SECURITIES AND EXCHANGE COMMISSION
                                    UNITED STATES
                                WASHINGTON, D.C. 20549

                                     FORM 10-QSB
          (Mark One)


                 [X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
                         THE SECURITIES EXCHANGE ACT OF 1934

                    For the quarterly period ended March 31, 1998

                                          or

                 [ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF
                         THE SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from          to          
                                                -------    ---------

                           Commission File Number:  0-14210

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

                     Delaware                          95-2860434
          ------------------------------      -----------------------------
          State or Other Jurisdiction of            (I.R.S. Employer
          Incorporation or Organization)           Identification No.)

             1230 Rosecrans Avenue, Suite 110, Manhattan Beach, CA 90266
          -----------------------------------------------------------------
                      (Address of Principal Executive Officers)

                                    (310) 643-5106
          -----------------------------------------------------------------
                 (Registrant's telephone number, including area code)

                                    Not applicable
          -----------------------------------------------------------------
                 (Former name, former address and former fiscal year,
                            if changed since last report)

               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 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 in for  the past
          90 days.                                          Yes  X   No    
                                                                ---     ---

               The registrant had 11,385,414  shares of common stock, ($.01
          par value) issued and outstanding an issued as of March 31, 1998.


     <PAGE>


                                        INDEX

                           COMPUMED, INC. AND SUBSIDIARIES



          PART I.  FINANCIAL INFORMATION

            Item 1. Financial Statements (unaudited)

                    Consolidated   balance  sheets   --   March  31,   1998
                    (unaudited) and September 30, 1997.

                    Consolidated statements  of operations --  three months
                    and  six   months  ended   March  31,  1998   and  1997
                    (unaudited).

                    Consolidated  statements of  cash flows  -- six  months
                    ended March 31, 1998 and 1997 (unaudited).

                    Notes  to  interim  unaudited   consolidated  financial
                    statements.

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


          PART II.  OTHER INFORMATION

            Item 2  Changes in Securities and Use of Proceeds
            Item 6  Exhibits and Reports on Form 8K


          SIGNATURES


                                      2
     <PAGE>


                                        PART I

                                FINANCIAL INFORMATION


          CONSOLIDATED CONDENSED BALANCE SHEETS
          COMPUMED, INC. AND SUBSIDIARIES


                                                     March 31,    September 30,
                                                       1998           1997
                                                       ----       -------------
                                                    (Unaudited)
           ASSETS

           CURRENT ASSETS
            Cash                                      $   39,000     $   81,000
            Marketable securities                      3,397,000        850,000
            Accounts receivable, less allowance
              of $40,000 (March 1998) and $66,000
              (September 1997)                           322,000        247,000
            Inventories                                   25,000         55,000
            Prepaid expenses and other current
              assets                                      29,000         27,000
                                                      ----------     ----------

                TOTAL CURRENT ASSETS                   3,812,000      1,260,000
                                                      
           PROPERTY AND EQUIPMENT
             Machinery and equipment                   2,999,000      2,994,000
             Furniture, fixtures and leasehold
               improvements                              208,000        208,000
             Equipment under capital leases              787,000        787,000
                                                      ----------     ----------
                                                       3,994,000      3,989,000

           Less allowance for depreciation and
             amortization                              3,685,000      3,591,000
                                                      ----------     ----------
                                                         309,000        398,000

           OTHER ASSETS
             Required franchises, net of
               accumulated amortization of
               $295,000 (March 1998) and
               $263,000 (September 1997)                  32,000         63,000
             Other assets                                 25,000         55,000
                                                      ----------     ----------
                                                      $4,178,000     $1,776,000
                                                      ==========     ==========


          See notes to interim unaudited consolidated condensed financial
          statements


                                      3
     <PAGE>


          CONSOLIDATED CONDENSED BALANCED SHEETS
          COMPUMED, INC. AND SUBSIDIARIES

                                                 March 31,   September 30,
                                                   1998           1997
                                                   ----      -------------
                                                (Unaudited)

