SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


             [ X ] Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                for the Quarterly Period Ended September 30, 2001
                                       OR
             [ ] Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
        for the Transition Period from ............... to ...............

                         Commission File Number 0-19407

                         LASER-PACIFIC MEDIA CORPORATION
             (Exact name of registrant as specified in its charter)

            Delaware                                      95-3824617
  (State or other jurisdiction of                        (I.R.S. Employer
  incorporation or organization)                         Identification No.)

                              809 N. Cahuenga Blvd.
                           Hollywood, California 90038
                                 (323) 462-6266
 (Address, including zip code and telephone number, including area code of
 principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No

The number of shares outstanding of each of the registrant's classes of common
stock, as of October 31, 2001 was 7,179,595 shares of Common Stock, $.0001 par
value.



<PAGE>


                         LASER-PACIFIC MEDIA CORPORATION
                                AND SUBSIDIARIES

                                Table of Contents




Part I.        Financial Information                                      Page
                                                                         ------

Item 1.        Condensed Consolidated Financial Statements                  3

               Condensed Consolidated Balance Sheets                        3
               Condensed Consolidated Statements of Operations              4
               Condensed Consolidated Statements of Cash Flows              5
               Notes to Condensed Consolidated Financial Statements         6

Item 2.        Management's Discussion and Analysis of Financial Condition  7
               and Results of Operations

Item 3.        Quantitative and Qualitative Disclosures about Market Risk   10

Part II.       Other Information

Item 6.        Exhibits and Reports on Form 8-K                             11

               Signatures                                                   12



<PAGE>


Part I.  Financial Information

Item 1.   Condensed Consolidated Financial Statements


                         LASER-PACIFIC MEDIA CORPORATION
                                AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)



<TABLE>
<CAPTION>
                                                                                   September 30,       December 31,
                                                                                        2001               2000
                                                                                   ---------------    ----------------
<S>                                                                           <C>                  <C>
Assets

Current Assets:

  Cash and cash equivalents                                                   $         4,776,679  $        4,527,042
  Receivables, net of allowance for doubtful accounts                                   4,089,469           5,339,830
  Other current assets                                                                  1,349,896           1,274,546
                                                                                   ---------------    ----------------

    Total Current Assets                                                               10,216,044          11,141,418

Net property and equipment                                                             19,595,517          18,457,816
Other assets                                                                              263,147             824,082

                                                                                   ---------------    ----------------
Total Assets                                                                  $        30,074,708  $       30,423,316
                                                                                   ===============    ================

Liabilities and Stockholders' Equity

Current Liabilities:
  Current installments of notes payable to bank and long-term debt            $         3,285,412  $        3,489,618
  Other current liabilities                                                             2,626,726           1,797,369
                                                                                   ---------------    ----------------

    Total Current Liabilities                                                           5,912,138           5,286,987

Notes payable to bank and long-term debt, less current installments                     6,925,390           7,934,387

Stockholders' Equity:
   Preferred stock, $.0001 par value.  Authorized 3,500,000 shares;
   none issued.                                                                               ---                 ---
   Common stock, $.0001 par value.  Authorized 25,000,000 shares; issued
   and outstanding 8,003,795 shares at September 30, 2001 and 7,751,295
   shares at December 31, 2000.                                                               800                 775
Additional paid-in capital                                                             20,186,681          19,936,156
Accumulated deficit                                                                     (887,301)         (2,734,989)
Treasury stock, at cost: 825,200 shares at September 30, 2001.                        (2,063,000)                 ---
                                                                                   ---------------    ----------------

   Net Stockholders' Equity                                                            17,237,180          17,201,942
                                                                                   ---------------    ----------------

Total Liabilities and Stockholders' Equity                                    $        30,074,708  $       30,423,316
                                                                                   ===============    ================


</TABLE>


See accompanying notes to the condensed consolidated financial statements.


