** **

**SECURITIES AND EXCHANGE COMMISSION**

**UNITED STATES**

**WASHINGTON, D.C. 20549**

 

**FORM 10-QSB**

 

**(MarkOne)**

 

| **ý** |   | **QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE  SECURITIES EXCHANGE ACT OF 1934** |
|------------|--------|----------------------------------------------------------------------------------------|

 

**Forthe quarterly period ended March 31, 2002**

 

**or**

 

| **o** |   | **TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE  SECURITIES EXCHANGE ACT OF 1934** |
|-------|--------|-----------------------------------------------------------------------------------------|

 

**Forthe transition period from              to               **

 

**CommissionFile Number:  0-14210**

 

**COMPUMED, INC.**

(Exactname of registrant as specified in its charter)

 

| **Delaware**                                                                        |   | **95-2860434**                        |
|-------------------------------------------------------------------------------------|--------|---------------------------------------|
| State or Other  Jurisdiction of  Incorporation or Organization)                     |   | (I.R.S. Employer  Identification No.) |
|                                                                                |   |                                  |
|                                                                                |   |                                  |
| **5777  W. Century Blvd., Suite 1285, Los Angeles, CA  90045**                 |
| (Address of  Principal Executive Officers)                                          |
|                                                                                |   |                                  |
| **(310)  258-5000**                                                                 |
| (Registrant’s  telephone number, including area code)                          |
|                                                                                |   |                                  |
| (Former name,  former address and former fiscal year, if changed since last report) |

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Exchange Act during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports, and(2) has been subject to such filing requirements in for the past 90 days.                                                            Yes  ý   No  o

 

The registrant had17,869,309 shares of common stock, ($.01 par value) issued and outstanding asof March 31, 2002.

 

 

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INDEX

 

COMPUMED, INC.

 
| PART I.  FINANCIAL INFORMATION |
|-------------------------------------|
|                                |   |   |
| Item 1.                             |   | Financial Statements  (unaudited) |
|                                |   |   |
|                                |   | Balance Sheets – March  31, 2002 (unaudited) and September 30, 2001. |
|                                |   |   |
|                                |   | Statements  of Operations – Three months and six months ended March 31, 2002 and 2001  (unaudited). |
|                                |   |   |
|                                |   | Statements  of Cash Flows – Three months and six months ended March 31, 2002 and 2001  (unaudited). |
|                                |   |   |
|                                |   | Notes  to Financial Statements (unaudited). |
|                                |   |   |
| Item  2.                            |   | Management’s  Discussion and Analysis of Financial Condition and Results of Operations. |
|                                |   |   |
| PART  II.  OTHER INFORMATION   |
|                                |   |   |
| Item 1                              |   | Legal Proceedings |
|                                |   |   |
| Item 2                              |   | Changes in Securities |
|                                |   |   |
| Item 3                              |   | Defaults upon  Senior Securities |
|                                |   |   |
| Item  4                             |   | Submission  of Matters to a Vote of Security Holders |
|                                |   |   |
| Item 5                              |   | Other Information |
|                                |   |   |
| Item 6                              |   | Exhibits and  Reports on Form 8-K |
|                                |   |   |
| SIGNATURES                          |

 

2

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PART I

 

FINANCIALINFORMATION

 

BALANCE SHEETS

COMPUMED, INC.