          LIABILITIES AND STOCKHOLDERS'
          EQUITY

          CURRENT LIABILITIES
            Accounts payable                    $    173,000  $    174,000 
            Other accrued liabilities                479,000       501,000 
            Current portion of capital lease
              obligations                             87,000        81,000
                                                ------------  ------------

               TOTAL CURRENT LIABILITIES             739,000       756,000 
                                                  
          CAPITAL LEASE OBLIGATIONS, less
            current portion                          106,000       152,000 

          COMMITMENTS AND CONTINGENCIES

          STOCKHOLDERS' EQUITY
            Preferred stock, $.10 par value--
              authorized 1,000,000 shares

              Class A $3.50 cumulative
                convertible voting preferred
                stock, issued and outstanding
                --8,400 shares                         1,000         1,000

              Class B $3.50 convertible
                voting preferred stock,
                issued and outstanding--
                300 shares                             1,000         1,000

              Class C 7% convertible
                preferred stock, issued and
                outstanding--18,800 shares         1,465,000

           Common Stock, $.01 par value
             --authorized 50,000,000 shares,
             issued and outstanding--
             11,385,414 shares (March 1998)
             and 9,041,857 shares (September
             1997)                                   114,000        90,000

          Additional paid in capital              29,038,000    27,169,000

          Retained deficit                       (27,286,000)  (26,393,000)
                                                ------------  ------------ 
               STOCKHOLDERS' EQUITY                3,333,000       868,000 
                                                ------------  ------------

                                                $  4,178,000  $  1,776,000 
                                                ============  ============ 

          See notes to interim unaudited consolidated condensed financial
          statements


     <PAGE>


          CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
          COMPUMED, INC. AND SUBSIDIARIES


                                                  Three Months Ended
                                                       March 31,
                                                       --------
                                                    1998          1997
                                                    ----          ----
      REVENUES FROM OPERATIONS
       ECG services                           $    351,000   $   366,000 
       ECG product and supplies sales               97,000        21,000 
       Cardiac event monitoring services                 0        46,000 
       OsteoGram royalties                          17,000        27,000 
                                              ------------   -----------

                                                   465,000       460,000


      COSTS AND EXPENSES
       Costs of ECG services                       216,000       227,000 
       Cost of goods sold                           52,000        10,000 
       Costs of cardiac event monitoring                 0        76,000 
      Services
       Selling expenses                             46,000        81,000 
       Research and development                    210,000       167,000 
       General and administrative expenses         283,000       485,000 
       Depreciation and amortization                91,000        76,000 
                                              ------------   ----------- 
      LOSS FROM OPERATIONS                        (433,000)     (662,000)

        Other income                                28,000        29,000 
        Interest expense                            (9,000)       (3,000)
                                              ------------   -----------

      NET LOSS                                $   (414,000)  $  (636,000)
                                              ============   ===========

      NET LOSS PER SHARE                      $       (.12)  $      (.07)
         (Basic and diluted)                  ============   ===========

      Weighted average number of
       common shares outstanding                10,225,939     8,954,786
                                              ============   =========== 


                                                  Six Months Ended
                                                     March 31,
                                                     ---------
                                                 1998         1997
                                                 ----         ----
      REVENUES FROM OPERATIONS
       ECG services                           $695,000      $718,000  
       ECG product and supplies sales          143,000        58,000  
       Cardiac event monitoring services             0       180,000  
       OsteoGram royalties                      42,000        56,000  
                                           -----------   -----------

                                               880,000     1,012,000  

                                                
      COSTS AND EXPENSES
       Costs of ECG services                   451,000       430,000  
       Cost of goods sold                       81,000        18,000 
       Costs of cardiac event monitoring             0       167,000  
      Services
       Selling expenses                         91,000       193,000  
       Research and development                374,000       340,000  
       General and administrative expenses     647,000       921,000  
       Depreciation and amortization           158,000       156,000  
                                           -----------   -----------  
      LOSS FROM OPERATIONS                    (922,000)   (1,213,000)