<PAGE>


                         LASER-PACIFIC MEDIA CORPORATION
                                AND SUBSIDIARIES
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)




<TABLE>
<CAPTION>
                                                                  Three Months ended                     Nine Months ended
                                                                     September 30,                         September 30,
                                                           ----------------------------------     --------------------------------
                                                                2001               2000               2001              2000
                                                           ---------------    ---------------     --------------    --------------

<S>                                                     <C>                        <C>        <C>                      <C>
Revenues                                                $       6,856,819          7,233,449  $      24,364,577        22,337,684

Operating costs
      Direct costs                                              4,734,264          4,519,822         15,388,676        14,282,547
      Depreciation and amortization                             1,073,060          1,046,960          3,176,515         2,995,852
                                                           ---------------    ---------------     --------------    --------------
             Total operating costs                              5,807,324          5,566,782         18,565,191        17,278,399
                                                           ---------------    ---------------     --------------    --------------
      Gross profit                                              1,049,495          1,666,667          5,799,386         5,059,285
Selling, general and administrative
    and other expenses                                          1,174,426          1,125,148          3,543,438         3,388,641
                                                           ---------------    ---------------     --------------    --------------
      Income (loss) from operations                             (124,931)            541,519          2,255,948         1,670,644

Interest expense                                                  229,243            303,387            774,033           995,017
Other income                                                      329,463             60,741            510,750           191,029
                                                           ---------------    ---------------     --------------    --------------
      Income (loss) before income taxes                          (24,711)            298,873          1,992,665           866,656

Income tax (benefit) expense                                    (400,141)             17,400            144,977            43,300
                                                           ---------------    ---------------     --------------    --------------
      Net income                                        $         375,430            281,473  $       1,847,688           823,356
                                                           ===============    ===============     ==============    ==============

Income per share (basic)                                $            0.05               0.04  $            0.25              0.11
                                                           ---------------    ---------------     --------------    --------------

Income per share (diluted)                              $            0.05               0.04  $            0.25              0.10
                                                           ---------------    ---------------     --------------    --------------

Weighted average shares outstanding (basic)                     7,178,595          7,721,293          7,468,928         7,720,493
                                                           ===============    ===============     ==============    ==============

Weighted average shares outstanding (diluted)                   7,227,083          7,949,890          7,503,313         8,071,083
                                                           ===============    ===============     ==============    ==============


</TABLE>














See accompanying notes to condensed consolidated financial statements.
<PAGE>


                         LASER-PACIFIC MEDIA CORPORATION
                                AND SUBSIDIARIES
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)




<TABLE>
<CAPTION>
                                                                                             Nine Months ended September 30,
                                                                                          ---------------------------------------
                                                                                                2001                  2000
                                                                                          ----------------       ----------------
   <S>                                                                                <C>                   <C>
    Cash flows from operating activities

      Net income                                                                      $          1,847,688  $            823,356
      Adjustments to reconcile net income to net cash
        provided by operating activities:
           Depreciation and amortization                                                         3,176,515             2,995,852
           Gain on sale of property and equipment                                                 (25,713)              (74,490)
           Provision for doubtful accounts receivable                                              167,840               167,186
           Change in assets and liabilities:
              (Increase) decrease in:
                 Receivables                                                                     1,082,521               835,159
                 Other current assets                                                             (75,350)              (92,514)
              Increase (decrease) in:
                 Other current liabilities                                                         829,357               138,182
                 Other                                                                             561,680             (181,109)
                                                                                          -----------------     -----------------
                     Net cash provided by operating activities                                   7,564,538             4,611,622

    Cash flows from investing activities:
           Purchases of property and equipment                                                 (4,496,227)           (1,906,861)
           Net proceeds from disposal of property and equipment                                    206,979               355,493
                                                                                          -----------------     -----------------
                     Net cash used in investing activities                                     (4,289,248)           (1,551,368)

    Cash flows from financing activities:
           Proceeds borrowed under notes payable to bank and long-term debt                      2,870,251             1,930,846
           Repayment of notes payable to bank and long-term debt                               (4,083,454)           (3,833,240)
           Proceeds from issuance of common stock                                                  250,550                 1,210
           Purchase of treasury stock                                                          (2,063,000)                    --
                                                                                          -----------------     -----------------
                     Net cash used in financing activities                                     (3,025,653)           (1,901,184)

                     Net increase in cash and cash equivalents                                     249,637             1,159,070
    Cash and cash equivalents at beginning of period                                             4,527,042             2,398,407
                                                                                          -----------------     -----------------
    Cash and cash equivalents at end of period                                        $          4,776,679  $          3,557,477
                                                                                          =================     =================

