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        June 30, 1998                  
                                   _____________________________________ 

                                        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  _____________________ 1-4245  __________________


                                CompuDyne Corporation
              ______________________________________________________
              (Exact name of registrant as specified in its charter)


                          Nevada                 23-1408659
            ______________________________     _________________ 
           (State or other jurisdiction of     (I.R.S. Employer
             Incorporation or Organization)    Identification No.)


                 120 Union Street, Willimantic, Connecticut 06226
                 ________________________________________________
                       (Address of principal executive offices)

                                     (860) 456-4187
                 ________________________________________________
               (Registrant's telephone number, including area code)

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
                                  _____          _____

As of August 6, 1998 a total of 4,124,542 shares of Common Stock, $.75
par value, were outstanding.






                       COMPUDYNE CORPORATION AND SUBSIDIARIES

                                        INDEX



                                                          Page No.
                                                          --------

Part I.  Financial Information                                            


 Item 1. Financial Statements

   Consolidated Balance Sheets - June 30, 1998
    (unaudited) and December 31, 1997                         3

   Consolidated Statements of Operations - Three Months 
   and Six Months Ended June 30, 1998 and 1997 (unaudited)    4

   Consolidated Statements of Cash Flows
   Six Months Ended June 30, 1998 and 1997 (unaudited)        5

   Notes to Consolidated Financial Statements                 6-7

 Item 2. Management's Discussion and Analysis of
         Results of Operations and Financial
         Condition                                             8-11

Part II.  Other Information                                   12

 Signature                                                     13


------------------------------------------------------------------------

                       COMPUDYNE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                (In Thousands)
<TABLE>
<CAPTION>
                                                   June 30,  December 31,
                                                     1998        1997
                                                   --------  --------
                                                       (Unaudited)
<S>                                               <C>          <C>    
ASSETS
Current Assets:
  Cash and cash equivalents                       $       -   $       -  
  Accounts receivable                                 4,601       4,757
  Inventories:
    Finished Goods                                      116          72
    Work in process                                     774         888
    Raw materials and supplies                          705         612
                                                    -------    --------
       Total inventories                              1,595       1,572
                                                    -------    --------

  Prepaid expenses and other current assets              68          95
                                                    -------    --------
      Total Current Assets                            6,264       6,424
                                                    -------    --------
Non-current receivables, related parties                 60          60

Property, plant and equipment, at cost
  Land and improvements                                  26          26
  Buildings and leasehold improvements                  256         250
  Machinery and equipment                               812       1,055
  Furniture and fixtures                                356         287
  Automobiles                                            69          84
                                                    -------     -------
    Total property, plant and equipment               1,519       1,702
                                                    -------     -------
  Less:  accumulated depreciation and amortization      738         990
                                                    -------     -------
    Net property, plant and equipment                   781         712
                                                    -------     -------

Deferred tax asset                                      128         124
Intangible assets, net of accumulated amortization       63          66
Other assets                                             44          43
                                                    -------     -------
    Total other assets                                  235         233
                                                    -------     -------
Total Assets                                      $   7,340    $  7,429
                                                   ========     =======

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accounts payable                                $   2,084    $  2,104
  Bank notes payable                                  1,106       1,339
  Other accrued expenses                                924       1,015
  Accrued income taxes                                  161          35
  Current portion of deferred compensation                -          26
  Current portion of notes payable related parties        -          20
                                                   --------     -------
    Total Current Liabilities                     $   4,275    $  4,539
                                                   --------     -------
  Notes payable, related parties                  $      45    $     30
  Long term pension liability                           479         489
  Other liabilities                                     197         209
                                                   --------     -------
    Total Liabilities                             $   4,996    $  5,267
                                                   --------     -------
SHAREHOLDERS' EQUITY:
  Common stock, par value $.75 per share:
    10,000,000 shares authorized; 4,124,542 shares
    issued at June 30, 1998 and December 31, 1997,    3,093       3,093
  Other capital                                       8,203       8,203
  Treasury shares, at cost; 78,636 shares 
         as of June 30, 1998;
    16,666 shares as of December 31, 1997              (120)          -
  Receivable from management                            (90)        (90)
Accumulated Deficit                                  (8,742)     (9,044)
                                                    -------     -------
    Total Shareholders' Equity                        2,344       2,162
                                                    -------     -------
  Total Liabilities and Shareholders' Equity      $   7,340    $  7,429
                                                   ========     =======
</TABLE>
                        See notes to consolidated financial statements