        Other income                            42,000        60,000  
        Interest expense                       (13,000)       (7,000)
                                           -----------   -----------

      NET LOSS                               $(893,000)  $(1,160,000)
                                           ===========   ===========

      NET LOSS PER SHARE                   $      (.17)  $      (.13)
         (Basic and diluted)               ===========   ===========

      Weighted average number of
       common shares outstanding             9,640,049     8,953,536  
                                           ===========   ===========

          See notes to interim unaudited consolidated condensed financial
          statements


                                      5
     <PAGE>


          CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
          COMPUMED, INC. AND SUBSIDIARIES

                                                           Six Months Ended
                                                       March 31,      March 31,
                                                         1998           1987
                                                         ----           ----

           OPERATING ACTIVITIES:
            Net loss                                $ (893,000)   $(1,160,000)
            Adjustment to reconcile net loss to
             net cash used in operating
             activities:
                 Depreciation and amortization         155,000        156,000  
             Changes in operating assets and
              liabilities:
                 Accounts receivable                   (75,000)        33,000  
                 Inventories, prepaid expenses          28,000         40,000  
                  and other assets
                 Accounts payable and other            (23,000)         7,000  
                  liabilities                       ----------    -----------  
           NET CASH USED IN OPERATING ACTIVITIES      (808,000)      (924,000)

           INVESTING ACTIVITIES:
            Purchases of marketable securities      (2,547,000)
            Sale of marketable securities                             916,000  
            Purchases of property, plant and
             equipment                                  (5,000)       (44,000)
                                                    ----------    ----------- 
           NET CASH (USED IN) PROVIDED BY
             INVESTING ACTIVITIES                   (2,552,000)       872,000

           FINANCING ACTIVITIES:
            Sale of Class C 7% convertible
             preferred stock, net of offering
             costs                                   3,290,000  
            Dividends on Class A preferred stock        (1,000)        (2,000)
            Principal payments on capital lease
             obligations                               (40,000)       (15,000)
            Exercise of stock options and                       
              warrants                                  69,000  
                                                    ----------    ----------- 
           NET CASH PROVIDED BY(USED IN)                        
           FINANCING 
           ACTIVITIES                                3,318,000        (17,000) 
                                                    ----------    ----------- 
           DECREASE IN CASH                            (42,000)       (69,000)

           Cash at beginning period                     81,000        155,000  
                                                    ----------    -----------

           CASH AT END OF PERIOD                    $   39,000    $    86,000 
                                                    ==========    =========== 
           Cash paid for interest:                  $   13,000    $     7,000  
                                                    ==========    =========== 




          See notes to interim  unaudited consolidated condensed  financial
          statements


                                      6
     <PAGE>


          NOTES TO INTERIM UNAUDITED CONSOLIDATED CONDENSED 
          FINANCIAL STATEMENTS

          COMPUMED, INC. AND SUBSIDIARIES


          NOTE A--BASIS OF PREPARATION

          The balance sheet at September 30, 1997 has been derived from the
          Company's year-end audited financial statements.

          The   accompanying   interim  unaudited   consolidated  financial
          statements  have  been  prepared  in  accordance  with  generally
          accepted accounting principles  for interim financial information
          and pursuant to the  rules and regulations of the  Securities and
          Exchange Commission.  Accordingly, they do not include all of the
          information   and  footnotes   required  by   generally  accepted
          accounting principles for complete  financial statements.  In the
          opinion of  management,  all adjustments  (consisting  of  normal
          recurring accruals) considered necessary  for a fair presentation
          have been included.  Operating results for the period ended March
          31, 1998 are not  necessarily indicative of the results  that may
          be expected for the year ending  September 30, 1998.  For further
          information, refer to  the consolidated financial statements  for
          the  year ended September 30, 1997 and the notes thereto included
          in the Company's Annual Report on Form 10-KSB.

