SECURITIES
AND EXCHANGE COMMISSION
UNITED STATESWASHINGTON, D.C. 20549 FORM 10-QSB   (Mark One) xQUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF
THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 or oTRANSITION 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
  95-2860434State or Other
  Jurisdiction of
  (I.R.S. Employer
  Identification No.)Incorporation or
  Organization)
  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 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.                                
                                     
YesxNoo The registrant had 17,869,309
shares of common stock, ($.01 par value) issued and outstanding as of April 30,
2001.   INDEX

COMPUMED, INC. AND
SUBSIDIARIES



PART I.
  FINANCIAL INFORMATIONItem 1.
  Financial Statements (unaudited)Consolidated balance sheets  March 31, 2001
  (unaudited) and September 30, 1999.Consolidated statements of operations –
  Six months ended March 31, 2001 and 2000 (unaudited).Consolidated statements of cash flows  Six
  months ended March 31, 2001 and 2000 (unaudited).Notes to condensed consolidated financial
  statements (unaudited).Item 2.
  Management's Discussion and Analysis of
  Financial Condition and Results of Operations.PART II.
  OTHER
  INFORMATIONItem 1
  Legal ProceedingsItem 2
  Changes in Securities and Use of ProceedsItem 3
  Defaults upon Senior SecuritiesItem 4
  Submission of matters to a Vote of Security
  HoldersItem 5
  Other InformationItem 6
  Exhibits and Reports on Form 8KSIGNATURES


PART I FINANCIAL INFORMATION  CONSOLIDATED
CONDENSED BALANCE SHEETS
COMPUMED, INC. AND SUBSIDIARIES  March 31,
  2001
  September 30,
  2000(unaudited)ASSETSCURRENT
  ASSETSCash and cash equivalents
  $252,000
  $129,000Marketable securities
  559,000
  1,554,000Accounts receivable, less allowance of
  $33,000   (March 2001) and $49,000
  (September 2000)
  263,000
  275,000Inventories
  113,000
  180,000Prepaid expenses and other current
  assets
  12,000
  11,000TOTAL CURRENT ASSETS
  1,199,000
  2,149,000PROPERTY
  AND EQUIPMENTMachinery and equipment
  862,000
  814,000Furniture, fixtures and leasehold
  improvements
  100,000
  100,000Equipment under capital leases
  953,000
  953,0001,915,000
  1,867,000Less
  allowance for depreciation and amortization
  (1,086,000)
  (924,000)829,000
  943,000Other
  Assets
  26,000
  44,000TOTAL
  ASSETS
  $2,054,000
  $3,136,000 See
notes to condensed consolidated financial statements CONSOLIDATED
CONDENSED BALANCED SHEETS
COMPUMED, INC. AND SUBSIDIARIES

March 31,
  2001
  September 30,
  2000(unaudited)LIABILITIES
  AND STOCKHOLDERS' EQUITYCURRENT
  LIABILITIESAccounts payable
  $155,000
  $441,000Accrued liabilities
  109,000
  180,000Unearned revenue
  45,000
  76,000Current portion of capital lease
  obligations
  98,000
  127,000TOTAL CURRENT LIABILITIES
  407,000
  824,000CAPITAL
  LEASE OBLIGATIONS, less current portion
  25,000
  63,000COMMITMENTS
  AND CONTINGENCIESSTOCKHOLDERS'
  EQUITYPreferred
  Stock, $.10 par value  authorized 1,000,000 sharesClass A $3.50 cumulative convertible
  voting - issued and outstanding  8,400 shares
  1,000
  1,000Class B $3.50 convertible voting  - issued and outstanding  300 shares
  -
  -Class C 7% convertible voting  - issued and outstanding  0 shares
  -
  -Common Stock, $.01 par valueauthorized
  50,000,000 shares, issued and outstanding 17,869,309 shares (March 2001) and
  17,869,362 shares (September 2000)
  179,000
  179,000Additional
  paid in capital
  32,243,000
  32,234,000Accumulated
  deficit
  (30,830,000)
  (30,212,000)Accumulated
  other comprehensive income
  65,000
  97,000Deferred
  stock compensation
  (36,000)
  (50,000)STOCKHOLDERS' EQUITY
  1,622,000
  2,249,000TOTAL
  LIABILITIES AND STOCKHOLDERS EQUITY
  $2,054,000
  $3,136,000See
notes to condensed consolidated financial statements

