##### Table of Contents



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 September 30, 2002

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 November 8, 2002 was
7,253,516.

Transitional Small Business Disclosure Format:

Yes [  ]     No [X]







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TABLE OF CONTENTS



|                                                 |                                                                                               |                               |  |  |  |  |  | 
|------------------------------------------------ | --------------------------------------------------------------------------------------------- | ----------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                   
|                                                 | Item 1. Financial Statements                                                                 
|                                                 |                                                                                               | Balance Sheets               
|                                                 |                                                                                               | Statements of Operations     
|                                                 |                                                                                               | Statements of Cash Flows     
|                                                 |                                                                                               | Notes to Financial Statements
|                                                 | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                 | Item 4. Controls and Procedures.                                                             
|PART II. OTHER INFORMATION                      
|                                                 | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                      
|CERTIFICATIONS                                  
|EX-99.1 Certificate Pursuant to 18 USC Sect 1350



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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  September 30, 2002 and June 30, 2002                                 | 3       
|                              |    |         |  | Statements of Operations  Three Months Ended
September 30, 2002 and 2001             | 4       
|                              |    |         |  | Statements of Cash Flows  Three Months Ended
September 30, 2002 and 2001             | 5       
|                              |    |         |  | Notes to Financial Statements                                                         | 6       
|                              |    | Item 2. |  | Managements Discussion and Analysis of Financial Condition
and Results of Operations | 8       
|                              |    | Item 4. |  | Controls and Procedures                                                               | 13      
|PART II OTHER INFORMATION:    |   
|                              |    | Item 6. |  | Exhibits and Reports on Form 8-K                                                      | 14      
|SIGNATURES                    | 15
|CERTIFICATIONS                | 16

2



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##### Table of Contents












PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Hypertension Diagnostics, Inc.

Balance Sheets

|                                                                                                                      |                                   |                                                                                                                                         |                                            |             |               |           |          |             |        |           | 
|--------------------------------------------------------------------------------------------------------------------- | --------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ----------- | ------------- | --------- | -------- | ----------- | ------ | --------- | 
|                                                                                                                      |                                   |                                                                                                                                         |                                            |             | September 30, |           | June 30,
|                                                                                                                      |                                   |                                                                                                                                         |                                            |             | 2002          |           | 2002    
|                                                                                                                      |                                   |                                                                                                                                         |                                            |             |               |           |         
|Assets                                                                                                                |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|Current Assets:                                                                                                       |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|                                                                                                                      | Cash and cash equivalents         |                                                                                                                                         | $                                          | 1,239,050   |               |           | $        | 1,824,238   |       
|                                                                                                                      | Accounts receivable               |                                                                                                                                         |                                            | 79,320      |               |           |          | 279,609     |       
|                                                                                                                      | Interest receivable               |                                                                                                                                         |                                            | 7,462       |               |           |          | 5,070       |       
|                                                                                                                      | Related party note receivable     |                                                                                                                                         |                                            | 117,000     |               |           |          | 117,000     |       
|                                                                                                                      | Inventory                         |                                                                                                                                         |                                            | 1,332,182   |               |           |          | 1,394,191   |       
|                                                                                                                      | Prepaids and other current assets |                                                                                                                                         |                                            | 131,501     |               |           |          | 89,338      |       
|                                                                                                                      |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|                                                                                                                      |                                   |                                                                                                                                         | Total Current Assets                       |             |               | 2,906,515 |          |             |        | 3,709,446 | 
|Property and Equipment:                                                                                               |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|                                                                                                                      | Leasehold improvements            |                                                                                                                                         |                                            | 17,202      |               |           |          | 17,202      |       
|                                                                                                                      | Furniture and equipment           |                                                                                                                                         |                                            | 1,130,534   |               |           |          | 1,074,468   |       
|                                                                                                                      | Less accumulated depreciation     |                                                                                                                                         |                                            | (560,172    | )             |           |          | (505,283    | )     
|                                                                                                                      |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|                                                                                                                      |                                   |                                                                                                                                         | 587,564                                    |             |               |           | 586,387  |            
|Patents, net of accumulated amortization of $43,705
and $42,005 at September 30, 2002 and June 30, 2002,
respectively |                                   |                                                                                                                                         | 1,700                                      |             |               |           | 3,400    |            
|Other Assets                                                                                                          |                                   |                                                                                                                                         | 6,730                                      |             |               |           | 6,730    |            
|                                                                                                                      |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|                                                                                                                      |                                   |                                                                                                                                         | Total Assets                               |             | $             | 3,502,509 |          |             | $      | 4,305,963 | 
|                                                                                                                      |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|Liabilities and Shareholders Equity                                                                                  |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|Current Liabilities:                                                                                                  |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|                                                                                                                      | Accounts payable                  |                                                                                                                                         | $                                          | 127,685     |               |           | $        | 149,306     |       
|                                                                                                                      | Accrued payroll and payroll taxes |                                                                                                                                         |                                            | 256,151     |               |           |          | 224,515     |       
|                                                                                                                      | Convertible notes payable         |                                                                                                                                         |                                            | 1,001,421   |               |           |          | 1,268,119   |       
|                                                                                                                      | Deferred revenue                  |                                                                                                                                         |                                            | 69,667      |               |           |          | 69,667      |       
|                                                                                                                      | Other accrued expenses            |                                                                                                                                         |                                            | 18,489      |               |           |          | 58,433      |       
|                                                                                                                      |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|                                                                                                                      |                                   |                                                                                                                                         | Total Current Liabilities                  |             |               | 1,473,413 |          |             |        | 1,770,040 | 
|Deferred Revenue, less current portion                                                                                |                                   |                                                                                                                                         | 17,417                                     |             |               |           | 34,833   |            
|Shareholders Equity:                                                                                                 |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|                                                                                                                      | Preferred Stock, $.01 par value:  |                                                                                                                                         |                                            |             |               |           |          |             |       
|                                                                                                                      |                                   | Authorized
shares5,000,000Issued and outstanding sharesnone                                                                           |                                            |             |              |           |          |             |       |          
|                                                                                                                      | Common Stock, $.01 par value:     |                                                                                                                                         |                                            |             |               |           |          |             |       
|                                                                                                                      |                                   | Authorized
shares25,000,000Issued and outstanding shares7,193,029 and 6,495,577
at September 30, 2002 and June 30, 2002, respectively |                                            |             | 71,930        |           |          |             | 64,956 |          
|                                                                                                                      | Additional paid-in capital        |                                                                                                                                         |                                            | 20,524,519  |               |           |          | 20,044,153  |       
|                                                                                                                      | Accumulated deficit               |                                                                                                                                         |                                            | (18,584,770 | )             |           |          | (17,608,019 | )     
|                                                                                                                      |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|                                                                                                                      |                                   |                                                                                                                                         | Total Shareholders Equity                 |             |               | 2,011,679 |          |             |        | 2,501,090 | 
|                                                                                                                      |                                   |                                                                                                                                         |                                            |             |               |           |          |            
|                                                                                                                      |                                   |                                                                                                                                         | Total Liabilities and Shareholders Equity |             | $             | 3,502,509 |          |             | $      | 4,305,963 | 
|                                                                                                                      |                                   |                                                                                                                                         |                                            |             |               |           |          |            