</TABLE>














See accompanying notes to condensed consolidated financial statements.
<PAGE>

                         LASER-PACIFIC MEDIA CORPORATION
                                AND SUBSIDIARIES
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)


(1)      Basis of Presentation

     In  the  opinion  of  management,   the  accompanying  unaudited  condensed
consolidated financial statements contain all adjustments  (consisting of normal
recurring  items)  necessary  to  present  fairly  the  financial   position  of
Laser-Pacific  Media  Corporation  ("the  Company") and its  subsidiaries  as of
September 30, 2001 and December 31, 2000;  the results of its operations for the
three and nine month periods ended  September 30, 2001 and 2000;  and cash flows
for the nine month  periods  ended  September  30, 2001 and 2000.  The Company's
business is subject to the prime time television industry's typical seasonality.
Historically,  revenues and income from  operations have been highest during the
first and fourth quarters, when production of television programs and demand for
the Company's services is at its highest.  The net income or loss of any interim
quarter is seasonally  disproportionate to revenues because selling, general and
administrative   expenses  and  certain  operating  expenses  remain  relatively
constant  during the year.  Therefore,  interim  results are not  indicative  of
results to be expected for the entire fiscal year.

     In  accordance   with  the  regulations  of  the  Securities  and  Exchange
Commission  under Rule 10-01 of Regulation  S-X, the  accompanying  consolidated
financial  statements  and  footnotes  have been  condensed  and do not  contain
certain  information  included in the Company's  annual  consolidated  financial
statements and notes thereto.


(2)      Income per Share

     Income  per  basic and  diluted  share is based  upon the  weighted-average
number of common shares  outstanding.  Basic income per share is computed as net
income divided by the  weighted-average  number of common shares outstanding for
the period.  Diluted  shares  outstanding  represents the total of common shares
outstanding  as well as the dilutive  effect of options and  warrants  where the
exercise  price was below the average  closing  stock price during the three and
nine-month  periods ended September 30, 2001 and 2000.  Diluted income per share
reflects the potential  dilution  that could occur from common  shares  issuable
through stock-based compensation plans including stock options, restricted stock
awards,  warrants and other  convertible  securities  using the  treasury  stock
method.  The following  summarizes the computation of basic income per share and
diluted income per share:


<TABLE>
<CAPTION>
                                                                   Three Months                        Nine Months
                                                                Ended September 30,                Ended September 30,
                                                           ------------------------------     -------------------------------
                                                               2001             2000              2001              2000
                                                           -------------    -------------     -------------     -------------

<S>                                                    <C>                       <C>      <C>                        <C>
Net Income                                             $        375,430          281,473  $      1,847,688           823,356
                                                           =============    =============     =============     =============

Shares:
Weighted Average Common Shares                                7,178,595        7,721,293         7,468,928         7,720,493
Dilutive Effective of Stock Options and Warrants                 48,488          228,597            34,385           350,590
                                                           -------------    -------------     -------------     -------------
Weighted Average Diluted Shares Outstanding                   7,227,083        7,949,890         7,503,313         8,071,083

Income Per Share:
Basic                                                  $           0.05             0.04  $           0.25              0.11
Diluted                                                $           0.05             0.04  $           0.25              0.10

</TABLE>





<PAGE>


(3)      Income Taxes

     For the nine months ended  September 30, 2001, the Company  recorded income
tax expense of  $145,000  which  includes  the impact of  reversing  an $879,000
valuation  allowance that had been recorded  against the Company's net operating
loss  carryforward  deferred tax assets.  The  valuation  allowance was reversed
during the third  quarter  when the Company was  reasonably  certain  that there
would not be a strike and that the tax  benefit  associated  with the  valuation
allowance would be fully utilized in the current year. The Company also recorded
an income tax benefit of  $400,000  relating  to the  reversal of the  valuation
allowance in the third quarter.  As a result,  the Company's  effective tax rate
and its income tax  expense  will be  significantly  higher in the future if the
Company remains profitable.


