TABLE OF CONTENTS




|                     |                          |                          |                               |                            |                         |                                                             |                                          |              
|-------------------- | ------------------------ | ------------------------ | ----------------------------- | -------------------------- | ----------------------- | ----------------------------------------------------------- | ---------------------------------------- | -------------
|Financial Statements
|                     | Statements of Operations
|                     |                          | Statements of Cash Flows
|                     |                          |                          | Notes to Financial Statements
|                     |                          |                          |                               | PART II. OTHER INFORMATION
|                     |                          |                          |                               |                            | Item 2. Use of Proceeds
|                     |                          |                          |                               |                            |                         | Item 4. Submission of Matters to a Vote of Security Holders
|                     |                          |                          |                               |                            |                         |                                                             | Item 6. Exhibits and Reports on Form 8-K
|                     |                          |                          |                               |                            |                         |                                                             |                                          | SIGNATURES   
|                     |                          |                          |                               |                            |                         |                                                             |                                          | EXHIBIT INDEX



---



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
December 31, 1999

Commission File Number: 0-24635

HYPERTENSION DIAGNOSTICS, INC.
(Exact name of small business issuer as specified in its charter)

|                                   |  |                                                
|---------------------------------- |  | -----------------------------------------------
|MINNESOTA
(State of incorporation) |  | 41-1618036
(I.R.S. Employer Identification No.)

2915 WATERS ROAD, SUITE 108
EAGAN, MINNESOTA 55121-1562
(651) 687-9999
(Address of issuers principal executive offices and telephone number)

Check 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 preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.

Yes [X] No [ ]

The number of shares of Common Stock outstanding as of January 31, 2000 was
5,109,235.

Transitional Small Business Disclosure Format:

Yes [ ] No [X]



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##### Table of Contents



HYPERTENSION DIAGNOSTICS, INC.

INDEX TO FORM 10-QSB

|                               |                                                                                               |                                                                                                                                                                       |    |          |   | 
|------------------------------ | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -- | -------- | - | 
|                               |                                                                                               |                                                                                                                                                                       |    | Page No.
|                               |                                                                                               |                                                                                                                                                                       |    |         
|PART I.
FINANCIAL INFORMATION:
|                              
|                              
|                              
|                              
|                               | Item 1.
Financial Statements                                                                  |                                                                                                                                                                       |    | 3        |  
|                              
|                              
|                              
|                              
|                               |                                                                                               | Balance Sheets 
June 30, 1999 and December 31, 1999                                                                                                                  |    |          | 3 | 
|                              
|                              
|                              
|                              
|                               |                                                                                               | Statements of Operations  Three Months and Six Months Ended
December 31, 1998 and 1999, respectively, and Period
From July 19, 1988 (Inception) to December 31, 1999 |    |          | 4 | 
|                              
|                              
|                              
|                              
|                               |                                                                                               | Statements of Cash Flows  Six Months Ended
December 31, 1998 and 1999 and Period From
July 19, 1988 (Inception) to December 31, 1999                                 |    |          | 5 | 
|                              
|                              
|                              
|                              
|                               |                                                                                               | Notes to Financial
Statements                                                                                                                                         |    |          | 6 | 
|                              
|                              
|                              
|                              
|                               | Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations |                                                                                                                                                                       |    | 7        |  
|                              
|                              
|                              
|                              
|PART II. OTHER
INFORMATION:   
|                              
|                              
|                              
|                              
|                               | Item 2.
Use of Proceeds                                                                       |                                                                                                                                                                       |    | 13       |  
|                              
|                              
|                              
|                              
|                               | Item 4.
Submission of Matters to a Vote of Security Holders                                   |                                                                                                                                                                       |    | 13       |  
|                              
|                              
|                              
|                              
|                               | Item 6.
Exhibits and Reports on Form 8-K                                                      |                                                                                                                                                                       |    | 13       |  
|                              
|                              
|                              
|                              
|SIGNATURES                     |                                                                                               |                                                                                                                                                                       | 15 |         
|                              
|                              
|                              
|                              
|EXHIBIT
INDEX                  |                                                                                               |                                                                                                                                                                       | 16 |         

2



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##### Table of Contents






PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Hypertension Diagnostics, Inc.
(A Development Stage Company)
Balance Sheets

