UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934 For the quarterly period ended February 29, 2000

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from _______________ to ______________

Commission File Number: 0-18105

                                VASOMEDICAL, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                      11-2871434
--------------------------------------------------------------------------------
(State or other jurisdiction of             (IRS Employer Identification Number)
 incorporation or organization)

                    180 Linden Ave., Westbury, New York 11590
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

Registrant's Telephone Number                         (516) 997-4600
                                                      --------------
Number of Shares Outstanding of Common Stock,
$.001 Par Value, at March 27, 2000                     55,857,761
                                                       ----------

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the  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 [ ]
                                   ---     --
<PAGE>
                        Vasomedical, Inc. and Subsidiary

                                      INDEX

PART I - FINANCIAL INFORMATION

   Item 1 - Financial Statements:                                           Page
                                                                            ----
        Consolidated Condensed Balance Sheets as of

            February 29, 2000 and May 31, 1999 (Unaudited)                     3

        Consolidated Condensed Statements of Operations for
            the Nine and Three Months Ended

            February 29, 2000 and February 28, 1999 (Unaudited)                4

        Consolidated  Condensed  Statement of Changes in Stockholders'
            Equity for the Period from June 1, 1999 to February 29,
            2000 (Unaudited)                                                   5

        Consolidated Condensed Statements of Cash Flows for the
            Nine Months Ended February 29, 2000 and
            February 28, 1999 (Unaudited)                                      6


        Notes to Consolidated Condensed Financial Statements                   7

   Item 2 - Management's Discussion and Analysis of Financial Condition
        and Results of Operations                                             10

PART II - OTHER INFORMATION                                                   12
<PAGE>
                        Vasomedical, Inc. and Subsidiary

                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                February 29,          May 31,
                                                                    2000               1999
                                                                    ----               ----
<S>                                                             <C>                 <C>
         ASSETS

CURRENT ASSETS

     Cash and cash equivalents                                    $738,983          $1,678,175
     Accounts receivable                                         3,556,087           1,585,432
     Inventories                                                   588,375             594,093
     Other current assets                                          327,841             177,713
                                                                ----------          ----------
         Total current assets                                    5,211,286           4,035,413

PROPERTY AND EQUIPMENT, net                                        498,006             571,368
CAPITALIZED COST IN EXCESS OF FAIR
     VALUE OF NET ASSETS ACQUIRED, net                             408,455             568,277
OTHER ASSETS                                                         1,038              23,114
                                                                ----------          ----------
                                                                $6,118,785          $5,198,172
                                                                ----------          ----------
     LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
     Accounts payable and accrued expenses                        $697,513            $705,640
     Accrued warranty and customer support expenses                357,083             382,000
     Accrued professional fees                                     161,090             271,438
     Accrued commissions                                           337,768             307,951
     Dividends payable                                                                 193,610
                                                                ----------          ----------
         Total current liabilities                               1,553,454           1,860,639

ACCRUED WARRANTY COSTS                                             232,317             114,000
OTHER LONG-TERM LIABILITIES                                         24,000              70,000

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
     Preferred  stock,  $.01 par value;  1,000,000  shares
       authorized;  175,000 shares at May 31, 1999, issued
       and outstanding (liquidation preference of $3,500,000
       at May 31, 1999)                                                                  1,750
     Common stock, $.001 par value; 110,000,000 shares authorized;
       54,603,097 and 50,402,687 shares at February 29, 2000 and
       May 31, 1999, respectively, issued and outstanding           54,603              50,403
     Additional paid-in capital                                 38,328,901          37,749,483
     Accumulated deficit                                       (34,074,490)        (34,648,103)
                                                                ----------          ----------
         Total stockholders' equity                              4,309,014           3,153,533
                                                                ----------          ----------
                                                                $6,118,785          $5,198,172
                                                                ----------          ----------
<FN>
The accompanying notes are an integral part of these condensed statements.
</FN>
</TABLE>
<PAGE>
                        Vasomedical, Inc. and Subsidiary

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (unaudited)
<TABLE>
<CAPTION>

