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 June 30, 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 12,406,102 shares of common stock, ($.01
          par value) issued and outstanding as of June 30, 1998.

          <PAGE>



                                        INDEX

                           COMPUMED, INC. AND SUBSIDIARIES



          PART I.  FINANCIAL INFORMATION

            Item 1. Financial Statements (unaudited)

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

                    Consolidated statements of operations - three months
                    and nine months ended June 30, 1998 and 1997
                    (unaudited).

                    Consolidated statements of cash flows -- nine months
                    ended June 30, 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 4    Submission of Matters to a Vote of Security Holders
          Item 6    Exhibits and Reports on Form 8K 


          SIGNATURES
                                      -2-

          <PAGE>
                                        PART I

                                FINANCIAL INFORMATION


          CONSOLIDATED CONDENSED BALANCE SHEETS
          COMPUMED, INC. AND SUBSIDIARIES

                                                     June 30,     September 30,
                                                       1998           1997 
                                                       ----       ------------
                                                    (Unaudited)

           ASSETS

           CURRENT ASSETS
            Cash                                    $      8,000     $   81,000
            Marketable securities                      3,058,000        850,000
            Accounts receivable, less allowance   
             of $57,000                                  303,000        247,000
              (June 1998) and $66,000 (September  
             1997)
            Inventories                                   60,000         55,000
            Prepaid expenses and other current            32,000         27,000
             assets                                   ----------    -----------

                TOTAL CURRENT ASSETS                   3,461,000      1,260,000

           PROPERTY AND EQUIPMENT
            Machinery and equipment                    3,001,000      2,994,000
            Furniture, fixtures and leasehold            208,000        208,000
             improvements
            Equipment under capital leases               852,000        787,000
                                                       ---------     ----------
                                                       4,061,000      3,989,000

           Less allowance for depreciation and         3,732,000      3,591,000
             amortization                              ---------      ---------
                                                         329,000        398,000

           OTHER ASSETS                                                        
                                                          41,000        118,000
                                                      ----------     ----------
                                                      $3,831,000     $1,776,000
                                                      ==========     ==========





          See notes to interim unaudited consolidated condensed financial
          statements

                                      -3-

     <PAGE>

          CONSOLIDATED CONDENSED BALANCED SHEETS
          COMPUMED, INC. AND SUBSIDIARIES
                                                  June 30,       September 30,
                                                    1998             1997
                                                    ----      ---------------
                                                    (Unaudited) 
           LIABILITIES AND STOCKHOLDERS'       
            EQUITY

           CURRENT LIABILITIES
            Accounts payable                      $  172,000   $   174,000
            Other accrued liabilities                415,000       501,000
            Current portion of capital lease         116,000        81,000
             obligations                          ----------   -----------
                TOTAL CURRENT LIABILITIES            703,000       756,000
           CAPITAL LEASE OBLIGATIONS, less           120,000       152,000
             current portion
           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                        1,000         1,000
                outstanding -- 8,400 shares
              Class B $3.50 convertible voting 
               preferred stock, issued and             1,000         1,000
              outstanding - 300 shares
              Class C 7% convertible preferred 
               stock, issued and outstanding         901,000
              - 11,650 shares

            Common Stock, $.01 par             
               value--authorized 50,000,000    
               shares, issued and              
              outstanding--12,406,102 shares         124,000        90,000
              (June 1998) and 9,041,857        
             shares (September 1997)
           Additional paid in capital             29,592,000    27,169,000

           Retained deficit                     (27,611,000)  (26,393,000)
                                                 -----------  ------------
                STOCKHOLDERS' EQUITY                               868,000
                                                   3,008,000  ------------
                                                 -----------
                                                 $ 3,831,000    $1,776,000
                                                 ===========  ============

          See notes to interim unaudited consolidated condensed financial
          statements

                                      -4-

          <PAGE>

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


                                   Three Months Ended      Nine Months Ended
                                        June 30,               June 30,
                                        --------               --------
                                    1998        1997        1998        1997
                                    ----        ----        ----        ----
     REVENUES FROM OPERATIONS
      ECG services               $ 380,000  $ 394,000   $1,076,000  $1,096,000
      ECG product and supplies
       sales                        99,000     35,000      242,000     108,000
      Cardiac event monitoring
       services                       -        17,000          -       198,000
      OsteoGram royalties             -        33,000       42,000      89,000
                                 ---------  ---------    ---------   ---------
                                   479,000    479,000    1,360,000   1,491,000