 
|                                                                                       |   | **March 31,  2002** |      | **September  30,  2001** |   |
|--------------------------------------------------------------------------------------------|--------|---------------------|-----------|--------------------------|--------|
|                                                                                       |   | **(Unaudited)**     |      | **(Audited)**            |   |
| ASSETS                                                                                     |   |                |      |                     |   |
|                                                                                       |   |                |      |                     |   |
| CURRENT ASSETS                                                                             |   |                |      |                     |   |
| Cash  and cash equivalents                                                                 |   | $                   | 116,000   |                     | $      | 239,000 |   |
| Marketable  securities                                                                     |   | 487,000             |      | 424,000                  |   |
| Accounts  receivable, less allowance of $80,000 (March 2002) and $69,000 (September  2001) |   | 193,000             |      | 224,000                  |   |
| Inventory                                                                                  |   | 88,000              |      | 83,000                   |   |
| Prepaid  expenses and other current assets                                                 |   | 25,000              |      | 23,000                   |   |
|                                                                                       |   |                |      |                     |   |
| TOTAL  CURRENT ASSETS                                                                      |   | 909,000             |      | 993,000                  |   |
|                                                                                       |   |                |      |                     |   |
| PROPERTY AND EQUIPMENT                                                                     |   |                |      |                     |   |
| Machinery  and equipment                                                                   |   | 1,201,000           |      | 994,000                  |   |
| Furniture,  fixtures and leasehold improvements                                            |   | 100,000             |      | 100,000                  |   |
| Equipment  under capital leases                                                            |   | 126,000             |      | 326,000                  |   |
|                                                                                       |   | 1,427,000           |      | 1,420,000                |   |
|                                                                                       |   |                |      |                     |   |
| Accumulated depreciation  and amortization                                                 |   | (902,000            | )         | (762,000                 | )      |
|                                                                                       |   | 525,000             |      | 658,000                  |   |
| OTHER ASSETS                                                                               |   |                |      |                     |   |
| Other  Assets                                                                              |   | 28,000              |      | 28,000                   |   |
|                                                                                       |   |                |      |                     |   |
| TOTAL ASSETS                                                                               |   | $                   | 1,462,000 |                     | $      | 1,679,000 |   |

 

See notes to condensed financial statements

 

3

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|                                                                                                            |   | **March 31  2002** |      | **September 30,  2001** |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|-------------------------|--------|
|                                                                                                            |   | **(Unaudited)**    |      | **(Audited)**           |   |
| LIABILITIES  AND STOCKHOLDERS’ EQUITY                                                                      |   |               |      |                    |   |
|                                                                                                            |   |               |      |                    |   |
| CURRENT  LIABILITIES                                                                                            |   |               |      |                    |   |
| Accounts  payable                                                                                               |   | $                  | 134,000   |                    | $      | 174,000 |   |
| Accrued  liabilities                                                                                            |   | 103,000            |      | 76,000                  |   |
| Unearned  revenue                                                                                               |   | 1,000              |      | 18,000                  |   |
| Current  portion of capital lease obligations                                                                   |   | 14,000             |      | 47,000                  |   |
|                                                                                                            |   |               |      |                    |   |
| TOTAL  CURRENT LIABILITIES                                                                                      |   | 252,000            |      | 315,000                 |   |
|                                                                                                            |   |               |      |                    |   |
| Capital  lease obligations, less current portion                                                                |   | 11,000             |      | 15,000                  |   |
|                                                                                                            |   |               |      |                    |   |
| Commitments  (Note C)                                                                                           |   |               |      |                    |   |
|                                                                                                            |   |               |      |                    |   |
| STOCKHOLDERS’  EQUITY                                                                                      |   |               |      |                    |   |
| Preferred  Stock- Class A $3.50 cumulative convertible voting - issued and outstanding -  8,400 shares          |   | 1,000              |      | 1,000                   |   |
|                                                                                                            |   |               |      |                    |   |
| Preferred  Stock - Class B $3.50 cumulative convertible voting  - issued and outstanding -300 shares       |   | —             |      | —                  |   |
|                                                                                                            |   |               |      |                    |   |
| Common  Stock, $.01 par value—authorized 50,000,000 shares, issued and  outstanding—17,869,309 shares |   | 179,000            |      | 179,000                 |   |
|                                                                                                            |   |               |      |                    |   |
| Additional  paid in capital                                                                                     |   | 32,241,000         |      | 32,241,000              |   |
|                                                                                                            |   |               |      |                    |   |
| Accumulated  deficit                                                                                            |   | (31,332,000        | )         | (31,109,000             | )      |
|                                                                                                            |   |               |      |                    |   |
| Accumulated  other comprehensive income                                                                         |   | 118,000            |      | 55,000                  |   |
|                                                                                                            |   |               |      |                    |   |
| Deferred  stock compensation                                                                                    |   | (8,000             | )         | (18,000                 | )      |
|                                                                                                            |   |               |      |                    |   |
|                                                                                                            |   | 1,199,000          |      | 1,349,000               |   |
|                                                                                                            |   |               |      |                    |   |
| TOTAL  LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                |   | $                  | 1,462,000 |                    | $      | 1,679,000 |   |