                                         Nine months ended              Three months ended
                                      February 29,  February 28,    February 29,   February 28,
                                      --------------------------    ---------------------------
                                         2000          1999            2000            1999
                                         ----          ----            ----            ----
<S>                                    <C>           <C>            <C>             <C>
Revenues
 Equipment sales                       $8,718,175    $2,007,100     $3,049,000      $1,457,100
 Equipment rentals and services           435,538       469,179        129,138         227,079
                                       ----------    ----------     ----------      ----------
                                        9,153,713     2,476,279      3,178,138       1,684,179
                                       ----------    ----------     ----------      ----------
Costs and expenses

 Cost of sales and services             2,157,634     1,164,174        788,347         590,384
 Selling, general and administrative    4,952,387     4,014,589      1,603,649       1,366,313
 Research and development               1,063,295       470,752        416,443         130,989
 Depreciation and amortization            367,400       324,559        116,692         122,850
 Interest and financing costs               5,207         9,415          1,645           2,078
 Interest and other income - net          (59,945)     (102,101)       (18,498)        (18,036)
                                       ----------    ----------     ----------      ----------
                                        8,485,978     5,881,388      2,908,278       2,194,578
                                       ----------    ----------     ----------      ----------
 NET EARNINGS (LOSS)                      667,735    (3,405,109)       269,860        (510,399)

       Deemed dividend on preferred stock    -         (864,000)          -               -
       Preferred stock dividend
        requirement                       (94,122)     (161,413)       (19,879)        (53,342)
                                       ----------    ----------     ----------      ----------
 EARNINGS (LOSS) APPLICABLE TO
    COMMON STOCK                         $573,613   $(4,430,522)      $249,981       $(563,741)
                                       ----------    ----------     ----------      ----------
Earnings (loss) per common
 share (basic and diluted)                  $.01          $(.09)          $.00           $(.01)
                                            ----          -----           ----           -----
Weighted average common shares
 outstanding

      Basic                            51,543,519    49,025,137     52,687,156      49,614,736
                                       ----------    ----------     ----------      ----------
      Diluted                          55,719,121    49,025,137     55,270,913      49,614,736
                                       ----------    ----------     ----------      ----------

<FN>
The accompanying notes are an integral part of these condensed statements.
</FN>
</TABLE>
<PAGE>
                        Vasomedical, Inc. and Subsidiary

       CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                                                   Total
                                                                                  Additional       Accum-          stock-
                                      Preferred Stock           Common stock       paid-in         ulated          holders'
                                      Shares    Amount       Shares      Amount    capital        deficit          equity
                                      ------    ------       ------      ------    -------        -------          ------
<S>                                  <C>      <C>          <C>           <C>       <C>           <C>              <C>
Balance at June 1, 1999               175,000   $1,750     50,402,687    $50,403   $37,749,483   $(34,648,103)    $3,153,533
Conversion of preferred stock        (175,000)  (1,750)     3,095,612      3,096        (1,346)                         -
Preferred stock dividend requirement                                                                  (94,122)       (94,122)
Common stock issued in lieu of
   preferred stock dividends                                  253,200        253       287,479                       287,732
Exercise of options and warrants                              851,598        851       206,285                       207,136
Stock options granted for services                                                      87,000                        87,000
Net earnings                                                                                          667,735        667,735
                                      -------   ------     ----------    -------   -----------   ------------     ----------
Balance at February 29, 2000             -      $ -        54,603,097    $54,603   $38,328,901   $(34,074,490)    $4,309,014
                                      -------   ------     ----------    -------   -----------   ------------     ----------








<FN>
The accompanying notes are an integral part of this condensed statement.
</FN>
</TABLE>
<PAGE>
                        Vasomedical, Inc. and Subsidiary

