<PAGE>

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                                 United States

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-Q

(Mark One)


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934


                  For the quarterly period ended June 30, 2001

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

     For the transition period from   _____________ to _____________

                       Commission file number 000-29642

                               FILM ROMAN, INC.


              (Exact name of registrant as specified in charter)

               Delaware                                95-4585357
      (State or other jurisdiction                 (I.R.S. Employer
   of incorporation or organization)            Identification Number)


   12020 Chandler Boulevard, Suite 300
       North Hollywood, California                        91607
(Address of principal executive offices)                (Zip Code)

      Registrant's telephone number, including area code:  (818) 761-2544


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 at least the past 90 days. YES [X] NO [ ].


                     APPLICABLE ONLY TO CORPORATE ISSUERS:


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

As of July 31, 2001, 8,577,690 shares of common stock, par value $.01 per share,
were issued and outstanding.

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                               TABLE OF CONTENTS


                         PART I.  FINANCIAL INFORMATION
<TABLE>

<S>                                                                                                                          <C>
Item 1.  Financial Statements.............................................................................................    3

             Consolidated Balance Sheets as of December 31, 2000 and June 30, 2001 (unaudited)............................    3

             Consolidated Statements of Operations for the Three and Six Months Ended
             June 30, 2000 and June 30, 2001 (unaudited)..................................................................    4

             Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000 and
             June 30, 2001 (unaudited)....................................................................................    5

             Notes to Consolidated Financial Statements...................................................................    6

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

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.......................................................   15


                                                    PART II.  OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K.................................................................................   16

Signatures................................................................................................................  S-1
</TABLE>

                                       2
<PAGE>

                        PART I.  FINANCIAL INFORMATION



Item 1. Financial Statements



                               FILM ROMAN, INC.

                         CONSOLIDATED  BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                           December 31,  2000    June 30, 2001
                                                                                          --------------------  ---------------
                                                                                                                  (unaudited)
                                         ASSETS
                                         ------

<S>                                                                                       <C>                   <C>
Cash and cash equivalents...............................................................         $  4,203,221      $  1,912,488
Accounts receivable.....................................................................              249,893           595,963
Film costs, net of accumulated amortization of $336,568,427 (2000) and $364,109,387                24,558,709        16,596,398
 (2001).................................................................................
Property and equipment, net of accumulated depreciation and amortization of $2,437,270                735,552           593,809
 (2000) and $2,637,270 (2001)...........................................................
Deposits and other assets...............................................................              652,455         1,012,709
                                                                                                 ------------      ------------

Total Assets............................................................................         $ 30,399,830      $ 20,711,367
                                                                                                 ============      ============

                                            LIABILITIES AND
                                         STOCKHOLDERS' EQUITY

Accounts payable........................................................................         $  1,672,785      $    969,089
Accrued expenses........................................................................            1,826,860         1,400,034
Deferred revenue........................................................................           24,815,940        17,844,458
                                                                                                 ------------      ------------

Total liabilities.......................................................................           28,315,585        20,213,581


Stockholders' equity:
Preferred Stock, $.01 par value, 10,000,000 shares authorized, none issued..............                   --                --

Common stock, $.01 par value, 40,000,000 shares authorized, 8,565,190 shares issued and                85,652            85,777
 outstanding in 2000 and  8,577,690 shares issued and outstanding in 2001...............

Additional paid-in capital..............................................................           36,370,365        36,379,615

Accumulated deficit.....................................................................          (34,371,772)      (35,967,606)
                                                                                                 ------------      ------------

Total stockholders' equity..............................................................            2,084,245           497,786
                                                                                                 ------------      ------------

Total liabilities and stockholders' equity..............................................         $ 30,399,830      $ 20,711,367
                                                                                                 ============      ============
</TABLE>
                            See accompanying notes

                                       3
<PAGE>

                               FILM ROMAN, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
<TABLE>
<CAPTION>

                                                    Three Months ended           Six Months ended
                                                         June 30,                    June 30,
                                                --------------------------  --------------------------
                                                     2000          2001          2000          2001
                                                 ----------   -----------   -----------   -----------
<S>                                             <C>           <C>           <C>           <C>
Revenue.......................................   $7,936,103   $ 9,401,056   $20,631,784   $28,599,635
Cost of revenue...............................    7,935,128     9,287,388    20,544,989    27,540,960
Selling, general and
administrative expenses.......................      871,775     1,416,138     2,178,930     2,338,980
                                                 ----------   -----------   -----------   -----------

