UNITED STATESSECURITIES AND EXCHANGE COMMISSION WASHINGTON,
D.C. 20549  FORM 10–QSB x
  QUARTERLY REPORT
  UNDER SECTION 13 OR 15() OF THE SECURITIES EXCHANGE ACT OF 1934 For
the quarterly period ended March 31, 2001
OR  ̈
  TRANSITION REPORT
  UNDER SECTION 13 OR 15() OF THE SECURITIES EXCHANGE ACT OF 1934 For
the transition period from  to Commission
file number 0–18785 
 OXBORO MEDICAL, INC. (Exact name of small business issuer as
specified in its charter)  Minnesota
  41–1391803(State or other jurisdictionof incorporation  or organization)
  (IRS EmployerIdentification
  No.)
 13828
Lincoln Street N.E., Ham Lake, Minnesota 55304(Address of principal executive
offices) (763)
755–9516(Issuer's telephone number) (Former name, former address and former
fiscal year, if changed since last report)  Check whether the issuer (1) filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the past 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: YESxNO ̈ At May 12, 2001 1,768,683 shares of the
issuer's Common Stock were outstanding.   OXBORO MEDICAL, INC.INDEX TO FORM 10-QSB

PART IFINANCIAL INFORMATION:Item
  1.
  Consolidated
  Financial Statements (unaudited)Consolidated Balance Sheets
  at March 31, 2001 (unaudited) and September 30, 2000Consolidated
  Statements of Operations for the Three Months  and Six Months Ended March 31, 2001 and 2000 (unaudited)Consolidated
  Statements of Cash Flows for the Six Months Ended March 31, 2001 and 2000
  (unaudited)Notes
  to Consolidated Financial Statements (unaudited)Item
  2.
  Management's
  Discussion and Analysis or Plan of OperationPART IIOTHER INFORMATION:Item
  6.
  Exhibits and
  Reports on Form 8–KSIGNATURESPart IFinancial Information

Item 1. Financial Statements

OXBORO MEDICAL, INC.CONSOLIDATED BALANCE SHEETS
(unaudited)

March 31,2001
  September
  30,2000ASSETSCurrent Assets:Cash and
  cash equivalents
  $2,542,684
  $461,108Warrant
  proceeds due from trustee
  0
  1,079,196Trade
  receivables, net
  816,491
  708,933Inventories
  785,516
  761,295Income taxes
  receivable
  9,300
  0Deferred
  income taxes
  20,000
  20,000Other
  current assets
  57,094
  12,269Total current assets
  4,231,085
  3,042,801Property and
  equipment, net
  1,088,845
  1,132,546Other assets
  1,566,122
  1,510,618Total assets
  $6,886,052
  $5,685,965LIABILITIES AND STOCKHOLDERS' EQUITYCurrent
  liabilities:Current
  portion of long-term debt
  $48,921
  $50,883Accounts
  payable
  240,343
  148,481Accrued
  payroll and related taxes
  149,347
  168,360Other
  accrued expenses
  51,503
  72,476Total
  current liabilities
  490,115
  440,200Long-term debt,
  net of current portion
  971,431
  379,551Deferred income
  taxes
  20,000
  20,000Total
  liabilities
  1,481,546
  839,751Stockholders
  equity:Common
  stock, $0.01 par value
  17,555
  17,555Additional
  paid-in capital
  3,331,726
  3,309,069Retained
  earnings
  1,819,271
  1,495,725Accumulated
  other comprehensive income
  235,955
  23,865Total
  stockholders' equity
  5,404,506
  4,846,214Total
  liabilities and stockholders equity
  $6,886,052
  $5,685,965See
accompanying notes to consolidated financial statements.

OXBORO MEDICAL, INC.CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)



For the Three Months Ended  March 31,
  For the Six Months Ended March 31,2001
  2000
  2001
  2000Sales, net
  $1,387,312
  $1,204,372
  $2,643,144
  $2,452,636Cost of goods
  sold
  552,143
  401,491
  1,042,035
  845,656Gross profit
  835,169
  802,881
  1,601,109
  1,606,980Selling,
  general and administrative expenses
  686,212
  603,656
  1,301,222
  1,177,750Income from
  operations
  148,957
  199,225
  299,887
  429,230Interest
  expense
  31,885
  10,221
  42,398
  22,133Interest and
  other income (expense)
  35,565
  33,675
  66,057
  79,063Net income
  152,637
  222,679
  323,546
  486,160Other comprehensive income
  293,340
  0
  212,090
  0Comprehensive income
  $445,977
  $222,679
  $535,636
  $486,160Net income per
  share:Basic
  $0.09
  $0.17
  $0.18
  $0.42Diluted
  0.09
  0.15
  0.18
  0.38Weighted
  average common and common equivalent shares outstanding:Basic
  1,768,683
  1,340,199
  1,766,900
  1,164,104Diluted
  1,780,437
  1,530,440
  1,841,834
  1,268,668See
accompanying notes to consolidated financial statements.