|                                                                                                               |                                                  |                                         |                                            |            |          |           |              |            |        |           | 
|-------------------------------------------------------------------------------------------------------------- | ------------------------------------------------ | --------------------------------------- | ------------------------------------------ | ---------- | -------- | --------- | ------------ | ---------- | ------ | --------- | 
|                                                                                                               |                                                  |                                         |                                            |            | June 30, |           | December 31,
|                                                                                                               |                                                  |                                         |                                            |            | 1999     |           | 1999        
|                                                                                                               |                                                  |                                         |                                            |            |          |           |             
|Assets                                                                                                         |                                                  |                                         |                                            |            |          |           | (Unaudited   | )         
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Current Assets:                                                                                               
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Cash and cash equivalents                        |                                         | $                                          | 7,684,525  |          |           | $            | 5,677,258  |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Accounts receivable                              |                                         |                                            | 182,728    |          |           |              | 88,498     |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Interest receivable                              |                                         |                                            | 49,753     |          |           |              | 49,905     |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Inventory                                        |                                         |                                            | 375,497    |          |           |              | 972,201    |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Prepaid expenses                                 |                                         |                                            | 4,720      |          |           |              | 67,448     |       
|                                                                                                               |                                                  |                                         |                                            |            |          |           |              |           
|                                                                                                               |                                                  |                                         | Total Current Assets                       |            |          | 8,297,223 |              |            |        | 6,855,310 | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Property and Equipment:                                                                                       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Leasehold improvements                           |                                         |                                            | 17,202     |          |           |              | 17,202     |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Furniture and equipment                          |                                         |                                            | 458,999    |          |           |              | 530,666    |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Less accumulated depreciation                    |                                         |                                            | (92,119    | )        |           |              | (140,564   | )     
|                                                                                                               |                                                  |                                         |                                            |            |          |           |              |           
|                                                                                                               |                                                  |                                         | 384,082                                    |            |          |           | 407,304      |           
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Patents, net of accumulated amortization of $21,605
and $25,005 at June 30 and December 31, 1999,
respectively |                                                  |                                         | 23,800                                     |            |          |           | 20,400       |           
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Others Assets                                                                                                  |                                                  |                                         | 6,730                                      |            |          |           | 6,730        |           
|                                                                                                               |                                                  |                                         |                                            |            |          |           |              |           
|                                                                                                               |                                                  |                                         | Total Assets                               |            | $        | 8,711,835 |              |            | $      | 7,289,744 | 
|                                                                                                               |                                                  |                                         |                                            |            |          |           |              |           
|Liabilities and Shareholders Equity
Current Liabilities:                                                     
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Accounts payable                                 |                                         | $                                          | 113,397    |          |           | $            | 236,427    |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Accrued payroll and payroll taxes                |                                         |                                            | 98,356     |          |           |              | 153,553    |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Other accrued expenses                           |                                         |                                            | 10,856     |          |           |              | 2,594      |       
|                                                                                                               |                                                  |                                         |                                            |            |          |           |              |           
|                                                                                                               |                                                  |                                         | Total Current Liabilities                  |            |          | 222,609   |              |            |        | 392,574   | 
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|Shareholders Equity:                                                                                         
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Preferred Stock, $.01 par value:                
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               |                                                  | Authorized shares5,000,000            
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               |                                                  | Issued and outstanding sharesnone      |                                            |            |         |           |              |            |       |          
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Common Stock, $.01 par value:                   
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               |                                                  | Authorized shares25,000,000           
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               |                                                  | Issued and outstanding shares5,109,235 |                                            |            | 51,092   |           |              |            | 51,092 |          
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Additional paid-in capital                       |                                         |                                            | 14,083,028 |          |           |              | 14,083,028 |       
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Deferred compensation                            |                                         |                                            | (154,550   | )        |           |              | (118,880   | )     
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                              
|                                                                                                               | Deficit accumulated during the development stage |                                         |                                            | (5,490,344 | )        |           |              | (7,118,070 | )     
|                                                                                                               |                                                  |                                         |                                            |            |          |           |              |           
|                                                                                                               |                                                  |                                         | Total Shareholders Equity                 |            |          | 8,489,226 |              |            |        | 6,897,170 | 
|                                                                                                               |                                                  |                                         |                                            |            |          |           |              |           
|                                                                                                               |                                                  |                                         | Total Liabilities and Shareholders Equity |            | $        | 8,711,835 |              |            | $      | 7,289,744 | 
|                                                                                                               |                                                  |                                         |                                            |            |          |           |              |           

See accompanying notes.

3



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##### Table of Contents






Hypertension Diagnostics, Inc.
(A Development Stage Company)


Statements of Operations
(Unaudited)