Operating loss................................     (870,800)   (1,302,470)   (2,092,135)   (1,280,305)


Interest income...............................       70,558         8,829       141,481        48,471
Loss before cumulative effect of a change in
 accounting principle and provision for
 income taxes.................................     (800,242)   (1,293,641)   (1,950,654)   (1,231,834)


Cumulative effect of a change in accounting
 principle....................................           --            --            --      (364,000)

Provision for income taxes....................          (18)           --        (1,588)           --
                                                 ----------   -----------   -----------   -----------

Net loss......................................   $ (800,260)  $(1,293,641)  $(1,952,242)  $(1,595,834)
                                                 ==========   ===========   ===========   ===========

Loss before cumulative effect of a change in
 accounting principle, per common share basic
 & diluted....................................   $    (0.09)  $     (0.15)  $     (0.23)  $     (0.14)
                                                 ==========   ===========   ===========   ===========

Net loss per common share basic
 and diluted..................................   $    (0.09)  $     (0.15)  $     (0.23)  $     (0.19)
                                                 ==========   ===========   ===========   ===========
Weighted average number of
shares outstanding basic and
 diluted......................................    8,565,190     8,565,465     8,562,157     8,565,328
                                                 ==========   ===========   ===========   ===========
</TABLE>


                            See accompanying notes

                                       4
<PAGE>

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                                   Six Months ended
                                                                                                       June 30,
                                                                                           --------------------------------
                                                                                                 2000              2001
                                                                                             -----------       -----------
<S>                                                                                          <C>               <C>
Operating activities:
   Net loss..............................................................................    $(1,952,242)      $(1,595,834)
   Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization.......................................................        197,158           200,000
     Amortization of film costs..........................................................      7,935,128         9,287,388
     Cumulative effect of a change in accounting principles..............................              -           364,000
   Changes in operating assets and liabilities:
     Accounts receivable.................................................................       (184,922)         (346,070)
     Film costs..........................................................................     (9,475,977)       (1,689,077)
     Deposits and other assets...........................................................       (131,646)         (360,255)
     Accounts payable....................................................................       (772,862)         (703,696)
     Accrued expenses....................................................................       (503,213)         (426,825)
     Deferred revenue....................................................................     (1,736,467)       (6,971,482)
                                                                                             -----------       -----------
     Net cash used in operating activities...............................................     (3,152,109)       (2,241,851)
Investing activities:
   Additions to property and equipment...................................................        (92,512)          (58,257)
                                                                                             -----------       -----------
     Net cash used in investing activities...............................................        (92,512)          (58,257)
Financing activities:
   Exercise of Stock Options.............................................................         58,938             9,375
                                                                                             -----------       -----------
       Net cash provided by financing activities.........................................         58,938             9,375
   Net decrease in cash..................................................................     (3,185,683)       (2,290,733)
   Cash and cash equivalents at beginning of period......................................      7,557,673         4,203,221
                                                                                             -----------       -----------
   Cash and cash equivalents at end of period............................................    $ 4,371,990       $ 1,912,488
                                                                                             ===========       ===========
Supplemental disclosure of cash flow information:

   Cash paid during the period for:
         Income taxes....................................................................    $     8,400       $     6,000
                                                                                             ===========       ===========
</TABLE>

                            See accompanying notes

                                       5
<PAGE>

                               FILM ROMAN, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1) - Basis of Presentation

     Film Roman, Inc., a Delaware corporation (the "Company"), currently
conducts all of its operations through its wholly owned subsidiaries, Film
Roman, Inc., a California corporation; Namor Productions, Inc., a California
corporation;  Chalk Line Productions, Inc., a California corporation; Diversion
Entertainment, Inc., a Delaware corporation; Level 13 Entertainment, Inc., a
Delaware corporation, and Special Project Films, Inc., a Delaware corporation.
The accompanying consolidated unaudited financial statements of the Company have
been prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include
all of the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements.  In the opinion
of management, all adjustments consisting only of normal recurring accruals
necessary to present fairly the financial position of the Company as of June 30,
2001 and the results of its operations for the three and six months ended June
30, 2000 and 2001 and the cash flows for the six months ended June 30, 2000 and
2001 have been included.  The results of operations for interim periods are not
necessarily indicative of the results which may be realized for the full year.
For further information, refer to the financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000 (the "Form 10-K") filed with the Securities and Exchange Commission.