     COSTS AND EXPENSES
      Costs of ECG services        250,000    232,000      702,000     648,000
      Cost of goods sold            56,000     16,000      138,000      47,000
      Costs of cardiac event
       monitoring services             -       74,000          -       240,000
      Selling expenses              44,000     75,000      135,000     268,000
      Research and development      68,000    179,000      442,000     519,000
      General and administrative
        expenses                   344,000    333,000      991,000   1,254,000
      Depreciation and
       amortization                 64,000     77,000      221,000     234,000
                                 ---------  ---------   ----------   ---------
     LOSS FROM OPERATIONS         (347,000)  (507,000)  (1,269,000) (1,719,000)

       Other income                 33,000     20,000       75,000      79,000
       Interest expense            (11,000)    (6,000)     (24,000)    (13,000)
                                 ---------  ---------   ----------  ----------
                                 $(325,000) $(493,000) $(1,218,000)$(1,653,000)
     NET LOSS                    =========  =========   ==========  ==========
     NET LOSS PER SHARE          $    (.03) $    (.06) $      (.19)$      (.18)
        (Basic and diluted)      =========  =========   ==========  ==========
     Weighted average number of
      common shares outstanding 11,895,758  8,954,786   10,391,952   8,952,286
                                ==========  =========   ==========  ==========




     See notes to interim unaudited consolidated condensed financial statements

                                      -5-

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

                                                   Nine Months Ended
                                                June 30,       June 30,
                                                  1998           1997
                                                  ----           ----
      OPERATING ACTIVITIES:
       Net loss                                $  (998,000)   $(1,653,000)
       Adjustment to reconcile net loss to
        net cash used in operating
        activities:
            Depreciation and amortization          188,000        234,000 
        Changes in operating assets and
         liabilities:
            Accounts receivable                    (56,000)       111,000 
            Inventories, prepaid expenses
             and other assets                       20,000         49,000 
            Accounts payable and other
             liabilities                          (308,000)      (48,000) 
                                                 ----------    ---------- 
      NET CASH USED IN OPERATING ACTIVITIES     (1,154,000)    (1,307,000)

      INVESTING ACTIVITIES:
       Purchases of marketable securities       (2,208,000)     -         
       Sale of marketable securities                            1,474,000 
       Purchases of property, plant and
        equipment                                   (2,000)       (47,000)
                                                -----------    -----------
      NET CASH (USED IN) PROVIDED BY
       INVESTING ACTIVITIES                     (2,210,000)     1,427,000 
      FINANCING ACTIVITIES:
       Proceeds from the 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                                (67,000)       (29,000)
       Exercise of stock options and
        warrants                                    69,000        -       
                                                 ---------     ---------- 
      NET CASH PROVIDED BY (USED IN)                        
      FINANCING ACTIVITIES                       3,291,000        (31,000) 
                                               -----------     ---------- 
      DECREASE IN CASH                             (73,000)       (89,000)
      Cash at beginning period                      81,000        155,000 
                                               ------------    ---------- 

      CASH AT END OF PERIOD                       $  8,000   $    244,000 
                                               ===========     ========== 
      Cash paid for interest:                  $    24,000    $    13,000 
                                               ===========    =========== 


          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 June
          30, 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 nine months
          ended June 30, 1998.  The value of the beneficial conversion
          feature is measured by the difference between the conversion

                                      -7-

     <PAGE>


          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.  The final settlement is anticipated
          to be completed by December 31, 1998 and will involve the
          issuance of 770,000 shares of Common Stock and the issuance of
          1,870,000 warrants for the purchase of Common Stock at a price of
          $3.00.  The effect of these issuances was recorded during the
          fiscal year ended September 30, 1997.

          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, 1997, 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)
          $1.51 or (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,

                                      -8-
     <PAGE>

          1999 at the conversion ratio on that date.  There is no minimum
          conversion price. 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.

          Should the value of the Common Stock fall substantially prior to
          conversion, the holders of the Class C Preferred Stock could
          obtain a significant share of the Common Stock upon their
          conversions.

          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 lesser 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 June 30, 1998, Class C
          shareholders converted 7,150 shares of Class C preferred stock
          into 1,020,688 shares of Common Stock.   At June 30, 1998, there
          were 11,650 shares of Class C Preferred Stock remaining,
          including 6,100 shares of Series 1 and 5,550 shares of Series 2.

                                      -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(Registered
          Trademark) bone density test.  Revenues earned under this license
          agreement terminated after March 1998.  During the nine-month
          period ended June 30, 1998 royalty revenues were $42,000.  The
          rights to the OsteoGram technology reverted back to the Company
          on March 31, 1998.  The Company is currently incorporating this
          technology into a software product and is seeking distribution
          and licensing agreements for this test.