 

See notes to condensedfinancial statements

 

4

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STATEMENTS OF OPERATIONS (UNAUDITED)

COMPUMED, INC.

 
|                                                  |   | **Three  Months Ended March 31,** |    | **Six Months  Ended March 31,** |   |
|-------------------------------------------------------|--------|-----------------------------------|---------|---------------------------------|--------|
|                                                  |   | **2002**                          |    | **2001**                        |   | **2002** |   | **2001** |   |
| REVENUES  FROM OPERATIONS                             |   |                              |    |                            |   |   |   |   |   |
| ECG  services                                         |   | $                                 | 429,000 |                            | $      | 421,000 |   | $ | 844,000 |   | $ | 818,000 |   |
| ECG  product and supplies sales                       |   | 37,000                            |    | 50,000                          |   | 74,000 |   | 106,000 |   |
| OsteoGram  sales and services                         |   | 45,000                            |    | 27,000                          |   | 45,000 |   | 35,000 |   |
|                                                  |   | 511,000                           |    | 498,000                         |   | 963,000 |   | 959,000 |   |
| COSTS  AND EXPENSES                                   |   |                              |    |                            |   |   |   |   |   |
| Costs  of ECG services                                |   | 139,000                           |    | 147,000                         |   | 275,000 |   | 317,000 |   |
| Cost  of goods sold-ECG                               |   | 25,000                            |    | 29,000                          |   | 49,000 |   | 65,000 |   |
| Cost  of goods sold-OSTEOGRAM                         |   | 7,000                             |    | 5,000                           |   | 7,000 |   | 5,000 |   |
| Selling  expenses                                     |   | 62,000                            |    | 155,000                         |   | 110,000 |   | 385,000 |   |
| Research  and development                             |   | 68,000                            |    | 56,000                          |   | 134,000 |   | 115,000 |   |
| General  and administrative expenses                  |   | 236,000                           |    | 281,000                         |   | 492,000 |   | 574,000 |   |
| Depreciation                                          |   | 66,000                            |    | 80,000                          |   | 140,000 |   | 163,000 |   |
|                                                  |   | 603,000                           |    | 753,000                         |   | 1,207,000 |   | 1,624,000 |   |
|                                                  |   |                              |    |                            |   |   |   |   |   |
| OPERATING  LOSS                                       |   | (92,000                           | )       | (255,000                        | )      | (244,000 | ) | (665,000 | ) |
|                                                  |   |                              |    |                            |   |   |   |   |   |
| Interest  income and dividends                        |   | 11,000                            |    | 19,000                          |   | 20,000 |   | 56,000 |   |
| Realized  gain on marketable securities               |   | —                            |    | 1,000                           |   | — |   | 2,000 |   |
| Interest  expense                                     |   | 2,000                             |    | (4,000                          | )      | 1,000 |   | (11,000 | ) |
| NET  LOSS                                             |   | $                                 | (79,000 | )                               | $      | (239,000 | ) | $ | (223,000 | ) | $ | (618,000 | ) |
|                                                  |   |                              |    |                            |   |   |   |   |   |
| NET  LOSS PER SHARE   (Basic and diluted)             |   | $                                 | (.01    | )                               | $      | (.01 | ) | $ | (.01 | ) | $ | (.03 | ) |
| Weighted  average number of common shares outstanding |   | 17,869,309                        |    | 17,869,336                      |   | 17,869,309 |   | 17,869,336 |   |

 

See notes to condensedfinancial statements

 

5

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STATEMENTS OF CASH FLOWS (UNAUDITED)

COMPUMED, INC.