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

Three Months Ended
  March 31,
  Six Months Ended
  March 31,2001
  2000
  2001
  2000REVENUES
  FROM OPERATIONSECG services
  $421,000
  $352,000
  $818,000
  $703,000ECG product and supplies sales
  50,000
  220,000
  106,000
  335,000OsteoGram sales, services and royalties
  27,000
  -0-
  35,000
  13,000498,000
  572,000
  959,000
  1,051,000COSTS
  AND EXPENSESCosts of ECG services
  147,000
  223,000
  317,000
  428,000Cost of goods sold
  29,000
  107,000
  65,000
  161,000Selling expenses
  155,000
  126,000
  385,000
  232,000Research and development
  61,000
  110,000
  130,000
  174,000General and administrative expenses
  281,000
  182,000
  564,000
  414,000Depreciation
  80,000
  68,000
  163,000
  129,000LOSS
  FROM OPERATIONS
  (255,000)
  (244,000)
  (665,000)
  (487,000)Interest income and dividends
  19,000
  51,000
  56,000
  80,000Realized gain on marketable securities
  1,000
  -0-
  2,000
  -0-Interest expense
  (4,000)
  (12,000)
  (11,000)
  (27,000)NET
  LOSS
  $(239,000)
  $(205,000)
  $(618,000)
  $(434,000)NET
  LOSS PER SHARE (Basic and diluted)
  $(.01)
  $(.01)
  $(.03)
  $(.03)Weighted
  average number of Common shares outstanding
  17,869,336
  17,035,300
  17,869,336
  16,871,796See
notes to condensed consolidated financial statements


CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
COMPUMED, INC. AND SUBSIDIARIES Six Months EndedMarch 31,
  2001
  March 31,
  2000OPERATING
  ACTIVITIES:Net loss
  $(618,000)
  $(434,000)Adjustment to reconcile net loss to
  net  cash used in operating
  activities:Realized gain on marketable securities
  (2,000)Amortization of deferred compensation
  23,000Depreciation and amortization
  163,000
  128,000Changes in operating assets and
  liabilities:Accounts receivable
  12,000
  228,000Inventories, prepaid expenses and other
  assets
  67,000
  (109,000)Accounts payable and other liabilities
  (388,000)
  57,000Other assets
  18,000
  (34,000)NET
  CASH USED IN OPERATING ACTIVITIES
  (725,000)
  (164,000)INVESTING
  ACTIVITIES:Purchases of marketable securities
  -
  (1,727,000)Sale of marketable securities
  964,000
  -Purchases of property, plant and equipment
  (49,000)
  (270,000)NET
  CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
  915,000
  (1,997,000)FINANCING
  ACTIVITIES:Proceeds from the sale of Class C 7%
  convertible preferred stock, net of offering costs
  -
  -Principal payments on capital lease
  obligations
  (67,000)
  (112,000)Exercise of stock options and warrants
  -
  323,000NET
  CASH AND CASH EQUIVALENTS PROVIDED BY (USED IN) FINANCING ACTIVITIES
  (67,000)
  211,000INCREASE
  (DECREASE) IN CASH AND CASH EQUIVALENTS
  123,000
  (1,950,000)Cash
  at beginning period
  129,000
  2,598,000CASH
  AND CASH EQUIVALENTS AT END OF PERIOD
  $252,000
  $648,000Cash
  paid for interest
  $12,000
  $27,000 See
notes to condensed consolidated financial statements


NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS (UNAUDITED) COMPUMED, INC. AND SUBSIDIARIES NOTE A––BASIS OF PREPARATION The accompanying balance sheet at September 30, 2000 has
been derived from the Company's year end audited financial statements. The accompanying unaudited condensed 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, these financial statements included all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation of the Companys financial position, results of operations and
cash flows for the interim periods presented. Operating results for the period
ended March 31, 2001 are not necessarily indicative of the results that may be
expected for the year ending September 30, 2001.  These financial statements should be read in conjunction with the
audited consolidated financial statements for the year ended September 30, 2000
and the notes thereto, which are 
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, divided by the weighted average number of
common shares outstanding during the period. 
Shares from the assumed exercise of outstanding warrants, and options
and the  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. NOTE CCOMMITMENTS AND CONTINGENCIES On January 26, 1998, the United States District Court
for the Central District of California approved the settlement of a class
action and derivative lawsuits on the terms agreed to by the parties in the Memorandum
of Understanding entered into on August 5, 1996.  The final settlement is anticipated to be completed in late 2001
and will involve the issuance of 770,000 shares of Common Stock and the
issuance of warrants for the purchase of 1,870,000 shares of Common Stock at a
price of $3.00.  The effect of these
issuances on the Companys statement of operations was recorded during the
fiscal year ended September 30, 1997. NOTE D  CONVERSION OF WARRANTS