|                                      |                                     |                                                               |           |         |                    |         |                  |         |                |        |            |         |            |         |            |           |            |         |            |           |             |         | 
|------------------------------------- | ----------------------------------- | ------------------------------------------------------------- | --------- | ------- | ------------------ | ------- | ---------------- | ------- | -------------- | ------ | ---------- | ------- | ---------- | ------- | ---------- | --------- | ---------- | ------- | ---------- | --------- | ----------- | ------- | 
|                                      |                                     |                                                               |           |         |                    |         |                  |         |                |        |            |         |            |         |            |           |            |         |            |           | Period From
|                                      |                                     |                                                               |           |         | Three Months Ended |         | Six Months Ended |         | July 19, 1988 
|                                      |                                     |                                                               |           |         | December 31        |         | December 31      |         | (Inception) to
|                                      |                                     |                                                               |           |         |                    |         |                  |         | December 31,  
|                                      |                                     |                                                               |           |         | 1998               |         | 1999             |         | 1998           |        | 1999       |         | 1999      
|                                      |                                     |                                                               |           |         |                    |         |                  |         |                |        |            |         |           
|Revenue:                             
|                                     
|                                     
|                                     
|                                     
|                                      | Equipment sales                     |                                                               | $         | 95,498  |                    |         | $                | 57,499  |                |        | $          | 95,498  |            |         | $          | 128,997   |            |         | $          | 510,244   |            
|                                     
|                                     
|                                     
|                                     
|Cost and Expenses:                   
|                                     
|                                     
|                                     
|                                     
|                                      | Cost of equipment sales             |                                                               |           | 29,092  |                    |         |                  | 12,420  |                |        |            | 29,092  |            |         |            | 29,953    |            |         |            | 168,741   |            
|                                     
|                                     
|                                     
|                                     
|                                      | Research and development            |                                                               |           | 195,708 |                    |         |                  | 164,687 |                |        |            | 364,751 |            |         |            | 227,958   |            |         |            | 2,362,902 |            
|                                     
|                                     
|                                     
|                                     
|                                      | Selling, general and administrative |                                                               |           | 533,032 |                    |         |                  | 926,220 |                |        |            | 937,594 |            |         |            | 1,676,931 |            |         |            | 5,844,798 |            
|                                      |                                     |                                                               |           |         |                    |         |                  |         |                |        |            |         |            |         |            |           |            |         |            |           |             |         | 
|                                      |                                     | Total Cost and Expenses                                       |           |         | 757,832            |         |                  |         | 1,103,327      |        |            |         | 1,331,437  |         |            |           | 1,934,842  |         |            |           | 8,376,441   |        
|                                      |                                     |                                                               |           |         |                    |         |                  |         |                |        |            |         |            |         |            |           |            |         |            |           |             |         | 
|Operating Loss                        |                                     |                                                               | (662,334  | )       |                    |         | (1,045,828       | )       |                |        | (1,235,939 | )       |            |         | (1,805,845 | )         |            |         | (7,866,197 | )        
|                                     
|                                     
|                                     
|                                     
|Other Income (Expense):              
|                                     
|                                     
|                                     
|                                     
|                                      | Interest income                     |                                                               |           | 121,100 |                    |         |                  | 86,837  |                |        |            | 213,700 |            |         |            | 178,119   |            |         |            | 795,158   |            
|                                     
|                                     
|                                     
|                                     
|                                      | Interest expense                    |                                                               |           |        |                    |         |                  |        |                |        |            |        |            |         |            |          |            |         |            | (47,031   | )          
|                                      |                                     |                                                               |           |         |                    |         |                  |         |                |        |            |         |            |         |            |           |            |         |            |           |             |         | 
|                                      |                                     |                                                               |           |         |                    | 121,100 |                  |         |                | 86,837 |            |         |            | 213,700 |            |           |            | 178,119 |            |           |             | 748,127 | 
|                                      |                                     |                                                               |           |         |                    |         |                  |         |                |        |            |         |            |         |            |           |            |         |            |           |             |         | 
|                                      |                                     | Net Loss and Deficit Accumulated
During the Development Stage |           | $       | (541,234           | )       |                  | $       | (958,991       | )      |            | $       | (1,022,239 | )       |            | $         | (1,627,726 | )       |            | $         | (7,118,070  | )      
|                                      |                                     |                                                               |           |         |                    |         |                  |         |                |        |            |         |            |         |            |           |            |         |            |           |             |         | 
|Basic and Dilutive Net Loss per Share |                                     | $                                                             | (.11      | )       |                    | $       | (.19             | )       |                | $      | (.21       | )       |            | $       | (.32       | )         |            | $       | (5.04      | )        
|                                     
|                                     
|                                     
|                                     
|Weighted Average Shares Outstanding   |                                     |                                                               | 5,105,857 |         |                    |         | 5,109,235        |         |                |        | 4,836,655  |         |            |         | 5,109,235  |           |            |         | 1,413,434  |          

See accompanying notes.

4



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##### Table of Contents






Hypertension Diagnostics, Inc.
(A Development Stage Company)

Statements of Cash Flows
(Unaudited)

