UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D. C. 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 August 31, 1997

[ ] 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 October 14, 1997                47,826,812
                                                    ---------- 


     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 Subsidiaries



                                      INDEX

<TABLE>
<CAPTION>

PART I - FINANCIAL INFORMATION

     Item 1 - Financial Statements:                                        Page
                                                                           ----
          <S>                                                               <C>
          Consolidated Condensed Balance Sheets as of
               August 31, 1997 and May 31, 1997 (Unaudited)                  3

          Consolidated  Condensed  Statements of Operations for
               the Three-Months Ended August 31, 1997 and 1996 (Unaudited)   4

          Consolidated  Condensed  Statement of Changes in Stockholders'
               Equity for the period from June 1, 1997 to
               August 31, 1997 (Unaudited)                                   5

          Consolidated Condensed Statements of Cash Flows for the
               Three-Months Ended August 31, 1997 and 1996 (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                                                 11
</TABLE>

<PAGE>


                       Vasomedical, Inc. and Subsidiaries

                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                August 31,             May 31,
                                                                      1997                1997
                                                                      ----                ----
         ASSETS
CURRENT ASSETS
     <S>                                                        <C>                 <C>       
     Cash and cash equivalents                                  $4,068,420          $1,753,004
     Accounts receivable                                           241,080              56,648
     Inventory                                                     852,743             953,045
     Other current assets                                           86,628              86,063
                                                                ----------          ----------
         Total current assets                                    5,248,871           2,848,760

PROPERTY AND EQUIPMENT, net                                        301,676             308,204
CAPITALIZED COSTS IN EXCESS OF FAIR
     VALUE OF NET ASSETS ACQUIRED, net                             941,195             994,469
OTHER ASSETS                                                        23,588              23,588
                                                                ----------          ----------
                                                                $6,515,330          $4,175,021
                                                                ----------          ----------

     LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
     Accounts payable and accrued expenses                        $483,237            $272,978
     Accrued warranty and customer support expenses                369,000             321,000
     Accrued professional fees                                     213,936             243,062
     Accrued commissions                                            18,525              30,389
     Dividends payable                                              27,448                    
                                                                 ---------           ---------
         Total current liabilities                               1,112,146             867,429

ACCRUED WARRANTY COSTS                                             280,000             220,000
OTHER LONG-TERM LIABILITIES                                         69,000              66,630

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
     Preferred stock, $.01 par value; 1,000,000
       shares authorized; 149,500 shares at August 31, 1997
       issued and outstanding                                        1,495
     Common stock, $.001 par value; 85,000,000 shares
       authorized; 47,161,643 shares and 46,782,003 shares at
       August 31 and May 31, 1997, respectively, issued and 
       outstanding                                                  47,162              46,782
     Additional paid-in capital                                 32,612,848          28,699,219
     Accumulated deficit                                       (27,607,321)        (25,725,039)
                                                                ----------          ----------
                                                                 5,054,184           3,020,962
                                                                ----------          ----------
                                                                $6,515,330          $4,175,021
                                                                ----------          ----------


<FN>
The accompanying notes are an integral part of these condensed statements.
</FN>
</TABLE>

<PAGE>


                       Vasomedical, Inc. and Subsidiaries

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>
                                            Three-months ended August 31,
                                            ----------------------------- 
                                                 1997                1996
                                                 ----                ---- 
 <S>                                         <C>                 <C>     
Revenues
 Equipment sales                             $952,537            $982,328
 Equipment rentals and services                89,219             192,000
                                            ---------           ---------  
                                            1,041,756           1,174,328
                                            ---------           --------- 
Costs and expenses
 Cost of sales and services                   374,840             272,074
 Selling, general and administrative        1,021,039           1,207,037
 Research and development                     598,724             149,534
 Depreciation and amortization                 90,767              76,413
 Interest and financing costs                   1,024               1,447
 Interest and other income - net             (46,890)            (59,763)
                                            ---------           -------- 
                                            2,039,504           1,646,742
                                            ---------           ---------  
 NET LOSS                                   (997,748)           (472,414)