(4)      Impact of Recently Issued Accounting Standards

     In  July  2001,  the  Financial  Accounting  Standards  Board  issued  FASB
Statement No. 141,  Business  Combinations,  and Statement No. 142, Goodwill and
other Intangible Assets.  Statement No. 141 requires that the purchase method be
used for all business combinations  initiated after June 30, 2001. Statement No.
142 requires  that  goodwill no longer be amortized to earnings,  but instead be
reviewed for  impairment  in an annual  basis.  The Company is required to adopt
Statement No. 141 and No. 142 no later than the year  beginning  after  December
15, 2001 and the Company  anticipates that the adoption of these  pronouncements
will  have  no  impact  on  the  Company's  financial  position  or  results  of
operations.

     In August  2001,  the  Financial  Accounting  Standards  Board  issued FASB
Statement  No. 144,  Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets which supersedes FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. Statement No. 144
retains the  fundamental  provisions  in Statement No. 121 for  recognizing  and
measuring  impairment  losses on long-lived  assets held for use and  long-lived
assets to be disposed of by sale,  while also resolving  certain  implementation
issues  associated  with  Statement  No.  121.  The Company is required to adopt
Statement  No. 144 no later than the year  beginning  after  December  15, 2001.
Management  does not expect the  adoption of  Statement  No. 144 for  long-lived
assets  held  for use to  have a  material  impact  on the  Company's  financial
statements.  The  provisions  of the Statement for assets held for sale or other
disposal generally are required to be applied  prospectively  after the adoption
date to  newly  initiated  disposal  activities.  Therefore,  management  cannot
determine the potential  effects that adoption of Statement No. 144 will have on
the  Company's  financial  statements  with  respect to assets  held for sale or
disposals.


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

     Statements  included  within  this  document,   other  than  statements  of
historical  facts,  that address  activities,  events or  developments  that the
Company expects or anticipates  will or may occur in the future,  including such
things as business  strategy  and measures to  implement  strategy,  competitive
strengths, goals, expansion and growth of the Company's business and operations,
plans,  references to future success and other such matters, are forward-looking
statements  within the meaning of Section 27A of the  Securities Act of 1933, as
amended and Section 21E of the  Securities and Exchange Act of 1934, as amended,
and fall under the safe  harbor.  The  forward-looking  statements  are based on
certain  assumptions and analyses made by the Company in light of its experience
and its perception of historical trends,  current conditions and expected future
developments  as well as  other  factors  it  believes  are  appropriate  in the
circumstances.  However,  actual  results and  financial  position  could differ
materially  in scope and nature from those  anticipated  in the forward  looking
statements as a result of a number of factors, including but not limited to, the
Company's ability to successfully expand capacity,  general economic,  market or
business  conditions;  the opportunities (or lack thereof) that may be presented
to and pursued by the Company;  competitive actions by other companies;  changes
in laws or regulations;  investments in new technologies;  continuation of sales
levels;  the risks related to the cost and  availability  of capital;  and other
factors, many of which are beyond the control of the Company.  Consequently, all
of the  forward-looking  statements  made in this report are  qualified by these
cautionary  statements  and there can be no assurance that the actual results or
developments   anticipated   by  the  Company  will  be  realized  or,  even  if
substantially  realized,  that they will have the  expected  consequences  to or
effects  on the  Company  or its  business  operations.  Readers  are  urged  to
carefully  review and consider  various  disclosures  made by the Company in its
filings with the Securities and Exchange Commission to advise interested parties
of certain risks and other  factors that may affect the  Company's  business and
operating results.
<PAGE>



Results of Operations

     Revenues  for the  nine  months  ended  September  30,  2001  increased  to
$24,365,000  from  $22,338,000  for the same  year-ago  period,  an  increase of
$2,027,000 or 9.1%. The increase in revenues is attributable to increased demand
for the Company's services through the first six months of the current year that
was partially  offset by a decline in demand for the Company's  services  during
the  quarter  ended  September  30,  2001  (discussed  below)  compared  to  the
corresponding  periods in the prior year.  The  increase  in  revenues  consists
primarily of an increase in revenues of $1,826,000 from post-production services
related to the  Company's  core  business  on episodic  television  shows and an
increase in revenues of $555,000 from digital compression services. The increase
in revenues was partially offset by a decrease in revenues of $190,000 from film
processing  resulting  from increased use by some customers of film formats that
require a lower volume of film processing and a decrease in revenues of $142,000
from laser disc services.