The terms of the purchase agreement for
the Class C Preferred Stock include the issuance of warrants for the purchase
of Common Stock at exercise prices equivalent to the discounted prices on the
date of conversion of the Preferred Stock to Common Stock.  Warrants were issued when the Class C
Preferred Stock was converted to Common Stock during fiscal years ended
September 30, 1999 and 1998 for the purchase of 5,619,525 shares of Common
Stock at a total exercise price of $3,500,000.

NOTE E  MARKETABLE SECURITIES

Marketable securities consist of
investments in common stock and bonds in various publicly traded domestic
companies and are stated at market value based on the most recently traded
price of these securities at March 31, 2001. These short-term investments are
defined as assets available for sale under the provisions of FASB Statement No.
115, Accounting for Certain Investments in Debt and Equity Securities. The
Company recognized $64,000 of unrealized gains during the Second Quarter 2001,
and $32,000 of unrealized losses during the six months ended March 31, 2001,
which was recorded as a component of Accumulated Other Comprehensive Income in
Stockholders Equity. At March 31, 2001 and September 30, 2000 the Companys
investments in marketable securities are as follows:

Investment Types
  March
  31, 2001
  September
  30, 2000Corporate Bonds
  $34,000
  $766,000Convertible Preferred
  Stocks
  62,000
  170,000Common Stock
  463,000
  168,000Total
  $559,000
  $1,554,000

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

This Form 10-QSB contains forward-looking statements
made based on current management expectations pursuant to the safe harbor
provisions of  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.  There can be no assurance that
managements expectations, beliefs or projections will result or be achieved or
accomplished.

In addition to other factors, the following, in the view
of the Company, could cause actual results to differ materially from the
forward-looking statements expressed herein: technological advances from the
Companys competitors, the impact of competition generally, dependence on key
employees and the need to attract new management, the risks of patent claims or
other third party liability, the risks of launching a new production service,
such as the Companys OsteoGram® test, changes in healthcare regulation,
including reimbursement programs, capital needs to fund any delays or
extensions of research programs and the availability of capital for working
capital on terms satisfactory to the Company. The Company disclaims any
obligation to update any forward-looking statements to reflect events or
circumstances after the date hereof.

Overview

During the six months ended March 31,
2001, in addition to the continued operation of the Companys transtelephonic
electrocardiagram (ECG) business, the Company commenced sales of its
completed osteoporosis testing system, the OsteoGram®. In addition,
representatives of the Company  attended
the American College of Rheumatology, the Radiological Society of North
America, Pri-Med West and Pri-Med South meetings in October 2000, November 2000
and February 2001, respectively, to seek potential venture partners and to
generate leads for potential sales of OsteoGram®.

Results
of Operations

Total revenues from operations for the
three months ended March 31, 2001 (the Second Quarter 2001) were $498,000, as
compared to $572,000 for the same period in 2000. Revenues from operations for
the six months ended March 31, 2001 were $959,000 as compared to $1,051,000 for
the same period in 2000. Revenues from ECG operations for the Second Quarter
2001 decreased to $471,000 from $572,000 during the same period in fiscal 2000,
and during the six months ended March 31, 2001 revenues from ECG operations
decreased to $924,000 from $1,038,000 due to a relative decrease in unit sales
compared to rental revenues. Revenues from the Companys OsteoGram® sales and
services were $27,000 for the Second Quarter 2001 compared with no revenues in
the prior year period. Revenues from the Companys OsteoGram® sales and
services increased to $35,000 during the six months ended March 31, 2001, from
$13,000 for the same period in fiscal 2000.