OXBORO MEDICAL, INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(unaudited)

For the Six MonthsEnded March 31,2001
  2000Cash flows from
  operation activities:Net income
  $323,546
  $486,160Adjustments
  to reconcile net income to cash flows from operating activities:Depreciation
  and amortization
  83,969
  53,938Gain on sale
  of available-for-sale securities
  (16,130)
  0Changes in operating assets and liabilities:Trade
  receivables, net
  (107,558)
  (13,028)Inventories
  (24,221)
  (64,167)Income taxes
  receivable
  (9,300)
  52,758Other
  current assets
  (58,925)
  (15,169)Accounts
  payable
  91,862
  (101,899)Accrued
  payroll and related taxes
  (19,013)
  32,999Accrued
  consulting fees
  0
  (121,250)Other
  accrued expenses
  (20,973)
  11,674Cash
  flows from operating activities
  243,257
  322,016Cash flows from
  investing activities:Purchases of
  property and equipment
  (40,268)
  (162,250)Proceeds
  from sale of subsidiary
  0
  245,000Proceeds
  from sale of available-for-sale securities
  83,687
  0Change in
  other assets
  103,129
  (14,820)Cash
  flows from investing activities
  146,548
  67,930Cash flows from
  financing activities:Payments on
  line of credit - bank, net
  0
  (145,313)Proceeds
  from long-term debt
  975,000
  0Payments on
  long-term debt
  (385,082)
  (20,405)Proceeds
  from rights and warrants exercised
  1,101,853
  1,007,321Cash
  flows from financing activities
  1,691,771
  841,603Increase in
  cash and cash equivalents
  2,081,576
  1,231,549Cash and cash
  equivalents, beginning of period
  461,108
  303,160Cash and cash
  equivalents, end of period
  $2,542,684
  $1,534,709See
accompanying notes to consolidated financial statements.

OXBORO MEDICAL, INC.NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTSMarch 31, 2001

Note 1
- Basis of Financial Statement Presentation

The
accompanying unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission.  Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States
of America have been consolidated or omitted pursuant to such rules and
regulations, although management believes that the disclosures are adequate to
make the information presented not misleading.In
the opinion of management, the unaudited consolidated financial statements
contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the financial position and results of
operations.  Results of operations for
the interim periods are not necessarily indicative of the results to be
expected for the full year or of the results for any future periods.
             In
preparation of the Company's consolidated financial statements, management is
required to make estimates and assumptions that affect reported amounts of
assets and liabilities and related revenues and expenses.  Actual results could differ from the
estimates used by management.
             Certain
accounts in the prior period consolidated financial statements have been
reclassified for comparative purposes to conform with the presentation in the
current period consolidated financial statements.  These reclassifications had no effect on net income or
stockholders' equity.

Note 2
- Significant Accounting Policies

Income taxes- The Company has adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, under which
deferred income tax assets and liabilities are recognized for the temporary
differences between the financial statement and income tax reporting bases of
assets and liabilities based on currently enacted rates and laws.  These temporary differences include
depreciation and related party accruals.

Revenue recognition- The Company records sales revenue at the time
merchandise is shipped.  The Company
ensures that the transaction complies with the seven conditions and the six
considerations contained in Accounting and Auditing Enforcement Release No. 108
of the Securities and Exchange Commission (SEC).

In
November 1999, the SEC issued Staff Accounting Bulletin (SAB) No. 101, Revenue
Recognition.  SAB No. 101, as amended,
sets forth the SEC staffs position regarding the point at which it is
appropriate for a registrant to recognize revenue.  The staff believes that revenue is realizable and earned when all
of the following criteria are met: persuasive evidence of an arrangement
exists, delivery has occurred or service has been rendered, the sellers price
to the buyer is fixed or determinable and collectibility is reasonably
assured.  The Company uses the above
criteria to determine whether revenue can be recognized, and therefore,
believes that the issuance of this bulletin does not have a material impact on
these financial statements.  The Company
adopted SAB No. 101 during the quarter ended March 31, 2001 and the effect of
adoption was not material to the consolidated financial statements.