       Deemed dividend on preferred stock   (857,000)                  -
       Preferred stock dividend requirement  (27,534)                  -
                                            --------            --------  
 NET LOSS APPLICABLE TO
    COMMON STOCK                         $(1,882,282)          $(472,414)
                                           ---------            --------   
Net loss per common share                      $(.04)              $(.01)
                                                ----                ----
Weighted average common shares
 outstanding                               47,022,520         46,250,476
                                           ----------         ----------  












<FN>

The accompanying notes are an integral part of these condensed statements.
</FN>
</TABLE>

<PAGE>


                       Vasomedical, Inc. and Subsidiaries

      CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                                                                      Total
                                                                                      Additional                      stock-
                                     Preferred Stock             Common stock           paid-in        Accumulated    holders'
                                    Shares      Amount       Shares       Amount        capital        deficit        equity
                                    ------      ------       ------       ------      ----------       -----------    --------   
<S>                                 <C>         <C>        <C>            <C>         <C>             <C>            <C>
Balance at June 1, 1997                    -         -     46,782,003     $46,782     $28,699,219     $(25,725,039)  $3,020,962

Issuance of preferred stock          150,000    $1,500                                  2,816,400                     2,817,900
Conversion of preferred stock           (500)       (5)         6,582           7              (2)                            -
Exercise of options and warrants                              373,001         373         240,145                       240,518
Deemed dividend on preferred stock                                                        857,000         (857,000)           -
Preferred stock dividend requirement                               57                          86          (27,534)     (27,448)
Net loss                                                                                                  (997,748)    (997,748)
                                     -------     ------     ----------    -------     -----------     ------------   ----------
Balance at August 31, 1997           149,500     $1,495     47,161,643    $47,162     $32,612,848     $(27,607,321)  $5,054,184
                                     -------     ------     ----------    -------     -----------     ------------   ----------






















<FN>
The accompanying notes are an integral part of this condensed statement.
</FN>
</TABLE>

<PAGE>


                       Vasomedical, Inc. and Subsidiaries

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<TABLE>
<CAPTION>

                                                      Three-months ended August 31,
                                                      ---------------------------- 
                                                           1997                1996
                                                           ----                ---- 
 <S>                                                  <C>                 <C>       
Cash flows from operating activities
  Net loss                                             $(997,748)          $(472,414)
                                                      ----------           ---------
  Adjustments to reconcile net loss
    to net cash used in operating activities
      Depreciation and amortization                      90,767              76,413
      Provision for doubtful accounts                                       100,000
      Amortization of deferred compensation                                  42,453
Changes in operating assets and liabilities
        Accounts receivable                            (184,432)            156,371
        Inventory                                       100,302            (307,883)
        Other current assets                               (565)             64,415
        Accounts payable, accrued expenses 
         and other current liabilities                   217,269            (76,027)
        Other liabilities                                 62,370             50,000
                                                       ---------           --------
                                                         285,711            105,742
                                                       ---------           --------
     Net cash used in operating activities              (712,037)          (366,672)
                                                       ---------           --------

Cash flows from investing activities
Purchase of property and equipment                       (30,965)           (44,327)
                                                       ---------           --------
Net cash used in investing activities                    (30,965)           (44,327)
                                                       ---------           --------
Cash flows from financing activities
  Proceeds from exercise of options and warrants         240,518            418,125
  Debt conversion fees                                                      (10,000)
  Proceeds from issuance of preferred stock, net       2,817,900            
                                                       ---------           --------
Net cash provided by financing activities              3,058,418            408,125
                                                       ---------           --------

      NET INCREASE (DECREASE) IN
        CASH AND CASH EQUIVALENTS                      2,315,416             (2,874)
Cash and cash equivalents - beginning of period        1,753,004          4,447,806
                                                       ---------          ---------
Cash and cash equivalents - end of period             $4,068,420         $4,444,932
                                                       ---------          ---------


Non-cash investing and financing activities:
Deemed dividend on preferred stock                      $857,000
Issuance of common stock upon conversion of debt                         $3,344,575