See accompanying notes.

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##### Table of Contents






Hypertension Diagnostics, Inc.

Statements of Operations

|                                     |                                     |                |           |                    |          |      |            |           |            |  
|------------------------------------ | ----------------------------------- | -------------- | --------- | ------------------ | -------- | ---- | ---------- | --------- | ---------- | -
|                                     |                                     |                |           | Three Months Ended
|                                     |                                     |                |           | September 30      
|                                     |                                     |                |           |                   
|                                     |                                     |                |           | 2002               |          | 2001
|                                     |                                     |                |           |                    |          |     
|Revenue                              |                                     | $              | 119,062   |                    |          | $    | 91,715     |          
|Cost of Sales                        |                                     |                | 15,730    |                    |          |      | 22,100     |          
|                                     |                                     |                |           |                    |          |      |            |          
|                                     |                                     | Gross Profit   |           |                    | 103,332  |      |            |           | 69,615     |  
|Expenses:                            |                                     |                |           |                    |          |      |            |          
|                                     | Research and development            |                |           |                   |          |      |            | 35,510    |           
|                                     | Selling, general and administrative |                |           | 997,193            |          |      |            | 2,172,926 |           
|                                     |                                     |                |           |                    |          |      |            |          
|                                     |                                     | Total Expenses |           |                    | 997,193  |      |            |           | 2,208,436  |  
|                                     |                                     |                |           |                    |          |      |            |          
|Operating Loss                       |                                     |                | (893,861  | )                  |          |      | (2,138,821 | )        
|Other Income (Expense):              |                                     |                |           |                    |          |      |            |          
|                                     | Interest income                     |                |           | 6,629              |          |      |            | 29,032    |           
|                                     | Interest expense                    |                |           | (89,519            | )        |      |            |          |           
|                                     |                                     |                |           |                    |          |      |            |          
|                                     |                                     | Net Loss       |           | $                  | (976,751 | )    |            | $         | (2,109,789 | )
|                                     |                                     |                |           |                    |          |      |            |          
|Basic and Diluted Net Loss per Share |                                     | $              | (.14      | )                  |          | $    | (.36       | )        
|Weighted Average Shares Outstanding  |                                     |                | 6,768,162 |                    |          |      | 5,872,210  |          

See accompanying notes.

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Hypertension Diagnostics, Inc.