                       COMPUDYNE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS
                        (In Thousands, Except Per Share Data)
                                      (Unaudited)

<TABLE>
<CAPTION>
                                   Three Months Ended    Six Months Ended
                                         June 30,            June 30,
                                      1998     1997       1998    1997
                                   --------  --------   -------- --------
<S>                               <C>       <C>        <C>      <C>
Net sales                         $  6,184  $  5,301   $ 11,267 $ 10,054
Cost of sales                        4,978     4,333      9,090    8,219
                                   -------   -------    -------  -------
  Gross margin                       1,206       968      2,177    1,835

Selling, general and administra-
 tive expenses                         811       756      1,631    1,422
Research and Development                61        37         68       90
                                   -------   -------    -------  -------
  Operating income                     334       175        478      323
                                   -------   -------    -------  -------

Other (income) expense
  Interest expense                      16        17         44       25
  Other income                          (8)      (27)        (3)     (32)
                                   -------   -------    -------   ------
   Total other (income) expense, 
    net                                  8       (10)        41       (7)
                                   -------   -------    -------   ------

Income from continuing operations
  before income tax provision
  or benefit                           326       185        437      330
Income tax provision (benefit)         125        25        135       50
                                   -------   -------    -------   ------
Income from continuing operations $    201   $   160    $   302  $   280
                                   =======   =======    =======  =======

Basic EPS:
   Net income (loss)              $    .05   $   .06    $   .07  $   .10
                                   =======    ======     ======   ======
Weighted average number of
   common shares outstanding         4,125     2,847      4,125    2,847
                                   =======    ======     ======   ======

Diluted EPS:
   Net income (loss)              $    .04   $   .04    $   .07  $   .07
                                   =======    ======     ======   ======

Weighted average number of
   common shares and equivalents     4,525     4,108      4,525    4,108
                                   =======    ======     ======   ======
</TABLE>

              See Notes to Consolidated Financial Statements (unaudited).
                    COMPUDYNE CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                     Six  Months Ended
                                                          June 30,   
                                                     -----------------
                                                       1998        1997
<S>                                                  <C>         <C>
Cash flows provided by operating activities:

Net Income                                           $    302   $    280

Adjustments to reconcile net income to net 
 cash provided by (used in) continuing operations:
   Depreciation                                            90         55
   Amortization                                             -         (8)
   Decrease in accounts receivable                        156      1,005
   Decrease in accounts receivable, related parties         -        (12)
   Decrease in prepaid expenses                            27          7
   (Increase) in inventories                              (23)        (9)
   Increase in accounts payable                           (20)      (511)
   (Decrease) in accrued liabilities                     (137)      (373)
   Increase in accrued income taxes                       126        (49)
   (Decrease) in billings in excess of costs                -       (503)
   (Increase) in other, net                               (24)         -
                                                       ------     ------
Net cash flows provided by (used in) operations           497       (118)
                                                       ------     ------

Cash flows used for investing activities:
  Additions to property, plant and equipment             (159)       (88)
                                                       ------     ------
Net cash flows used for investing activities             (159)       (88)
                                                       ------     ------

Cash flows (used for) provided by financing 
  activities:

  Purchase of treasury stock                             (120)         -
  Purchase of goodwill & tangible assets                    -         (8)
  Increase (decrease) in short term debt                 (233)       171
  Proceeds from long term debt, related parties            15        (10)
                                                       ------     ------

Net cash (used for) provided by financing activities     (338)       153
                                                       ------     ------

Net increase (decrease) in cash                             -        (53)
Cash and cash equivalents at beginning of period            -        186
                                                       ------     ------
Cash and cash equivalents at end of period           $      -    $   133
                                                      =======     ======

Supplemental Schedule of Cash Flow Information:
  Cash paid during the period for:
     Interest                                        $     44    $    25

</TABLE>
        See Notes to Consolidated Financial Statements (unaudited).

