  The Company believes that the  Medtronic
investment will allow EchoCath to meet the requirements  for
continued  listing on the NASDAQ Small Cap Stock  Market  at
this  time.  The agreement also provides EchoCath with  $1.8
million   of   new  working  capital  and  may  provide   an
opportunity to earn additional royalty or licensing  income.
The Company cannot determine whether this cash infusion will
be  sufficient  to meet EchoCath's long term cash  needs  or
whether EchoCath will recognize additional revenue or attain
profitability.

The  EchoCath  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
investment for permanent impairment and as a result of  this
review,  management  believes that  there  is  no  permanent
impairment at this time.  However, management will  continue
to  evaluate  the  investment  and  may  determine  that   a
permanent  impairment has occurred and that such  impairment
should  be recorded in the future.  The preferred  stock  is
convertible,  at the option of the Company, into  shares  of
EchoCath  common stock at a conversion price  of  $6.00  per
share  through  1999  and $6.50 per share  thereafter.   The
market  price for the common stock on November 7,  1997  was
$4.00 per share.  The Company does not anticipate converting
its shares in the near future.

9.  SUPPLEMENTAL STATEMENT OF CASH FLOW INFORMATION:
Supplemental Noncash Investing and Financing Activities:
During the nine months ended September 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 and $1,872 for the three and
nine  months  ended  September 30, 1997,  respectively,  and
$5,757, and $60,969 during the comparable period in 1996.

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.

CAUTIONARY STATEMENT
Except for the historical information contained herein, this
Report  on  Form 10-QSB contains forward-looking  statements
within  the meaning of Section 27A of the Securities Act  of
1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended.  When used in this Form 10-QSB, the
words   or  phrases  "believes,"  "anticipates,"  "expects,"
"intends," "will likely result," "estimates," "projects"  or
similar  expressions are intended to identify such  forward-
looking  statements,  but are not  the  exclusive  means  of
identifying such statements. Such forward-looking statements
are  only predictions, and the actual events or results  may
differ materially from the results discussed in the forward-
looking  statements.  Factors that could cause or contribute
to  such  differences include, but are not  limited  to  the
following:  the Company's history of losses and  uncertainty
of  profitability; the possibility that the Company may  not
have  sufficient  capital,  and  if  additional  capital  is
needed, that the Company may not be able to raise sufficient
new  capital;  risks regarding demand for new  and  existing
products, particularly the EP WorkMate and the ALERT System;
the  success  of  new product development efforts;  clinical
results  of the ALERT System; the uncertainty as to  whether
the Company's products will receive approval for sale in the
United  States  and  in  the  event  that  they  do  receive
approval,  the  risk  that there will  not  be  third  party
reimbursement  available; the Company's  highly  competitive
industry  and rapid technological change within the industry
and  the  fact  that  the  industry is  dominated  by  large
companies with much greater resources than the Company;  the
reliance  on  key personnel; the uncertainty  of  patent  or
proprietary technology protection, particularly with respect
to   the  ALERT  System;  other  factors  discussed  in  the
following paragraphs; and in the Company's Form 10-KSB filed
with the Securities and Exchange Commission.
                              
The  Company  cautions investors and others  to  review  the
cautionary  statements set forth in this report and  in  the
Company's  other  reports  filed  with  the  Securities  and
Exchange  Commission  and cautions that  other  factors  may
prove  to  be important in affecting the Company's  business
and  results  of operations.  Readers are cautioned  not  to
place  undue  reliance on these forward-looking  statements,
which speak only as of the date of this report.  The Company
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  an  accumulated deficit  of  $8.6  million  at
September 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.  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
received conditional approval from the FDA to begin clinical
trials of the ALERT and expects to begin trials of the ALERT
System at three U.S. centers in the fourth quarter of  1997.
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.  During
September,  1997,  the Company received  approval  from  its
notified  body  to label the ALERT System with  a  CE  Mark.
This designation allows the Company to initiate sales of the
ALERT  System  in  the European Community  and  the  Company
expects to make a limited market release of the ALERT System
for European sales.

