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, 1998

[ ] 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 13, 1999                     49,466,754
                                                         ----------

    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, 1998 and May 31, 1998 (Unaudited)                         3

  Consolidated Condensed Statements of Operations for
       the Six and Three Months Ended
       November 30, 1998 and 1997 (Unaudited)                                4

  Consolidated Condensed Statement of Changes in Stockholders' Equity for
       the Period from June 1, 1998 to November 30, 1998 (Unaudited)         5

  Consolidated Condensed Statements of Cash Flows for the
       Six Months Ended November 30, 1998 and 1997 (Unaudited)               6


   Notes to Consolidated Condensed Financial Statements                      7

 Item 2 - Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                          9

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

                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (unaudited)
<TABLE>
<CAPTION>
                                                              November 30,      May 31,
                                                                  1998           1998
                                                                  ----           ----
<S>                                                             <C>             <C>    
        ASSETS
CURRENT ASSETS
    Cash and cash equivalents                                   $1,509,002     $4,367,986
    Accounts receivable                                            418,045        976,341
    Inventories                                                    965,655        678,302
    Other current assets                                           100,579        164,826
                                                                ----------     ----------      
        Total current assets                                     2,993,281      6,187,455

PROPERTY AND EQUIPMENT, net                                        506,536        352,902
CAPITALIZED COST IN EXCESS OF FAIR
     VALUE OF NET ASSETS ACQUIRED, net                             674,825        781,373
OTHER ASSETS                                                        23,114         23,516
                                                                ----------     ----------      
                                                                $4,197,756     $7,345,246
                                                                ----------     ----------      
    LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
    Accounts payable and accrued expenses                         $457,137       $436,730
    Accrued warranty and customer support expenses                 264,000        240,000
    Accrued professional fees                                      156,258        225,833
    Accrued commissions                                             55,440        176,553
    Dividends payable                                              150,298         62,137
                                                                ----------     ----------      
        Total current liabilities                                1,083,133      1,141,253

ACCRUED WARRANTY COSTS                                             232,500        334,000
OTHER LONG-TERM LIABILITIES                                        112,000        117,000

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
    Preferred stock, $.01 par value; 1,000,000
      shares authorized; 208,500 and 225,750 shares at 
      November 30, 1998 and May 31, 1998, respectively,
      issued and outstanding                                         2,085          2,258
    Common stock, $.001 par value; 110,000,000 shares
      authorized; 48,916,754 and 48,531,278 shares at 
      November 30, 1998 and May 31, 1998, respectively,
      issued and outstanding                                        48,917         48,531
    Additional paid-in capital                                  37,341,853     36,458,155
    Accumulated deficit                                        (34,622,732)   (30,755,951)
                                                                ----------     ----------      
                                                                 2,770,123      5,752,993
                                                                ----------     ----------      
                                                                $4,197,756     $7,345,246
                                                                ----------     ----------      
<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,
                                           ------------                  ------------
                                         1998          1997            1998          1997
                                         ----          ----            ----          ----
<S>                                  <C>           <C>             <C>           <C>    
Revenues
 Equipment sales                       $550,000     $2,024,416       $200,000     $1,071,879
 Equipment rentals and services         242,100        152,732        164,000         63,513
                                       --------     ----------       --------     ---------- 
                                        792,100      2,177,148        364,000      1,135,392
                                       --------     ----------       --------     ---------- 
Costs and expenses
 Cost of sales and services             573,790        639,720        243,422        264,880
 Selling, general and administrative  2,648,276      2,506,533      1,377,612      1,485,494
 Research and development               339,763        948,865        150,099        350,141
 Depreciation and amortization          201,709        182,316        108,626         91,549
 Interest and financing costs             7,337          1,076          2,128             52
 Interest and other income - net        (84,065)       (96,605)       (31,851)       (49,715)
                                      ---------     ----------      ---------     ---------- 
                                      3,686,810      4,181,905      1,850,036      2,142,401
                                      ---------     ----------      ---------     ---------- 
 NET LOSS                            (2,894,710)    (2,004,757)    (1,486,036)    (1,007,009)