Statements of Cash Flows

|                                                                            |                                                                          |                                   |                                                  |         |                    |           |            |           |          |            |  
|--------------------------------------------------------------------------- | ------------------------------------------------------------------------ | --------------------------------- | ------------------------------------------------ | ------- | ------------------ | --------- | ---------- | --------- | -------- | ---------- | -
|                                                                            |                                                                          |                                   |                                                  |         | Three Months Ended
|                                                                            |                                                                          |                                   |                                                  |         | September 30      
|                                                                            |                                                                          |                                   |                                                  |         |                   
|                                                                            |                                                                          |                                   |                                                  |         | 2002               |           | 2001      
|                                                                            |                                                                          |                                   |                                                  |         |                    |           |           
|Operating Activities:                                                       |                                                                          |                                   |                                                  |         |                    |           |            |          
|Net loss                                                                    |                                                                          | $                                 | (976,751                                         | )       |                    | $         | (2,109,789 | )        
|Adjustments to reconcile net loss to net
cash used in operating activities: |                                                                          |                                   |                                                  |         |                    |           |            |          
|                                                                            | Value of stock options, Common Stock and warrants
issued in lieu of cash |                                   |                                                  | 150,000 |                    |           |            | 1,076,870 |         
|                                                                            | Depreciation                                                             |                                   |                                                  | 54,890  |                    |           |            | 47,641    |         
|                                                                            | Amortization                                                             |                                   |                                                  | 1,700   |                    |           |            | 1,700     |         
|                                                                            | Amortization of debt discount                                            |                                   |                                                  | 62,798  |                    |           |            |          |         
|                                                                            | Interest expense  converted to Common Stock                             |                                   |                                                  | 7,843   |                    |           |            |          |         
|                                                                            | Change in operating assets and liabilities:                              |                                   |                                                  |         |                    |           |            |           |         
|                                                                            |                                                                          | Accounts receivable               |                                                  |         | 200,289            |           |            |           | (46,507  | )         
|                                                                            |                                                                          | Interest receivable               |                                                  |         | (2,392             | )         |            |           | 916      |           
|                                                                            |                                                                          | Inventory                         |                                                  |         | 5,943              |           |            |           | (174,902 | )         
|                                                                            |                                                                          | Prepaids and other current assets |                                                  |         | (42,163            | )         |            |           | (22,033  | )         
|                                                                            |                                                                          | Accounts payable                  |                                                  |         | (21,621            | )         |            |           | 7,079    |           
|                                                                            |                                                                          | Accrued payroll and payroll taxes |                                                  |         | 31,636             |           |            |           | 41,395   |           
|                                                                            |                                                                          | Deferred revenue                  |                                                  |         | (17,416            | )         |            |           |         |           
|                                                                            |                                                                          | Other accrued expenses            |                                                  |         | (39,944            | )         |            |           | (41,397  | )         
|                                                                            |                                                                          |                                   |                                                  |         |                    |           |            |          
|                                                                            |                                                                          |                                   | Net cash used in operating activities            |         |                    | (585,188  | )          |           |          | (1,219,027 | )
|Investing Activities:                                                       |                                                                          |                                   |                                                  |         |                    |           |            |          
|Purchase of property and equipment                                          |                                                                          |                                   |                                                 |         |                    |           | (5,653     | )        
|                                                                            |                                                                          |                                   |                                                  |         |                    |           |            |          
|                                                                            |                                                                          |                                   | Net cash used in investing activities            |         |                    |          |            |           |          | (5,653     | )
|Financing Activities:                                                       |                                                                          |                                   |                                                  |         |                    |           |            |          
|Issuance of Common Stock                                                    |                                                                          |                                   |                                                 |         |                    |           | 23,200     |          
|                                                                            |                                                                          |                                   |                                                  |         |                    |           |            |          
|                                                                            |                                                                          |                                   | Net cash provided by financing activities        |         |                    |          |            |           |          | 23,200     |  
|                                                                            |                                                                          |                                   |                                                  |         |                    |           |            |          
|Net decrease in cash and cash equivalents                                   |                                                                          |                                   | (585,188                                         | )       |                    |           | (1,201,480 | )        
|                                                                            |                                                                          |                                   | Cash and cash equivalents at beginning of period |         |                    | 1,824,238 |            |           |          | 3,885,064  |  
|                                                                            |                                                                          |                                   |                                                  |         |                    |           |            |          
|Cash and cash equivalents at end of period                                  |                                                                          | $                                 | 1,239,050                                        |         |                    | $         | 2,683,584  |          
|                                                                            |                                                                          |                                   |                                                  |         |                    |           |            |          
|Supplemental Schedule of Noncash Financing Activities:                      |                                                                          |                                   |                                                  |         |                    |           |            |          
|Conversion of notes payable and accrued interest into Common Stock          |                                                                          | $                                 | 337,340                                          |         |                    | $         |           |          

See accompanying notes.

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Hypertension Diagnostics, Inc.
Notes to Financial Statements

September 30, 2002



|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 ended September 30, 2002 are not necessarily indicative
of the results that may be expected for the full year ending June 30,
2003. The June 30, 2002 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, 2002. The policies described in that report
are used for preparing quarterly reports.
|  
|2. |  | Convertible Notes Payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | The Company is a party to that certain Subscription Agreement dated as of
March 27, 2002 (the Subscription Agreement) with the subscribers named
therein for a private placement to five investors of three-year 8%
Convertible Notes (the Notes) in the original aggregate principal
amount of $2,000,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|   |  | One of the events of default specified in the Notes is notification from
The Nasdaq SmallCap Market that the Company is not in compliance with the
conditions for continued listing on The Nasdaq SmallCap Market. On
August 27, 2002, the Company received a notice from The Nasdaq Stock
Market, Inc. advising the Company that because the minimum bid price of
the Companys Common Stock was not at least $1.00 for a period of thirty
(30) consecutive trading days, the Company does not meet the requirements
for continued listing on The Nasdaq SmallCap Market. Because of the
receipt of this notice from Nasdaq, the Company was in default of the
Notes.                                                                                                                                                                                                                                                                                                                              
|  
|   |  | The Nasdaq Marketplace Rules provide that the Company has 180 calendar
days, or until February 24, 2003, to regain compliance with the
requirement for continued listing relating to the minimum bid price.
Generally, unless otherwise determined by Nasdaq staff, compliance with
the minimum bid price requirement can be demonstrated during the 180
calendar day period by the Companys Common Stock maintaining a $1.00
minimum bid price for at least ten (10) consecutive trading days.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | As reported on a Form 8-K dated July 24, 2002, the Company was also in
default of the Note covenant relating to the failure of the Companys
Common Stock to maintain a minimum bid price of $1.00 for a period of
seven (7) consecutive trading days. By a letter dated October 15, 2002,
each of the holders of the Companys 8% Convertible Notes due March 27,
2005 agreed to waive existing covenant defaults under the Notes if, in
exchange, the Company hired a proxy solicitor for its Special Meeting of
Shareholders and on or before October 25, 2002, obtained shareholder
approval of the proposal put forth at the Companys Special Meeting. The
Special Meeting sought shareholder approval of the issuance by the
Company of Common Stock equal to 20% or more of
its outstanding Common Stock upon conversion of the Notes and exercise of
certain Common Stock Purchase Warrants.                                                                                               

