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 November 30, 1999

[ ] 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 January 10, 2000                    51,590,385
                                                        ----------

        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
                  November 30, 1999 and May 31, 1999 (Unaudited)               3

            Consolidated Condensed Statements of Operations for
                  the Six and Three Months Ended
                  November 30, 1999 and 1998 (Unaudited)                       4

            Consolidated Condensed Statement of Changes in Stockholders'
                  Equity for the Period from June 1, 1999 to
                  November 30, 1999 (Unaudited)                                5

            Consolidated Condensed Statements of Cash Flows for the
                  Six Months Ended November 30, 1999 and 1998 (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>
                                                                     November 30,    May 31,
                                                                         1999         1999
                                                                      ----------   ----------
<S>                                                                   <C>          <C>
                ASSETS
CURRENT ASSETS
     Cash and cash equivalents                                        $1,498,746   $1,678,175
     Accounts receivable                                               2,604,482    1,585,432
     Inventories                                                         419,485      594,093
     Other current assets                                                163,270      177,713
                                                                      ----------   ----------
            Total current assets                                       4,685,983    4,035,413

PROPERTY AND EQUIPMENT, net                                              466,567      571,368
CAPITALIZED COST IN EXCESS OF FAIR
 VALUE OF NET ASSETS ACQUIRED, net                                       461,728      568,277
OTHER ASSETS                                                               1,038       23,114
                                                                      ----------   ----------
                                                                      $5,615,316   $5,198,172
                                                                      ----------   ----------
      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
     Accounts payable and accrued expenses                              $677,100     $705,640
     Accrued warranty and customer support expenses                      434,000      382,000
     Accrued professional fees                                           172,492      271,438
     Accrued commissions                                                 311,455      307,951
     Dividends payable                                                   216,892      193,610
                                                                      ----------   ----------
            Total current liabilities                                  1,811,939    1,860,639

ACCRUED WARRANTY COSTS                                                   134,000      114,000
OTHER LONG-TERM LIABILITIES                                               32,000       70,000

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
     Preferred stock, $.01 par value; 1,000,000
      shares authorized; 135,000 and 175,000 shares at November
      30, 1999 and May  31,  1999,  respectively,  issued  and
      outstanding  (liquidation preference of $2,700,000  and
      $3,500,000 at November 30, 1999 and May 31, 1999,
      respectively)                                                        1,350        1,750
     Common stock, $.001 par value; 110,000,000 shares authorized;
      51,296,585 and  50,402,687  shares  at  November  30,  1999
      and  May  31,  1999, respectively, issued and outstanding           51,297       50,403
        Additional paid-in capital                                    37,909,201   37,749,483
        Accumulated deficit                                          (34,324,471) (34,648,103)
                                                                      ----------   ----------
                Total stockholders' equity                             3,637,377    3,153,533
                                                                      ----------   ----------
                                                                      $5,615,316   $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>
                                                Six months ended                   Three months ended
                                                ----------------                   ------------------
                                                  November 30,                        November 30,
                                                  ------------                        ------------
                                               1999            1998              1999             1998
                                               ----            ----              ----             ----
<S>                                         <C>               <C>             <C>               <C>
Revenues
 Equipment sales                            $5,669,175        $550,000        $2,778,995        $200,000
 Equipment rentals and services                306,400         242,100           177,100         164,000
                                           -----------      ----------        ----------      ----------
                                             5,975,575         792,100         2,956,095         364,000
                                           -----------      ----------        ----------      ----------
Costs and expenses
 Cost of sales and services                  1,369,287         573,790           757,017         243,422
 Selling, general and administrative         3,348,738       2,648,276         1,606,422       1,377,612
 Research and development                      646,852         339,763           393,704         150,099
 Depreciation and amortization                 250,708         201,709           129,101         108,626
 Interest and financing costs                    3,562           7,337             1,550           2,128
 Interest and other income - net               (41,447)        (84,065)          (21,425)        (31,851)
                                           -----------      ----------        ----------      ----------
                                             5,577,700       3,686,810        2,866,369       1,850,036
                                           -----------      ----------        ----------      ----------
 NET EARNINGS (LOSS)                           397,875      (2,894,710)          89,726      (1,486,036)