                      COMPUDYNE CORPORATION AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.BASIS OF PRESENTATION
-----------------------
The accompanying unaudited consolidated financial statements of CompuDyne
Corporation and subsidiaries ( CompuDyne  or the "Company"), have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission.  Certain information and note disclosures normally
included in the annual financial statements, prepared in accordance with
generally accepted accounting principles, have been condensed or omitted
pursuant to those rules and regulations, although the Company believes
that the disclosures made are adequate to make the information presented
not misleading.

In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all necessary adjustments and
reclassifications (all of which are of a normal, recurring nature) that
are necessary for fair representation for the periods presented.  It is
suggested that these consolidated financial statements be read in
conjunction with the consolidated financial statements and the notes
thereto included in the Company's latest annual report to the Securities
and Exchange Commission on Form 10-K for the year ended December 31,
1997.

2.ACCOUNTS RECEIVABLE
---------------------
<TABLE>
<CAPTION>

Accounts receivable consist of the following:

($ in thousands)                        June 30,     December 31,
                                         1998            1997
                                        --------     -----------
<S>                                     <C>          <C>
U.S. Government Contracts:
  Billed                               $   1,068     $    1,712
  Unbilled                                 1,122          1,054
                                        --------      ---------
                                           2,190          2,766
Commercial
  Billed                                   2,301          2,084
  Unbilled                                   233            207
                                        --------      ---------
                                           2,534          2,291

Total Accounts Receivable             $    4,724     $    5,057
  Less Allowance for Doubtful 
   Accounts                                 (123)          (300)
                                       ---------      ---------
          
  Net Accounts Receivable             $    4,601     $    4,757
                                       =========      =========
</TABLE>


3.COMMON STOCK AND COMMON STOCK OPTIONS
---------------------------------------
On April 1, 1998, the Compensation and Stock Options Committee
("Committee") granted options to purchase up to 75,000 shares of
CompuDyne stock to a key employee of SecurSystems at a price of $2.56 per
share (the fair market value of such shares at the date of grant).  This
grant is dependent upon the achievement of specific goals in European
markets over a three year period.

On April 1, 1998, the Committee granted options to purchase up to 25,000
shares of CompuDyne stock to a key consultant of Quanta Systems at a
price of $2.56 per share (the fair market value of such shares at the
date of grant).  This grant is dependent upon the achievement of specific
sales and distribution channel goals over a two year period.

On April 1, 1998, in a unanimous consent of the Board of Directors it was
resolved to amend the Stock Purchase Agreement, dated August 1, 1993
between the Corporation and each of Phillip M. Blackmon, Diane W. Burns
and George Manz.  The maturity date was changed from five years from the
date of the note to seven years from the date of the note and allows for
the obligor to make payment in cash or an equivalent amount of stock.

On July 7, 1998 Phillip Blackmon elected this option to use stock to
repay the principle and interest on his four notes dated August 1 1993,
1994, 1995, and 1996.

On May 1, 1998, the Committee granted options to purchase 46,000 shares
of CompuDyne stock to key employees of Quanta Systems and Quanta
SecurSystems at a price of $2.56 per share (the fair market value of such
shares at the date of grant).

4.LEGAL PROCEEDINGS
-------------------
Quanta Systems settled its claim against the Army for change orders at
the Fort Bragg installation.  While the claim was ready to go to
arbitration on July 7th, the decision was made to settle for a lesser
amount than was due in order to avoid the uncertainty, legal cost and
distraction of a lengthy arbitration hearing.  Quanta Systems will
receive $400,000 which is about $55,000 less than remained on the books
as an unbilled receivable.  This shortfall, plus legal fees recorded to
date, have been be charged to existing contract reserves.  Any additional
legal fees incurred will be charged to existing contract reserves.

5. REVOLVING CREDIT AGREEMENT
-----------------------------
The Company signed a secured working capital line of credit agreement
with Chevy Chase Bank, Chevy Chase, Maryland which allows borrowings of
an average of 80% of eligible  accounts receivable.  The new agreement
was signed on June 25, 1998 and allows for a maximum available loan of
$2.5 million which is a $750 thousand increase over the line of credit
previously with Asian American Bank and Trust Company of Boston,
Massachusetts.  The interest rate for the new line of credit is at LIBOR
plus 2.75%, compared with the old Asian American line of credit which was
at a rate of prime plus 0.5%.  The new line has a two year term which
expires June 25, 2000.  