  Deemed dividend on preferred stock   (864,000)      (857,000)      (203,000)          -
  Preferred stock dividend requirement (108,071)       (52,939)       (53,315)       (25,405)
                                      ---------     ----------      ---------     ---------- 
LOSS APPLICABLE TO
 COMMON STOCK                       $(3,866,781)   $(2,914,696)   $(1,742,351)   $(1,032,414)
                                    -----------    -----------    -----------    ----------- 

Loss per common share (basic and 
 diluted)                                 $(.08)         $(.06)         $(.04)         $(.02)
                                          -----          -----          -----          -----

Weighted average common shares
 outstanding (basic and diluted)     48,730,338     47,417,151     48,800,910     47,811,782
                                    -----------    -----------    -----------    ----------- 
The accompanying notes are an integral part of these condensed statements.

</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, 1998       225,750   $2,258    48,531,278    $48,531    $36,458,155    $(30,755,951)   $5,752,993

Conversion of preferred
  stock                       (17,250)    (173)      364,028        364           (191)                       -
Deemed dividend on preferred
 stock                                                                         864,000        (864,000)       -
Preferred stock dividend
 requirement                                                                                  (108,071)     (108,071)
Common stock issued in lieu of
   preferred stock dividends                          21,448         22         19,889                        19,911
Net loss                                                                                    (2,894,710)   (2,894,710)
                              -------   ------    ----------   --------    -----------    ------------    ----------
Balance at November 30, 1998  208,500   $2,085    48,916,754    $48,917    $37,341,853    $(34,622,732)   $2,770,123
                              -------   ------    ----------   --------    -----------    ------------    ----------

</TABLE>























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

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                        Six months ended November 30,
                                                                        -----------------------------
                                                                              1998           1997
                                                                              ----           ----  
<S>                                                                        <C>            <C> 
Cash flows from operating activities
  Net loss                                                                 $(2,894,710)   $(2,004,757)
                                                                           -----------    -----------
  Adjustments to reconcile net loss
    to net cash used in operating activities
      Depreciation and amortization                                            201,709        182,316
      Changes in operating assets and liabilities
        Accounts receivable                                                    558,296       (360,366)
        Inventories                                                           (511,353)       120,144
        Other current assets                                                    64,247        (48,792)
        Other assets                                                               402
        Accounts payable, accrued expenses and other current liabilities      (146,280)       358,827
        Other liabilities                                                     (106,500)        56,370
                                                                           -----------    -----------
                                                                                60,521        308,499
                                                                           -----------    -----------
     Net cash used in operating activities                                  (2,834,189)    (1,696,258)
                                                                           -----------    -----------
Cash flows from investing activities
  Purchases of property and equipment                                          (24,795)       (13,204)
                                                                           -----------    -----------
     Net cash used in investing activities                                     (24,795)       (13,204)
                                                                           -----------    -----------
Cash flows from financing activities
  Proceeds from exercise of options and warrants                                              409,463
  Proceeds from issuance of preferred stock, net                                            2,817,900
                                                                           -----------    -----------
     Net cash provided by financing activities                                    --        3,227,363
                                                                           -----------    -----------
      NET (DECREASE) INCREASE IN
        CASH AND CASH EQUIVALENTS                                           (2,858,984)     1,517,901
Cash and cash equivalents - beginning of period                              4,367,986      1,753,004
                                                                           -----------    -----------
Cash and cash equivalents - end of period                                  $ 1,509,002    $ 3,270,905
                                                                           -----------    -----------


Non-cash investing and financing activities were as follows:
Deemed dividend on preferred stock                                         $   864,000    $   857,000
Issuance of common stock in lieu of preferred dividends                         19,911         18,282
Inventories transferred to property and equipment,
   attributable to operating leases                                            224,000         30,000
</TABLE>









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

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                November 30, 1998
                                   (unaudited)

NOTE A - BASIS OF PRESENTATION
    The  consolidated  condensed  balance  sheet as of November 30, 1998 and the
related  consolidated  condensed  statements  of  operations  for the  six-  and
three-month  periods ended November 30, 1998 and 1997,  changes in stockholders'
equity for the six-month  period ended  November 30, 1998 and cash flows for the
six-month  periods  ended  November  30,  1998 and 1997  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 as of November
30, 1998 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,  1998.  Results  of
operations for the periods ended November 30, 1998 and 1997 are not  necessarily
indicative of the operating results expected for the full year.