(2) - Net Loss per Common Share

     For the three and six months ended June 30, 2000 and 2001, the per share
data is based on the weighted average number of common and common equivalent
shares outstanding during the period.  Common equivalent shares, consisting of
outstanding stock options, are not included since they are antidilutive.

(3) - Film Costs

     The components of unamortized film costs consist of the following:

<TABLE>
<CAPTION>
                                                 December 31, 2000      June 30, 2001 (unaudited)
                                                 -----------------      -------------------------
<S>                                              <C>                    <C>
Film productions released, net of amortization         $   678,154                    $   586,730

Film productions in process                             22,549,666                     14,666,012

Film productions in development                          1,330,889                      1,343,656
                                                       -----------                    -----------

                                                       $24,558,709                    $16,596,398
                                                       ===========                    ===========
</TABLE>

                                       6
<PAGE>

(4) - Pentamedia Transaction

     The Company had anticipated the receipt of approximately $10,000,000 to
$15,000,000 in cash from the issuance and sale of common stock to Pentamedia
Graphics, Ltd. ("Pentamedia").  However, after several attempts to restructure
the stock purchase transaction between the two companies, and two closing date
extensions, Pentamedia continued to provide no satisfactory evidence of its
ability to deliver the agreed upon purchase price in the agreed upon manner.
Consequently, on May 18, 2001, Film Roman terminated the transaction between the
two companies and later submitted a demand for arbitration on the grounds that
Pentamedia had breached the agreements between the two companies.  Film Roman is
no longer constrained from pursuing other strategic alliances and financing
sources.

(5) - Change in Accounting Principle

     In June 2000, Statement of Position 00-2 "Accounting by Producers or
Distributors of Films" ("SOP-002") was issued.  SOP 00-2 establishes new
financial accounting and reporting standards for producers and distributors of
films, including changes in accounting for advertising, development and overhead
costs.  The Company adopted the provisions of SOP 00-2 as of January 1, 2001.

     The SOP requires that certain indirect overhead costs and development costs
for abandoned projects be charged directly to expense, instead of those costs
being capitalized to film costs as was required under the previous accounting
model.  In connection with the adoption of the SOP, the Company recorded a non-
cash charge of $364,000 to reduce the carrying value of its film inventory.
Such amount is primarily due to the expensing of certain indirect overhead costs
and development costs for abandoned projects, which were previously capitalized.
The non-cash charge is reflected as a cumulative effect of a change in
accounting principle on the accompanying consolidated statements of operations.

                                       7
<PAGE>

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

This Form 10-Q contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.  The words "expect", "estimate",
"anticipate", "predict", "believe", "plan", "should", "may" and "projects" and
similar expressions and variations thereof are intended to identify forward-
looking statements.  Such forward-looking statements relate to, among other
things, trends affecting the financial condition or results of operations of the
Company; the Company's future production and delivery schedule (including the
number of episodes of programming to be produced and delivered during the 2001-
2002 television season); plans to enter into new business areas beyond the
Company's core business of animation television production; the Company's
objectives, planned or expected activities and anticipated financial performance
and liquidity.  These forward-looking statements are based largely on the
Company's current expectations and are subject to a number of risks and
uncertainties, including without limitation, those described under the caption
"Risks Related to the Business Risk Factors" in the Company's Form 10-K for the
year ended December 31, 2000.  Actual results could differ from these forward-
looking statements.  The Company does not make projections of its future
operating results and undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

General

     Film Roman, Inc. ("Film Roman" or the "Company") develops, produces and
distributes a broad range of television programming for the television network,
cable television, first-run domestic syndication and international markets. The
Company was founded in 1984 and has grown into one of the leading independent
animation studios in the world.  Film Roman has produced and is producing some
of the world's best known animated series, including The Simpsons, King of the
Hill, The Mask, Bobby's World, The Twisted Tales of Felix the Cat and Garfield &
Friends.  Over the years, the Company has primarily produced animation for
television, both on a fee-for-service and a proprietary basis.  The Company had
pursued a limited amount of live action feature film development, which is now
being phased out so that the Company can concentrate on animated projects.