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<TABLE>
<CAPTION>
                                                              Nine months ended
                                                              -----------------
                                                          February 29,  February 28,
                                                          ------------  ------------
                                                              2000         1999
                                                              ----         ----
<S>                                                          <C>        <C>
Cash flows from operating activities
  Net earnings (loss)                                        $667,735   $(3,405,109)
  Adjustments to reconcile net earnings (loss)               --------   -----------
    to net cash provided by (used in) operating activities
      Depreciation and amortization                           367,400       324,559
      Stock options granted for services                       87,000
      Changes in operating assets and liabilities
        Accounts receivable                                (1,970,655)      525,048
        Inventories                                           (50,282)     (549,943)
        Other current assets                                 (150,128)       13,564
        Other assets                                           22,076           402
        Accounts payable, accrued expenses and other
         current liabilities                                 (113,575)      185,421
        Other liabilities                                      72,317      (213,560)
                                                           ----------   -----------
                                                           (1,735,847)      285,491
                                                           ----------   -----------
     Net cash used in operating activities                 (1,068,112)   (3,119,618)
                                                           ----------   -----------
Cash flows from investing activities
  Purchase of property and equipment                          (78,216)      (24,881)
                                                           ----------   -----------
     Net cash used in investing activities                    (78,216)      (24,881)
                                                           ----------   -----------
Cash flows from financing activities
  Proceeds from exercise of options and warrants              207,136       355,000
                                                           ----------   -----------
     Net cash provided by financing activities                207,136       355,000
                                                           ----------   -----------
      NET DECREASE IN CASH AND CASH EQUIVALENTS              (939,192)   (2,789,499)
Cash and cash equivalents - beginning of period             1,678,175     4,367,986
                                                           ----------   -----------
Cash and cash equivalents - end of period                    $738,983    $1,578,487
                                                           ----------   -----------


Non-cash investing and financing activities were as follows:

Deemed dividend on preferred stock                                         $864,000
Issuance of common stock in lieu of preferred dividends      $287,732        73,692
Inventories transferred to (from) property and equipment,
   attributable to operating leases - net                      56,000       375,111






<FN>
The accompanying notes are an integral part of these condensed statements.
</FN>
</TABLE>
<PAGE>
                        Vasomedical, Inc. and Subsidiary

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                February 29, 2000
                                   (unaudited)

NOTE A - BASIS OF PRESENTATION
     The  consolidated  condensed  balance sheet as of February 29, 2000 and the
related  consolidated  condensed  statements  of  operations  for the  nine- and
three-month  periods ended  February 29, 2000 and February 28, 1999,  changes in
stockholders'  equity for the nine-month period ended February 29, 2000 and cash
flows for the  nine-month  periods ended February 29, 2000 and February 28, 1999
have been prepared by Vasomedical,  Inc. and Subsidiary (the "Company")  without
audit. In the opinion of management, all adjustments (which include only normal,
recurring  accrual  adjustments)  necessary  to  present  fairly  the  financial
position and results of  operations  as of February 29, 2000 and for all periods
presented have been made.

     Certain  information  and  footnote   disclosures,   normally  included  in
financial  statements  prepared in accordance with generally accepted accounting
principles, have been condensed or omitted. These financial statements should be
read in conjunction with the financial  statements and notes thereto included in
the  Annual  Report on Form 10-K for the year  ended May 31,  1999.  Results  of
operations for the periods ended February 29, 2000 and February 28, 1999 are not
necessarily  indicative  of the operating  results  expected or reported for the
full year.

NOTE B - STOCKHOLDERS' EQUITY
     In January  1999,  the Company's  Board of Directors  granted stock options
under the 1997 Plan to a consultant to purchase  150,000  shares of common stock
at an exercise price of $.875 per share (which represented the fair market value
of the  underlying  common stock at the time of grant)  contingent  upon meeting
certain performance criteria. The stock options were fair-valued at $87,000. The
Company  recorded a charge to operations of $29,000 and $58,000 in February 2000
and  June  1999,  respectively,   commensurate  with  the  satisfaction  of  the
performance criteria defined therein.

     In July 1999,  the  Company's  Board of  Directors  approved the 1999 Stock
Option Plan (the "1999  Plan"),  for which the Company  reserved an aggregate of
2,000,000  shares of common stock. In addition,  the Board of Directors  granted
stock options under its 1997 and 1999 Plans to certain officers and employees to
purchase an  aggregate  of 175,000  shares and 150,000  shares of common  stock,
respectively,  at an  exercise  price of $1.69 per share,  and to an employee to
purchase  30,000 shares of common stock at an exercise  price of $1.53 per share
(which  represented the fair market value of the underlying  common stock at the
time of the respective grants).