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|3. |  | Subsequent Event                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | On October 25, 2002, the Company reconvened its Special Meeting of
Shareholders, which had been adjourned from the original meeting date of
September 25, 2002. The Special Meeting was called for the purposes of
allowing the Companys shareholders to consider and approve Proposal 1:
The issuance of Common Stock equal to 20% or more of the outstanding
Common Stock of the Company upon (a) conversion of $2,000,000 aggregate
principal amount of 8% Convertible Notes due March 27, 2005 and (b)
exercise of certain Common Stock Purchase Warrants. Since a majority of
the Companys shares were represented at the reconvened Special Meeting,
a quorum was present. Proposal 1 was approved by a majority of the
shares present in person or represented by proxy at the Special Meeting.
Accordingly, Proposal 1 has been adopted by shareholders of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | By a letter dated October 15, 2002, each of the holders of the Companys
8% Convertible Notes due March 27, 2005 has agreed to waive certain
existing covenant defaults under the Notes if, in exchange, the Company
hired a proxy solicitor for its Special Meeting of Shareholders and on or
before October 25, 2002, obtained shareholder approval of the proposal
put forth at the Companys Special Meeting. With approval of Proposal 1
by the Companys shareholders, the Company has met the two conditions for
the effectiveness of the waiver.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | The waiver only relates to the following events of default: (a) the
failure of the Company to obtain the Approval on or before the Approval
Date; (b) the failure of the Company to comply with the requirement for
continued listing on The Nasdaq SmallCap Market for a period of seven (7)
consecutive trading days because the minimum bid price of its Common
Stock was less than $1.00; and (c) the receipt by the Company on August
27, 2002 of a notice from The Nasdaq Stock Market, Inc. stating that the
Company is not in compliance with the requirements for continued listing
because of the failure of the Companys Common Stock to maintain a
minimum bid price of $1.00 for a period of thirty (30) consecutive
trading days. No other events of default are waived. The failure of the
Company to comply with any of the covenants of the Notes will result in
an event of default under the Notes. Upon an event of default, a Note
holder, at its option, may demand cash repayment of 130% of the
then-outstanding principal amount of the Note and any accrued but unpaid
interest. There can be no assurance that the Company will comply with
the Note covenants in the future. See Liquidity and Capital
Resources for a discussion of our violation of The Nasdaq Stock Market, Inc.
shareholders equity requirement for continued listing. There can also be no assurance that
the Company will successfully obtain a waiver of any future event of
default, if any event of default should occur.
|  
|   |  | The Note holders have also agreed to waive a covenant default, if any
such default exists, relating to the Companys registration of its Common
Stock for resale if, in addition to hiring a proxy solicitor and
obtaining approval of its Shareholders as outlined above, the Company
files a registration statement to register 750,000 additional shares of
its Common Stock on or before November 15, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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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, we may make
forward-looking statements orally in the future by or on behalf of the Company.
When used, the words believe, expect, will, can, estimate,
anticipate and similar expressions are intended to identify forward-looking
statements. We wish 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 our 2002 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, our immediate need for additional
capital; our violation of the requirements for continued
listing on The Nasdaq SmallCap Market and our ability to comply with each of
the other requirements for continued listing; the existence of events of
default under our 8% Convertible Notes and the resulting right of the holders
of such Notes to demand immediate repayment; our ability to more quickly
generate acceptable levels of revenue; the availability of third-party
reimbursements for the use of our products; increased market acceptance of our
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 our
products on a commercial scale and in compliance with regulatory requirements;
the availability of integral components for our products; our ability to
develop distribution channels; increased competition; changes in government
regulation; health care reforms; exposure to potential product liability; and
our ability to protect our proprietary technology. We undertake no
responsibility to update any forward-looking statement.

Forward-looking statements involve risks and uncertainties, including
those discussed under Risk Factors, that could cause actual results to differ
materially from those anticipated. Because actual results may differ, readers
are cautioned not to place undue reliance on these forward-looking statements.