Cost of services and goods sold consists
of the costs of ECG services provided, supplies, electrocardiograph equipment
sold, and certain overhead expenses. During the Second Quarter 2001, costs of
services and goods sold decreased to 37% from 58% during the same period in
fiscal 2000. Cost of services and goods sold decreased during the six months
ended March 31, 2001, to 41% from 57% during the same period in 2000. The
decrease in costs of services and goods sold is due to the automation of the
overread process, consolidation of facilities and lower sales.

Overall operating costs decreased by 8% during the
Second Quarter 2001 to $753,000, as compared to $816,000 for the same period in
fiscal 2000. Overall operating costs increased by 6% during the six months
ended March 31, 2001 to $1,624,000 as compared to $1,538,000 for the same
period in fiscal 2000. General and administrative expenses increased by 54%
during the Second Quarter 2001 from $182,000 to $281,000 for the same period in
fiscal 2000, and during the six months ended March 31, 2001 increased by 36%,
from $414,000 to $564,000 for the same period in fiscal 2000, due to additional
executive personnel. Research and development costs decreased by 45% during the
Second Quarter 2001 to $61,000 as compared to $110,000 for the same period in
fiscal 2000, and decreased by 25% to $130,000 during the six months ended March
31, 2001, as compared to $174,000 for the same period in fiscal 2000 due to
completion of clinical trials and field studies. Selling expenses increased
from $126,000 to $155,000 during the Second Quarter 2001, as compared to the
same period in fiscal 2000, and increased by 66% during the six months ended
March 31, 2001, to $385,000 as compared to $232,000 for the same period in
fiscal 2000, primarily due to an increase of promotional activities in
OsteoGram®. The major expenses for developing selling tools, videos, CDs, as
well as the product packaging have been incurred. Selling expenses for the
remainder of the year are expected to decrease. These expenses will be limited
to additional printing and mailing costs.

The Company recorded interest and dividend income during
the Second Quarter 2001 of $19,000 compared to $51,000 for the same period in
fiscal 2000. During the six months ended March 31, 2001, the Company recorded
interest and dividend income of $56,000 as compared to $80,000 for the same
period in fiscal 2000. The decrease was generally due to the decrease in
marketable securities balance.

Net loss for the Second Quarter 2001 was $239,000
compared to a loss of $205,000 for the same period in fiscal 2000.  Net loss for the six months ended March 31,
2001 was $618,000 compared to $434,000 for the same period in fiscal 2000. The
increased loss is primarily due to selling expenses for market development and
the initial marketing of the OsteoGram®.

Financial
Condition and Liquidity

As of March 31, 2001 the Company had $792,000 of working
capital, a decrease of $533,000 from September 30, 2000.  This decrease in working capital is
primarily a result of losses from operations which were funded by the sales of
marketable securities held by the Company in the quarter.

The Company's capital resource commitments at March 31,
2001 consisted primarily of costs associated with the development and
commercialization of its OsteoGram® product. These expenditures are anticipated
to be at a substantially lower rate than in the previous period. It is
anticipated that any additional expenses will be offset, at least partially, by
additional sales of the Companys OsteoGram® software product.

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 either 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 or that
such financing would be available at satisfactory terms.

On
December 1, 1999, the Nasdaq notified the Company that it had not met the
minimum bid price requirement for a sufficient duration and the Companys
common stock was delisted from the SmallCap Market on that date and has since
traded on the OTC Bulletin Board. The delisting may impede or increase the cost
of raising capital.

PART IIOTHER INFORMATION

Item 1.  LEGAL PROCEEDINGSNoneItem 2.  CHANGES IN SECURITIES AND USE OF PROCEEDSNoneItem 3.  DEFAULTS UPON SENIOR SECURITIESNoneItem 4.  SUBMISSION OF MATTERS TO A VOTE OF
  SECURITY HOLDERSNoneItem 5.  OTHER INFORMATIONNoneItem 6.  EXHIBITS AND REPORTS ON FORM 8-K(a)  No Exhibits(b)  Form 8-K  During the fiscal quarter ended
  March 31, 2001, the Company did not file any reports on Form 8-K.

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/PHUONG
  DANGPhuong DangPrincipal Financial OfficerBy:
  /s/ HERBERT S LIGHTSTONEHerbert S LightstonePresident and Chief Executive OfficerDate:  May 10, 2001