     Revenues  for the three  months  ended  September  30,  2001  decreased  to
$6,857,000 from $7,233,000 for the same year-ago  period, a decrease of $376,000
or 5.2%. The decline has impacted all categories of the Company's services.  The
following  factors  impacted the decrease in revenues during this third quarter:
1) a slowing  of movie  production  in the  second  and third  quarters  because
studios and networks  stockpiled  shows to ride out a  threatened  strike by the
writers and actors that did not  materialize,  which  impacted  the services the
Company provides on feature movies such as movie mastering, preview services and
digital  compression:  2) the impact of the September 11 terrorist  attacks that
resulted in the cancellation and rescheduling of certain  production and delayed
the beginning of the fall  broadcast  season:  3) a  significant  decline in the
number of movies made for television with much of the remaining television movie
production business being moved outside of the United States: and 4) the overall
slowdown  in the economy and  general  weakness of the  entertainment  industry,
which has impacted  advertising  revenues  and the  programs  supported by those
revenues such that there are fewer non-broadcast and off network shows and those
being produced have lower post production budgets.

     Operating  costs  for  the  nine  months  ended  September  30,  2001  were
$18,565,000  versus  $17,278,000  for the same year-ago  period,  an increase of
$1,287,000 or 7.4%.  The increase in operating  costs  consists  primarily of an
increase in labor costs of $568,000, an increase in depreciation of $181,000 and
an increase in outside services of $125,000. Higher labor costs are attributable
to salary increases.  The increase in depreciation is due to equipment purchases
in prior  years to expand  the  Company's  capacity.  The  increase  in  outside
services is primarily due to the cost of digital  transmission of work performed
for  customers   located  in  remote  locations.   Operating  costs,   including
depreciation,  as a percentage  of revenues for the nine months ended  September
30, 2001 were 76.2% compared with 77.4% for the same year-ago period.

     Operating  costs  for the  three  months  ended  September  30,  2001  were
$5,807,000  versus  $5,567,000  for the same  year-ago  period,  an  increase of
$240,000 or 4.3%.  The  increase in operating  costs  consists of an increase in
labor costs of $130,000,  an increase in equipment  supplies and  maintenance of
$88,000 and an increase in  depreciation  of $26,000.  The increase in operating
costs was partially offset by a reduction in rawstock costs as a result of lower
revenues.  The increase in labor costs is the result of compensation  increases.
The  increase  in  equipment  supplies  and  maintenance  is due  to  additional
equipment  purchased in the past 18 months.  The increase in depreciation is due
to  equipment  purchases  in  prior  years to  expand  the  Company's  capacity.
Operating  costs,  including  depreciation,  as a percentage of revenues for the
three months ended  September  30, 2001 were 84.7%  compared  with 77.0% for the
same year-ago period.

     For the nine months ended  September 30, 2001 the Company  recorded a gross
profit of $5,799,000  compared with $5,059,000 for the same year-ago period,  an
increase of $740,000 or 14.6%. The increase in gross profit is the result of the
increase in revenues partially offset by increases in operating costs, discussed
above.

     For the three months ended September 30, 2001 the Company  recorded a gross
profit of  $1,049,000  compared  to a gross  profit of  $1,667,000  for the same
year-ago  period,  a decrease of $618,000 or 37.0%. The decrease in gross profit
is the result of lower revenues for the quarter and increased  operating  costs,
discussed above.

     Selling,  general and administrative  ("SG&A") expenses for the nine months
ended September 30, 2001 were $3,543,000  compared to $3,389,000 during the same
year-ago  period,  an  increase of  $154,000  or 4.6%.  The  increase in SG&A is
primarily  attributable to an increase in professional  services of $148,000, an
increase in labor costs of $79,000  and an  increase in  advertising  expense of
$44,000.  The  increase in SG&A was  partially  offset by a decrease in property
taxes of $98,000.  The  increase in  professional  services is due to  increased
legal and financial  advisory fees. The increased  labor costs are the result of
compensation increases in addition to a higher number of employees.