The  Company  has identified the diagnosis and treatment  of
atrial  fibrillation ("atrial fib") as a primary  focus  for
its  ongoing  development efforts.  Atrial fib is  the  most
prevalent  type  of  abnormal  heart  rhythm,  estimated  to
afflict up to 2,500,000 people in the United States  and  an
estimated 160,000 new cases develop each year.  Although not
immediately life threatening, atrial fib has now been linked
to  a  significantly increased risk of stroke.  The American
Heart Association estimates that 15% of all strokes in
the  United  States occur in people with atrial fib, with
published reports that stroke is twice as likely to be fatal
in patients with atrial fib. In patients over the age of 65,
atrial fib is reported to  quadruple the risk of stroke.

Although  treatment  of atrial fib varies  from  patient  to
patient,  the treatment goals remain constant:  (1)  restore
and   maintain   normal  heart  rhythm,  (2)   control   the
ventricular heart rate and (3) prevent stroke.  The  Company
believes  that the ALERT System provides numerous advantages
over current therapies for cardioversion or restoring normal
heart rhythm.

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.   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  trials,  regulatory
approval  and  market  acceptance of the  ALERT  System  and
developmental, regulatory and market success of new products
under development.

RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE
MONTHS ENDED SEPTEMBER 30, 1996

Total revenues increased $887,552 (or 205%) from $433,461 to
$1,321,013 in the three months ended September 30,  1997  as
compared to the comparable period in 1996.  The increase  in
sales  in the third quarter of 1997 resulted primarily  from
increased sales of the EP WorkMate, which represented 70% of
total revenues during the three month period.  Shipments  of
the  EP  WorkMate  incorporating several  improved  features
began  during  the  third quarter of  1997  which  may  have
contributed to the increased level of sales.  Delays in  the
introduction of these features may have contributed to lower
than  expected  sales in the quarter ended  June  30,  1997.
Accordingly,  the  Company believes that a  portion  of  the
increase in  sales for the three months ended September  30,
1997  was attributable to the unavailability of the upgrades
in  the  second quarter.  The Company believes that  the  EP
WorkMate  is the most technologically advanced and  easy  to
use  EP workstation on the market.  Sales of the EP WorkMate
represented  38%  of total revenue during  the  three  month
period ended September 30, 1996.

The  level  of sales during the fourth quarter of  1997,  as
well  as  fiscal 1998 and beyond, will depend materially  on
the ability of the Company's domestic direct sales force and
network   of   international  independent  distributors   to
effectively  market  and  sell  the  EP  WorkMate  and   the
Company's other products.

Cost  of  products sold increased $383,051  (or  141%)  from
$270,959 to $654,010.  Gross profit on product sales for the
three months ended September 30, 1997 was $667,003 (or 50.5%
as a percentage of product sales), as compared with $162,502
(or   37.5%)  for  1996.   The  increase  in  gross   profit
percentage  was  due to increased sales of the  EP  WorkMate
during  1997  which has yielded a higher gross  margin  than
other product lines. During the three months ended September
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 $672,191 (or 376.8%)
from  $178,372  to  $850,563 and as a  percentage  of  total
revenues from 41.1% to 65.3%.  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  believes  that a domestic direct sales  force  will
generate  higher sales in the future than the Company  would
have  generated  through the use of a  domestic  network  of
independent  distributors.  During this period, the  Company
also expended substantial funds in an effort to improve  its
network of international independent distributors.

Although there can be no assurance of such fact, the Company
expects to make a limited market release of the ALERT System
for European sales.  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.

The Company expects sales and marketing expenses to increase
significantly in the fourth quarter of 1997,  as compared to
fourth quarter of 1996, as the direct sales force will be in
place   for   the  entire  year  and  as  product  promotion
associated  with  the direct sales effort and  international
independent  distribution  network  continues.   Sales   and
marketing  expenses for 1998 are also expected to  increase,
but not by as much as the increase realized in 1997.  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.