Effective January 1, 2001, the
Company began recording amounts being charged to customers for shipping and
handling as revenue in accordance with recently released Emerging Issues Task
Force (EITF) Issue 00-10, Accounting for Shipping and Handling Fees and
Costs.  Historically, the Company had
netted the shipping and handling revenue with the cost of shipping and handling
in cost of sales.  Prior period consolidated financial statements have
been reclassified for comparative purposes to conform with the presentation in
the current period consolidated financial statements.  These reclassifications had no effect on net income or
stockholders' equity.

Recently issued accounting
pronouncement- Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities, as amended, is
effective for years beginning after June 15, 2000.  SFAS No. 133 establishes accounting and reporting standards
requiring that every derivative instrument, including certain derivative
instruments embedded in other contracts, be recorded in the balance sheet as
either an asset or liability measured at its fair value.  SFAS No. 133 requires that changes in the
derivatives fair value be recognized currently in earnings unless specific
hedge criteria are met.  Special
accounting for qualifying hedges allows a derivatives gains or losses to
offset related results on the hedged item in the statement of operations and
requires that a company must formally document, designate and assess the
effectiveness of transactions that receive hedge accounting.  The adoption of SFAS No. 133 did not have a
material effect on the Companys financial position or results of operations.

Note 3
- Inventories

March 31, 2001
  September 30, 2000Inventories
  consist of:Raw
  materials
  $507,520
  $497,950Work in process
  85,086
  77,675Finished
  goods
  277,313
  287,873Total
  869,919
  863,498Less: valuation
  reserve
  (84,403)
  (102,203)Inventories, net
  $785,516
  $761,295Note 4
- Available for Sale Securities

The
Company classifies all equity securities, which are not cash equivalents, as
available-for-sale securities. Available-for-sale securities are reported at
fair value with all unrealized gains or losses included in other comprehensive
income.  The fair value of the
securities is determined by quoted market prices of the underlying security.

Note 5
-Net Income Per
Share

The
Company's basic net income per share amounts have been computed by dividing net
income by the weighted average number of outstanding common shares.  The Company's diluted net income per share
is computed by dividing net income by the weighted average number of
outstanding common shares and common share equivalents relating to stock
options and warrants, when dilutive. 
For the three months ended March 31, 2001 and 2000, 11,754 and
190,241 shares of common stock equivalents were included in the computation of
diluted net income per share, respectively. For the six months ended
March 31, 2001 and 2000, 74,934 and 104,564 shares of common stock
equivalents were included in the computation of diluted net income per share,
respectively.

Options
to purchase 38,900 and 44,400 shares of common stock with a weighted average
exercise price of $5.44 and $6.26 were outstanding at March 31, 2001 and
2000, respectively, but were excluded from the computation of common share
equivalents because their exercise prices were greater than the average market
price of the common shares for such periods.

Note 6
- Income Taxes

The
Company utilized net operating loss carryforwards to offset income tax expense
during the six months ended March 31, 2001.  Accordingly, the Company did not report income tax expense.  Remaining net operating loss carryforward
available to offset future income taxes total approximately $875,000.

Note 7
- Long-term debt

In January
2001 the Company entered into a $975,000 mortgage payable.  The mortgage payable requires monthly
installments of $8,175 including interest at 8.5% and is due in February
2011.  A portion of the proceeds from
the new mortgage payable were used to pay off an existing mortgage which was to
mature in June 2001 of approximately $370,000 and the remaining proceeds are
included in cash and cash equivalents at March 31, 2001.

Note 8 - Subsequent event

The
Company entered into an asset purchase agreement dated April 24, 2001 between
the Johnson & Johnson Medical division of Ethicon, Inc. (the Seller) and
the Company for the purchase of the Sellers assets and assumption of certain
liabilities related to the Sellers Sterion business unit.  The purchase price is $2.7 million, subject
to adjustment after closing for certain inventory book value.   The Company will pay the purchase price
using cash and cash equivalents of approximately $700,000 and a commitment from
Crown Bank of Edina, Minnesota for a loan of up to approximately $2.6 million.

Item 2. Management's
Discussion and Analysis or Plan of Operation

Overview

The
Company ("Oxboro") develops, assembles, and markets medical and
surgical devices.  Principal medical
products produced and sold by Oxboro include silicone loops, silicone and
fabric clamp covers, instrument guards, suture aid booties, identification
sheet and roll tape, and various holders and organizers for instruments used in
the operating room.

Results of
Operations

Net
sales for the six-month period ended March 31, 2001 were $2,643,144 as
compared to $2,452,636 for the corresponding period in the previous fiscal
year.  This represents an increase of
approximately 7.8%.  Net sales for the
three-month period ended March 31, 2001 were $1,387,312 as compared to
$1,204,372 for the corresponding period in the previous fiscal year.  This represents an increase of approximately
15.2%.  Continued competition and
pricing pressure have constrained revenue growth in the Company's existing
product lines; however several new products have recently been added and the
Company expects these new products, together with future additions to
contribute to sales growth in the future.