<FN>
The accompanying notes are an integral part of these condensed statements.
</FN>
</TABLE>

<PAGE>


                       Vasomedical, Inc. and Subsidiaries

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                 August 31, 1997
                                   (unaudited)

NOTE A - BASIS OF PRESENTATION

     The  consolidated  condensed  balance  sheet as of August 31,  1997 and the
related  consolidated  condensed  statements of operations  for the  three-month
periods ended August 31, 1997 and 1996, changes in stockholders'  equity for the
three-month  period  ended  August 31,  1997 and cash flows for the  three-month
periods ended August 31, 1997 and 1996 have been prepared by  Vasomedical,  Inc.
and  Subsidiaries  (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 August 31, 1997 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,  1997.  Results  of
operations for the period ended August 31, 1997 are not  necessarily  indicative
of the operating results expected for the full year.

NOTE B - STOCKHOLDERS' EQUITY

     On June 25, 1997,  the Company  issued  150,000  shares of newly created 5%
Series B Convertible Preferred Stock, $.01 par value, to one accredited investor
pursuant to Regulation D under the  Securities Act of 1933 at a price of $20 per
share, for net cash proceeds approximating $2,800,000. The convertible preferred
stock is convertible into common stock of the Company at an effective conversion
price of the lower of (i) $2.18 or (ii) 85% of the  average  closing  bid of the
Company's common stock for the five (5) trading days  immediately  preceding the
conversion date, as defined in the Certificate of Designation of the convertible
preferred  stock.  In  addition,  five-year  warrants  were issued  granting the
investor  one  warrant  for every five  shares of common  stock  which  would be
issuable under the convertible preferred stock at an exercise price of $2.18 per
share, as defined.
     The Company  recorded a deemed dividend of $857,000 in the first quarter of
fiscal 1998, representing the discount resulting from the allocation of proceeds
to the  beneficial  conversion  feature  and the fair  value  of the  underlying
warrants.  Such deemed dividend was recognized from the date of issuance through
the date such preferred stock was first convertible.
     In the first  quarter of fiscal 1998,  500 shares of  preferred  stock were
converted  into 6,582 shares of common stock.  (Subsequent to the first quarter,
52,000 shares of preferred  stock were  converted  into 628,710 shares of common
stock.)  Also in the first  quarter,  options and  warrants to purchase  373,001
shares of common stock were exercised, aggregating $241,000.

NOTE C - COMMITMENTS AND CONTINGENCIES

  Employment Agreements
  ---------------------   
     Approximate aggregate minimum annual compensation  obligations under active
employment agreements at August 31, 1997, are summarized as follows:

<TABLE>
<CAPTION>
          Twelve-months ended August 31,        Amount
          -----------------------------         ------
                              <S>             <C>    
                              1998            $459,000
                              1999              99,000
                                              --------
                                              $558,000
                                              --------
</TABLE>

<PAGE>


                       Vasomedical, Inc. and Subsidiaries

        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
                                 August 31, 1997
                                   (unaudited)

NOTE C - COMMITMENTS AND CONTINGENCIES (continued)
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 has 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(R) . 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.

<PAGE>


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
--------------------------------------------------------------------------
OPERATIONS
----------
Results of Operation
--------------------
Three-months Ended August 31, 1997 and 1996
-------------------------------------------

     The  Company  generated  revenues  from the sale and  lease of its  EECP(R)
device of $1,042,000 and $1,174,000 for the  three-months  ended August 31, 1997
and 1996, respectively. The Company incurred net losses of $998,000 and $472,000
for the three-months ended August 31, 1997 and 1996, respectively (excluding the
fiscal 1998  recognition of an $857,000 deemed dividend 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
$28,000 in dividend  requirements,  in connection  with the Company's  June 1997
financing).  The Company has generated  increasing  revenues in each of its last
three  quarterly  periods as the number of EECP(R) units  purchased or rented by
treatment centers is growing steadily.  Although there can be no assurances that
EECP(R)  will  become a  commercial  success,  the  Company  expects to generate
increasing  revenues  in fiscal  1998,  including  the  expansion  of EECP(R) in
international  markets.  Management  believes  that  there  are many  cardiology
practices  and hospitals  interested in becoming  providers of EECP(R) that have
decided to await the results of the Company's  multicenter  clinical study to be
presented  at the American  Heart  Association  meeting in November  1997 before
making a financial commitment.