     In the first three  quarters of fiscal 2000, all 175,000 shares of Series C
preferred  stock  were  converted  into  3,095,612  shares of common  stock.  In
addition,  options and warrants to purchase  851,598 shares of common stock were
exercised  (net  of  101,910  shares  offered  in  payment  in  lieu  of  cash),
aggregating $207,136 in proceeds to the Company.

     In the third quarter of fiscal 2000,  the Board of Directors  granted stock
options under the 1999 Plan to its newly appointed President and CEO and another
officer to purchase an  aggregate  of 710,000  shares of common  stock;  660,000
shares at an exercise price of $1.21 per share and 50,000 shares at an exercised
price of $5.15  per  share  (which  represented  the  fair  market  value of the
underlying  common  stock  at the time of the  respective  grants),  subject  to
certain vesting provisions as defined in the agreements.

NOTE C   EARNINGS PER COMMON SHARE
     Basic earnings per share are based on the weighted average number of common
shares  outstanding  without  consideration of potential  common stock.  Diluted
earnings  per share are based on the  weighted  number of common  and  potential
common shares  outstanding.  The calculation  takes into account the shares that
may be issued upon the exercise of stock  options and  warrants,  reduced by the
shares that may be repurchased with the funds received from the exercise,  based
on the  average  price  during the  period,  and  convertible  preferred  stock,
assuming conversion at the beginning of the period. Potential common shares were
excluded  from the  diluted  calculation  for the nine and  three  months  ended
February 28, 1999, as their effects were anti-dilutive.
<PAGE>
                        Vasomedical, Inc. and Subsidiary

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
                                February 29, 2000
                                   (unaudited)

NOTE C   EARNINGS PER COMMON SHARE (continued)
     The  following  table  sets  forth the  computation  of basic  and  diluted
earnings per share for the nine and three months ended February 29, 2000:
<TABLE>
<CAPTION>
                                                Nine months ended  Three months ended
                                                February 29, 2000  February 29, 2000
                                                -----------------  ------------------
<S>                                                 <C>              <C>
Numerator:
   Basic earnings                                     $667,735         $269,860
      Preferred stock dividends                         94,122           19,879
                                                    ----------       ----------
   Diluted earnings                                   $573,613         $249,981
                                                    ----------       ----------
Denominator:
   Basic   weighted average shares                  51,543,519       52,687,156
     Stock options                                     757,887        1,031,644
     Warrants                                        1,093,660          923,716
     Convertible preferred stock                     2,324,055          628,397
                                                    ----------       ----------
   Diluted   weighted average shares                55,719,121       55,270,913
                                                    ----------       ----------
Basic and diluted earnings per share                     $0.01            $0.00
                                                         -----            -----
</TABLE>

NOTE D - COMMITMENTS AND CONTINGENCIES
Employment Agreements

     In January 2000,  the Board of Directors  appointed a new President and CEO
and  approved  a  one-year  employment  agreement  for  annual  compensation  of
$180,000.  Such employment  agreement provides,  among other things, that in the
event there is a change in the control of the Company, as defined therein, or in
any person  directly or  indirectly  controlling  the  Company,  as also defined
therein, the employee has the option,  exercisable within six months of becoming
aware  of  such  event,  to  terminate  his  employment  agreement.   Upon  such
termination or upon any other  termination  of such  employment in breach of the
agreement,  the employee has the right to receive as a lump-sum  payment certain
compensation remaining to be paid for the balance of the term of the agreement.

     Approximate aggregate minimum annual compensation  obligations under active
employment agreements at February 29, 2000 are summarized as follows:
<TABLE>
<CAPTION>
          Twelve months ended February 29,          Amount
          --------------------------------          ------
                        <S>                        <C>
                        2001                       $515,000
                        2002                        128,000
                                                   --------
                                                   $643,000
                                                   --------
</TABLE>
Litigation