          NOTE B--PER SHARE DATA

          Basic  loss  per share  is calculated  using  the net  loss, less
          preferred stock dividends and  the value of beneficial conversion
          features that  have become  exercisable, divided by  the weighted
          average  common  shares outstanding.    Shares  from the  assumed
          conversion  of outstanding  warrants, options  and effect  of the
          conversion of  the Class  A Preferred  Stock,  Class B  Preferred
          Stock  and  Class   C  Preferred  Stock  are   omitted  from  the
          computations of diluted loss  per share because the  effect would
          be antidilutive.

          The  sales  of Class  C  convertible preferred  stock  involved a
          beneficial  conversion  feature  whereby the  securities  may  be
          converted into Common  Stock at  a fixed discount  to the  market
          price of the Common Stock at the date of conversion.   The Series
          1 Class C Preferred Stock provides  for a discount of 25% and the
          Series 2 Class C  Preferred Stock provides for a discount  of 20%
          (or  22.5% if the Company  received full payment  for such shares
          prior to December  31, 1998).  The total  value of the beneficial
          conversion  feature in the amount  of $794,000 has  been added to
          the  net loss in determining loss per  share during the three and
          six months  ended March 31,  1998.   The value of  the beneficial


                                      7
     <PAGE>


          conversion  feature is  measured  by the  difference between  the
          conversion price and the market value of the Common Stock  on the
          date of issue multiplied  by the number of shares  into which the
          Preferred Stock may be converted.

          NOTE C--COMMITMENTS AND CONTENGENCIES

          On  August 5,  1996  the Company  entered  into a  Memorandum  of
          Understanding to  confirm the material  terms of an  agreement in
          principle to  settle the  securities class action  and derivative
          litigation filed  in the  United  States District  Court for  the
          Central District of California (the "Court") on behalf of persons
          who purchased  Common Stock during various  time periods spanning
          from  August  11,  1995  to  October   17,  1995,  inclusive  and
          derivatively on behalf of the Company.   On January 26, 1998, the
          United  States  District  Court   for  the  Central  District  of
          California  approved  the  settlement  of the  class  action  and
          derivative lawsuits on the terms agreed to by the  parties in the
          Memorandum  of Understanding.   See  Item  1 of  Part II  of this
          report.

          NOTE D - IMPACT OF RECENTLY ADOPTED ACCOUNTING STANDARDS

          In February 1997, the Financial Accounting Standards Board issued
          Statement  No. 128, Earnings per  Share, which is  required to be
          adopted  for periods ending after  December 15, 1997.   Under the
          new requirements  basic earnings  per share includes  no dilution
          and  is   computed  by   dividing  income  available   to  common
          stockholders  by the  weighted  average number  of common  shares
          outstanding.   Diluted earnings  per share reflect  the potential
          dilution of securities  that could  share in the  earnings of  an
          entity.  The Company  adopted Statement 128 in the  quarter ended
          December  31,  although  such  adoption did  not  change  amounts
          previously provided.

          NOTE  E --  PRIVATE PLACEMENT  OF CLASS  C CONVERTIBLE  PREFERRED
          STOCK

          On  December 24, 1997, the Company closed the placement of 17,500
          shares  of Series 1 Class  C 7% Convertible  Preferred Stock (the
          "Series C-1 Preferred Stock") at a price of $100 per share, or an
          aggregate purchase  price  of $1,750,000  pursuant to  Securities
          Purchase  Agreements.     The  Series  C-1   Preferred  Stock  is
          immediately convertible into shares of the Company's Common Stock
          at a conversion ratio equal to  $100 divided by the lesser of (i)
          $1.51or (ii)  75% of the  average closing bid  price for the  ten
          consecutive trading days prior  to the notice of conversion.   In
          the event that the closing bid  price of the Common Stock is less
          than $1.00 per share on the trading day immediately preceding the
          receipt of a conversion  notice, the holder requesting conversion
          would be limited to converting not  more than 5% of the shares he
          initially purchased, which limitation would continue for a period
          of 30 days.  The Company has the right to force conversion of any
          or all  outstanding Series  C-1 Preferred  Stock on  November 30,
          1999 at the conversion ratio  on that date.  There is  no minimum
          conversion  price.   Should the  value of  the Common  Stock fall
          substantially prior  to conversion, the holders  of the Preferred
          Stock could obtain a  significant share of the Common  Stock upon