 
|                                                                             |   | **Three  Months Ended** |     |
|----------------------------------------------------------------------------------|--------|-------------------------|----------|
|                                                                             |   | **March 31,  2002**     |     | **March 31,  2001** |   |
|                                                                             |   |                    |     |   |   |
| OPERATING  ACTIVITIES:                                                           |   |                    |     |   |   |
| Net  loss                                                                        |   | $                       | (223,000 | ) | $ | (618,000 | ) |
| Net  adjustments to reconcile net loss to net cash used in operating activities: |   |                    |     |   |   |
| Realized  gain on marketable securities                                          |   | —                  |     | (2,000 | ) |
| Amortization  of deferred stock compensation                                     |   | 10,000                  |     | 23,000 |   |
| Depreciation  and amortization                                                   |   | 140,000                 |     | 163,000 |   |
| Changes  in operating assets and liabilities:                                    |   |                    |     |   |   |
| Accounts  receivable                                                             |   | 31,000                  |     | 12,000 |   |
| Inventory,  prepaid expenses and other assets                                    |   | (7,000                  | )        | 67,000 |   |
| Accounts  payable and other liabilities                                          |   | (30,000                 | )        | (388,000 | ) |
| Other  assets                                                                    |   | —                  |     | 18,000 |   |
| NET  CASH USED IN OPERATING ACTIVITIES                                           |   | (79,000                 | )        | (725,000 | ) |
|                                                                             |   |                    |     |   |   |
| INVESTING  ACTIVITIES:                                                           |   |                    |     |   |   |
| Sales  of marketable securities                                                  |   | —                  |     | 964,000 |   |
| Purchases  of property, plant and equipment                                      |   | (7,000                  | )        | (49,000 | ) |
| NET  CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                             |   | (7,000                  | )        | 915,000 |   |
|                                                                             |   |                    |     |   |   |
| FINANCING  ACTIVITIES:                                                           |   |                    |     |   |   |
| Principal  payments on capital lease obligations                                 |   | (37,000                 | )        | (67,000 | ) |
|                                                                             |   |                    |     |   |   |
| NET  CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                             |   | (37,000                 | )        | (67,000 | ) |
|                                                                             |   |                    |     |   |   |
|                                                                             |   |                    |     |   |   |
| INCREASE  (DECREASE) IN CASH AND CASH EQUIVALENTS                                |   | (123,000                | )        | 123,000 |   |
|                                                                             |   |                    |     |   |   |
| Cash  and cash equivalents at beginning period                                   |   | 239,000                 |     | 129,000 |   |
|                                                                             |   |                    |     |   |   |
| CASH  AND CASH EQUIVALENTS AT END OF PERIOD                                      |   | $                       | 116,000  |   | $ | 252,000 |   |
|                                                                             |   |                    |     |   |   |
| Cash  paid for interest                                                          |   | $                       | 2,000    |   | $ | 12,000 |   |

 

See notes to condensedfinancial statements

 

6

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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

COMPUMED, INC.

 

NOTE A—BASIS OFPREPARATION

 

The balance sheet atSeptember 30, 2001 has been derived from the Company’s year end auditedfinancial statements.

 

The accompanying interimunaudited financial statements have been prepared in accordance with generallyaccepted accounting principles for interim financial information and pursuantto the rules and regulations of the Securities and Exchange Commission.  Accordingly, they do not include all of theinformation and footnotes required by generally accepted accounting principlesfor complete financial statements.  Inthe opinion of management, all adjustments (consisting of normal recurringaccruals) considered necessary for a fair presentation have been included.  Operating results for the six-month periodended March 31, 2002 are not necessarily indicative of the results that may beexpected for the year ending September 30, 2002.  For further information, refer to the financial statements forthe year ended September 30, 2001 and the notes thereto included in theCompany’s Annual Report on Form 10-KSB.

 

NOTE B—PER SHARE DATA

 

Basic loss per share iscalculated using the net loss, less preferred stock dividends, divided by theweighted average common shares outstanding. Shares from the assumed exercise of outstanding warrants, options andeffect of the conversion of the Class A Preferred Stock and Class B PreferredStock are omitted from the computations of diluted loss per share because theeffect would be antidilutive.