NOTE B - STOCKHOLDERS' EQUITY
    On April 30, 1998, the Company  completed a second tranche of financing with
an accredited  investor and issued  175,000  shares of newly created 5% Series C
Cumulative  Convertible Preferred Stock ("Series C Preferred"),  $.01 par value,
pursuant to Regulation D under the  Securities Act of 1933 at a price of $20 per
share, for net cash proceeds of $3,294,000. The Series C Preferred has no voting
rights and was  convertible  into common  stock of the  Company at an  effective
conversion  price of the lower of (i) $2.08 or (ii) 85% of the  average  closing
bid  price  of the  Company's  common  stock  for  the  five  (5)  trading  days
immediately  preceding the conversion  date (the "Average  Closing  Price"),  as
defined  in the  Certificate  of  Designation  of the  Series  C  Preferred.  In
addition, the investor was granted five-year warrants to purchase 413,712 shares
of  common  stock at an  exercise  price of $2.08 per  share.  The  Company  has
estimated the value of the deemed dividend,  representing the discount resulting
from the  allocation of proceeds to the  beneficial  conversion  feature and the
fair value of the  underlying  warrants,  to approximate  $936,000.  Such deemed
dividend  has been  recognized  from the date of issuance  through the date such
preferred   stock  was  first   convertible  (on  or  about  August  15,  1998).
Accordingly,  the Company recognized a deemed dividend of $275,000 in the fourth
quarter  of fiscal  1998 and  recognized  the  remaining  portion  of the deemed
dividend of $661,000 in the first quarter of fiscal 1999.
    Based upon  negotiations  between the Company and the holder of the Series C
Preferred  in  December  1998  relating  to  the  delayed   effectiveness  of  a
registration  statement  covering the  underlying  shares of common  stock,  the
conversion  price with respect to the Series C Preferred has been reduced to the
lower of (i) $2.00 per share,  or (ii) 81% of the  Average  Closing  Price.  The
Company has estimated the incremental value of the deemed dividend, representing
the  additional  discount  resulting  from the  allocation  of  proceeds  to the
beneficial conversion feature, to approximate $203,000. Accordingly, the Company
recognized  this  incremental  deemed  dividend in the second  quarter of fiscal
1999.
    In the first and second  quarters  of fiscal  1999,  9,250  shares and 8,000
shares of preferred  stock were converted into 167,636 shares and 196,392 shares
of common stock, respectively.
   In January  1999,  the Company's  Board of Directors  increased the number of
shares  authorized  for issuance  under the Company's  1997 Stock Option Plan by
1,000,000  shares to  2,800,000  shares.  In  addition,  the Board of  Directors
granted  stock  options  under the plan to  directors,  officers,  employees and
consultants to purchase an aggregate of 830,000 shares,  470,000 shares, 313,500
shares, and 150,000 shares of common stock,  respectively,  at an exercise price
of $.875 per share (which  represented  the fair market value of the  underlying
common stock at the time of grant).
    In January 1999,  warrants to purchase  550,000  shares of common stock were
exercised, aggregating $247,500.
<PAGE>
                        Vasomedical, Inc. and Subsidiary

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
                                November 30, 1998
                                   (unaudited)

NOTE C - COMMITMENTS AND CONTINGENCIES
Employment Agreements
---------------------
    Approximate  aggregate minimum annual compensation  obligations under active
employment agreements at November 30, 1998 are summarized as follows:
<TABLE>
<CAPTION>
         Twelve months ended November 30,       Amount
         --------------------------------       ------ 
                              <S>           <C>     
                              1999            $569,000
                              2000             569,000
                              2001             176,000
                              2002              23,000
                                            ----------
                                            $1,337,000
                                            ---------- 
</TABLE>
SEC Investigation
-----------------
    In  February  1995,  the  Company  received  a subpoena  duces  tecum by the
broker-dealer  branch of the Northeast  Regional  Office of the  Securities  and
Exchange  Commission  ("SEC")  requesting  certain  documents  from the  Company
pursuant to a formal order of private  investigation in connection with possible
registration and reporting violations. The Company complied with the request for
such  documents.  Whatever the  ultimate  objectives  of the SEC's  fact-finding
inquiry may be, the Company intends to cooperate as the investigation  proceeds.
As stated in the subpoena,  the "investigation is confidential and should not be
construed as an  indication  by the SEC or its staff that any  violations of law
have  occurred,  nor should it be  interpreted  as an adverse  reflection on any
person,  entity or security." This  investigation is in its early stages and the
Company is unable to determine the likelihood of an  unfavorable  outcome or the
existence or amount of any potential loss.