                                      8
    <PAGE>


          their conversions.  Upon  conversion of the Series  C-1 Preferred
          Stock,  the holder  would  receive warrants  (the "Warrants")  to
          purchase  the  same number  of shares  of  Common Stock  as being
          issued  on  the conversion,  at an  exercise  price equal  to the
          conversion price and exercisable for three years from issuance.

          The Securities Purchase Agreements  also provide for the issuance
          of 17,500 shares  of Series  2 Class C  7% Convertible  Preferred
          Stock (the  "Series C-2  Preferred Stock"  and together  with the
          Series  C-1 Preferred Stock, the "Class C Preferred Stock").  The
          Series  C-2  Preferred  Stock  is  identical  to  the Series  C-1
          Preferred Stock except that the conversion ratio is equal to $100
          divided by the  lessor of (i)  $1.34 or (ii)  80% of the  average
          closing bid price for  the ten consecutive trading days  prior to
          the notice of conversion  (or 77.5% if the Company  received full
          payment  for such  shares  prior  to  December  31,  1998).    In
          addition,  the  Company  has the  right  to  force  conversion on
          December  31, 1999. On January  22, 1998, the  Company sold 8,750
          shares  of such Series C-2  Preferred Stock for  $875,000 and, on
          March 31, 1998, the Company sold 8,750 shares of such  Series C-2
          for $875,000.

          As  a  condition to  the initial  closing  of the  placement, the
          Company entered  into a  Registration Rights Agreement  with each
          purchaser  whereby  the Company  agreed  to  file a  registration
          statement  under the Securities Act of 1933, as amended, with the
          Securities and Exchange Commission registering for offer and sale
          the  Common  Stock underlying  his  Class C  Preferred  Stock and
          Warrants.    The  registration  statement   became  effective  on
          February 6, 1998.

          The net proceeds  from the  placement of the  Series C  Preferred
          Stock were approximately $3,300,000 (after payment of a 4% fee to
          the distributor and other placement expenses).   
           
          On December 24, 1997, the Company also issued warrants (the "1995
          Warrants") exercisable for the purchase of  200,000 shares of its
          Common  Stock at  an exercise  price of  $1.10 per  share  to the
          distributor of certain placements effected by the Company in 1995
          and 1996. The shares of Common Stock underlying the 1995 Warrants
          were also  included in the registration  statement filed pursuant
          to the Registration Rights Agreement.

          During  the   fiscal  quarter  ended  March  31,  1998,  Class  C
          shareholders converted  16,200 shares of Class  C preferred stock
          into 2,273,494 shares of Common Stock.  Class C  Series 1 shares,
          in the amount of  9,700, were converted into 1,384,524  shares of
          Common Stock and Class C Series 2 shares, in the amount of 6,500,
          were converted into 888,970 shares of Common Stock.


                                      9
     <PAGE>


          NOTE F -- TERMINATION OF ROYALTY REVENUES

          On  January 7, 1998, the Company was notified of a termination of
          a license  agreement under which  the Company had  earned royalty
          revenues for the processing of its OsteoGram(R) bone density test.
          Revenues earned  under this  license  agreement terminated  after
          March 1998.   During  the three-month and  the six-month  periods
          ended March 31,  1998 royalty revenues  were $17,000 and  $42,000
          respectively.   The rights  to the OsteoGram  technology reverted
          back to  the Company on March  31, 1998.  The  Company is seeking
          new licensing agreements to enter into with this technology.