     Production work on a fee-for-services basis has historically accounted for
the largest and most reliable portion of the Company's revenues.  Fees paid to
the Company for these production services generally range from $300,000 to
$800,000 per episode and typically cover all direct production costs plus a
profit margin.  The Company also produces programming for which it controls some
of the proprietary rights (including, for example, international distribution
and licensing and merchandising rights).  Fees paid to the Company for these
production services typically do not cover all direct production costs.
Generally, the Company seeks to cover a portion of its production costs prior to
production of its proprietary programs and seeks to cover the remaining
production costs through the exploitation of the proprietary rights associated
with these programs.  As a result, the Company may recognize revenue associated
with its proprietary programming over a period of years.

     The Company produces a limited number of animated television series in any
year and is substantially dependent on revenues from licensing these programs to
broadcasters and from fees from producing programs for third parties.  The
Company's future performance will be affected by issues facing all producers of
animated programming, including risks related to the limited number of time
slots allocated to children's and/or animated television programming, the
intense competition for those time slots, the limited access to distribution
channels (particularly for programs produced by independent studios), the
declining license fees paid to producers of programming by broadcasters and the
regulations implemented by the Federal Communications Commission ("FCC")
governing program content.  While the Company seeks to limit its financial risk
associated with its proprietary programming by obtaining commitments from third
parties prior to production to cover a portion of its direct production costs,
there can be no assurance that the Company will be able to cover the balance of
its production costs and overhead costs relating to

                                       8
<PAGE>

production, licensing and distribution through the exploitation of its
proprietary rights. As a result of the foregoing risks, there can be no
assurance that the Company will be able to generate revenues that exceed its
costs.

     The Company's future performance will be affected by unpredictable and
changing factors that influence the success of an individual animated or live
action television program, feature film or direct-to-video release such as
personal taste of the public and critics as well as public awareness of a
production and the successful distribution of a production. Although the Company
intends to attempt to limit the risks involved with television, film and direct-
to-video production, the Company will likely be unable to limit all financial
risk, and the level of marketing, promotional and distribution activities and
expenses necessary for such production cannot be predicted with certainty.  All
production involves many of these risks, which include, but are not limited to,
the risk of strike by actors and film crew, increased union activity, delay in
production, weather and other local conditions, inability to obtain proper
permitting at a desired site, at desired times and/or under desired terms, and
accidents or injury to actors and film crew.  No assurance can be given that the
Company will produce any live action television projects or direct-to-video
productions or that, if produced, such productions will be profitable.

The Company's 2001 Production Schedule

     The Company has historically been a major producer of animated prime time,
first run syndicated, and Saturday morning programming.  The market for these
programs is composed of television networks (ABC, CBS, NBC, FOX, UPN and WB);
syndicators of first run programming that license programming on local stations
nationwide (Columbia-Tristar, Universal, Paramount, King, Fox, MGM and Viacom);
and cable networks and services (USA, Disney Channel, Fox Family, HBO, Showtime
and TNT).  The Company also has produced numerous animated commercials.  The
company is spending a minor amount of money developing low cost live action
television programs.

     The Company is currently scheduled to produce the following programming for
the 2001-2002 broadcast season:

          The Simpsons. The Company is scheduled to produce 22 new episodes of
     The Simpsons for exhibition over the Fox Broadcasting Network. Entering its
     thirteenth season and now the longest-running prime time animated series in
     television history, The Simpsons has been honored with a number of awards,
     including a Peabody Award, Emmy Awards, Annie Awards, Genesis Awards,
     International Monitor Awards and Environmental Media Awards, among numerous
     other honors. The Simpsons has transformed the way the television industry
     and audiences perceive animation and comedy series in general.

          King of the Hill. The Company is currently scheduled to produce 22 new
     episodes of King of the Hill to be exhibited on the Fox Broadcasting
     Network. King of the Hill is the hit half-hour, animated comedy, voted the
     Best Television Show of 1997 by TV Guide and Entertainment Weekly, that
     tells the hilarious stories about Hank Hill, his family and their neighbors
     in the fictional suburb of Arlen, Texas, the heartland of America.

          X-Men.  The Company is currently scheduled to produce 17 episodes of
     X-Men to be exhibited on the WB Network during the fall of 2001.

          Day Dreams.  The Company is developing a live action half hour
     television series.

          Santa Claus Brothers.  The Company is developing with Nelvana a one
     hour Christmas special using 3D animation that will air on the Disney
     Channel.

                                       9
<PAGE>

          Tara.  The Company has produced a live action direct-to-video two-hour
     film starring Ice T and Isaiah Washington, and directed by Leslie Small.