   Deemed dividend on preferred stock             -           (864,000)            -           (203,000)
   Preferred stock dividend requirement        (74,243)       (108,071)         (35,780)        (53,315)
                                           -----------      ----------        ----------      ----------
 EARNINGS (LOSS) APPLICABLE TO
  COMMON STOCK                                $323,632     $(3,866,781)          $53,946     $(1,742,351)
                                           -----------      ----------        ----------      ----------
Earnings (loss) per common
 share (basic and diluted)                        $.01           $(.08)             $.00           $(.04)
                                           -----------      ----------        ----------      ----------
Weighted average common shares
 outstanding
  Basic                                     50,971,701      48,730,338        51,092,875      48,800,910
                                           -----------      ----------        ----------      ----------
  Diluted                                   55,848,051      48,730,338        55,488,074      48,800,910
                                           -----------      ----------        ----------      ----------

<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          (40,000)      (400)        773,338         774           (374)                          -
Preferred stock dividend requirement                                                                         (74,243)       (74,243)
Common stock issued in lieu of
   preferred stock dividends                                       50,385          50         50,912                         50,962
Exercise of options and warrants                                   70,175          70         51,180                         51,250
Stock options granted for services                                                            58,000                         58,000
Net earnings                                                                                                 397,875        397,875
                                       -------     ------      ----------     -------    -----------    ------------     ----------
Balance at November 30, 1999           135,000     $1,350      51,296,585     $51,297    $37,909,201    $(34,324,471)    $3,637,377
                                       -------     ------      ----------     -------    -----------    ------------     ----------
<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>
                                                                    Six months ended November 30,
                                                                    -----------------------------
                                                                         1999           1998
                                                                         ----           ----
<S>                                                                   <C>           <C>
Cash flows from operating activities
 Net earnings (loss)                                                    $397,875    $(2,894,710)
                                                                      ----------    -----------
 Adjustments to reconcile net earnings (loss)
  to net cash provided by (used in) operating activities
   Depreciation and amortization                                         250,708        201,709
   Stock options granted for services                                     58,000
   Changes in operating assets and liabilities
    Accounts receivable                                               (1,019,050)       558,296
    Inventories                                                          166,164       (511,353)
    Other current assets                                                  14,443         64,247
    Other assets                                                          22,076            402
    Accounts payable, accrued expenses and other current liabilities     (71,982)      (146,280)
    Other liabilities                                                    (18,000)      (106,500)
                                                                      ----------    -----------
                                                                        (597,641)        60,521
                                                                      ----------    -----------
   Net cash used in operating activities                                (199,766)    (2,834,189)
                                                                      ----------    -----------
Cash flows from investing activities
 Purchase of property and equipment                                      (30,913)       (24,795)
                                                                      ----------    -----------
  Net cash used in investing activities                                  (30,913)       (24,795)
                                                                      ----------    -----------
Cash flows from financing activities
 Proceeds from exercise of options and warrants                           51,250           -
                                                                      ----------    -----------
  Net cash provided by financing activities                               51,250           -
                                                                      ----------    -----------
  NET DECREASE IN CASH AND CASH EQUIVALENTS                             (179,429)    (2,858,984)
Cash and cash equivalents - beginning of period                        1,678,175      4,367,986
                                                                      ----------    -----------
Cash and cash equivalents - end of period                             $1,498,746     $1,509,002
                                                                      ----------    -----------


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                  $50,962         19,911
Inventories transferred to (from) property and equipment,
 attributable to operating leases - net                                    8,444        224,000
<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
                               November 30, 1999
                                  (unaudited)

NOTE A - BASIS OF PRESENTATION
        The consolidated condensed balance sheet as of November 30, 1999 and the
related  consolidated  condensed  statements  of  operations  for the  six-  and
three-month  periods ended November 30, 1999 and 1998,  changes in stockholders'
equity for the six-month  period ended  November 30, 1999 and cash flows for the
six-month  periods  ended  November  30,  1999 and 1998  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 November 30, 1999 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 November 30, 1999 and 1998 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 $58,000 in June 1999,  commensurate
with the partial 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 quarter of fiscal 2000,  28,000  shares of preferred  stock
were  converted into 477,912  shares of common stock.  In addition,  options and
warrants to purchase 70,175 shares of common stock were  exercised,  aggregating
$51,250 in proceeds to the Company.
        In the second quarter of fiscal 2000,  12,000 shares of preferred  stock
were converted into 295,426 shares of common stock.
        In January 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 660,000  shares of common stock at an exercise price of
$1.21 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 six and three
months ended November 30, 1998, as their effects were anti-dilutive.
<PAGE>
                        Vasomedical, Inc. and Subsidiary

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
                               November 30, 1999
                                  (unaudited)