                                     -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 June 30, 1998 (the
          "Third Quarter 1998") were $479,000, as compared to $479,000 for
          the same period in 1997.  Revenues from ECG product and supplies
          sales increased to $99,000, from $35,000 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 declined by
          approximately 4% from prior year period.  Since cardiac event
          monitoring services were eliminated in fiscal 1997, no revenue
          was recorded during the Second Quarter 1998 compared to $17,000
          recorded during the prior year.  There was no royalty income
          earned during the Second Quarter 1998 from OsteoGram(Registered
          Trademark) operations being managed by a subsidiary of Merck &
          Co., Inc. as compared to $33,000 during the same period in fiscal
          1997. The license agreement was terminated in January 1998, so
          royalties have ceased.  See Note F to Notes to Interim Unaudited
          Consolidated Condensed Financial Statements. 

          Operating costs decreased by 16% during the Third Quarter 1998 to
          $826,000, as compared to the prior year.  The combined costs of
          services ($250,000) and selling expenses ($44,000) during the
          Third Quarter 1998 decreased by $18,000, 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 transtelephonic ECG
          services.  General and administrative expenses increased by 3%

                                     -11-
     <PAGE>

          during the Second Quarter 1998 to $344,000, as compared to 1997,
          primarily due to a settlement amount paid to a former executive
          in the amount of approximately $75,000.  Exclusive of the
          settlement, general and administrative expenses during the Third
          Quarter 1998 decreased by approximately $64,000, or 19%, from the
          prior year, due to reductions in executive and administrative
          staff and to reductions in insurance costs, professional fees and
          consulting expenses. Research and development costs decreased by
          62% to $68,000 during the Third 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(Registered Trademark) bone densitometer and it's
          automated OsteoGram(Registered Trademark) software. 

          The Company recorded other income during the quarter of $33,000,
          which is comprised of investment income.  

          Net loss for the Third Quarter 1998 was $325,000 compared to a
          loss of $493,000 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 
          general cost reductions enacted by the Company.

          Revenues for the nine months ended June 30, 1998 were $1,360,000,
          as compared to $1,491,000 for the same period in 1997.  Revenues
          from ECG product and supplies sales increased to $242,000, from
          $108,000 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
          $198,000 recorded during the prior year.  Royalty income was
          $42,000 during the 1998 period as compared to $89,000 during the
          same period in fiscal 1997; however the license agreement was
          terminated in January 1998, so royalties have ceased as of the
          Third Quarter 1998 (See Note F to Notes to Interim Unaudited
          Consolidated Condensed Financial Statements). 

          Operating costs decreased by 18% during the nine months ended
          June 30, 1998 to $2,629,000, 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 21% to $991,000,
          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 decreased by 15% to $442,000, as compared to
          the prior year, and such costs are primarily salaries and direct
          costs relating to the Company's development of the
          OsteoView(Registered Trademark) bone densitometer and its
          automated OsteoGram(Registered Trademark) software.

                                     -12-

     <PAGE>


          Other income increased to $295,000, from $79,000 during the same
          period in 1997 due to the revised income tax accrual of $220,000
          mentioned above.

          Net loss for the nine months ended June 30, 1998 was $1,218,000
          compared to a loss of $1,653,000 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 general cost reductions enacted by the Company.



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

          As of June 30, 1998 the Company had $2,978,000 of working
          capital, an increase of $2,474,000 from September 30, 1997.  This
          increase in working capital is primarily a result of the sale of
          the Company's Class C 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 June 30, 1998
          consist primarily of costs associated with the development of its
          bone densitometry technology.  During the nine months ended June
          30, 1998, total research and development expenses were $442,000. 
          Expenditures during future periods may meet or exceed this level.


          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.  During the fiscal quarter ended June
          30, 1998, 7,150 shares of Class C Preferred Stock were converted
          into an aggregate of 1,020,688 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 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

               (a)  On May 1, 1998, the Company held its 1998 Annual
                    Meeting of Stockholders (the "Meeting").
               (b)  The following persons were elected at the Meeting: 
                    Robert Goldberg, Herbert S. Lightstone, John Minnick,
                    John Romm and Robert Stuckelman.
               (c)  At the Meeting, the following matters voted upon were:


                                                                Broker
                                     For     Against  Abstain  Nonvotes
                                     ---     -------  -------  --------
        Election of Directors     9,251,232     0     327,471     0

        Amendment to Option Plan  8,779,607  709,701  40,426    48,969

        Ratification of auditors  9,422,915  135,488  20,300      0


                                     -14-

     <PAGE>

          Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

            (a)     Exhibits - None

            (b)     Form 8-K - During the fiscal quarter ended June 30,
                    1998, the Company did not file a report on Form 8-K.

                                     -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
                                        President and Chief Financial
                                        Officer





          Date:  August 14, 1998


                                     -16-