|                                                                            |                                                             |                                                  |            |                  |            |                |            |        |            |   |            |             |            |  
|--------------------------------------------------------------------------- | ----------------------------------------------------------- | ------------------------------------------------ | ---------- | ---------------- | ---------- | -------------- | ---------- | ------ | ---------- | - | ---------- | ----------- | ---------- | -
|                                                                            |                                                             |                                                  |            |                  |            |                |            |        |            |   |            | Period From
|                                                                            |                                                             |                                                  |            | Six Months Ended |            | July 19, 1988 
|                                                                            |                                                             |                                                  |            | December 31      |            | (Inception) to
|                                                                            |                                                             |                                                  |            |                  |            | December 31,  
|                                                                            |                                                             |                                                  |            | 1998             |            | 1999           |            | 1999  
|                                                                            |                                                             |                                                  |            |                  |            |                |            |       
|Operating Activities:                                                      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Net loss                                                                    |                                                             | $                                                | (1,012,239 | )                |            | $              | (1,627,726 | )      |            | $ | (7,118,070 | )          
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Adjustments to reconcile net loss to net
cash used in operating activities:
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Value of stock options granted in lieu
of cash compensation |                                                  |            |                 |            |                |            | 35,670 |            |   |            | 608,573     |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Depreciation                                                |                                                  |            | 26,100           |            |                |            | 48,445 |            |   |            | 177,033     |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Amortization                                                |                                                  |            | 4,646            |            |                |            | 3,400  |            |   |            | 26,055      |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Write-off of property and equipment                         |                                                  |            |                 |            |                |            |       |            |   |            | 42,702      |           
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            | Change in operating assets and liabilities:                
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                             | Accounts receivable                              |            |                  | (95,785    | )              |            |        | 94,230     |   |            |             | (88,498    | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                             | Interest receivable                              |            |                  | (53,257    | )              |            |        | (152       | ) |            |             | (49,905    | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                             | Inventory                                        |            |                  | (172,173   | )              |            |        | (596,704   | ) |            |             | (972,201   | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                             | Prepaid expenses                                 |            |                  | 125,121    |                |            |        | (62,728    | ) |            |             | (67,448    | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                             | Other assets                                     |            |                  | (200       | )              |            |        |           |   |            |             | (6,730     | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                             | Accounts payable                                 |            |                  | (93,619    | )              |            |        | 123,030    |   |            |             | 236,427    |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                             | Accrued payroll and payroll taxes                |            |                  | 10,180     |                |            |        | 55,197     |   |            |             | 153,553    |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                             | Other accrued expenses                           |            |                  | 33,452     |                |            |        | (8,262     | ) |            |             | 2,768      |  
|                                                                            |                                                             |                                                  |            |                  |            |                |            |        |            |   |            |             |            |  
|                                                                            |                                                             | Net cash used in operating activities            |            |                  | (1,227,774 | )              |            |        | (1,935,600 | ) |            |             | (7,055,741 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Investing Activities:                                                      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Purchase of property and equipment                                          |                                                             |                                                  | (241,252   | )                |            |                | (71,667    | )      |            |   | (627,039   | )          
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Payment of patent costs                                                     |                                                             |                                                  |           |                  |            |                |           |        |            |   | (46,455    | )          
|                                                                            |                                                             |                                                  |            |                  |            |                |            |        |            |   |            |             |            |  
|                                                                            |                                                             | Net cash used in investing activities            |            |                  | (241,252   | )              |            |        | (71,667    | ) |            |             | (673,494   | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Financing Activities:                                                      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Proceeds from notes payable                                                 |                                                             |                                                  |           |                  |            |                |           |        |            |   | 315,500    |            
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Payments of notes payable                                                   |                                                             |                                                  |           |                  |            |                |           |        |            |   | (49,000    | )          
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Issuance of Common Stock                                                    |                                                             |                                                  | 9,196,464  |                  |            |                |           |        |            |   | 13,140,293 |            
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Redemption of Common Stock                                                  |                                                             |                                                  |           |                  |            |                |           |        |            |   | (300       | )          
|                                                                            |                                                             |                                                  |            |                  |            |                |            |        |            |   |            |             |            |  
|                                                                            |                                                             | Net cash provided by financing activities        |            |                  | 9,196,464  |                |            |        |           |   |            |             | 13,406,493 |  
|                                                                            |                                                             |                                                  |            |                  |            |                |            |        |            |   |            |             |            |  
|Net increase (decrease) in cash and cash equivalents                        |                                                             |                                                  | 7,727,438  |                  |            |                | (2,007,267 | )      |            |   | 5,677,258  |            
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |                                                             | Cash and cash equivalents at beginning of period |            |                  | 1,239,804  |                |            |        | 7,684,525  |   |            |             |           |  
|                                                                            |                                                             |                                                  |            |                  |            |                |            |        |            |   |            |             |            |  
|Cash and cash equivalents at end of period                                  |                                                             | $                                                | 8,967,242  |                  |            | $              | 5,677,258  |        |            | $ | 5,677,258  |            
|                                                                            |                                                             |                                                  |            |                  |            |                |            |        |            |   |            |             |            |  
|Supplemental Schedule of Noncash Financing Activities:                     
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Conversion of note payable and accrued interest into
Common Stock           |                                                             | $                                                |           |                  |            | $              |           |        |            | $ | 266,674    |            
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Cash paid for interest                                                      |                                                             |                                                  |           |                  |            |                |           |        |            |   | 12,526     |            

See accompanying notes.

5



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##### Table of Contents






Hypertension Diagnostics, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)

December 31, 1999



|1. |  | Interim Financial Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and do not include all
the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, these unaudited financial statements reflect all
adjustments, consisting only of normal and recurring adjustments
necessary for a fair presentation of the financial statements. The
results of operations for the three months and six months ended
December 31, 1999 are not necessarily indicative of the results that
may be expected for the full year ending June 30, 2000. The June 30,
1999 balance sheet was derived from audited financial statements. For
further information, refer to the financial statements and notes
included in the Companys Annual Report on Form 10-KSB for the fiscal
year ended June 30, 1999. The policies described in that report are
used for preparing quarterly reports.
|  
|2. |  | Shareholders Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |  | In July and August 1998, the Company raised $9,188,414 (net of
underwriting discounts and offering expenses), through an initial
public offering of 2,587,500 units (which included 337,500 additional
units to cover over-allotments) at $4.125 per unit. Each unit consists
of one share of Common Stock and one redeemable Class A Warrant which
entitles the holder to purchase one share at an exercise price of $5.50
per Warrant, subject to adjustment. The Class A Warrants are subject to
redemption by the Company for $.01 per Warrant at any time commencing
90 days after the Effective Date (July 23, 1998), provided that the
closing bid price of the Common Stock exceeds $6.50 (subject to
adjustment) for 14 consecutive trading days. The Class A Warrants
expire on July 22, 2002.                                                                                                                                                                                                          

6



---



##### Table of Contents

Item 2. ManagementS Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. In addition, forward-looking
statements may be made orally in the future by or on behalf of the Company. When
used in this report, the words believe, expect, will, can, estimate,
anticipate and similar expressions are intended to identify such
forward-looking statements. The Company wishes to caution readers not to place
undue reliance on any forward-looking statements and to recognize that the
statements are not predictions of actual future results. Actual results could
differ materially from those anticipated in the forward-looking statements due
to the risks and uncertainties set forth in the Companys 1999 Annual Report on
Form 10-KSB under the caption Risk Factors, as well as others not now
anticipated. These risks and uncertainties include, without limitation, the
Companys ability to receive regulatory approval for its
CVProfilor DO-2020
System; the availability of third-party reimbursements; market acceptance of the
Companys products; the ability to operate and maintain the Central Data
Management Facility (CDMF) on a commercial scale; regulatory restrictions
pertaining to data privacy issues in utilizing the CDMF; the ability to
manufacture the Companys products on a commercial scale and in compliance with
regulatory requirements; the availability of integral components for the
Companys products; the Companys ability to develop distribution channels;
increased competition; changes in government regulation; health care reforms;
exposure to potential product liability; and the Companys ability to protect
its proprietary technology.