NOTE C - EARNINGS PER COMMON SHARE (continued)
        The  following  table sets forth the  computation  of basic and  diluted
earnings per share for the six and three months ended November 30, 1999:
<TABLE>
<CAPTION>
                                                       Six months ended  Three months ended
                                                       November 30, 1999 November 30, 1999
                                                       ----------------- ------------------
<S>                                                       <C>            <C>
Numerator:
 Basic earnings                                             $323,632        $53,946
  Preferred stock dividends                                   74,243         35,780
                                                          ----------     ----------
 Diluted earnings                                           $397,875        $89,726
                                                          ----------     ----------
Denominator:
 Basic - weighted average shares                          50,971,701     51,092,875
         Stock options                                       621,009        388,907
         Warrants                                          1,178,631      1,056,337
         Convertible preferred stock                       3,076,710      2,949,955
                                                          ----------     ----------
 Diluted - weighted average shares                        55,848,051     55,488,074
                                                          ----------     ----------
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 November  30, 1999  (reflecting  January 2000
revisions) are summarized as follows:
<TABLE>
<CAPTION>
                     Twelve months ended November 30,        Amount
                     --------------------------------        ------
<S>                                <C>                      <C>
                                   2000                     $590,000
                                   2001                      178,000
                                   2002                       23,000
                                                            --------
                                                            $791,000
                                                            --------
</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)
                               November 30, 1999
                                  (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 November  30,  1999,  the  Company had  outstanding
purchase  commitments of $486,000.  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
---------------------
Six and Three Months Ended November 30, 1999 and 1998
-----------------------------------------------------
     The Company  generated  revenues from the sale and lease of EECP systems of
$5,976,000  and $792,000 for the six-month  periods ended  November 30, 1999 and
1998,  respectively,  and  $2,956,000 and $364,000 for the  three-month  periods
ended November 30, 1999 and 1998,  respectively.  The Company generated earnings
of $398,000 and $90,000 (before deducting $74,000 and $36,000 in preferred stock
dividend requirements) for the six and three months ended November 30, 1999. For
the comparable prior-year periods, the Company incurred net losses of $2,895,000
and $1,486,000 (before deducting $864,000 and $203,000,  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 $108,000 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 second 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 six months ended
November  30,  1999 and  1998  were  approximately  $3,349,000  and  $2,648,000,
respectively, and $1,606,000 and $1,378,000,  respectively, for the three months
ended  November 30, 1999 and 1998. The increases in SGA expenses of $701,000 and
$228,000 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 six and three  months
ended  November 30, 1999  increased by $307,000 and $244,000 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 congestive 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 November 30,  1999,  the Company had a cash
balance of  $1,499,000  and working  capital of  $2,874,000,  compared to a cash
balance of $1,678,000  and working  capital of  $2,175,000 at May 31, 1999.  The
Company's operating  activities used cash of $200,000 and $2,834,000 for the six
months ended November 30, 1999 and 1998, respectively.  Net cash used during the
six months  ended  November  30,  1999  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 $31,000 and $25,000  during the six
months ended November 30, 1999 and 1998,  respectively.  The principal uses were
for the purchase of property and  equipment.  At November 30, 1999,  the Company
did not have any material commitments for capital expenditures.
     Financing  activities  provided cash of $51,000 during the six months ended
November 30, 1999.  Financing  activities during fiscal 2000 consisted primarily
from the sale of common stock and receipt of cash  proceeds upon the exercise of
Company common stock warrants by officers and directors.
     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 have been, and are expected to
be, 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 November 30, 1999,  40,000 shares of
Series C  preferred  stock,  representing  23% of the  total  outstanding,  were
converted into approximately 773,000 shares of the Company's common stock.
     Management believes that its working capital position at November 30, 1999,
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

     A. The  registrant  held its Annual Meeting of  Stockholders  on October 6,
1999.
     B. Not applicable.
     C. Three  directors  were elected at the Annual Meeting to serve in Class I
until the Annual  Meeting of  Stockholders  for fiscal 2002.  They are E. Donald
Shapiro,  Anthony Viscusi and Zhen-sheng Zheng. The minimum number of votes cast
in favor of their elections was 36,308,338.

     The other  matter voted upon was the  ratification  of the  appointment  of
Grant Thornton LLP as the Company's independent certified public accountants for
the fiscal year ended May 31,  2000.  The votes cast are as follows:  Votes For:
36,253,028; Votes Against: 144,830; Votes Abstained: 76,535

ITEM 5 - OTHER INFORMATION:

        None

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

        Exhibits:
          No.  10  Employment  Agreement  dated  January  6,  2000  between  the
               Registrant and D. Michael Deignan
          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:  January 13, 2000