<PAGE>


     SG&A expenses for the three months ended September 30, 2001 were $1,174,000
compared to $1,125,000 for the same year-ago  period,  an increase of $49,000 or
4.4%.  The  increase in SG&A is primarily  attributable  to an increase in labor
costs of $59,000, an increase in advertising costs of $23,000 and an increase in
professional services of $15,000. The increase in SG&A was partially offset by a
decrease in property taxes of $41,000.  The increased labor costs are the result
of  compensation  increases  in addition to a higher  number of  employees.  The
increase in professional  services is due to increased  financial  advisory fees
partially offset by reduced tax consulting fees.

     Interest  expense for the nine months ended September 30, 2001 was $774,000
compared to $995,000  for the same  year-ago  period,  a decrease of $221,000 or
22.2%.  The decrease in interest expense is a result of lower interest rates and
a reduction of long-term debt.

     Interest expense for the three months ended September 30, 2001 was $229,000
compared  to $303,000  for the same  year-ago  period,  a decrease of $74,000 or
24.4%.  The decrease in interest expense is a result of lower interest rates and
a reduction of long-term debt.

     Other  income for the nine months  ended  September  30, 2001 was  $511,000
compared to $191,000 for the same  year-ago  period,  an increase of $320,000 or
167.4%.  Other income primarily consists of interest income of $198,000,  income
recognized in connection with a research and development collaboration agreement
of $193,000, and a gain on the sale of the Company's interest in CIS of $83,000.
Interest  income  increased  compared to the same year-ago period as a result of
higher cash balances.  The Company entered into a  collaboration  agreement (the
Agreement) with an equipment manufacturer and supplier. Under the agreement, the
Company provided  development and consulting services related to the development
of technical equipment used in connection with high definition  post-production.
In consideration for the services provided, the Company received equipment at no
charge and discounts on the purchase of additional  equipment from the supplier.
During the third quarter, the Company recorded other income of $193,000 pursuant
to this  agreement.  The sale of the  Company's  interest in CIS is discussed in
other matters.

     Other  income for the three months  ended  September  30, 2001 was $329,000
compared to $61,000  for the same  year-ago  period,  an increase of $268,000 or
442.4%. The increase in other income is primarily due to an increase in interest
income  resulting  from higher cash  balances,  recognition  of other  income in
connection with a collaboration  agreement,  discussed  above, and a gain on the
sale of the Company's interest in CIS, discussed in other matters.

     Income  tax  expense  for the nine  months  ended  September  30,  2001 was
$145,000  compared  to $43,000  for the same  period  last year,  an increase of
$102,000 or 234.8%.  During the  nine-month  period the Company  recognized  tax
benefit  relating to the  realization of deferred tax assets.  The effective tax
rate and income tax expense for the current year and future years will  increase
if the Company remains profitable.

     For the three  months  ended  September  30, 2001 the  Company  realized an
income tax  benefit of  $400,000  relating to the  realization  of deferred  tax
assets  compared  to an income tax  expense of $17,000  for the same period last
year.  The net operating loss  carryforwards  that had reduced the Company's tax
liability  have been fully  utilized as of  September  30, 2001.  The  Company's
effective  tax rate and its income tax  expense  for the fourth  quarter of 2001
will be significantly higher if the Company remains profitable.

     Net income for the nine months  ended  September  30,  2001 was  $1,848,000
compared to $823,000 for the same year-ago period,  an increase of $1,025,000 or
124.4%.  The  increase  in net income is a  consequence  of the above  described
factors.

     Net income for the three  months  ended  September  30,  2001 was  $375,000
compared to $281,000  for the same  year-ago  period,  an increase of $94,000 or
33.4%.  The increase in net income is a result of lower  revenues and  increased
operating  costs,  increased  SG&A  offset by an income tax  benefit,  explained
above.

<PAGE>

Liquidity and Capital Resources

     As of September  30, 2001 the Company and its  subsidiaries  increased  the
non-asset based credit facility with Merrill Lynch Business Financial  Services.
The maximum  credit  under the  agreement  increased  from $8.0 million to $10.0
million.  The loan agreement provides for borrowings of up to $6.0 million under
a revolving loan and an equipment term loan,  which  increased from $2.0 million
to $4.0  million.  There was no  outstanding  balance of the  revolving  loan at
September 30, 2001. The equipment loan had an outstanding  balance of $1,870,000
at September  30,  2001.  The  revolving  loan and the  equipment  term loan are
payable  monthly and bear  interest at the 30-day dealer  commercial  paper rate
plus  2.2%.  The  revolving  loan is for a  one-year  term  and  can be  renewed
annually. The equipment term loan is for a five-year term.