     Gross  margins  from the  EECP(R)  are  dependent  on a number of  factors,
particularly the mix of units sold and rented during the period,  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(R) 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  three-months
ended August 31, 1997 and 1996 were  approximately  $1,021,000  and  $1,207,000,
respectively.  The $186,000  decrease in SGA expenses from the comparable period
resulted primarily from a $120,000 reduction in commission  expenses as a result
of certain  current-period  sales not subject to commissions  and a $100,000 bad
debt  expense  charged in the prior  period,  offset by  increases  in marketing
expenses  related  to  programs  for  the  dissemination  of the  aforementioned
multicenter study's results and for promotional  materials,  as well as expenses
incurred in extending the marketing of EECP(R) to international markets.

     Research and development (R&D) expenses  increased $449,000 compared to the
comparable  quarterly  period.  The  increase is the result of  commitments  and
expenses related to the Company's  multi-center clinical study for EECP(R) which
was  completed  in  July  1997,  the  initiation  of  the   development  of  the
next-generation  model  of  EECP(R)  ,  and  expenses  related  to a  continuing
quality-of-life  and resource  utilization  study  started in parallel  with the
multicenter  clinical  study.  Expenses  related to this study (which includes a
long-term   follow-up   phase)  and  the  continuing   mechanical  and  clinical
development of EECP(R) are expected to continue in fiscal 1998.


Liquidity and Capital Resources
-------------------------------
     Working  capital at August 31, 1997  increased  $2,156,000 to $4,137,000 as
compared to $1,981,000 at May 31, 1997,  principally  from net proceeds from the
issuance  of  convertible  preferred  stock  and the  exercise  of  options  and
warrants,  offset by continuing operating losses. During the first quarter ended
August 31,  1997,  the Company  generated  net  proceeds  of  $241,000  from the
exercise of common stock options and purchase warrants.

<PAGE>

     In March 1996,  the Company  entered  into an  exclusive  agreement  with a
medical  equipment  finance  company  whereby  this third  party will  purchase,
subject to credit approval, the EECP(R) system on a non-recourse basis and lease
the system to the Company's customers.  During fiscal 1997 and the first quarter
of  fiscal  1998,  approximately  54% and 14%,  respectively,  of the  Company's
revenues  were  derived  through  such  transactions.  Although  there can be no
certainty  about future  revenues  generated  through  these  transactions,  the
Company  believes that these  transactions  will contribute to expected  growing
revenues and working capital in the future.

     On June 25, 1997,  the Company  issued  150,000  shares of newly created 5%
Series B Convertible  Preferred  Stock to one accredited  investor at a price of
$20  per  share,  realizing  net  cash  proceeds  of  approximately  $2,800,000.
Dividends  due on such  preferred  stock are expected to be payable in shares of
the Company's  common stock. At September 30, 1997,  more than  one-third of
the preferred stock issued was converted into common stock.

     Management believes that its present working capital position at August 31,
1997,  along with the  ongoing  commercialization  of EECP(R)  in  domestic  and
international   markets,   some  units  of  which  will  be   purchased  by  the
aforementioned  medical equipment finance company, will make it possible for the
Company to support its internal  overhead expenses and to implement its business
plans at least through August 31, 1998.

     Except for historical  information  contained herein, the matters discussed
are forward looking statements that involve risks and  uncertainties.  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 SUBSIDIARIES
                                ---------------- 

                           PART II - OTHER INFORMATION
                           ---------------------------

ITEM 1 - LEGAL PROCEEDINGS:

     Previously reported.

ITEM 2 - CHANGES IN SECURITIES:

     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:
          None

     Reports on Form 8-K:
          Report on Form 8-K dated June 25, 1997.

<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 and CEO (Principal Executive Officer)


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


Date:  October 17, 1997