     In May 1996,  an action was  commenced in the Supreme Court of the State of
New York, Nassau County,  against the Company,  its directors and certain of its
officers and employees for the alleged  breach of an agreement to appoint a non-
affiliated  party as its exclusive  distributor  of EECP systems.  The complaint
sought damages in the  approximate sum of  $50,000,000,  declaratory  relief and
punitive  damages.  The  Company  denied the  existence  of any  agreement,  and
contended that the complaint was frivolous and without  merit.  The Company also
asserted  substantial  counterclaims.  In  August  1999,  a motion  for  summary
judgment to dismiss the complaint in its entirety was granted. This decision has
been appealed.
<PAGE>
                        Vasomedical, Inc. and Subsidiary

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
                                February 29, 2000
                                   (unaudited)

NOTE D - COMMITMENTS AND CONTINGENCIES (continued)

     In May 1998, an action was commenced in the New York Supreme Court, Suffolk
County,  against the Company and other parties.  The action seeks damages in the
sum of  $5,000,000  based  upon  alleged  injuries  resulting  from the  alleged
negligence of the  defendants in the use of the Company's  product.  The Company
and its insurer  believe that the  complaint is frivolous  and without merit and
are vigorously defending the claims.  Furthermore,  management believes that the
damages  sought under the complaint are fully covered by insurance.  This matter
is in its  preliminary  stages  and the  Company  is  unable  to  establish  the
likelihood of an unfavorable outcome or the existence or amount of any potential
loss.

     In February  1999,  an action was commenced in the  Massachusetts  Superior
Court, Essex County, against the Company. The action seeks damages in the sum of
$1,000,000  based  upon an  alleged  breach  of a sales  contract.  The  Company
believes  that the  complaint is frivolous  and without  merit and is vigorously
defending the claims.  This matter is in its preliminary  stages and the Company
is unable to establish the likelihood of an unfavorable outcome or the existence
or amount of any potential loss.

Agreement with VAMED

     In connection with an acquisition in 1995, the Company assumed  commitments
under an  agreement,  expiring  November  2008,  with VAMED  Medical  Instrument
Company Ltd. ("VAMED"),  a Chinese company,  for the contract manufacture of its
current EECP system,  subject to certain performance  standards,  as defined. At
February 29, 2000, the Company had outstanding  purchase commitments of $97,000.
The Company  believes  that VAMED will be able to meet the  Company's  needs for
EECP systems.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
--------------------------------------------------------------------------
OPERATIONS
----------

Results of Operations
---------------------
Nine and Three Months Ended February 29, 2000 and February 28, 1999
-------------------------------------------------------------------
     The Company  generated  revenues from the sale and lease of EECP systems of
$9,154,000 and $2,476,000 for the nine-month periods ended February 29, 2000 and
February  28,  1999,  respectively,   and  $3,178,000  and  $1,684,000  for  the
three-month periods ended February 29, 2000 and February 28, 1999, respectively.
The Company  generated  earnings  of $668,000  and  $270,000  (before  deducting
$94,000 and $20,000 in preferred stock dividend  requirements)  for the nine and
three months ended February 29, 2000. For the comparable prior-year periods, the
Company  incurred  net  losses of  $3,405,000  and  $510,000  (before  deducting
$864,000 and nil,  respectively,  in deemed dividends on preferred stock,  which
represented  the  discount  resulting  from the  allocation  of  proceeds to the
beneficial conversion feature and the fair value of the underlying warrants, and
$161,000 and $53,000, respectively, in preferred stock dividend requirements, in
connection with the Company's April 1998 and June 1997 financings).