                                      10
     <PAGE>


           Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
                         CONDITION AND RESULTS OF OPERATIONS


          This Form  10-QSB contains forward-looking statements  as defined
          by  the  Private  Securities   Litigation  Reform  Act  of  1995.
          Forward-looking statements include  statements concerning  plans,
          objectives, goals, strategies, future  events or performance  and
          underlying assumptions  and other statements that  are other than
          statements of historical facts.  These statements are  subject to
          uncertainties and  risks including,  but not limited  to, product
          and  service demand  and acceptance,  changes in  technology, the
          availability   of   appropriate  acquisition   candidates  and/or
          business   partnerships,  economic  conditions,   the  impact  of
          competition  and  pricing,  capacity and  supply  constraints  or
          difficulties, government  regulation and other  risks defined  in
          this  document.   All  such  forward-looking statements,  whether
          written or oral, and whether made by or on behalf  of the Company
          are expressly  qualified by  these cautionary statements  and any
          other  cautionary  statements  which may  accompany  the forward-
          looking  statements.   In  addition,  the  Company disclaims  any
          obligation to  update any  forward-looking statements  to reflect
          events or circumstances after the date hereof.


          RESULTS OF OPERATIONS
          ---------------------

          Total revenues from  for the  three months ended  March 31,  1998
          (the  "Second  Quarter  1998")  were  $465,000,  as  compared  to
          $460,000 for the same period in 1997.  Revenues from  ECG product
          and supplies sales increased to $97,000, from  $21,000 during the
          prior year, due to sales of electrocardiograph units and  related
          supplies.   During  the prior  fiscal year, the  Company provided
          electrocardiographs on  a rental-only  basis.  Revenues  from the
          Company's   ongoing  transtelephonic   ECG   services   were   at
          approximately the same  level as  the prior year  period.   Since
          cardiac event monitoring services were eliminated in fiscal 1997,
          no  revenue was recorded during  the Second Quarter 1998 compared
          to  $46,000 recorded during the  prior year.   Royalty income was
          $17,000 for  the Second Quarter 1998 from OsteoGram(R) operations
          being managed by a subsidiary of Merck & Co., Inc. as compared to
          $27,000  during  the  same period  in  fiscal  1997;  however the
          license agreement  was terminated  in January 1998,  so royalties
          will cease as of the Third Quarter  1998.  See Note F to Notes to
          Interim Unaudited Consolidated Condensed Financial Statements. 

          Operating  costs decreased by 20%  during the Second Quarter 1998
          to $898,000, as compared to  the prior year.  The  combined costs
          of services ($216,000) and  selling expenses ($46,000) during the
          Second  Quarter 1998  decreased by $122,000,  as compared  to the
          same  prior year.    These  decreases  in  operating  costs  were
          primarily due  to the  elimination of  costs associated  with the
          cardiac  event monitoring  services, as  mentioned above,  and to
          operating  cost reductions  relating  to  the  Company's  ongoing


                                      11
     <PAGE>


          transtelephonic   ECG  services.     General  and  administrative
          expenses  decreased  by 42%  during  the Second  Quarter  1998 to
          $283,000,  as compared to 1997,  primarily due to  a reduction in
          executive and administrative staff and to reductions in insurance
          costs,  professional fees  and consulting expenses.  Research and
          development costs  increased by 26% to $210,000 during the Second
          Quarter 1998, as  compared to the prior year, and  such costs are
          primarily  salaries and  direct costs  relating to  the Company's
          development of the OsteoView(R) bone densitometer. 

          Net loss for the Second Quarter  1998 was $414,000 compared to  a
          loss  of $636,000  for  the  same period  in  fiscal  1997.   The
          decreased loss is due to the elimination  of certain unprofitable
          cardiac event monitoring services, and the costs thereof, and  to
          general cost reductions enacted by the Company.