                        COMPUDYNE CORPORATION AND SUBSIDIARIES
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
                             AND RESULTS OF OPERATIONS 


RESULTS OF OPERATIONS
---------------------
Second Quarter 1998 and 1997 Comparison
---------------------------------------
CompuDyne s net sales increased $882 thousand from $5.3 million in the
second quarter of 1997 to $6.2 million in the second quarter of 1998. 
Quanta SecurSystems, Inc. ( SecurSystems ) net sales were $2.7 million in
the second quarter of 1998 compared with $1.4 million in the second
quarter of 1997, an increase of $1.3 million.  This increase is
attributed to the low volumes in the second quarter of 1997 compared with
increased sales in the second quarter of 1998.  CompuDyne s backlog is
currently $20.7 million as of June 30, 1998.  This is an increase of $1.0
million over December 31, 1997.  Quanta Systems Corporation ( Quanta
Systems ) net sales decreased $520 thousand to $2.6 million in the second
quarter of 1998 compared with $3.1 million in the same period for 1997. 
This decrease was due to low volumes experienced in the second quarter of
1998.  MicroAssembly Systems, Inc. ( MicroAssembly ) had a slight
increase of $30 thousand in net sales for the second quarter of 1998 to
$470 thousand compared with $440 thousand in the second quarter of 1997. 
Data Control Systems ( DCS ) had net sales of $378 thousand in the second
quarter of 1998, up $51 thousand from $327 thousand in the first quarter
of 1997.  Sysco Security Systems ( Sysco ) had $55 thousand in net sales
for the second quarter of 1998.  This was totally incremental since Sysco
was in a start-up status in the second quarter of 1997.

Gross margin for CompuDyne increased $237 thousand from $968 thousand in
the second quarter of 1997 to $1.2 million in the second quarter of 1998. 
SecurSystems showed an increase of $277 thousand from $221 thousand in
the second quarter of 1997 to $498 thousand in the second quarter of
1998.  This was due mainly to the increase in net sales.  Quanta Systems
had a slight decrease in gross margin of $26 thousand, down from $507
thousand in the second quarter of 1997 to $481 thousand in the second
quarter of 1998.  DCS had a slight increase of $11 thousand in gross
margin to $87 thousand in the second quarter of 1998, up from $76
thousand in the same period of 1997.  MicroAssembly s gross margin
decreased $33 thousand from $164 thousand in the second quarter of 1997
to $130 thousand in the second quarter of 1998.  This primarily was due
to start-up costs associated with a new customer.  Sysco had an
incremental margin addition of $9 thousand in the second quarter of 1998.

Selling, general and administrative expenses increased $54 thousand for
CompuDyne in the second quarter of 1998, increasing from $757 thousand in
1997 to $811 thousand in 1998.  SecurSystems had a slight decrease in
selling, general and administrative costs of $11 thousand, decreasing
from $236 thousand in the second quarter of 1997 to $225 thousand in
1998.  Quanta Systems  selling, general and administrative costs
decreased slightly from $290 thousand in the second quarter of 1997 to
$285 thousand in 1998, a $5 thousand increase.  Selling, general and
administrative expenses for DCS decreased $45 thousand to $(11) thousand
in the second quarter of 1998 from $34 thousand in 1997.  This reflects a
year-to-date adjustment to the G & A allocation between Quanta Systems
and DCS.  Year-to-date variances are discussed in the half year
comparisons.  MicroAssembly s selling, general and administrative
expenses increased $3 thousand to $90 thousand in the second quarter of
1998 up from $87 thousand in the same period for 1997.  Sysco s selling,
general and administrative expenses increased to $81 thousand in the
second quarter of 1998, up $58 thousand from $23 thousand in the second
quarter of 1997.  This is due to increased payrolls and staffing in the
current quarter for this start-up operation.  CompuDyne s corporate
selling, general and administrative expenses increased $55 thousand in
the second quarter of 1998 to $141 thousand, up from $86 thousand in
1997.  This increase is due to increased payrolls, payroll allocations
and insurance costs.

Research and development costs, which are related only to Quanta Systems 
DCS product division increased $24 thousand to $61 thousand in the second
quarter of 1998 from $37 thousand in 1997.  The costs in 1998 were spent
primarily on the redesign of the model 7500 satellite test modem.