          Doomsday.  The Company is currently in the final stage of development
     of a proposed series entitled Doomsday to be produced in association with
     Howard Stern Productions, among others, for broadcast over UPN.

          Werner.  The Company has produced a digitally animated pilot for a
     series distributed by Platinum Studios both on the Internet and via
     traditional television.

          Hairballs.  The Company and MTV are developing this animated series
     for broadcast.

Results of Operations

Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

     Total revenue increased by 19%, or $1.5 million, to $9.4 million for the
quarter ended June 30, 2001, from $7.9 million for the quarter ended June 30,
2000.  Total revenue increased because the Company delivered a live action
direct-to-video two-hour film.

     The Company delivered 9 fee-for-services episodes during the quarter ended
June 30, 2001 compared to 11 episodes in the comparable period in 2000.  Fee-
for-services revenue decreased 12%, or $0.9 million, to $6.5 million for the
quarter ended June 30, 2001, from $7.4 million in the comparable period in 2000
as a result of the decrease in episodes delivered.

     The Company delivered no "proprietary" episodes for the quarters ended June
30, 2001 and 2000. "Proprietary revenue" consists of revenue derived from the
U.S. license fees paid upon the initial delivery of a new episode of proprietary
programming to a U.S. broadcaster and from the exploitation of the proprietary
rights (e.g., merchandising, licensing and/or international distribution rights)
associated with the proprietary episodes in the Company's library that were
initially delivered in prior periods.  The Company earned minimal proprietary
revenue during the three months ended June 30, 2001 and 2000.

     Other revenue increased to $2.9 million for the quarter ended June 30, 2001
compared to $0.5 million for the quarter ended June 30, 2000.  The increase is
primarily due to the delivery of a live action direct-to-video two-hour film.

     Total cost of revenue increased by 18%, or $1.4 million, to $9.3 million
for the quarter ended June 30, 2001, from $7.9 million for the quarter ended
June 30, 2000.  Total cost of revenue as a percentage of sales decreased 1% to
99% for the quarter ended June 30, 2001, from 100% in the comparable period in
2000 due to higher fee-for-service margins.

     Total selling, general and administrative expenses for the quarter ended
June 30, 2001 increased by $0.5 million to $1.4 million from $0.9 million for
the comparable period in 2000, due to one-time costs incurred in connection with
the termination of certain administrative employees and the phasing out of the
live action feature film division, along with costs incurred from the Pentamedia
transaction.

     Operating loss was $1.3 million for the quarter ended June 30, 2001, as
compared to a loss of $0.9 million for the quarter ended June 30, 2000.

                                       10
<PAGE>

Six Months Ended June 30, 2001 Compared to Six Months Ended June 30, 2000

     Total revenue increased by 39%, or $8.0 million, to $28.6 million for the
six months ended June 30, 2001, from $20.6 million for the six months ended June
30, 2000.  Total revenue increased because the Company delivered more fee-for-
services episodes, a movie-of-the-week special and a live action direct-to-video
two-hour film.

     The Company delivered 47 fee-for-services episodes during the six months
ended June 30, 2001 compared to 29 episodes in the comparable period in 2000.
Fee-for-services revenue increased 14%, or $2.6 million, to $21.8 million for
the six months ended June 30, 2001, from $19.2 million in the comparable period
in 2000 as a result of the increase in episodes delivered.

     The Company delivered no "proprietary" episodes for the quarters ended June
30, 2001 and 2000. "Proprietary revenue" consists of revenue derived from the
U.S. license fees paid upon the initial delivery of a new episode of proprietary
programming to a U.S. broadcaster and from the exploitation of the proprietary
rights (e.g., merchandising, licensing and/or international distribution rights)
associated with the proprietary episodes in the Company's library that were
initially delivered in prior periods.  Proprietary revenue decreased 67% or $0.2
million to $0.1 million for the six months June 30, 2001 from $0.3 million for
the six months ended June 30, 2000.

     Other revenue increased to $6.7 million for the six months ended June 30,
2001 compared to $1.1 million for the six months ended June 30, 2000.  The
increase is primarily due to the delivery of a movie-of-the-week special and a
live action direct-to-video two-hour film.

     Total cost of revenue increased by 34%, or $7.0 million, to $27.5 million
for the six months ended June 30, 2001, from $20.5 million for the six months
ended June 30, 2000.  Total cost of revenue as a percentage of sales decreased
4% to 96% for the six months ended June 30, 2001, from 100% in the comparable
period in 2000 due primarily to higher fee-for-service margins.