 

NOTE C—COMMITMENTS

 

On January 26, 1998, theUnited States District Court for the Central District of California approvedthe settlement of the class action and derivative lawsuits on the terms agreedto by the parties in the Memorandum of Understanding entered into on August 5,1996.  The final settlement is anticipatedto be completed in 2002 and will involve the issuance of 770,000 shares ofCommon Stock and the issuance of 1,870,000 warrants for the purchase of CommonStock at a price of $3.00.  The effectof these issuances on the Company’s statement of operations was recorded duringthe fiscal year ended September 30, 1997.

 

7

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NOTE D—MARKETABLE SECURITIES

 

Marketable securities consist of investments in equity andbonds in various publicly traded domestic companies and are stated at marketvalue based on the most recently traded prices of these securities at March 31,2002. These short-term investments are defined as assets available for saleunder the provisions of FASB Statement No. 115, “Accounting for CertainInvestments in Debt and Equity Securities.”

 

During the quarter ended March 31, 2002, the Companyrecognized $63,000 of unrealized gains which was recorded as a component ofAccumulated Other Comprehensive Income in Stockholders’ Equity. At March 31,2002 and September 30, 2001 the Company’s investments in marketable securitiesare as follows:

 
| **Investments  Types**        |   | **March 31, 2002** |    | **September 30, 2001** |   |
|-------------------------------|--------|--------------------|---------|------------------------|--------|
|                          |   |               |    |                   |   |
| Corporate  Bonds              |   | $                  | 9,000   |                   | $      | 9,000 |   |
| Convertible  Preferred Stocks |   | 76,000             |    | 61,000                 |   |
| Common  Stock                 |   | 402,000            |    | 354,000                |   |
|                          |   |               |    |                   |   |
| Total                         |   | $                  | 487,000 |                   | $      | 424,000 |   |

 

8

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Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This Form 10-QSB containsforward-looking statements made based on current management expectationspursuant to the safe harbor provisions of the Private Securities LitigationReform Act of 1995.  Forward-lookingstatements include statements concerning plans, objectives, goals, strategies,future events or performance and underlying assumptions and other statementsthat are other than statements of historical facts.  There can be no assurance that management’s expectations, beliefsor projections will result or be achieved or accomplished.

 

In evaluating thesestatements, you should consider various factors including the risks set forthunder the caption “Factors That May Affect Future Results” at the end of thisItem 2, and those included in our other filings with the SEC. The Companydisclaims any obligation to update any forward-looking statements to reflectevents or circumstance after the date thereof.

 

## **Overview**

 

The Company has a steady business providing trans-telephonic ECGinterpretations. Customers include health care providers who do not have accessto self-interpreting ECG machines, including those in the prison health system,short-stay surgery centers and rural health clinics.  This business has remained steady for several years, and theCompany has implemented measures to further automate and improve itsservice.  However, the Company couldlose customers who choose to receive services from a competitor or who purchasea self-interpretive machine and no longer need the Company’s ECGinterpretations.  If the Company were tolose any existing customers, they may be difficult to replace.

 

During the six months ended March 31, 2002, the Company pursuedopportunities for the OsteoGram® in international markets.  The U.S. market at present is saturated andsales have been slow due to competition from previously installed equipment.  However, the international market is lesssaturated and the Company is concentrating on countries where medicalfacilities and physicians have standard x-ray equipment already in place anddesire the ability to provide an accurate and cost effective method fordetermining bone mineral density as an indicator of fracture risk.  In preparation for marketing the OsteoGram®in China, CompuMed sponsored a clinical trial in conjunction with the ChinaOsteoporosis Foundation which was presented at the First InternationalConference on Bone Mineral Research in Beijing in September 2001.  In addition, the Company received its firstorder from its European distributor in March 2002.  The Company intends to continue marketing the OsteoGram® in Chinaand in Europe, and is considering other possible markets.  It is pursuing FDA approval in China whichit hopes to receive during the next fiscal quarter.