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 . The complaint seeks
damages in the approximate sum of $50,000,000,  declaratory  relief and punitive
damages.  The Company denies the existence of any  agreement,  believes that the
complaint is frivolous and without merit and is vigorously  defending the claims
as  well  as  asserting  substantial  counterclaims.   This  matter  is  in  its
preliminary  stages and the Company is unable to determine the  likelihood of an
unfavorable outcome or the existence or amount of any potential loss.
    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 this
action is fully covered by insurance.  This matter is in its preliminary  stages
and the Company is unable to determine the likelihood of an unfavorable  outcome
or the existence or amount of any potential loss.

Purchase Commitments
--------------------
    At November 30, 1998, the Company had  outstanding  purchase  commitments of
$168,000 for the purchase of EECP systems from its contract manufacturer.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
Results of Operations
---------------------
Six and Three Months Ended November 30, 1998 and 1997
-----------------------------------------------------
    The Company  generated  revenues  from the sale and lease of EECP systems of
$792,000 and $2,177,000 and $364,000 and $1,135,000 for the six- and three-month
periods ended November 30, 1998 and 1997, respectively. The Company incurred net
losses of $2,895,000  and  $2,005,000 for the six months ended November 30, 1998
and 1997, respectively (before deducting $864,000 and $857,000, 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 dividend  requirements,  in connection with the Company's April 1998 and June
1997  financings).  The Company incurred net losses of $1,486,000 and $1,007,000
for the three months  ended  November  30, 1998 and 1997,  respectively  (before
deducting  $203,000 in fiscal 1999 in incremental  deemed dividends on preferred
stock which represented the additional discount resulting from the allocation of
proceeds  to  the  beneficial   conversion  feature  and  $53,000  and  $25,000,
respectively,  in dividend  requirements  in connection with the Company's April
1998 and June 1997 financings).

     Management  believes that the number of cardiology  practices and hospitals
interested  in becoming  providers of EECP therapy has  increased  following the
announcement of the results of the Company's  multicenter  clinical study at the
American Heart  Association (AHA) meeting in November 1997,  additional  reports
presented at the American  College of Cardiology  meeting in March 1998, and the
one-year  follow-up  quality-of-life  outcomes  study  presented  at the  AHA in
November  1998.  The number of units  placed in the first two quarters of fiscal
1999 has exceeded that of the comparable prior-year period, however, revenues in
the  current  fiscal  year have been  adversely  affected  by the  nature of the
commercial  arrangements  under  which those units were  placed,  including  the
decline in outright  sales.  The  Company  expects  that many of the  placements
currently  under  rental  or use  arrangements  will  become  outright  sales or
financed  leases in the latter  part of fiscal  1999,  although  there can be no
assurance that this will occur.

    Management  believes that the  publication  of the results of a multicenter,
controlled  clinical study in a major  peer-review  journal and decisions by the
Health Care Financing  Administration  (which  administers the Medicare program)
and  other  third-party  payers  to  provide  coverage  for EECP  treatment  are
essential  to  the  commercial  success  of the  Company.  The  Company  expects
publication  of the  multicenter  clinical study and  determination  of positive
coverage policies to occur during the course of the current fiscal year.

    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 by certain fixed period costs, including facilities, payroll and
insurance.  Gross  margins  are  furthermore  affected  by the  location  of the
Company's  customers  and the amount and nature of  training  and other  initial
costs   required  to  place  the  EECP  system  in  service  for  customer  use.
Accordingly,  the gross  margin  realized  during the current  period may not be
indicative of future margins.