Overview

We are engaged in the design, development, manufacture and marketing of
proprietary medical devices that we believe non-invasively detect subtle
changes in the elasticity of both large and small arteries. Vascular
compliance or arterial elasticity has been investigated for many years and
clinical studies suggest that a lack of arterial elasticity is an early
indicator of vascular disease. We are currently marketing three versions of
our Product: the HDI/PulseWave CR-2000 Research CardioVascular Profiling
System, the CVProfilor® DO-2020 CardioVascular Profiling System and the
CVProfilor® MD-3000 CardioVascular Profiling System. The CR-2000 Research
System is being marketed worldwide, has a medical device CE Mark (CE0123) which
allows it to be marketed as a medical device in the European Union and is being
marketed for research purposes only in the United States (that is, not for
screening, diagnosing, or monitoring the treatment of patients). The
CVProfilor® DO-2020 System is being marketed to primary care physicians and
other health care professionals on a per-patient-tested rental basis.
Utilizing our Central Data Management Facility (the CDMF), we are able to
track utilization of the CVProfilor® DO-2020 System in each physicians office
and medical clinic and to invoice our physician customers on the number of
CardioVascular Profile Reports (CVProfile Reports) which they generate each
month. We anticipate that marketing the CVProfilor® DO-2020 System under a
per-patient-tested rental program (as opposed to a capital sale approach)
will allow us to accelerate the rate of Product acceptance in the medical
marketplace and should allow physician usage fees to eventually generate the
majority of our revenue. The CVProfilor® MD-3000 System is being marketed to
physicians outside the United States. We believe that the CVProfilor® MD-3000 will
provide clinically beneficial information useful in screening patients who may
be at risk for future cardiovascular disease, provide assistance to physicians
with their diagnosis of patient cardiovascular diseases, and

8



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allow for
monitoring the effectiveness of various treatments of patients with diagnosed
cardiovascular disease. The CVProfilor® MD-3000 System has a medical device CE
Mark that allows it to be marketed within European Union countries. The
CVProfilor® MD-3000 will require certain regulatory approval for it to be
marketed in other countries throughout the world.

Results of Operations

As of September 30, 2002, we had an accumulated deficit of $(18,584,770),
attributable primarily to research and development and general and
administrative expenses. Until we are able to generate significant revenue
from our activities, we expect to continue to incur operating losses.

Three Months Ended September 30, 2002 Compared to Three Months Ended September
30, 2001

The following is a summary of our Revenue and Cost of Sales for the three
months ended September 30, 2002 and 2001, respectively:

|              |  |                                       |         |       |  |           |        |                    |  |                  |        |  |  |   |        | 
|------------- |  | ------------------------------------- | ------- | ----- |  | --------- | ------ | ------------------ |  | ---------------- | ------ |  |  | - | ------ | 
|              |  | Three Months Ended September 30, 2002
|              |  |                                      
|              |  |                                       |         |       |  | Equipment |        | CVProfilor®DO-2020 |  | Service Warranty
|              |  | Total                                 |         | Sales |  | Rental    |        | Income            
|              |  |                                       |         |       |  |           |        |                   
|Revenue       |  | $                                     | 119,062 |       |  | $         | 28,700 |                    |  | $                | 72,945 |  |  | $ | 17,417 | 
|Cost of Sales |  |                                       | 15,730  |       |  |           | 5,785  |                    |  |                  | 9,945  |  |  |   |       | 
|              |  |                                       |         |       |  |           |        |                    |  |                  |        | 
|Gross Profit  |  | $                                     | 103,332 |       |  | $         | 22,915 |                    |  | $                | 63,000 |  |  | $ | 17,417 | 
|              |  |                                       |         |       |  |           |        |                    |  |                  |        | 

|              |  |                                       |        |       |  |           |        |                    |  |                  |       |  |  |   |   | 
|------------- |  | ------------------------------------- | ------ | ----- |  | --------- | ------ | ------------------ |  | ---------------- | ----- |  |  | - | - | 
|              |  | Three Months Ended September 30, 2001
|              |  |                                      
|              |  |                                       |        |       |  | Equipment |        | CVProfilor®DO-2020 |  | Service Warranty
|              |  | Total                                 |        | Sales |  | Rental    |        | Income            
|              |  |                                       |        |       |  |           |        |                   
|Revenue       |  | $                                     | 91,715 |       |  | $         | 85,150 |                    |  | $                | 6,565 |  |  | $ |  | 
|Cost of Sales |  |                                       | 22,100 |       |  |           | 20,445 |                    |  |                  | 1,655 |  |  |   |  | 
|              |  |                                       |        |       |  |           |        |                    |  |                  |       | 
|Gross Profit  |  | $                                     | 69,615 |       |  | $         | 64,705 |                    |  | $                | 4,910 |  |  | $ |  | 
|              |  |                                       |        |       |  |           |        |                    |  |                  |       | 

Total expenses for the three months ended September 30, 2002 were $997,193
compared to $2,208,436 for the three months ended September 30, 2001. A
further breakdown of research and development expenses is as follows:

|                                                                                             |                                         |   |                    |   |      |   |        |        | 
|-------------------------------------------------------------------------------------------- | --------------------------------------- | - | ------------------ | - | ---- | - | ------ | ------ | 
|                                                                                             |                                         |   | Three Months Ended
|                                                                                             |                                         |   | September 30      
|                                                                                             |                                         |   |                   
|                                                                                             |                                         |   | 2002               |   | 2001
|                                                                                             |                                         |   |                    |   |     
|Design and development of prototype devices and other
enhancements and improvements          |                                         | $ |                   |   |      | $ | 23,640 |       
|Recognized compensation cost for value of stock options
granted in lieu of cash compensation |                                         |   |                   |   |      |   | 11,870 |       
|                                                                                             |                                         |   |                    |   |      |   |        |       
|                                                                                             | Total research and development expenses |   | $                  |  |      |   | $      | 35,510 | 
|                                                                                             |                                         |   |                    |   |      |   |        |       