Overview

The Company was founded in July 1988 to develop its blood pressure
waveform analysis technology into a clinically acceptable, non-invasive method
for conducting cardiovascular profiling. The Company has developed proprietary
cardiovascular profiling technology that analyzes non-invasively derived
arterial pulse pressure waveform data as a means of providing parameters that
are useful in assessing the cardiovascular system. From inception, the majority
of the Companys efforts have been focused on incorporating this technology into
an instrument that is intended to allow physicians to reliably and effectively
screen patients with cardiovascular disease. While the Company has developed and
tested commercial models of the Product and in April 1998 commenced marketing
the CR-2000 Research CardioVascular Profiling System for research use only, it
expects to incur substantial net operating losses until it achieves a
significant level of revenue following FDA clearance to market the
CVProfiler DO-2020.

The Company plans to market three models: the CR-2000 Research
CardioVascular Profiling System, the CVProfilor DO-2020 System and the
CVProfilor MD-3000 System (previously referred to as the Model DO-2020i).
Management believes that the CR-2000, intended for research use only in the
United States (that is, not for screening, diagnosing, monitoring or determining
treatment of patients), does not require FDA clearance to market, and marketing
activities have commenced worldwide. The CVProfilor DO-2020 System, intended
for use by physicians to screen patients with vascular disease, is an FDA
regulated medical device. The Company is unable to market the CVProfilor
DO-2020 System in the United States until FDA clearance to market is obtained.

On November 30, 1999, the Company announced that its Quality Assurance
System was registered to ISO-9002, EN-46002 and ISO-13488 by TUV Product
Services. The Companys non-invasive CR-2000 Research CardioVascular Profiling
System now carries the CE0123 mark, indicating that the CR-2000 is certified
for sale throughout the European Union and that the product complies with
applicable safety standards. The Company is currently pursuing foreign
registrations and approvals that will allow marketing of a similar physician
product, the CVProfilor MD-3000 System, in foreign markets.

7



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##### Table of Contents



Development Stage Results of Operations

The Company is a development stage company and is not presently
generating any significant revenues. There can be no assurance that the Company
will ever be able to generate significant revenues, attain or maintain
profitable operations or successfully implement its business plan or its current
development opportunities. As of December 31, 1999, the Company had a deficit
accumulated during the development stage of $(7,118,070), attributable primarily
to research and development and general and administrative expenses. Until it is
able to generate significant revenues from its activities, the Company expects
to continue to incur operating losses.

The Company is seeking clearance from the FDA to market the
CVProfilor DO-2020. The Company has been notified by the FDA that it will not be granted an extension to the
510(k) Premarket Notification submission that was previously submitted. Instead, the FDA has requested that the Company
submit a new 510(k) submission which will include additional information as mutually agreed upon between the FDA and the Company.
The gathering of information and the drafting of a new submission is ongoing, and a new 510(k) submission for the CVProfilor DO-2020
System is expected to be forwarded to the FDA before the end of the Company's fiscal year (that is, before June 30, 2000).  It is unknown how long it will take the FDA
to review the 510(k) submission, or when the FDA will clear the 510(k), if at all.

In the quarter ended December 31, 1999, the Company established an
Executive Incentive Bonus Plan (the Bonus Plan). The main objective of the
Bonus Plan is to reward the senior management team for accomplishment of
periodic major corporate milestones essential to the growth of the Company and
supporting of increased shareholder value. Each fiscal year, the Board of
Directors of the Company will review program participation and the payout
criteria established for the fiscal year. Upon approval, the eligible officers
will be measured versus the criteria set and compensated in accordance with the
terms of their own unique employment agreement.

Three Months Ended December 31, 1998 Compared to Three Months Ended December 31, 1999

Revenue was $95,498 and $57,499 for the three months ended December 31,
1998 and 1999, respectively. This revenue related to sales of the
HDI/PulseWave CR-2000 Research CardioVascular Profiling System.

Total cost and expenses for the three months ended December 31, 1998
were $757,832 compared to $1,103,327 for the three months ended December 31,
1999. Approximately 26% of the $757,832 and 15% of the $1,103,327 total cost and
expenses were related to research and development expenses. A further breakdown
of research and development expenses is as follows:

|                                                                                             |                                         |   |                    |         |      |   |         |         | 
|-------------------------------------------------------------------------------------------- | --------------------------------------- | - | ------------------ | ------- | ---- | - | ------- | ------- | 
|                                                                                             |                                         |   | Three Months Ended
|                                                                                             |                                         |   | December 31       
|                                                                                             |                                         |   |                   
|                                                                                             |                                         |   | 1998               |         | 1999
|                                                                                             |                                         |   |                    |         |     
|Design and development of prototype devices and other
enhancements and improvements          |                                         | $ | 80,408             |         |      | $ | 146,852 |        
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Design and development of a Central Data Management
Facility (CDMF)                          |                                         |   | 115,300            |         |      |   |        |        
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Recognized compensation cost for value of stock options
granted in lieu of cash compensation |                                         |   |                   |         |      |   | 17,835  |        
|                                                                                             |                                         |   |                    |         |      |   |         |        
|                                                                                             | Total research and development expenses |   | $                  | 195,708 |      |   | $       | 164,687 | 
|                                                                                             |                                         |   |                    |         |      |   |         |        

The design and development of the CDMF was completed in the fiscal year
ended June 30, 1999. The CDMF is capable of handling multiple simultaneous
transmissions by the CVProfilor DO-2020

8



---



##### Table of Contents



System integrated with the Companys tracking, billing and production systems
and capable of storing and retrieving several hundred thousand patient records.