 

9

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The Companyrecently announced that it hired a new Chief Executive Officer and named a newChairman to its Board of Directors.  Thefuture of the Company may depend on the ability of the management team tointroduce new products and raise additional capital, as needed.  There can be no assurance that newmanagement will be successful in these endeavors.

*** ***

**Results of Operations**

 

Revenues from ECG operations were slightly lower for theSecond Quarter 2002 at $466,000, as compared to $471,000 for the same period in2001, and during the six months ended March 31, 2002 revenues from ECGoperations decreased to $918,000 as compared to $924,000 for the same period infiscal 2001. Revenues from the Company’s OsteoGram® sales and services for theSecond Quarter 2002 increased to $45,000, as compared to $27,000 for the sameperiod in 2001, and increased to $45,000 during the six months ended March 31,2002, as compared to $35,000 for the same period in 2001.

 

Cost of services and goods sold consists of the costs ofECG services provided, supplies, electrocardiograph equipment sold and certainoverhead expenses. During the Second Quarter 2002, costs of services and goodssold decreased by 7% to $164,000 from $176,000 during the same period in fiscal2001, and during the six months ended March 31, 2002 decreased by 15% to$324,000 as compared to $382,000 for the same period in 2001. The decrease incost of services is due to the automation of the overread process and lowersales.

 

General and administrative expenses decreased by 16% duringthe Second Quarter 2002 to $236,000, as compared to $281,000 for the sameperiod in fiscal 2001, and during the six months ended March 31, 2002,decreased by 14% to $492,000, as compared to $574,000 for the same period infiscal 2001, due to a reduction in professional and consulting fees.

 

Research and development costs increased by 21% during theSecond Quarter 2002 to $68,000 as compared to $56,000 for the same period infiscal 2001, and during the six months ended March 31, 2002 to $134,000 ascompared to $115,000 for the same period in fiscal 2001, due to the Company’sOsteoGram® clinical trials conducted in China and the U.S.

 

Selling expenses decreased by 60% during the Second Quarter2002 to $62,000  as compared to $155,000for the same period in fiscal 2001, and during the six months ended March 31,2002 decreased by 71% to $110,000 as compared to $385,000 for the same periodin fiscal 2001, primarily due to a decrease in marketing of the OsteoGram® inthe US.

 

The Company recordedinterest and dividend income during the Second Quarter 2002 of $11,000 ascompared to $19,000 for the same period in fiscal 2001, and during the sixmonths ended March 31, 2002, the Company recorded $20,000 as compared to$56,000

 

10

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for the same period infiscal 2001. The decrease was generally due to a decrease in the marketablesecurities balance from 2002 to 2001.

 

Net loss for the SecondQuarter 2002 was $79,000 compared to a loss of $239,000 for the same period infiscal 2001.  Net loss for the sixmonths ended March 31, 2002 was $223,000 as compared to $618,000 for the sameperiod in fiscal 2001. The decreased loss is due to the factors describedabove.

 

**Financial Condition and Liquidity**

 

As of March 31, 2002 theCompany had $658,000 of working capital, a decrease of $20,000 from September30, 2001.  This decrease in workingcapital is primarily a result of losses from operating activities.

 

Management anticipatesthe Company’s current working capital amounts will be sufficient to meet itsanticipated financial needs for the next 12 months.

 

### **Factors ThatMay Affect Future Results**

 

The Company is includingthe following cautionary statement in this form 10-QSB to make applicable andtake advantage of the safe harbor provisions of the Private SecuritiesLitigation Reform Act of 1995 for any forward-looking statements made by, or onbehalf of, the Company.  Forward-lookingstatements include statements concerning plans, objectives, goals, strategies,future events or performance and underlying assumptions and other statementsthat are other than statements of historical facts.  From time to time, the Company may publish or otherwise makeavailable forward-looking statements of this nature.  All such subsequent forward-looking statements, whether writtenor oral, and whether made by or on behalf of the Company, are also expresslyqualified by these cautionary statements.