CompuDyne s second quarter 1998 profit before taxes was $326 thousand,
increasing $141 thousand from the second quarter of 1997 which was $185
thousand.  This was a 76% increase.  SecurSystems increased $265 thousand
from a loss of $27 thousand in the second quarter of 1997 to a profit of
$238 thousand in 1998.  Quanta Systems net profit was $121 thousand in
the second quarter of 1998, down $42 thousand from a profit of $163
thousand in the second quarter of 1997.  This is a result of lower sales
for the quarter than expected.  DCS had a net profit of $29 thousand for
the second quarter of 1998, an increase of $28 thousand over the $1
thousand profit for the second quarter of 1997.  This is attributed to
increased sales at DCS.  MicroAssembly had a profit of $29 thousand for
the second quarter of 1998 down $42 thousand from $71 thousand in the
second quarter of 1997.  Sysco had a loss of $79 thousand in the second
quarter of 1998 as its start-up phase was accelerated with additional
management resources. This compared with a loss of $24 thousand during
the same period in 1997.

Interest expense for the second quarter of 1998 was $16 thousand compared
to $17 thousand in 1997.

Year-to-Date Comparison
-----------------------
CompuDyne s net sales increased $1.2 million or 12% in the first half of
1998.  Net sales were $11.3 million in the first half of 1998 compared
with $10.1 million in the first half of 1997.  SecurSystems had $4.3
million in net sales in the first half of 1998 compared with $2.7 million
for the same period in 1997, an increase of $1.6 million.  Quanta Systems
net sales for the first half of 1998 totalled $5.2 million.  This was a
decrease of $791 thousand from the first half of 1997 net sales of $6.0
million.  This was due to lower volumes from the NSA and Fort Bragg
contracts, partially offset by an increase in the TETON contract sales. 
DCS had $780 thousand in net sales for the first half of 1998, up $255
thousand from $524 thousand in the first half of 1997.  This increase was
primarily due to the unexpected purchase of a replacement base band unit
by an existing customer.   MicroAssembly s net sales increased $91
thousand from $834 thousand in the first half of 1997 to $924 thousand in
the first half of 1998.  Sysco had $55 thousand in net sales for the
first half of 1998.  This was totally incremental since Sysco had no
sales in the first half of 1997.

CompuDyne s gross margins increased $342 thousand in the first half of
1998 to $2.2 million, up from $1.8 million during the same period in
1997.  SecurSystem s gross margins increased $190 thousand to $742
thousand in the first half of 1998.  Gross margins were $552 thousand in
1997.  This increase is attributed to higher sales.  Quanta Systems gross
margins were $943 thousand in the first half of 1998, up $53 thousand
from 1997 first half gross margins of $890 thousand.  Although sales were
reduced for the period, the reduction in sales relates to low margin
sales.  Therefore gross margins were up due to higher margin sales during
the period.  Gross margins at DCS increased $105 thousand to $210
thousand in the first half of 1998.  This compares with $105 thousand in
the same period for 1997.  This is due to higher sales.  MicroAssembly
gross margins decreased $14 thousand from $287 thousand in the first half
of 1997 to $273 thousand during the same period for 1998 due to start-up
costs for a new customer incurred in the first and second quarter of
1998.  Sysco had a modest $10 thousand gross margin for the first half of
1998.

CompuDyne s selling, general and administrative costs increased $210
thousand to $1.6 million in the first half of 1998 up from $1.4 million
in the same period in 1997.  SecurSystems had a slight decrease of $25
thousand in the first half of 1998, with $462 thousand in 1998 compared
with $487 thousand for 1997.  Quanta Systems selling, general and
administrative expenses increased by $78 thousand to $577 in the first
half of 1998, up from $499 thousand in the same period for 1997.  This
increase was due to the treatment of legal costs for the Fort Bragg claim
and increased marketing costs.  This is partially offset by a $57
decrease in DCS s costs due to a reduction in staff and consolidation of
some facilities.  DCS s costs were $24 thousand in the first half of 1998
compared with $81 thousand for the same period in 1997.  MicroAssembly s
selling, general and administrative costs were $205 thousand in the first
half of 1998 increasing $36 thousand from $168 thousand in the first half
of 1997.  This is due to increased marketing efforts including a staff
addition and additional advertising and promotional expenses.  Selling,
general and administrative costs for Sysco increased $92 thousand in the
first half of 1998, up from $46 thousand for the same period in 1997. 
This is due to increased payrolls.