The following is a summary of the major categories included in selling,
general and administrative expenses:

|                                                             |                                                    |   |                    |         |      |   |         |         | 
|------------------------------------------------------------ | -------------------------------------------------- | - | ------------------ | ------- | ---- | - | ------- | ------- | 
|                                                             |                                                    |   | Three Months Ended
|                                                             |                                                    |   | December 31       
|                                                             |                                                    |   |                   
|                                                             |                                                    |   | 1998               |         | 1999
|                                                             |                                                    |   |                    |         |     
|Wages, related expenses and benefits                         |                                                    | $ | 127,489            |         |      | $ | 299,042 |        
|                                                            
|                                                            
|                                                            
|                                                            
|Patents and related expenses                                 |                                                    |   | 8,367              |         |      |   | 14,584  |        
|                                                            
|                                                            
|                                                            
|                                                            
|Outside consultants                                          |                                                    |   | 60,100             |         |      |   | 101,527 |        
|                                                            
|                                                            
|                                                            
|                                                            
|Rent-building and utilities                                  |                                                    |   | 21,706             |         |      |   | 21,913  |        
|                                                            
|                                                            
|                                                            
|                                                            
|Insurance-general and directors/officers liability           |                                                    |   | 16,092             |         |      |   | 12,392  |        
|                                                            
|                                                            
|                                                            
|                                                            
|Selling, marketing and promotion, including applicable wages |                                                    |   | 106,345            |         |      |   | 300,425 |        
|                                                            
|                                                            
|                                                            
|                                                            
|Depreciation and amortization                                |                                                    |   | 18,686             |         |      |   | 27,026  |        
|                                                            
|                                                            
|                                                            
|                                                            
|Other-general and administrative                             |                                                    |   | 174,247            |         |      |   | 149,311 |        
|                                                             |                                                    |   |                    |         |      |   |         |        
|                                                             | Total selling, general and administrative expenses |   | $                  | 533,032 |      |   | $       | 926,220 | 
|                                                             |                                                    |   |                    |         |      |   |         |        

The Companys number of employees increased from ten in the three
months ended December 31, 1998 to seventeen in the three months ended December
31, 1999.

The increase in outside consultants expense from $60,100 for the three
months ended December 31, 1998 to $101,527 for the three months ended December
31, 1999 was mainly attributable to additional work relating to the Companys
FDA 510(k) Application and the Companys ISO-9002 certification and CE mark for
the CR-2000 Research CardioVascular Profiling System.

Selling, marketing and promotion expense increased from $106,345 for the
three months ended December 31, 1998 to $300,425 for the three months ended
December 31, 1999. This category includes wages and commissions paid by the
Company relating to its sales and marketing efforts as well as travel and
convention expenses.

Interest income was $121,100 and $86,837 for the three months ended
December 31, 1998 and 1999, respectively. In July and August 1998, the Company
raised $9,188,414 (net of underwriting discounts and offering expenses) through
an initial public offering of 2,587,500 units (which included 337,500 additional
units to cover over-allotments) at $4.125 per unit.

Net loss was $(541,234) and $(958,991) for the three months ended
December 31, 1998 and 1999, respectively. For the three months ended December
31, 1998, basic and dilutive net loss per share was $(.11), based on weighted
average shares outstanding of 5,105,857. For the three months ended December 31,
1999, basic and dilutive net loss per share was $(.19), based on weighted
average shares outstanding of 5,109,235.

Six Months Ended December 31, 1998 Compared to Six Months Ended December 31, 1999

Revenue was $95,498 and $128,997 for the six months ended December 31,
1998 and 1999, respectively. This revenue related to sales of the
HDI/PulseWave CR-2000 Research CardioVascular Profiling System.

9



---



##### Table of Contents



Total cost and expenses for the six months ended December 31, 1998 were
$1,331,437 compared to $1,934,842 for the six months ended December 31, 1999.
Approximately 27% of the $1,331,437 and 12% of the $1,934,842 total cost and
expenses were related to research and development expenses. A further breakdown
of research and development expenses is as follows:

|                                                                                             |                                         |   |                  |         |      |   |         |         | 
|-------------------------------------------------------------------------------------------- | --------------------------------------- | - | ---------------- | ------- | ---- | - | ------- | ------- | 
|                                                                                             |                                         |   | Six Months Ended
|                                                                                             |                                         |   | December 31     
|                                                                                             |                                         |   |                 
|                                                                                             |                                         |   | 1998             |         | 1999
|                                                                                             |                                         |   |                  |         |     
|Design and development of prototype devices and other
enhancements and improvements          |                                         | $ | 157,555          |         |      | $ | 192,288 |        
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Design and development of a Central Data Management
Facility (CDMF)                          |                                         |   | 207,196          |         |      |   |        |        
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Recognized compensation cost for value of stock options
granted in lieu of cash compensation |                                         |   |                 |         |      |   | 35,670  |        
|                                                                                             |                                         |   |                  |         |      |   |         |        
|                                                                                             | Total research and development expenses |   | $                | 364,751 |      |   | $       | 227,958 | 
|                                                                                             |                                         |   |                  |         |      |   |         |        

The design and development of the CDMF was completed in the fiscal year
ended June 30, 1999. The CDMF is capable of handling multiple simultaneous
transmissions by the CVProfilor DO-2020 System integrated with the Companys
tracking, billing and production systems and capable of storing and retrieving
several hundred thousand patient records.