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

|                                                             |                                                    |   |                    |         |      |   |           |           | 
|------------------------------------------------------------ | -------------------------------------------------- | - | ------------------ | ------- | ---- | - | --------- | --------- | 
|                                                             |                                                    |   | Three Months Ended
|                                                             |                                                    |   | September 30      
|                                                             |                                                    |   |                   
|                                                             |                                                    |   | 2002               |         | 2001
|                                                             |                                                    |   |                    |         |     
|Wages, related expenses and benefits                         |                                                    | $ | 233,754            |         |      | $ | 323,669   |          
|Patents and related expenses                                 |                                                    |   | 22,115             |         |      |   | 18,860    |          
|Outside consultants                                          |                                                    |   | 178,613            |         |      |   | 1,103,315 |          
|Rent-building, equipment and utilities                       |                                                    |   | 25,645             |         |      |   | 36,996    |          
|Insurance-general and directors/officers liability           |                                                    |   | 23,455             |         |      |   | 15,602    |          
|Selling, marketing and promotion, including applicable wages |                                                    |   | 305,708            |         |      |   | 462,784   |          
|Legal and audit/accounting fees                              |                                                    |   | 68,977             |         |      |   | 75,099    |          
|Royalties                                                    |                                                    |   | 3,049              |         |      |   | 2,751     |          
|Depreciation and amortization                                |                                                    |   | 46,644             |         |      |   | 47,686    |          
|Convertible debt private placement expenses                  |                                                    |   | 11,053             |         |      |   |          |          
|Other-general and administrative                             |                                                    |   | 78,180             |         |      |   | 86,164    |          
|                                                             |                                                    |   |                    |         |      |   |           |          
|                                                             | Total selling, general and administrative expenses |   | $                  | 997,193 |      |   | $         | 2,172,926 | 
|                                                             |                                                    |   |                    |         |      |   |           |          

Our number of employees decreased from twenty-three in the three months
ended September 30, 2001 to sixteen in the three months ended September 30,
2002.

Outside consultants expense decreased from $1,103,315 for the three months
ended September 30, 2001 to $178,613 for the three months ended September 30,
2002. Included in the $178,613 expense amount is a non-cash expense charge of
$150,000 relating to our June 2002 Consulting Agreement with HRI Consultants.
The fair value of that agreement is being expensed as services are provided.

Selling, marketing and promotion expense decreased from $462,784 for the
three months ended September 30, 2001 to $305,708 for the three months ended
September 30, 2002. This category includes wages and commissions paid by us
relating to our sales and marketing efforts, as well as travel and convention
expenses.

For the three months ended September 30, 2002, convertible debt private
placement expenses amounted to $11,053. These expenses relate to the March 27,
2002 private placement to five investors consisting of three-year 8%
Convertible Notes in the aggregate principal amount of $2,000,000.

Interest income was $6,629 and $29,032 for the three months ended
September 30, 2002 and 2001, respectively.

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Interest expense was $89,519 for the three months ended September 30,
2002. A further breakdown of the components of interest expense is as follows:

|                          |                                                                                                                                                                                                                                       |                        |   |        |        | 
|------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------- | - | ------ | ------ | 
|Convertible Notes Payable |                                                                                                                                                                                                                                       |                        |   |       
|                          | 8% interest on outstanding principal balances from July 1, 2002 to September 30, 2002                                                                                                                                                 |                        | $ | 26,721 |       
|                          | Fair value basis allocation to the five-year warrants to purchase
250,000 shares of Common Stock ($315,789), being amortized
on a straight-line basis over the three (3) year term of the debt
agreement and as the debt is converted |                        |   | 62,798 |       
|                          |                                                                                                                                                                                                                                       |                        |   |        |       
|                          |                                                                                                                                                                                                                                       | Total Interest Expense |   | $      | 89,519 | 
|                          |                                                                                                                                                                                                                                       |                        |   |        |       

Net loss was $(976,751) for the three months ended September 30, 2002
compared to a net loss of $(2,109,789) for the three months ended September 30,
2001. For the three months ended September 30, 2002, basic and diluted net
loss per share was $(.14), based on weighted average shares outstanding of
6,768,162. For the three months ended September 30, 2001, basic and diluted
net loss per share was $(.36), based on weighted average shares outstanding of
5,872,210.

Liquidity and Capital Resources

Cash and cash equivalents had a net decrease of $585,188 for the three
months ended September 30, 2002. The significant elements of this change were
as follows: net cash used in operating activities net loss, as adjusted for
non-cash items, of $699,520; decrease in accounts receivable  $200,289;
increase in prepaids and other current assets  $42,163. For the three months
ended September 30, 2001, cash and cash equivalents had a net decrease of
$1,201,480. The significant elements of this change were as follows: net cash
used in operating activities net loss, as adjusted for non-cash items, of
$983,578; increase in accounts receivable  $46,507; increase in
inventory  $174,902.