General  and  administrative expenses increased $66,370  (or
24.3%)  from  $273,665  to  $340,035  and  decreased  as   a
percentage  of  total  revenues from 63.1%  to  26.1%.   The
dollar  increase was due to, among other things, the  hiring
of additional administrative personnel and increased product
liability  and  directors  and  officers  insurance  expense
incurred  during  1997.   The Company  expects  general  and
administrative expense to increase in future periods due  to
anticipated future growth.  It is anticipated, however, that
these expenses may 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  $308,931  (or
146%)  from  $211,537  to  $520,468  and  decreased   as   a
percentage  of  net sales from 48.8% to 40.0%.   The  dollar
increase  was  due  to  significant  expenses  incurred   in
connection with preparations for manufacturing of the  ALERT
products,  including  obtaining the CE  Mark  and  preparing
submissions to the FDA.  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 the fourth quarter of 1997 and during
1998, when clinical trials are expected to be ongoing.   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 and other
development projects which may arise.

Interest expense decreased from $5,757 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  decreased from $173,488 to  $65,768.   The
decrease was due to  the utilization of the proceeds of  the
Company's  June, 1996 initial public offering.  The  Company
expects  to continue earning interest on its investments  in
future  periods,  but  the amount of  interest  income  will
decrease as proceeds of the initial public offering continue
to be utilized in the operation of the Company's business.

The  Company  incurred a net loss of $978,919 (or  $.13  per
share  based on 7,599,917  shares outstanding) in the  three
months  ended  September 30, 1997 as compared with  $333,341
(or $.04 per share based on 7,581,167 shares outstanding) in
the comparable period in 1996.  The increase in net loss was
caused by the factors discussed above.

RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS
ENDED SEPTEMBER 30, 1996

Total revenues increased $598,494 (or 29.8%) from $2,008,156
to  $2,606,650 in the nine months ended September 30,  1997.
The  increase  in  sales  for the nine  month  period  ended
September  30, 1997 resulted primarily from increased  sales
of  the EP WorkMate, which represented 59% of total revenues
during   the   period.   Shipments  of   the   EP   WorkMate
incorporating  several improved features  began  during  the
third  quarter  of 1997, which may have contributed  to  the
increased level of sales.  The Company believes that the  EP
WorkMate  is the most technologically advanced and  easy  to
use  EP workstation on the market.  Sales of the EP WorkMate
represented  34%  of total revenue during  the  nine  months
ended  September  30, 1996.  During the  nine  months  ended
September 30, 1996, the Company recorded revenue of $250,000
from  catheter development for a third party which  was  not
recurring in 1997.

The  level  of sales during the fourth quarter of  1997,  as
well  as  fiscal 1998 and beyond, will depend materially  on
sales  of  the EP WorkMate and the ability of the  Company's
direct  sales force and network of international independent
distributors to effectively market and sell the EP  WorkMate
and the Company's other products.

Cost  of  products sold increased $608,653 (or  65.0%)  from
$936,765  to  $1,545,418 in the nine months ended  September
30, 1997.  Gross profit on product sales for the nine months
ended  September  30,  1996 was  $821,391  (or  46.7%  as  a
percentage  of  product sales), as compared with  $1,061,232
(or  40.7% as a percentage of product sales) for 1997.   The
Company realized an increase in gross profit during 1997 due
to  higher  sales  of the EP WorkMate which  has  yielded  a
higher gross margin than other product lines.  This increase
was  offset  by  increased labor and manufacturing  overhead
expenses  at  ProCath  incurred as the Company  prepares  to
commence manufacturing of the ALERT System. During the  nine
months  ended September 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  $1,879,029   (or
419.8%)  from $447,560 to $2,326,589 and as a percentage  of
total revenues from 22.2% to 89.9%.  Beginning in September,
1996,  the  Company  began hiring a  domestic  direct  sales
force,   including  several  salaried  sales  and  marketing
managers  and personnel.  The effort also involved increased
base commissions for direct sales representatives, increased
travel  and  lodging  and convention  related  expenses  and
increased  promotion expenses related to existing  products.
The Company believes that a domestic direct sales force will
generate  higher sales in the future than the Company  would
have  generated  through the use of a  network  of  domestic
independent  distributors. During this period,  the  Company
also expended substantial funds in an effort to improve  its
network of international independent distributors.