          Revenues for the six  months ended March 31, 1998  were $880,000,
          as compared to $1,012,000 for the same period  in 1997.  Revenues
          from ECG product  and supplies sales increased to  $143,000, from
          $58,000 during the prior year, due to sales of electrocardiograph
          units and related supplies.   Revenues from the Company's ongoing
          transtelephonic ECG services were at approximately the same level
          as  the  prior  year  period.    Since  cardiac  event monitoring
          services were  eliminated in fiscal 1997, no revenue was recorded
          during the 1998 period, compared  to $180,000 recorded during the
          prior  year.  Royalty income was $42,000 during the1998 period as
          compared to  $56,000  during  the  same period  in  fiscal  1997;
          however  the license agreement was terminated in January 1998, so
          royalties will cease as of the Third Quarter 1998 (See  Note F to
          Notes  to  Interim  Unaudited  Consolidated  Condensed  Financial
          Statements). 

          Operating costs  decreased by  19% during  the  six months  ended
          March  31, 1998  to $1,802,000,  as compared  to the  prior year.
          These  decreases  in operating  costs were  primarily due  to the
          elimination of costs associated with the cardiac event monitoring
          services, as  mentioned above,  and to operating  cost reductions
          relating to the  Company's ongoing transtelephonic  ECG services.
          General and administrative expenses decreased by 30% to $647,000,
          as  compared to 1997, primarily  due to a  reduction in executive
          and administrative  staff and  to reductions in  insurance costs,
          professional   fees  and   consulting   expenses.  Research   and
          development costs  increased by 10%  to $374,000, as  compared to
          the  prior year, and such costs are primarily salaries and direct
          costs relating to the Company's development of  the OsteoView (R)
          bone  densitometer.   Other  income  decreased  to $42,000,  from
          $60,000 during the  same period  in 1997 due  to liquidations  of
          marketable securities, although other income may increase to as a
          result  of the  net proceeds  from the  Series C  Preferred Stock
          placements, subject to  the use  of such funds  for research  and
          development and  other company  expenses and  to  changes in  the
          current  yields  of  such  investments.    Marketable  securities
          consist of  money market  accounts and short-term  investments in
          Treasury bills.


                                      12
     <PAGE>


          Net loss for  the six months  ended March  31, 1998 was  $893,000
          compared to  a loss of  $1,160,000 for the same  period in fiscal
          1997.  The decreased  loss is due  to the elimination of  certain
          unprofitable cardiac  event monitoring  services,  and the  costs
          thereof, and to general cost reductions enacted by the Company.


          FINANCIAL CONDITION AND LIQUIDITY
          ---------------------------------

          As  of March  31,  1998 the  Company  had $3,073,000  of  working
          capital, an increase of $2,569,000 from September 30, 1997.  This
          increase in working capital is primarily a result of the sale  of
          the  Company's  Preferred  Stock,  generating  net  proceeds   of
          approximately  $3,300,000,  which  was   offset  by  losses  from
          operations,  including  product development  costs,  adjusted for
          depreciation expense. 

          The  Company's capital  resource  commitments at  March 31,  1998
          consist primarily of costs associated with the development of its
          bone densitometry technology.  During the six  months ended March
          31, 1998, total research  and development expenses were $374,000.
          Expenditures during future periods may meet or exceed this level.
          The  Varian agreement requires a payment in the amount of $70,000
          during  the  next  fiscal  quarter  to  cover  testing  equipment
          relating to the amorphous silicon panel, which is  anticipated to
          be funded by lease financing. 

          The University of Georgia  sponsored Detoxahol research agreement
          has  been suspended and  the Company  is only  supporting patent-
          related costs at this time.  Due to the long-term  nature of this
          project, the  Company has  been seeking  a  strategic partner  to
          participate in future development.   

          The  Company intends  to pursue  additional research  and/or sub-
          contractor  agreements  relating  to  its  development  projects.
          Additionally,  the  Company  is  actively  seeking  partners  and
          acquisition candidates of  businesses that  are complementary  to
          its own.  Such  investments would  be financed  by the  Company's
          working  capital, through  issuance  of Company  securities or  a
          combination  thereof.    No  assurance  can  be  given  that  any
          acquisition would not be dilutive to stockholders.