In July 1998, we completed our initial public offering (IPO) in which we
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 (the Class A Warrants). 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. On January 23, 2001, we commenced an offering of up to 2,752,192
Redeemable Class B Warrants enabling holders to purchase one share of our $.01
par value Common Stock (the Class B Warrants). As an incentive to exercise
our outstanding Class A Warrants, we offered the Class B Warrants to those
holders of the Class A Warrants who properly exercised a Class A Warrant in the
offering period. The offering period began January 23, 2001, and expired at
5:00 p.m. Central Time, March 26, 2001. We raised $1,964,371 (net of offering
expenses of $73,062) in connection with the offering of the Class B Warrants
and the exercise of 395,618 Class A Warrants at $5.15 per share of Common Stock
and issued 395,618 Class B Warrants. On March 23, 2001, we announced that
effective that day the exercise price of the Class B Warrants had been reduced
from $9.00 to $5.85 per share of Common Stock issuable upon exercise of the
Class B Warrant. The Class B Warrants expire on January 23, 2006. The Class B
Warrants are redeemable by us for $.01 per Class B Warrant at any time the
closing bid price of our Common Stock exceeds $13.50 (subject to adjustment)
for 5 consecutive trading days, as reported by The Nasdaq SmallCap Market. The
Class B Warrants were approved for listing by The Nasdaq SmallCap Market and
began trading on March 7, 2001 under the symbol HDIIZ.

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On March 27, 2002, we completed a private placement to five investors
consisting of three-year 8% Convertible Notes in the aggregate principal amount
of $2,000,000. The 8% Convertible Notes are convertible into our Common Stock
at a conversion price initially set at $2.5072. This conversion price is
subject to downward adjustment because the closing bid price of our Common
Stock was less than $2.5072 for twenty consecutive trading days. The new
conversion price is 80% of the average of the closing bid prices of our Common
Stock for the last 5 consecutive trading days of any 20 consecutive trading day
period. In connection with the private placement, we also issued to the
investors five-year warrants to purchase an aggregate of 250,000 shares of our
Common Stock. The warrants have an exercise price of $3.3925, which is 115% of
the closing bid price of our Common Stock as of the closing date.

On April 5, 2002, we filed a Registration Statement on Form S-3 relating
to the offering of 2,356,073 Redeemable Class B Warrants (the Class B
Warrant) to eligible holders of our Redeemable Class A Warrants (the Class A
Warrant). On June 6, 2002, we filed a Pre-Effective Amendment No. 1 to the
registration statement. The registration statement was declared effective by
the U.S. Securities and Exchange Commission on June 6, 2002. In connection
with the effectiveness of the registration statement and effective June 6,
2002, we reduced the exercise price of the Class A Warrant from $5.15 to $1.80
per share of Common Stock issuable upon exercise of the Class A Warrant and
reduced the exercise price of the Class B Warrant from $5.85 to $2.00 per share
of Common Stock issuable upon exercise of the Class B Warrant. On June 6,
2002, we also extended the expiration date of the Class A Warrant from July 22,
2002 to August 7, 2002. Effective July 25, 2002, we reduced the exercise price
of the Class A Warrant from $1.80 to $1.25 per share of Common Stock issuable
upon exercise of the Class A Warrant and reduced the exercise price of the
Class B Warrant from $2.00 to $1.50 per share of Common Stock issuable upon
exercise of the Class B Warrant. On September 11, 2002, we extended the
expiration date of the Class B Warrant offering to October 22, 2002 and
likewise extended the expiration date of the Class A Warrant to October 22,
2002. Effective October 17, 2002, we reduced the exercise prices of both the
Class A Warrant and the Class B Warrant from $1.25 and $1.50, respectively, to
$1.00 per share of Common Stock issuable upon exercise of the respective Class
A and Class B Warrants. Also on October 17, 2002, we extended the expiration
date of the Class B Warrant offering to November 14, 2002 and likewise extended
the expiration date of the Class A Warrant to November 14, 2002. There can be
no assurance we will raise any capital from this offering.

As of September 30, 2002, we have cash and cash equivalents of $1,239,050,
and anticipate that these funds, in conjunction with revenue anticipated to be
earned from placements of our CVProfilor® DO-2020 Systems, anticipated sales of
our CR-2000 Research Systems, as well as anticipated operating cost reductions,
are estimated to allow us to pursue our business development strategy for
approximately the next five months following September 30, 2002. We are
currently implementing a plan to conserve cash through reductions in selling,
general and administrative expenses to improve working capital management. We
are seeking additional financing for working capital and are considering all
possible financing alternatives, the receipt of which cannot be assured. No
assurance can be given that additional working capital will be obtained in a
timely manner or on terms and conditions acceptable to us or our shareholders.
Further, our efforts to raise additional funds may be hampered by covenants and
restrictions relating to the 8% Convertible Notes and the possibility that our
securities may be de-listed from The Nasdaq SmallCap Market due to our failure
to comply with the requirements for continued listing.

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In June 2001, the U.S. Securities and Exchange Commission approved a
change in the requirements for continued listing on The Nasdaq SmallCap Market
from a minimum $2,000,000 net tangible assets requirement to a minimum
$2,500,000 shareholders equity requirement. A company that was listed as of
June 29, 2001 has until November 1, 2002 to achieve compliance with the new
equity requirement, provided it continues to maintain at least $2,000,000 in
net tangible assets. As of September 30, 2002, we had shareholders equity of
$2,011,679, which does not meet the shareholders equity requirement for
continued listing on The Nasdaq SmallCap Market.