    Selling,  general  and  administrative  (SGA)  expenses  for  the  six-  and
three-month  periods  ended  November  30,  1998  and  1997  were  approximately
$2,648,000 and  $2,507,000,  and $1,378,000 and  $1,485,000,  respectively.  The
$141,000  increase in SGA expenses for the comparable  six-month period resulted
primarily  from the expansion of the  Company's  direct sales force and customer
services personnel and marketing expenses related to customer support activities
and programs,  offset by a decrease in  commissions  and other  related  selling
expenses  as a result  of  decreased  revenues.  The  $107,000  decrease  in SGA
expenses  for  the  comparable   three-month   period  resulted  primarily  from
substantial  expenditures  in the prior  period  for public  relations  programs
related to the announcement of the  aforementioned  multicenter  study's results
and for new promotional and educational  materials and a decrease in commissions
and other related selling expenses as a result of decreased revenues,  offset by
expenses in connection  with the  expansion of the Company's  direct sales force
and customer services personnel.
<PAGE>
    Research and development (R&D) expenses  decreased $609,000 and $200,000 for
the six and three months ended  November 30, 1998 compared to the prior periods.
The decreases were the result of significant  prior period  expenses  related to
the completion of the Company's multicenter clinical study of EECP (completed in
July 1997) and the  front-loaded  expenses for the development of a new model of
the EECP system. Current period expenses relate to the long-term follow-up phase
of the  multicenter  clinical  study,  i.e., a  quality-of-life  outcomes  study
(completed  in July 1998),  the  expansion  of the  International  EECP  Patient
Registry at the University of Pittsburgh,  and the ongoing  feasibility study in
congestive heart failure,  all of which, to some extent, are expected to further
affect operating results in fiscal 1999.

Liquidity and Capital Resources
-------------------------------
    Working  capital  decreased by $3,136,000 from $5,046,000 at May 31, 1998 to
$1,910,000 at November 30, 1998, principally as a result of continuing operating
losses.  In January  1999,  the Company  received  proceeds of $247,500 from the
exercise of warrants.

    In fiscal 1998,  the Company  issued an aggregate of 325,000 shares of newly
created 5% Series B and 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. At November 30, 1998, approximately 78% of
Series B preferred stock and no Series C preferred stock had been converted into
common stock.

    Management  believes that its present working  capital  position at November
30,  1998,  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  proceeds
from the exercise of options and warrants ($247,500  received  subsequent to the
end of the second  fiscal  quarter),  will make it  possible  for the Company to
support its internal  overhead  expenses and to implement its business plans for
the next twelve months.  Management  will revise its business plans in the event
actual revenues deviate from current  projections.  If the Company's future cash
requirements  are not  adequately  generated  from the  sale  and  lease of EECP
systems,  the Company may require infusions of additional capital from equity or
debt issuances.



Impact of the Year 2000 on Information Systems

    The Year 2000 issue  arises as the result of computer  programs  having been
written, and systems having been designed,  using two digits rather than four to
define the  applicable  year.  Consequently,  such software has the potential to
recognize  a date using "00" as the year 1900  rather  than the year 2000.  This
could  result in a system  failure or  miscalculations  causing  disruptions  of
operations,  including,  among other  things,  a temporary  inability to process
transactions, send invoices, or engage in similar normal business activities.
<PAGE>
    The Company's sole product is not expected to be affected by Year 2000 as it
does not rely on  date-sensitive  software or affected  hardware.  The Company's
current accounting and other systems were purchased "off-the-shelf". The Company
intends to timely update its  accounting  and other systems which are determined
to be affected  by Year 2000 by  purchasing  Year 2000  compliant  software  and
hardware available from retail vendors at reasonable costs.

    The Company has not yet  contacted  other  companies  on whose  services the
Company  depends to  determine  whether  such  companies'  systems are Year 2000
compliant.  If the systems of the Company or other  companies on whose  services
the  Company  depends,  including  the  Company's  customers,  are not Year 2000
compliant,  there could be a material adverse effect on the Company's  financial
condition or results of operations.




    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.
<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/ Anthony Viscusi
                             President, Chief
                             Executive Officer and Director 
                             (Principal Executive Officer)

                              /s/ Joseph A. Giacalone
                              Secretary and Treasurer
                              (Principal Financial and Accounting Officer)

Date:  January 14, 1999