          Depending on  the extent of  development activities borne  by the
          Company,  the Company probably will continue to incur losses from
          operations until  sales of  products currently under  development
          will  commence.   Current working  capital levels  are considered
          adequate  for the  Company's  business activities  during the  12
          months.


                                      13
     <PAGE>


                                       PART II
          OTHER INFORMATION


          Item 2  CHANGES IN SECURITIES AND USE OF PROCEEDS

               (c) On  December 24, 1997, the Company  closed the placement
          of 17,500 shares  of Series  1 Class C  7% Convertible  Preferred
          Stock.  On  January 22, 1998 the Company closed  the placement of
          8,750 shares of Series  2 Class C 7% Convertible  Preferred Stock
          and on  March 31, 1998 the Company  closed the placement of 8,750
          shares of Series 2 Class C 7% Convertible Preferred Stock.  These
          placements  were  claimed  to  be exempt  from  the  registration
          requirements  of the  Securities  Act of  1933,  as amended  (the
          "Securities  Act"),  by  reason   of  Section  4(2)  thereof  and
          Regulation D thereunder.  As of March 31, 1998, 16,200 shares  of
          Class  C Preferred  Stock  were converted  into  an aggregate  of
          2,273,494 shares of Common Stock.   These conversions were exempt
          from registration under the  Securities Act by reason  of Section
          3(a)9 thereof.   For further information  about these placements,
          see  Note E -- Private Placement of Class C Convertible Preferred
          Stock to  the Notes  to Interim Unaudited  Consolidated Condensed
          Financial Statement included in  the financial statements in this
          Report and  the Company's Form 8-K  for an event of  December 24,
          1997.

          Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

            (a)     Exhibits

               3.1  Certificate  of   Designation  for  the   Class  C   7%
                    Convertible Preferred Stock, filed on December 11, 1997
                    [Incorporated  by  reference  to  Exhibit  3.1  to  the
                    Company's Form 8-K for an event of December 24, 1997]

               3.2  Certificate  of   Correction   for  the   Class  C   7%
                    Convertible Preferred Stock, filed on December 24, 1997
                    [Incorporated  by  reference  to  Exhibit  3.2  to  the
                    Company's Form 8-K for an event of December 24, 1997]

               10.1 Form of  Securities Purchase Agreement for  the sale of
                    Class   C  7%  Convertible   Preferred  Stock  (without
                    annexes) [Incorporated by reference to Exhibit  10.1 to
                    the  Company's Form  8-K for  an event of  December 24,
                    1997]

               10.2 Form of Warrant Agreement [Incorporated by reference to
                    Exhibit  10.2 to the Company's Form 8-K for an event of
                    December 24, 1997]


                                      14
     <PAGE>


               10.3 Form of Registration Rights Agreement  [Incorporated by
                    reference to Exhibit 10.3 to the Company's Form 8-K for
                    an event of December 24, 1997]

          (b) Form 8-K:

               The Company  filed a Form  8-K for  an event of  January 30,
                    1998 to report on Item 5, certain pro-forma information
                    as required by the Nasdaq Stock Market, Inc.
               The Company  filed a Form 8-K for an event of March 31, 1998
                    to  report on Item 5, the closing of the last placement
                    of  the  Class  C  Series 2  7%  Convertible  Preferred
                    Stock.




                                      15
     <PAGE>


                                      SIGNATURES


          Pursuant  to the requirements  of the Securities  Exchange Act of
          1934, the registrant has duly caused this report to be signed  on
          its behalf by the undersigned thereunto duly authorized.


                                   COMPUMED, INC.
                                   --------------
                                   (Registrant)



                                   By:  /s/ James Linesch
                                      -------------------------------------
                                        James Linesch
                                        Presidentand ChiefFinancial Officer





          Date:  May 11, 1998


                                      16
     <PAGE>


                                 EXHIBIT INDEX


          Exhibit                    Description
          -------                    -----------


            27                  Financial Data Schedule