     The number of cardiology  practices  and  hospitals  interested in becoming
providers of enhanced external  counterpulsation  (EECP) has increased following
the announcement by the Health Care Financing  Administration (HCFA) in February
1999 of its decision to extend  Medicare  coverage  nationally  to the Company's
noninvasive,  outpatient  treatment  for coronary  artery  disease.  HCFA is the
federal  agency that  administers  the  Medicare  program for  approximately  38
million  beneficiaries.  In addition,  the results of the Company's multicenter,
prospective,   randomized,   blinded,   controlled   clinical   study   of  EECP
("MUST-EECP")  were  published  in the June  1999  issue of the  Journal  of the
American  College of Cardiology.  Interest in EECP therapy has also been spurred
by  the  announcement  of  the  results  of  the  Company's  one-year  follow-up
quality-of-life  outcomes study at the American Heart  Association  (AHA) annual
meetings in November 1999 and 1998, at the American  College of Cardiology (ACC)
annual meeting in March 1999 and other scientific  meetings.  Revenue growth for
the third quarter of fiscal 2000 was,  however,  hindered because local Medicare
contractors  established  inappropriate  payment  levels  that did not take into
account the full value of the  resources  health care  providers  must deploy to
deliver EECP therapy.  Consequently,  in November 1999,  HCFA created a specific
code  for  external   counterpulsation  therapy  and  established  a  nationally
applicable allowable charge,  effective on January 1, 2000. The allowable charge
under the new code was based upon a preliminary  determination of Relative Value
Units (RVUs) assigned by HCFA to the resources needed for the  administration of
the  therapy.   Certain  patients  may  require  additional  services,  such  as
evaluation and management, which may be billed separately. The Company estimates
the standard  national  charge to approximate  $130 per session of EECP therapy,
which may be  adjusted by certain  geographic  indices.  This would  result in a
standard charge of $4,550 for a full course of therapy, which typically involves
35 one-hour outpatient sessions.  The assigned code will allow EECP providers to
bill Medicare  electronically,  substantially reducing the process for receiving
reimbursement.  Moreover,  in  light  of the  new  payment  instructions,  local
Medicare  contractors  will no longer have the  responsibility  of  establishing
reimbursement rates.  Management expects the aforementioned  events to provide a
strong foundation for accelerated growth in fiscal 2000.

     Revenues for fiscal 1999,  particularly  for the first two fiscal quarters,
were adversely affected by the nature of the commercial arrangements under which
those units were placed.  The Company expects,  especially as a result of HCFA's
recent establishment of a standard reimbursement rate for Medicare beneficiaries
effective  January 1, 2000,  that  placements  made in the past under  rental or
fee-for-use arrangements will continue to convert to financed leases or outright
sales in fiscal 2000, although there can be no assurance that this will occur.

     Gross margins are dependent on a number of factors, particularly the mix of
EECP units sold and rented  during the period,  the ongoing  costs of  servicing
such units, and certain fixed period costs,  including  facilities,  payroll and
insurance.  Gross  margins  are  furthermore  affected  by the  location  of the
Company's  customers   (including   non-domestic   business  or  distributorship
arrangements  which,  for discounted  equipment  purchase  prices,  co-invest in
establishing a market for EECP  equipment) and the amount and nature of training
and other  initial  costs  required  to place the EECP  system  in  service  for
customer use. Consequently,  the gross margin realized during the current period
may not be indicative of future margins.

     Selling,  general and  administrative  (SGA)  expenses  for the nine months
ended February 29, 2000 and February 28, 1999 were  $4,952,000  and  $4,015,000,
respectively, and $1,604,000 and $1,366,000,  respectively, for the three months
ended  February 29, 2000 and February 28, 1999. The increases in SGA expenses of
$937,000 and $238,000 from the comparable  prior-year  fiscal  periods  resulted
primarily from increases in sales and marketing personnel, commissions and other
selling expenses related to increased revenues.
<PAGE>
     Research and development  (R&D) expenses in the nine and three months ended
February  29,  2000  increased  by $593,000  and  $285,000  from the  comparable
prior-year  periods.  Current period expenses relate to the long-term  follow-up
phase of the multicenter clinical study, i.e., a quality-of-life outcomes study,
the expansion of the  International  EECP Patient  Registry at the University of
Pittsburgh,  the  development of an upgraded  model of the EECP system,  and the
ongoing  feasibility  study in heart failure,  all of which, to varying degrees,
are expected to further affect operating results in fiscal 2000.

Liquidity and Capital Resources

     The Company has financed its fiscal 2000 operations  primarily from working
capital and  operating  results.  For the past two fiscal  years,  the Company's
operations  were  primarily  funded from the  proceeds of equity  financings  in
fiscal 1998  (described  below).  At February 29,  2000,  the Company had a cash
balance of  $739,000  and  working  capital of  $3,658,000,  compared  to a cash
balance of $1,678,000  and working  capital of  $3,120,000 at May 31, 1999.  The
Company's  operating  activities  used cash of $1,068,000 and $2,834,000 for the
nine months ended  February 29, 2000 and  February 28, 1999,  respectively.  Net
cash used during the nine months ended February 29, 2000 consisted  primarily of
earnings from  operations,  decreases in inventories  and other current  assets,
offset by increases in accounts receivable and decreases in accounts payable and
accrued expenses.