     As of September 30, 2001 the Company had  outstanding  equipment  loans and
capital lease  obligations of  approximately  $10.2 million with various lenders
(including  the equipment  term loan  discussed  above) in  connection  with the
acquisition  of equipment.  The capital leases are for terms of up to 60 months,
at fixed interest rates ranging from 7.5% to 12.75% and variable  interest rates
ranging from 2.2% to 2.65% plus the 30-day  dealer  commercial  paper rate.  The
obligations  are secured by the equipment  that was financed.  The equipment was
acquired to expand the Company's  capabilities and to support the demand for the
Company's services.

     In June 2001, the Company purchased 825,200 shares of its common stock in a
private transaction for $2,063,000.

     In July 2001, 35 Lake Avenue,  a California  limited  partnership  in which
James R. Parks,  the Company's Chief Executive  Officer is a partner,  exercised
warrants to purchase 250,000 shares of the Company's common stock at an exercise
price of $1.00.  The  warrants  were  issued  during 1997 in  connection  with a
short-term debt financing arrangement.

     The Company's  principal  source of funds is cash  generated by operations.
The Company anticipates that existing cash balances, availability under existing
loan agreements and cash generated from operations will be sufficient to service
existing debt and to meet the Company's capital requirements for fiscal 2001.

Other Matters

     On July 9, 2001,  the  Company  entered  into an  agreement  with its joint
venture partner in Composite Image Systems, LLC ("CIS"), to sell its interest in
CIS to its joint venture partner. Under the terms of the agreement,  the Company
transferred  to its joint venture  partner the Company's 50% interest in CIS and
certain  equipment  previously  leased to CIS in exchange  for a cash payment of
$575,000.  The Company has given corporate  guarantees  regarding  certain lease
obligations,  and CIS and its joint venture partner have agreed to indemnify the
Company up to the amount of the principal  obligation  for any claims that might
arise under the guarantees should CIS default on the lease  obligations.  During
the quarter ended  September  30, 2001 the Company  recognized a gain of $83,000
net of related expenses in connection with the sale of its interest in CIS.

Seasonality and Variation of Quarterly Results

     The Company's business is subject to substantial  quarterly variations as a
result of seasonality,  which the Company  believes is typical of the television
post-production  industry.  Historically,  revenues  and net  income  have  been
highest during the first and fourth quarters,  when the production of television
programs  and  consequently  the demand  for the  Company's  services  is at its
highest. Historically,  revenues have been substantially lower during the second
and third quarters.


Item 3.  Quantitative and Qualitative Disclosures about Market Risk

     Derivative  Instruments.  The Company does not invest,  and during the nine
and three  months  ended  September  30,  2001 did not  invest,  in market  risk
sensitive instruments.

     Market Risk.  The Company's  market risk exposure with respect to financial
instruments is subject to changes in the "30-day dealer  commercial  paper" rate
in the United States.  The Company had borrowings of $1,870,000 at September 30,
2001 under a term loan (discussed above) and may borrow up to $6.0 million under
a revolving loan.  Amounts  outstanding under the term loan and revolving credit
facility bear interest at the 30-day dealer commercial paper rate plus 2.2%.

     If, under the  existing  credit  facility,  the "30-day  dealer  commercial
paper" rate were to change by 1%, the amortized interest expense would change by
approximately $46,000 annually.
<PAGE>

Part II.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits
              None

(b)      Reports on Form 8-K
              None














































<PAGE>


                                   Signatures

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



                              LASER-PACIFIC MEDIA CORPORATION
                                  (Registrant)


 Dated:  November 9, 2001       /s/James R. Parks
                                ------------------
                                   James R. Parks
                                   Chief Executive Officer





 Dated:  November 9, 2001       /s/Robert McClain
                                ------------------
                                   Robert McClain
                                   Chief Financial Officer
                                   (Principal Financial and Accounting Officer)