Although there can be no assurance of such fact, the Company
expects to make a limited market release of the ALERT System
for European sales.  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.

The Company expects sales and marketing expenses to increase
significantly in the fourth quarter of 1997, as compared  to
fourth quarter of 1996, as the direct sales force will be in
place   for   the  entire  year  and  as  product  promotion
associated  with  the direct sales effort and  international
independent  distribution  network  continues.   Sales   and
marketing  expenses for 1998 are also expected to  increase,
but not by as much as the increase realized in 1997.  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.

General  and administrative expenses increased $302,977  (or
36.5%)  from  $831,021  to $1,133,998  and  increased  as  a
percentage  of  total  revenues from 41.4%  to  43.4%.   The
dollar   increase  was  due  to  the  hiring  of  additional
administrative  personnel, increased product  liability  and
directors  and  officers insurance expense and  other  costs
associated with operating as a publicly traded company.  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 $1,087,300  (or
293%) from $370,809 to $1,458,109 and as a percentage of net
sales  from  18.5%  to  56.4%.   The  increase  was  due  to
significant    expenses   incurred   in   connection    with
preparations  for  manufacturing  of  the  ALERT   products,
including  obtaining the CE Mark and filings with  the  FDA.
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 EP WorkMate.  The  Company
expects  that expenses related to the ALERT System  will  be
significant  in the fourth quarter of 1997 and during  1998,
when  clinical  trials  are expected  to  be  ongoing.   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 and other
development projects which may arise.

Interest  expense  decreased from $44,238  to  $1,872.   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 increased from $183,948 to $289,362  due  to
interest earned on the proceeds of the Company's June,  1996
initial public offering for a nine month period during  1997
as  compared to a three month period following completion of
the offering in June, 1996.  The Company expects to continue
earning  interest on its cash investments in future periods,
but  the amount of interest income will decrease as proceeds
continue  to  be utilized in the operation of the  Company's
business.

The  Company incurred a net loss of $3,569,974 (or $.47  per
share based on 7,599,917    shares outstanding) in the  nine
months  ended  September 30, 1997 as compared with  $595,021
(or $.09 per share based on 6,491,235 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 nine  months
ended  September  30,  1997 was $4,903,964  as  compared  to
$1,262,070  for  the nine months ended September  30,  1996.
The  net  use  of  cash in operations during  1997  was  due
primarily   to  the  Company's  $3,569,974  net  loss   from
operations.  Accounts receivable, net, increased by $750,425
in  1997  from  $671,503 to $1,421,928 due to  higher  third
quarter 1997 sales.  Inventories increased by $867,377  from
$626,707 to $1,494,084 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. Inventory of EP WorkMate and  EP-3
Stimulators  also  increased in 1997. Prepaid  expenses  and
other current assets includes new product brochures, prepaid
trade show fees, prepaid insurance and costs associated with
the  importation  of  EP WorkMate systems  into  the  United
Kingdom   for  demonstration  and  evaluation  by  potential
customers.  Accounts payable and accrued expenses  increased
by  $286,414  from  $677,551 to $963,965  due  to  increased
inventory purchases and accrued liabilities associated  with
development activities.  Amounts payable to a related  party
increased by $67,191 from $85,035 to $152,226 due to a large
purchase  of products from HiTronics Designs Inc.  near  the
end of the third quarter of 1997.

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.

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  was  intended  to  fund
continuing  development of EchoCath products, including  the
EchoMark and 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.   See  Note  8  to  the
Consolidated Financial Statements and Part II. Item 1. Legal
Proceedings  for  additional   discussion  of  the  EchoCath
investment.