     Investing  activities  used net cash of $78,000 and $25,000 during the nine
months  ended  February  29,  2000 and  February  28,  1999,  respectively.  The
principal uses were for the purchase of property and equipment.  At February 29,
2000,   the  Company  did  not  have  any  material   commitments   for  capital
expenditures.

     Financing activities provided cash of $207,000 and $355,000 during the nine
months ended  February 29, 2000 and February 28, 1999,  respectively.  Financing
activities during fiscal 2000 and fiscal 1999 consisted  primarily from the sale
of common stock and receipt of cash proceeds upon the exercise of Company common
stock warrants by officers, directors, employees and consultants.  Subsequent to
February 29, 2000, the Company  received  additional cash proceeds of $2,500,000
from the exercise of Company common stock options and warrants.

     In fiscal 1998,  the Company issued an aggregate of 325,000 shares of newly
created  5%  Series  B and  5%  Series  C  Convertible  Preferred  Stock  to one
accredited investor at a price of $20 per share,  realizing net cash proceeds of
$6,112,000.  Dividends  due on such  preferred  stock were paid in shares of the
Company's  common stock.  By February 1999, all of the Series B preferred  stock
(150,000  shares) had been  converted  into  2,135,946  shares of the  Company's
common  stock.  As of February  29,  2000,  all of the Series C preferred  stock
(175,000  shares) had been  converted  into  3,095,612  shares of the  Company's
common stock.

     Management believes that its working capital position at February 29, 2000,
along with the ongoing commercialization of the EECP system (including,  but not
limited to, the conversion of current units under rental or use  arrangements to
outright  sales or financed  leases),  and possible  further  proceeds  from the
exercise  of options  and  warrants,  will make it  possible  for the Company to
support its internal  overhead  expenses and to implement its business plans for
the next twelve months.

     Except for historical  information  contained herein, the matters discussed
are forward-looking  statements that involve risks and uncertainties.  When used
in this report, words such as "anticipate",  "believe", "estimate", "expect" and
"intend"  and  similar  expressions,  as  they  relate  to  the  Company  or its
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of the  Company's  management,  as well as  assumptions
made by and information currently available to the Company's  management.  Among
the  factors  that  could  cause  actual  results to differ  materially  are the
following:  the effect of the dramatic  changes  taking place in the  healthcare
environment;  the  impact  of  competitive  procedures  and  products  and their
pricing;  unexpected  manufacturing  problems  in foreign  supplier  facilities;
unforeseen  difficulties  and delays in the conduct of clinical trials and other
product  development  programs;   the  actions  of  regulatory  authorities  and
third-party  payers in the United States and overseas;  uncertainties  about the
acceptance of a novel  therapeutic  modality by the medical  community;  and the
risk  factors  reported  from time to time in the  Company's  SEC  reports.  The
Company  undertakes  no  obligation  to update  forward-looking  statements as a
result of future events or developments.
<PAGE>
                        VASOMEDICAL, INC. AND SUBSIDIARY
                        --------------------------------
                           PART II - OTHER INFORMATION
                           ---------------------------

ITEM 1 - LEGAL PROCEEDINGS:

     Previously reported.

ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS:

     None

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES:

     None

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

     None

ITEM 5 - OTHER INFORMATION:

     None

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K:

     Exhibits:
          No. 27 Financial Data Schedule

     Reports on Form 8-K:
          None
<PAGE>
     In accordance with to the  requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                              VASOMEDICAL, INC.

                              By:/s/ D. Michael Deignan
                                 ------------------------------
                                 D. Michael Deignan
                                 President, Chief Executive Officer and Director
                                 (Principal Executive Officer)

                                 /s/ Joseph A. Giacalone
                                 ------------------------------
                                 Joseph A. Giacalone
                                 Chief Financial Officer (Principal Financial
                                 and Accounting Officer)

Date:  March 31, 2000