 

Certain statementscontained herein are forward-looking statements and accordingly involve risksand uncertainties that could cause actual results or outcomes to differmaterially from those expressed in the forward-looking statements. Theforward-looking statements contained herein are based on various assumptions,many of which are based, in turn, upon further assumptions.  The Company’s expectations, beliefs andforward-looking statements are expressed in good faith, but there can be noassurance that management’s expectations, beliefs or projections will result orbe achieved or accomplished.

 

In addition to otherfactors and matters discussed elsewhere herein, the following are importantfactors that, in the view of the Company, could cause actual results to differmaterially from those discussed in the forward-looking statements:technological advances by the Company’s competitors, the impact of competitionand pricing, the ability to attract and retain key employees and newmanagement, the risks of patent claims or other third party liability, and therisks of launching a new product or service, such as the

 

11

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Company’s OsteoGram®test, changes in health care regulation, including reimbursement programs,capital needs to fund any delays or extensions of research programs and theability to raise capital on terms satisfactory to the Company.  The Company disclaims any obligation toupdate any forward-looking statements to reflect events or circumstances afterthe date hereof.

 

The Company intends topursue additional research and/or sub-contractor agreements relating to itsdevelopment projects.  Additionally, theCompany is actively seeking partners and acquisition candidates of businessesthat are complementary to its own. Such investments would be financed either bythe Company’s working capital, through issuance of Company securities or acombination thereof.  No assurance canbe given that any acquisition would not be dilutive to stockholders or thatsuch financing would be available at satisfactory terms.

 

The Company recentlyannounced that its President and Chief Executive Officer, Herbert S Lightstone,will be leaving at the expiration of his employment agreement on May 31, 2002.Mr. Lightstone will be replaced by John G. McLaughlin, who has been hired asChief Executive Officer. According to the terms of his offer letter, Mr.McLaughlin will begin working on May 15, 2002. He will be employed on an at will basis until September 30, 2002 whichat will period may be extended for an additional two months by mutual agreementof the parties. If Mr. McLaughlin is retained at the end of his at will period,the Company intends to enter into an employment agreement with a term that willcontinue through June 30, 2004. He will receive a base salary of $150,000 peryear plus a performance incentive bonus of up to 100% of his salary and otherincentives based on the achievement of performance goals to be agreed upon byMr. McLaughlin and the Company.

 

In addition, the Companyrecently announced that Robert Goldberg resigned as Chairman of the Board ofDirectors and has been replaced by Robert Stuckelman, who founded the Companyin 1973.  The Company also recentlyannounced that Stuart Silverman, MD, FACP, FACR, a member of its Board ofDirectors and chairman of its Medical Advisory Board, will also assume theposition of Medical Director of the Company.

 

 

12

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**PART II**

**OTHER INFORMATION**

Item 1.    LEGALPROCEEDINGS

                None

 

Item 2.    CHANGESIN SECURITIES

                None

 

Item 3.    DEFAULTSUPON SENIOR SECURITIES

                None

 

Item 4.    SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS

                None

 

Item 5.    OTHERINFORMATION

                None

 

Item 6.    EXHIBITSAND REPORTS ON FORM 8-K

 

(a)           NoExhibits

 

(b)          Form8-K — During the fiscal quarter ended March 31, 2002, the Company did not fileany reports on Form 8-K.

 

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SIGNATURES

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 
|                     | COMPUMED, INC. |
|--------------------------|----------------|
|                     | (Registrant)   |
|                     |           |   |
|                     |           |   |
|                     |           |   |
|                     | By:            | /s/ Phuong Dang |   |
|                     |           | Phuong Dang |
|                     |           | Principal Financial  Officer |
|                     |           |   |
|                     |           |   |
|                     | By:            | /s/ Herbert S.  Lightstone |   |
|                     |           | Herbert S Lightstone |
|                     |           | President and Chief  Executive Officer |
|                     |           |   |
| Date:  May 14, 2002 |           |   |
|                          |                |  |  |  |

 

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