Our failure to meet
the requirements for continued listing, relating to shareholders
equity or any other requirement, for a period of
seven consecutive trading days is an event of default under the Notes. Receipt
by us of a notice from The Nasdaq Stock Market, Inc. of our failure to meet the
requirements for continued listing would also be an event of default. Upon an
event of default, a holder of an 8% Convertible Note, in its discretion, may
demand repayment in cash of the accrued but unpaid interest and 130% of the
then-outstanding principal of the 8% Convertible Note.

Our financing needs are based upon management estimates as to future
revenue and expense. Further, our financing needs assume that no event of
default occurs entitling the holders of our 8% Convertible Notes to demand
repayment of any Note. While we will seek to negotiate waivers by the holders
of our 8% Convertible Notes of any event of default, there can be no assurance
that we will obtain such waivers. Our inability to obtain waivers for any
event of default under our 8% Convertible Notes would have a material adverse
effect upon our ability to continue operations. Further, any demand for
repayment of the Notes, without additional financing, would adversely affect
our ability to continue operations. Our business plan and our financing needs
are also subject to change based upon, among other factors, market conditions,
the success of our offering to our Class A Warrant holders which is due to
expire on November 14, 2002 and our ability to materially increase the revenue
generated by our CVProfilor® DO-2020 System and other cash flow from
operations. These matters raise doubt about the Companys ability to continue
as a going concern.




Item 4. Controls and Procedures.

(a)  Evaluation of Disclosure Controls and Procedures.

The Companys President, Greg H. Guettler, and Chief Financial Officer,
James S. Murphy, have reviewed the Companys disclosure controls and procedures
within 90 days prior to the filing of this Quarterly Report on Form 10-QSB.
Based upon this review, these officers believe that the Companys disclosure
controls and procedures are effective in ensuring that material information
related to the Company is made known to them by others within the Company.

(b)  Changes in Internal Controls.

There were no significant changes in the Companys internal controls or in
other factors that could significantly affect these controls during the quarter
covered by this report or from the end of the reporting period to the date of
this Form 10-QSB.

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PART II. OTHER INFORMATION




Item 6. Exhibits and Reports on Form 8-K

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

| |      |                                         
| | ---- | ----------------------------------------
| | 99.1 | Certificate pursuant to 18 U.S.C. §1350.

(b)  Reports on Form 8-K.



| |  | The Company filed the following Current Reports on Form 8-K during the last
quarter covered by this Form 10-QSB:
| |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | Current Report on Form 8-K dated July 24, 2002 reporting under Item
5 an event of default under the Companys three-year 8% Convertible
Notes in the original aggregate principal amount of $2,000,000 relating
to the Companys failure to comply with the requirements for continued
listing on The Nasdaq SmallCap Market for a period of seven (7)
consecutive trading days because the minimum bid price of the Companys
Common Stock was not at least $1.00 for seven (7) consecutive trading
days.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Current Report on Form 8-K dated July 25, 2002 reporting under Item
5 the extension of the Companys offering of Class B Warrants, the
extension of the expiration of the Companys Class A Warrants and the
reduction in the respective exercise price of each of the Class A
Warrants and the Class B Warrants.                                                                                                                                                                                         



| |  |  | Current Report on Form 8-K dated August 27, 2002 reporting under
Item 5 an event of default under the Companys three-year 8%
Convertible Notes in the original aggregate principal amount of
$2,000,000 relating to receipt of a notice from The Nasdaq Stock
Market, Inc. of the Companys failure to comply with the requirements
for continued listing on The Nasdaq SmallCap Market because the minimum
bid price of the Companys Common Stock was not at least $1.00 for a
period of thirty (30) consecutive trading days.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Current Report on Form 8-K dated September 11, 2002 reporting under
Item 5 the extension of the Companys offering of Class B Warrants and
the extension of the expiration of the Companys Class A Warrants. The
Company also reported on this Form 8-K that it had engaged Mellon
Investor Services LLC as its transfer agent and registrar and warrant
agent with respect to the Companys Class A Warrants.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Current Report on Form 8-K dated September 25, 2002 reporting under
Item 5 the adjournment of the Companys Special Meeting of Shareholders
originally scheduled for 10 a.m. local time on September 25, 2002 to 10
a.m. local time on October 4, 2002.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Current Report on Form 8-K dated September 27, 2002 reporting under
Item 5 that the Company entered into an Amended and Restated Warrant
Agreement with respect to the Companys Class B Warrant to appoint
Mellon Investor Services LLC as the warrant agent with respect to the
Companys Class B Warrant.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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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. MurphyJames S. Murphy
Senior Vice President, Finance and
Administration and Chief Financial Officer
(principal financial officer)
|                       
|Date: November 14, 2002 |  |                                |  |                                                                                                                                               

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CERTIFICATIONS

I, Greg H. Guettler, certify that:

1.     I have reviewed this quarterly report on Form 10-QSB of Hypertension
Diagnostics, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                        |  |                               
|----------------------- |  | ------------------------------
|Date: November 14, 2002 |  | /s/  Greg H. GuettlerPresident

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I, James S. Murphy, certify that:

1.     I have reviewed this quarterly report on Form 10-QSB of Hypertension
Diagnostics, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                        |  |                                            
|----------------------- |  | -------------------------------------------
|Date: November 14, 2002 |  | /s/  James S. MurphyChief Financial Officer

17