Gross
profit as a percent of net sales for the first six months of fiscal 2001 and
2000 was 61% and 66%, respectively. 
Gross profit as a percent of net sales for the three-month period ended
March 31, 2001 and 2000 was 60% and 67%, respectively.  The decrease in gross profit percentage for
fiscal year 2001 results from a increase in labor and overhead costs being
absorbed into cost of goods sold, with a corresponding decrease in general and
administrative expenses.

Income
from operations for the first six months of fiscal year 2001 was $299,887 as
compared to $429,230 in the same period of fiscal 2000.  Income from operations for the three-month
period ended March 31, 2001 was $148,957 as compared to $199,225 in the same
period of fiscal 2000.  In the current
year, general and administrative expenses have increased because of increased staffing
for future new product support.

Liquidity
and Capital Resources

The
Company has typically financed its operations through internal working capital
and a bank line of credit. Financing of its building has been through long-term
bank financing.  The Company believes it
has adequate capital to meet its cash requirements for the next twelve months
(see note 8).  As of March 31,
2001, the Company had working capital of $3,740,970 as compared to $2,602,601 at
September 30, 2000, and long-term debt of $971,431 at March 31, 2001
compared to $379,551.  The increase in
working capital and long-term debt from September 30, 2000 to March 31, 2001
principally relates to the proceeds of approximately $605,000 (net of previous
mortgage paid off of approximately $370,000) of the new mortgage payable
entered into in January 2001 (see note 7). 
As of March 31, 2001, the Company had $2,542,684 in cash and cash
equivalents as compared to $461,108 at September 30, 2000.  The increase in cash and cash equivalents of
approximately $2.1 million from September 30, 2000 to March 31, 2001
principally relates to warrant proceeds of approximately $1.1 million received
and the net mortgage proceeds previously noted.

During
the six months ended March 31, 2001, the Company generated $243,257 in net
cash from operating activities primarily due to net income offset by an
increase in accounts receivable.  The
Company used $146,548 in investing activities during the six months ended
March 31, 2001, primarily due to the purchases of equipment of
approximately $40,000, proceeds received of approximately $84,000 on the sale
of available-for-sale equity securities, receipt of approximately $135,000 of
cash value of life insurance and the payment of approximately $32,000 of loan
origination fees.The Company generated
$1,691,771 in cash from financing activities due to warrant proceeds of
approximately $1.1 million received and proceeds of approximately $605,000 from
the new mortgage (see above).

Forward-Looking
Statements

This
report contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934.  In addition, forward-looking statements may
be made orally in the future by or on behalf of the Company.  When used in this report, the words
"believe," "expect," "will," "can,"
"estimate," "anticipate" and similar expressions are
intended to identify such forward-looking statements.  The Company wishes to caution readers not to place undue reliance
on any forward-looking statements and to recognize that the statements are not
predictions of actual future results. 
Actual results could differ materially from those anticipated in the
forward-looking statements due to the risks and uncertainties set forth in our
2000 Annual Report on Form 10-KSB under the caption "Risks Related to
Our Business," as well as others not now anticipated.  These risks and uncertainties include,
without limitation: market acceptance of the Company's products and our ability
to acquire new products, pricing strategies of competitors, general conditions
in the industries served by our products, including consolidation of customers
and the potential loss of those customers or their ability to demand discounted
pricing on our products, changes in management of the Company, maintenance of
operating capital and bank financing, the continuing licensing dispute with one
of our former officers, the success of competitive products, continuing
relationships with our third party suppliers, and overall economic conditions,
including inflation and consumer buying patterns.

PART II -
OTHER INFORMATION

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

(a)         Exhibits:

None

(b)        Reports on Form 8-K:

On May 9, 2001, the Company filed a current report on
Form 8-K, announcing the Company entered into an asset purchase agreement dated
April 24, 2001 between the Johnson & Johnson Medical division of Ethicon,
Inc. (the Seller) and the Company for the purchase of the Sellers assets and
assumption of certain liabilities related to the Sellers Sterion business unit.  The purchase price is $2.7 million, subject
to adjustment after closing for certain inventory book value.  The pro forma financial information will be
filed by amendment within 60 days of the filing date.SIGNATURES

In
accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Oxboro Medical, Inc.Date: May 14, 2001
  By: /s/ J. David BerkleyJ. David Berkley, President(Principal Executive Officer)Date: May 14, 2001
  By: /s/ Ramon L. BurtonRamon L Burton, Chief Financial Officer(Principal Financial and Accounting Officer)