Capital expenditures, net of disposals, were $582,434 during
the  nine  months ended September 30, 1997  as  compared  to
$46,706  in the nine month period ended September 30,  1996.
In  February, 1997, ProCath purchased 7,500 square  feet  of
manufacturing, administrative and warehouse space, including
2,500  square feet of space that was under lease by ProCath,
for  a  purchase price of approximately $370,000,  including
transaction  costs.  The Company completed  improvements  to
the  space  to  prepare  it  for  its  intended  use  at  an
approximate cost of $85,000. 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  $12,243,425
for  the  nine months ended September 30, 1996 and  included
approximately $11,786,000 net proceeds of the initial public
offering, $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 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  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.

The  Company  plans to finance its capital needs principally
from  existing capital resources for the next twelve months.
However,  in the event that sufficient additional sales  are
not  generated  to  offset increased  operating  costs,  the
Company  may  be required to raise additional funds  through
public  or  private  financing  or  other  arrangements   to
supplement  existing capital resources.   There  can  be  no
assurance  that  such additional funds, if needed,  will  be
available  on terms acceptable to the Company,  or  at  all.
Furthermore, any additional equity financing may be dilutive
to  stockholders, and debt financing, if available,  may  be
costly  and  involve restrictive covenants.  The failure  of
the  Company  to  raise capital when  needed  could  have  a
material adverse effect on the Company's business, financial
condition and results of operations.

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 received conditional approval
from  the  FDA  of its IDE to begin clinical trials  in  the
United  States. The Company expects to begin clinical trials
in  the fourth quarter of 1997.  Clinical data is needed  in
order to demonstrate the safety and efficacy of this product
under applicable FDA regulatory guidelines.  There can be no
assurance  that  the ALERT System 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
trials will be completed by early to mid calendar year 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.


PART II.     OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

On October 7,  1997,  the Company filed a lawsuit 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 sale
of 280,000 shares  of 5.4%  cumulative convertible preferred
stock to the  Company in  February, 1997. EchoCath has not yet
filed its response to the lawsuit.  For a further discussion of
the Company's investment  in  EchoCath, see Note  8 to the
consolidated financial statements.


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

Effective date of the Company's           
registration statement                    June 21, 1996
                                          
Commission file number                    333-3642
                                          
Date the offering commenced               June 21, 1996
                                          
Name of managing underwriter              Pacific Growth Equities
                                          
Class of securities registered            Common Stock
                                          
Number of shares registered and sold          2,500,000
                                                       
Aggregate price of offering amount                     
registered and sold                         $13,750,000
Underwriter's      discounts      and          $962,500
commissions
Finder's fees                                         0
Expenses paid to or for underwriters            $50,000
Other expenses (1)                             $951,500
     Total expenses                          $1,964,000
Net offering proceeds                       $11,786,000
                                          
Use of net offering proceeds:                          
Purchase of plant and equipment                 659,000
Investment in EchoCath, Inc.                  1,400,000
Product development (2)                       2,155,000
Sales, marketing & administration (2)         4,465,000
Working capital (2)                             344,000
Repayment of indebtedness                       285,000
                                                       
Short term investments                        2,478,000
                                          

(1)  Does not include any direct or indirect payments
to  directors  or  officers of the  issuer  or  their
associates;  to  persons owning ten (10)  percent  or
more of any class of equity securities of the issuer;
or to affiliates of the issuer.

(2)  This amount represents a reasonable estimate.




