     Total selling, general and administrative expenses for the six months ended
June 30, 2001 increased by $0.1 million to $2.3 million from $2.2 million for
the six months ended June 30, 2000, due to one-time costs incurred in connection
with the termination of certain administrative employees and the phasing out of
the live action feature film division, along with the costs incurred from the
Pentamedia transaction.

     Operating loss was $1.3 million for the six months ended June 30, 2001, as
compared to a loss of  $2.1 million for the six months ended June 30, 2000.

Subsequent Events

     Pentamedia Transaction

     On July 9, 2001, the Company received $350,000 in cash from Pentamedia as a
result of the Settlement Agreement entered into by the two companies as of such
date.  The settlement followed Film Roman's demand for arbitration submitted to
Pentamedia on June 5, 2001 based upon Film Roman's claim that Pentamedia had
breached the Stock Purchase Agreement and the Memorandum of Understanding
between the two companies.  Additional terms of the Settlement Agreement include
each party's release of the other party from any past or future claims arising
out of the prior agreements between the companies and a mutual agreement to
refrain from making disparaging statements about each other.

                                       11
<PAGE>

Liquidity and Capital Resources

     At June 30, 2001, the Company had cash and short-term investments of
approximately $1.9 million compared to $4.2 million at December 31, 2000.  The
Company's cash and short-term investment balances have continued to decline
since December 31, 2000 and the Company expects cash to decline further during
the next two quarters of 2001.  Management believes that its existing cash
balances and short-term investments, combined with anticipated cash flow from
operations, will nevertheless be sufficient to meet its cash requirements
through the next 12 months.  The Company may need to secure additional equity or
debt financing during fiscal 2001 in order to fulfill its growth strategies.
Recent operating losses, the Company's declining cash balances, trends in the
entertainment industry adversely affecting independent production companies
similar to the Company, and the Company's historical stock performance may make
it difficult for the Company to attract equity investments on terms that are
deemed to be favorable to the Company.  In addition, the Company's losses may
make it more difficult for the Company to attract significant debt financing.
As a consequence, there can be no assurance that the Company will be successful
in arranging for additional equity or debt financing at levels sufficient to
meet its planned needs.  The failure to obtain such financing could have an
adverse effect on the implementation of the Company's growth strategies and its
ability to successfully run its operation.

     For the six months ended June 30, 2001, net cash used in operating
activities was $2,241,851 due to cash used in connection with film production
activities, and by a decrease in deferred revenue.  For the six months ended
June 30, 2001, net cash used in investing activities was $58,257 due to
additions to property and equipment.  Net cash provided by financing activities
was $9,375 for the first six months of 2001.

     The Company recognizes revenues in accordance with the provisions of
Statement of Position 00-2 "Accounting by Producers or Distributors of Films."
Cash collected in advance of revenue recognition is recorded as deferred
revenue.  As of June 30, 2001, the Company had a balance in its deferred revenue
account of $17.8 million. There will be a net cost of $2.6 million to the
Company (future receipts less future expenditures) to finish the programs for
which cash has been collected in advance and included in deferred revenue.

Risk Factors

     The Company's business is subject to numerous risk factors, not all of
which can be known or anticipated and any one of which could adversely impact
the Company or its financial condition.  Some of those risk factors are as
follows:

     Failure to Renew Licenses or Production Agreements.  There can be no
assurance that any of the programs being produced by the Company will be
relicensed for additional broadcast seasons or renewed for production or, if so
relicensed or renewed, that the terms of the license agreements or production
agreements will be as favorable to the Company as those of existing licenses or
production agreements.

     Dependence on a Limited Number of Television Programs.  The Company's
revenue has historically come from the production of a relatively small number
of animated television programs.  King of the Hill, The Simpsons, The Oblongs
and X-Men accounted for approximately 35%, 35%, 16% and 5% respectively, of the
Company's total revenue for the year ended December 31, 2000.  Film Roman cannot
assure that broadcasters will continue to broadcast the Company's proprietary or
fee-for-services programs or that Film Roman will continue to be engaged to
produce such programs.

     Impact of FCC Regulations.  Certain FCC rules may adversely affect the
number of time slots available for the Company's productions.