The following is a summary of the major categories included in selling,
general and administrative expenses:

|                                                             |                                                    |   |                  |         |  |  |  |  |      |   |         |           | 
|------------------------------------------------------------ | -------------------------------------------------- | - | ---------------- | ------- |  |  |  |  | ---- | - | ------- | --------- | 
|                                                             |                                                    |   | Six Months Ended
|                                                             |                                                    |   | December 31     
|                                                             |                                                    |   |                 
|                                                             |                                                    |   | 1998             |         |  |  |  |  | 1999
|                                                             |                                                    |   |                  |         |  |  |  |  |     
|Wages, related expenses and benefits                         |                                                    | $ | 304,081          |         |  |  |  |  |      | $ | 538,343 |          
|                                                            
|                                                            
|                                                            
|                                                            
|Patents and related expenses                                 |                                                    |   | 16,205           |         |  |  |  |  |      |   | 43,966  |          
|                                                            
|                                                            
|                                                            
|                                                            
|Outside consultants                                          |                                                    |   | 129,528          |         |  |  |  |  |      |   | 194,521 |          
|                                                            
|                                                            
|                                                            
|                                                            
|Rent-building and utilities                                  |                                                    |   | 43,323           |         |  |  |  |  |      |   | 44,391  |          
|                                                            
|                                                            
|                                                            
|                                                            
|Insurance-general and directors/officers liability           |                                                    |   | 35,610           |         |  |  |  |  |      |   | 23,595  |          
|                                                            
|                                                            
|                                                            
|                                                            
|Selling, marketing and promotion, including applicable wages |                                                    |   | 128,482          |         |  |  |  |  |      |   | 516,950 |          
|                                                            
|                                                            
|                                                            
|                                                            
|Depreciation and amortization                                |                                                    |   | 30,746           |         |  |  |  |  |      |   | 51,846  |          
|                                                            
|                                                            
|                                                            
|                                                            
|Other-general and administrative                             |                                                    |   | 249,619          |         |  |  |  |  |      |   | 263,319 |          
|                                                             |                                                    |   |                  |         |  |  |  |  |      |   |         |          
|                                                             | Total selling, general and administrative expenses |   | $                | 937,594 |  |  |  |  |      |   | $       | 1,676,931 | 
|                                                             |                                                    |   |                  |         |  |  |  |  |      |   |         |          

The Companys number of employees increased from ten in the six months
ended December 31, 1998 to seventeen in the six months ended December 31, 1999.

The increase in outside consultants expense from $129,528 for the six
months ended December 31, 1998 to $194,521 for the six months ended December 31,
1999 was mainly attributable to additional work relating to the Companys FDA
510(k) Application and the Companys ISO-9002 certification and CE mark for the
CR-2000 Research CardioVascular Profiling System.

Selling, marketing and promotion expense increased from $128,482 for the
six months ended December 31, 1998 to $516,950 for the six months ended December
31, 1999. This category includes

10



---



##### Table of Contents



wages and commissions paid by the Company relating to its sales and marketing
efforts as well as travel and convention expenses.

Interest income was $213,700 and $178,119 for the six months ended
December 31, 1998 and 1999, respectively. In July and August 1998, the Company
raised $9,188,414 (net of underwriting discounts and offering expenses) through
an initial public offering of 2,587,500 units (which included 337,500 additional
units to cover over-allotments) at $4.125 per unit.

Net loss was $(1,022,239) and $(1,627,726) for the six months ended
December 31, 1998 and 1999, respectively. For the six months ended December 31,
1998, basic and dilutive net loss per share was $(.21), based on weighted
average shares outstanding of 4,836,655. For the six months ended December 31,
1999, basic and dilutive net loss per share was $(.32), based on weighted
average shares outstanding of 5,109,235.

Liquidity and Capital Resources

Cash and cash equivalents had a net increase of $7,727,438 for the six
months ended December 31, 1998. The significant elements of this change were as
follows: net cash used in operating activities  net loss, as adjusted for
non-cash items, of $(981,493); decrease in prepaid expenses  $125,121; increase
in inventory  $172,173; net cash used in investing activities  purchase of
property and equipment  $241,252; net cash provided by financing activities -
issuance of Common Stock  $9,196,464. For the six months ended December 31,
1999, cash and cash equivalents had a net decrease of $2,007,267. The
significant elements of this change were as follows: net cash used in operating
activities  net loss, as adjusted for non-cash items, of $(1,540,211); increase
in inventory  $596,704; increase in accounts payable  $123,030.

In July 1998, the Company completed its initial public offering (IPO)
in which it sold 2,250,000 units at $4.125 per unit, each unit consisting of one
share of Common Stock and one redeemable Class A Warrant. In August 1998, the
underwriter exercised in full an overallotment option to purchase an additional
337,500 units. Total net proceeds from the IPO were $9,188,414. As of December
31, 1999, the Company has cash and cash equivalents of $5,677,258, and
anticipates that these funds should allow it to pursue the different elements of
the Companys business development strategy for approximately the next 12 to 15
months. The Companys business plan and financing needs are subject to change
depending on, among other things, market conditions, timing of the receipt of
clearance from the FDA to market the CV Profilor DO-2020, business
opportunities and cash flow from operations. Pending application of the net
proceeds, such proceeds will be invested in short-term, high quality,
interest-bearing instruments.

Although not assured, in addition to the net proceeds from the IPO, the
Company may derive over a period of time up to $14,231,250 from the exercise of
the Class A Warrants included in the units. Each Class A Warrant entitles the
holder to purchase one share at an exercise price of $5.50 per Warrant, subject
to adjustment. The Class A Warrants are subject to redemption by the Company for
$.01 per Warrant at any time commencing October 21, 1998, provided that the
closing bid price of the shares exceeds $6.50 (subject to adjustment) for 14
consecutive trading days. The Class A Warrants expire on July 22, 2002. The
amounts, if any, that the Company derives from the exercise of such Class A
Warrants will be used in connection with the Companys development
opportunities, business plan activities and/or working capital requirements.