                              
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On  October 30, 1997, the Company held its Annual Meeting of
Shareholders  for  the year ended December  31,  1996.   The
matters voted upon by the security holders were:

(1)  To elect five directors of the Company to serve until
     the next Annual Meeting of Shareholders or until their
     respective successors shall have been duly
     elected and qualified:
                                                          
     For the election of Directors     For      Against   Abstain
                                    ---------   -------   -------
        David A. Jenkins            5,600,176      0       6,000
        David W. Mortara            5,600,176      0       6,000
        Lestor J. Swenson           5,600,176      0       6,000
        Jon A. Tietbohl             5,600,176      0       6,000
        Anthony J. Varrichio        5,600,176      0       6,000
                                                          
(2)  To approve an amendment to the 1995 Long Term Incentive
     Plan to increase the number of shares which may be issued
     thereunder by 300,000 from 400,000 to 700,000:
                                                              
                                       For      Against   Abstain
                                    ---------   -------   -------
     For the amendment to the Plan  4,886,026   503,850    6,000
                                                          
     
(3)  To ratify the selection of Arthur Andersen LLP,
     independent public accountants, as auditors for the
     Company for the fiscal year ending December 31, 1997:
                                                                 
                                          For      Against   Abstain
                                       ---------   -------   -------
     For the ratification of auditors  5,600,176      0       6,000
                                                             











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 3.1   Amended and Restated Certificate of Incorporation (1)
           Exhibit 3.2   Bylaws, as amended (1)
           Exhibit 11.1  Statement of Computation of Earnings Per Share
           Exhibit 27    Financial Data Schedule (SEC only)
                         
  (b)  Reports on Form 8-K
           No reports on Form 8-K were filed during the
           quarter ended September 30, 1997.
           
       (1) Previously filed and incorporated by
           reference to the exhibit of the same number
           filed with the Company's Form SB-2 Registration
           Statement(Registration No. 333-3642).
           



                         SIGNATURES

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

                                EP MEDSYSTEMS, INC.
                                         (Registrant)
                                
Date: November 13,1997     By:  /s/  David A. Jenkins
                                     David A. Jenkins
                                President and Chief Executive Officer
                                
                           By:  /s/  James J. Caruso
                                     James J. Caruso
                                Vice President and Chief Financial Officer
                                (Principal Financial and Accounting Officer)




                    EXHIBIT INDEX

Exhibit                                              
Number          Description of Exhibit               Method of Filing
-----------     --------------------------------     ----------------
                                                     
Exhibit 3.1     Amended and Restated Certificate     
                of Incorporation                     (1)
                                                     
Exhibit 3.2     Bylaws, as amended                   (1)
                                                     
Exhibit 11.1    Statement of Computation of          
                Earnings per Share                   EDGAR
                                                     
Exhibit 27      Financial Data Schedule              EDGAR
                (SEC only)                           
                                                     
                (1)Previously filed and incorporated by reference
                   to the exhibit of the same number filed
                   with the Company's Form SB-2 Registration
                   Statement (Registration No. 333-3642).

















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

                         Nine Months Ended          Three Months Ended
                           September 30,              September 30,
                        1996          1997          1996         1997
                    -----------  -------------  -----------  -----------
Net loss            $ (595,021)  $ (3,569,974)  $ (333,341)  $ (978,919)
                                                                        
Weighted average shares outstanding:
Common stock (1)      5,648,566      7,599,917    7,581,167    7,599,917
Options (2)(3)          602,707        --            --           --
Warrants (2) (3)        239,962        --            --           --
                      ---------      ---------    ---------   ----------
                      6,491,235      7,599,917    7,581,167    7,599,917
                      =========      =========    =========   ==========
Historical net                                                          
loss per share      $     (.09)  $       (.47)  $     (.04)  $     (.13)
                          =====          =====        =====        =====

(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 nine  month  periods  ended
September 30, 1996.

(2)    Options   and  warrants  at  909,055   and   361,932,
respectively,  were  granted at  prices  below  the  initial
public  offering  price.  For the nine  month  period  ended
September  30,  1996, the dilutive effect of  these  options
have been included in the loss per share calculation through
June  30,  1996, the period during which the initial  public
offering  became effective, using the treasury stock  method
in  accordance with SAB No. 83, even though they were  anti-
dilutive.

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

(3)   Options  and  warrants have  been  excluded  from  the
calculation of earnings per share for the three months ended
September  30,  1996  and the three and  nine  months  ended
September 30, 1997, because they are anti-dilutive.