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<PAGE>

     Risks of Vertical Integration.  Over the last decade, broadcasters,
distributors and producers of television and motion picture programming have
become increasingly integrated vertically through mergers, acquisitions,
partnerships, joint ventures or other affiliations.  Film Roman has not entered
into any of these relationships.  As a result of this integration, the number of
time slots available for children's and/or animated programming and,
specifically, for animated programming supplied by independent animation
studios, may decrease, making it more difficult to compete successfully for
available time slots.

     Declining Value of License Fee Agreements and Increasing Control of
Proprietary Rights by Broadcasters.  Competition created by the emergence of new
broadcasters (such as UPN, WB, MTV, Nickelodeon and the USA Network) has
provided television audiences with more choices, thereby generally reducing the
number of viewers watching any one program.  As a result, the market share of,
and license fees paid by major networks (FOX, NBC, CBS and ABC) may continue to
decrease and make it difficult for Film Roman to finance certain proprietary
programs.

     Current Programs May Not Sustain Their Popularity and New Programs May Not
Become Popular.  Film Roman derives substantially all of its revenue from the
production and distribution of animated television programs. Each program is an
individual artistic work, and consumer reaction will determine its commercial
success.  Film Roman cannot assure that the Company will be able to continue to
create entertaining episodes for its existing programs or that the Company will
be able to create new programs that are appealing to broadcasters.

     Risks Related to Expansion of Production of Proprietary Programming.  Film
Roman intends to expand its production of programming for which the Company owns
or controls certain licensing and/or distribution rights ("proprietary
programming").  These rights may include domestic and international broadcast
distribution, home video distribution, licensing and merchandising, feature film
and interactive/game development ("proprietary rights").  While Film Roman seeks
to limit the financial risk associated with the development of proprietary
programming by obtaining commitments prior to production to cover a portion of
its direct production costs, the Company cannot be sure that it will be able to
recover the balance of the production and overhead costs through the
exploitation of its remaining rights.

     Risk of Budget and Cost Overruns.  Although Film Roman reviews cost
reports, updates the Company's cost projections regularly and has generally
completed each of the Company's productions within its budget, the Company
cannot assure that the actual production costs for its programming will remain
within budget.

     Risks Related to Overestimation of Revenue or Underestimation of Costs.
Effective January 1, 2001, Film Roman follows Statement of Position 00-2
"Accounting by Producers or Distributors of Films" regarding revenue recognition
and amortization of production costs.  All costs incurred in connection with an
individual program or film, including acquisition, development, production and
allocable production overhead costs and interest, are capitalized as television
and film costs.  These costs are stated at the lower of unamortized cost or
estimated net realizable value. Film Roman amortizes its estimated total
production costs for an individual program or film in the proportion that
revenue realized relates to management's estimate of the total revenue expected
to be received from such program or film.  As a result, if revenue or cost
estimates change with respect to a program or film, the Company may be required
to write-down all or a portion of its unamortized costs for the program or film.
The Company cannot make assurances that these write-downs will not have a
significant impact on its results of operations and financial condition.

     Competition.  The creation, development, production and distribution of
television programming, together with the exploitation of the proprietary rights
related to such programming, is a highly competitive business.  Film Roman
competes with producers, distributors, licensors and merchandisers, many of whom

                                       13
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are larger and have greater financial resources than does the Company.  Although
the number of outlets available to producers of animated programming has
increased with the emergence of new broadcasters, the number of time slots
available to independent producers of children's and animated programming
remains limited.  Moreover, because license fees in the United States have
dropped substantially recently, companies that do not rely on U.S. broadcast
license fees to finance the production of animation programming, particularly
international animation companies that receive governmental subsidies, have
achieved a competitive advantage.  These companies now serve as an additional
source of competition for the limited slots available to independent animation
companies.  As a result of these factors, the Company cannot make assurances
that it will be able to remain competitive.

     Overseas Subcontractors.  Like other producers of animated programming,
Film Roman subcontracts some of the less creative and more labor-intensive
components of its production process to animation studios located in low-cost
labor countries, primarily in the Far East.  As the number of animated feature
films television programs increases, the demand for the services of overseas
studios has increased substantially.  This increased demand may lead overseas
studios to raise their fees, which may result in increased production costs, or
an inability to contract with the Company's preferred overseas studios.

     Technological Changes; Possible Changes in Production of Products.  The
proliferation of new production technologies may change the manner in which the
animation industry creates and distributes programming. Recently, certain
animators have begun to use computer-generated animation, including three-
dimensional digital animation, instead of two-dimensional cell animation, to
create their animated programming. Film Roman cannot be sure that the
introduction and proliferation of three-dimensional digital animation or other
technological changes will not cause the Company's historical methods of
producing animation to become less cost competitive or less appealing to its
audiences.  In addition, the Company cannot be sure that it will be able to
adapt to such changes in a cost-effective manner.