11



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##### Table of Contents



Year 2000 Compliance

Although it is now after January 1, 2000, many existing computer
programs still use only two digits to identify a year in a data field. These
programs were designed and developed without considering the impact of the
upcoming change in the century. If not corrected, many computer applications
could fail, create erroneous results, or otherwise lead to significant business
delays and disruptions in the Year 2000. The Company has experienced no Year
2000 information systems problems to date, and it believes its internal
information technology systems remain Year 2000 compliant. The Company has, and
expects to have certain material relationships with suppliers and vendors.
Although the Company has experienced no problems to date, it is currently unable
to predict to what extent the Year 2000 issue may affect such existing and
anticipated suppliers or vendors, or to what extent the Company would be
vulnerable to any failure by its suppliers or vendors to be Year 2000 compliant.
The failure of a supplier or vendor to remediate any Year 2000 issues could have
a material adverse effect on the Companys business, financial condition or
results of operation.

12



---



##### Table of Contents






PART II. OTHER INFORMATION




Item
2. Use of Proceeds

The following table sets forth the Companys use of the net proceeds
from its initial public offering, from July 28, 1998 through December 31, 1999:

|                                                                                                                                                             |  |   |           | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | - | --------- | 
|Temporary investments (U.S. Government obligations/notes
and U.S. Government money market fund; other short-term high
quality, interest-bearing instruments) |  | $ | 5,677,258 | 
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|Central Data Management Facility                                                                                                                             |  |   | 318,194   | 
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|Purchase of property and equipment                                                                                                                           |  |   | 397,754   | 
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|Sales, marketing and promotion                                                                                                                               |  |   | 674,664   | 
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|Wages, related expenses and benefits                                                                                                                         |  |   | 967,823   | 
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|Outside consultants                                                                                                                                          |  |   | 283,437   | 
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|                                                                                                                                                            
|Inventory                                                                                                                                                    |  |   | 869,284   | 
|                                                                                                                                                             |  |   |           | 
|                                                                                                                                                             |  | $ | 9,188,414 | 
|                                                                                                                                                             |  |   |           | 




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

(a) The Annual Meeting of Shareholders was held on November 30, 1999.

(b) The results of the shareholders votes were as follows:

|   |  |                                                                                            |  |     |                     |         |  |         |  |  |                | 
|-- |  | ------------------------------------------------------------------------------------------ |  | --- | ------------------- | ------- |  | ------- |  |  | -------------- | 
|   |  |                                                                                            |  | For |                     | Against |  | Abstain
|   |  |                                                                                            |  |     |                     |         |  |        
|1. |  | Re-Election of Class I Directors
Melville R. Bois
Charles F. Chesney, D.V.M., Ph.D, R.A.C. |  |     | 3,923,536
4,021,036 |         |  | -
-     |  |  | 143,500
46,000 | 
|  
|  
|  
|  
|2. |  | Approval of Selection of
Independent Auditors                                              |  |     | 4,021,496           |         |  | 45,100  |  |  | 440            | 




Item
6. Exhibits and Reports on Form 8-K

(a) The following Exhibits are furnished pursuant to Item 601 of Regulation S-B:

|            |  |                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                    
|            |  |                                                                                                
|10.17       |  | Employment Agreement between Dennis L. Sellke
and the Company, dated December 22, 1999         
|           
|           
|           
|           
|10.18       |  | Employment Agreement between Charles F. Chesney, D.V.M
and the Company, dated December 22, 1999
|           
|           
|           
|           
|10.19       |  | Employment Agreement between Greg H. Guettler
and the Company, dated December 22, 1999         

13



---



##### Table of Contents



|      |  |                                                                                      
|----- |  | -------------------------------------------------------------------------------------
|10.20 |  | Employment Agreement between James S. Murphy
and the Company, dated December 22, 1999
|     
|     
|     
|     
|27    |  | Financial Data Schedule for the quarter ended December 31, 1999                      



---

|(b) |  | Reports on Form 8-K.                                                         
|--- |  | -----------------------------------------------------------------------------
|   
|   
|   
|   
|    |  | No reports on Form 8-K were filed during the quarter ended December 31,
1999.

14



---



##### Table of Contents






SIGNATURES

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



| | HYPERTENSION DIAGNOSTICS,
INC.
| | ------------------------------



| | By /s/ James S. Murphy
James S. Murphy
Vice President of Finance and
Chief Financial Officer
(principal financial officer)
| | --------------------------------------------------------------------------------------------------------------------------

Date: February 11, 2000

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##### Table of Contents






EXHIBIT INDEX

|            |  |                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                    
|            |  |                                                                                                
|10.17       |  | Employment Agreement between Dennis L. Sellke
and the Company, dated December 22, 1999         
|           
|           
|           
|           
|10.18       |  | Employment Agreement between Charles F. Chesney, D.V.M
and the Company, dated December 22, 1999
|           
|           
|           
|           
|10.19       |  | Employment Agreement between Greg H. Guettler
and the Company, dated December 22, 1999         
|           
|           
|           
|           
|10.20       |  | Employment Agreement between James S. Murphy
and the Company, dated December 22, 1999          
|           
|           
|           
|           
|27          |  | Financial Data Schedule for the quarter ended December 31, 1999                                

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