Research and development costs, which are related only to Quanta Systems 
DCS product division were $68 thousand in the first half of 1998 down $22
thousand from $90 thousand for the same period in 1997.  The costs in
1998 were spent primarily on the redesign of the model 7500 satellite
test modem.

Net profit for CompuDyne increased $107 thousand to $437 thousand in the
first half of 1998 from $330 thousand in the same period for 1997. 
SecurSystems net profit increased $182 thousand to $219 thousand in the
first half of 1998 from $37 thousand in the first half of 1997.  This
increase was due to increased net sales for the period.  Quanta Systems
net profit was $222 thousand in the first half of 1998.  This was a
decrease of $87 thousand from $309 thousand in the first half of 1997. 
This was due to the decrease in sales for the first half of 1998 compared
with the same period in 1997.  DCS had a net loss of $73 thousand in the
first half of 1997.  The first half of 1998 had an increase of $160
thousand to $87 thousand.  Increased sales, a reduction in staff and
facility consolidations account for this increase.  MicroAssembly s net
profit for the first half of 1998 was $49 thousand, decreasing $56
thousand from $105 thousand in the same period of 1997.   Sysco had a net
loss of $141 thousand in the first half of 1998 compared with a $46
thousand loss in the first half of 1997, an increased loss of $95
thousand.  This is due to additional resources required for this start-up
operation.




LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company s principle source of cash is from operating activities and
bank borrowings.  The Company s primary requirement for working capital
is to carry billed and unbilled receivables.  The majority of Quanta
Systems  receivables are due under prime contracts with the United States
Government, or subcontracts thereunder.  The majority of SecurSystems 
receivables are due under contracts, subcontracts, or maintenance
agreements with state and local governments.

The Company has  a secured working capital line of credit agreement with
Chevy Chase Bank, Chevy Chase, Maryland which allows borrowings of an
average of 80% of eligible  accounts receivable.  The new agreement was
signed on June 25, 1998 and allows for a maximum available loan of $2.5
million which is a $750 thousand increase over the line of credit
previously with Asian American Bank and Trust Company of Boston,
Massachusetts.  The interest rate for the new line of credit is at LIBOR
plus 2.75%, compared with the old Asian American line of credit which was
at a rate of prime plus 0.5%.  The new line has a two year term and
expires June 25, 2000.  

MicroAssembly has an unsecured line of credit with Fleet Bank for $100
thousand with no expiration date.  The line of credit is guaranteed by
Mr. Roenigk.  The rate is prime plus 2% and there was $58 thousand
outstanding as of June 30, 1998.

Net cash flows provided by operations was $497 thousand in 1998, an
increase of $615 thousand from the 1997 cash flow used in operations of
$118 thousand.  Net income increased from $280 thousand in the first half
of 1997 to $302 thousand during the same period in 1998.  There was a
$233 thousand reduction in short term debt.  During the first half of
1998 CompuDyne purchased 62 thousand shares of treasury stock at a cost
of $120 thousand.  Capital additions totalled $159 thousand in the first
half of 1998.  This was $71 thousand more than in the same period of
1997.


PART II - OTHER INFORMATION
---------------------------
Item 1 - Legal Proceedings

The Company is party to certain legal actions and inquiries for
environmental and other matters resulting from the normal course of
business.  Although total amount of liability with respect to these
matters cannot be ascertained, management of the Company believes that
any resulting liability should not have a material effect on its
financial position or results of future operations.

Item 2 - Changes in Securities

   None

Item 3 - Defaults Upon Senior Securities

   None

Item 4 - Submission of Matters to a Vote of Security Holders

   None

Item 5 - Other Information

   None

Item 6 - Exhibits and Reports on Form 8-K

   None


SIGNATURE
---------
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.

                                                 COMPUDYNE CORPORATION



Date: August  5, 1998                            /s/ William C. Rock
                                                     --------------------
                                                     William C. Rock
                                                     Chief Financial
                                                      Officer