     Dependence upon Key Personnel.  Film Roman's success depends to a
significant extent upon the expertise and services of John Hyde, President and
Chief Executive Officer.  Although the Company has employment agreements with
Mr. Hyde and certain other key management personnel, the loss of services of Mr.
Hyde and/or other key management personnel could have an adverse effect on the
Company's business, results of operations and financial condition.  Film Roman
does not currently carry "key man" life insurance policies on any of the
Company's executives.

     Casualty Risks.  Substantially all of the Company's operations and
personnel are located in its North Hollywood headquarters, resulting in
vulnerability to fire, flood, power loss, telecommunications failure or other
local conditions, including the risk of seismic activity.  If a disaster were to
occur, the Company's disaster recovery plans may not be adequate to protect the
Company and its business interruption insurance may not fully compensate the
Company for its losses.

                                       14
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Item 3.  Quantitative and Qualitative Disclosures about Market Risk

    The Company does not utilize market risk sensitive instruments (such as
derivative financial instruments) for trading or other purposes.

    The Company has low exposure to interest rate risk.  The Company currently
does not have any debt (fixed or floating rate) other than trade liabilities and
invests its cash assets in debt instruments with maturities of less than 90
days.  Thus, a decrease (or increase) in future interest rates will directly and
proportionately decrease (or increase, respectively) the Company's future
interest income.  For the six  months ended June 30, 2001, the Company earned
interest income of $48,471.

    The Company is not exposed to significant foreign exchange rate risk.  All
of the Company's contracts with foreign subcontractors are dollar-denominated.
The Company makes limited international sales in foreign currencies, the
aggregate of which the Company estimates to be less than one percent of the
Company's yearly revenue.

                                       15
<PAGE>

                          PART II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K


(a) Exhibits

Those Exhibits, and the Index thereto, required to be filed by Item 601 of
Regulation S-K are attached hereto.

(b) Reports on Form 8-K

The Company filed five reports on Form 8-K during the quarter ended June 30,
2001:

    (1)  On April 6, 2001 the Company reported that Pentamedia Graphics, Ltd.
         ("Pentamedia") appeared unprepared to close the stock purchase
         transaction with the Company at that time, and the Company extended the
         closing date of the transaction to April 13, 2001.

    (2)  The Company filed a report on April 16, 2001 stating that it had
         formally notified Pentamedia of Pentamedia's breach of the Stock
         Purchase Agreement between the two companies.

    (3)  On May 2, 2001 the Company announced that it had reached an agreement
         with Pendamedia on a restructured stock purchase transaction pursuant
         to which Pentamedia would own a maximum of 49.946% of Film Roman's
         common stock with an overall valuation of up to $10,000,000.

    (4)  The Company filed a report on May 18, 2001 related to the Company's
         second formal notification of breach to Pentamedia, in which it claimed
         that Pentamedia had breached both the Stock Purchase Agreement and the
         subsequent Memorandum of Understanding governing the restructured
         transaction between the two companies.

    (5)  On June 6, 2001, the Company issued a report disclosing that it had
         submitted to Pentamedia a demand for arbitration pursuant to the Stock
         Purchase Agreement and the Memorandum of Understanding between the two
         companies.

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                                  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.


Dated: August 9, 2001


                            FILM ROMAN, INC.



                            By:   /s/ John Hyde
                                  ----------------------------
                                  John Hyde
                                  President and Chief Executive Officer and
                                  Director



                            By:   /s/ Joan Thompson
                                  ---------------------------
                                  Joan Thompson
                                  Chief Accounting Officer


                                      S-1
<PAGE>

                               INDEX TO EXHIBITS



Exhibit
Number       Description
------       -----------


10.1(a)      Production Services Agreement, dated as of June 18, 2001, between
             the Company and Producers Sales Organization, furnishing the
             services of John W. Hyde

10.1(b)      Executive Employment Agreement, dated June 18, 2001, between the
             Company and John W. Hyde


10.7         Stock Option Plan of the Company (Incorporated by reference to
             Annex A of the Revised Definitive Proxy Statement (Registration No.
             000-29642) as filed by the Registrant on May 1, 2000)