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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-QSB

|/x/ | QUARTERLY REPORT UNDER SECTION 13 OR 15() OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | --------------------------------------------------------------------------------

For the quarterly period ended December 31, 2000
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

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LOGO

OXBORO MEDICAL, INC.(Exact name of small business issuer as specified in its charter)

Minnesota(State or other jurisdiction of
incorporation or organization)

41-1391803(IRS Employer Identification 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)

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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:
YES /x/  NO / /

At
February 12, 2001 1,768,683 shares of the issuer's Common Stock were outstanding.

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OXBORO MEDICAL, INC.  INDEX TO FORM 10-QSB

|                              |         |                                                                                                         |                                                           | PAGE
|----------------------------- | ------- | ------------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ----
|PART IFINANCIAL INFORMATION:
|                              | Item 1. |                                                                                                         | Consolidated Financial Statements (unaudited)             |     
|                              |         | Consolidated Balance Sheets at December 31, 2000 and September 30, 2000 (unaudited)                     |                                                           | 3   
|                              |         | Consolidated Statements of Operations for the Three Months Ended December 31, 2000 and 1999 (unaudited) |                                                           | 4   
|                              |         | Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2000 and 1999 (unaudited) |                                                           | 5   
|                              |         | Notes to Consolidated Financial Statements (unaudited)                                                  |                                                           | 6   
|                              | Item 2. |                                                                                                         | Management's Discussion and Analysis or Plan of Operation |     
|PART IIOTHER INFORMATION:   
|                              | Item 5. |                                                                                                         | Other Information                                         |     
|                              | Item 6. |                                                                                                         | Exhibits and Reports on Form 8-K                          |     
|SIGNATURES                    |         | 9                                                                                                      

2

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Part IFinancial Information

Item 1. Financial Statements

OXBORO MEDICAL, INC.        CONSOLIDATED BALANCE SHEETS        (unaudited)

|                                               |                                               | December 31,
2000 |           | September 30,
2000
|---------------------------------------------- | --------------------------------------------- | ----------------- | --------- | ------------------
|ASSETS                                        
|Current Assets:                                |                                               |                   |           |                   
|                                               | Cash and cash equivalents                     |                   | $         | 1,577,843         
|                                               | Warrant proceeds due from trustee             |                   |           | 0                 
|                                               | Trade receivables, net                        |                   |           | 775,209           
|                                               | Inventories                                   |                   |           | 768,396           
|                                               | Income taxes receivable                       |                   |           | 9,300             
|                                               | Deferred income taxes                         |                   |           | 20,000            
|                                               | Other current assets                          |                   |           | 16,871            
|                                               | Total current assets                          |                   | $         | 3,167,619         
|PROPERTY AND EQUIPMENT, NET                    |                                               | $                 | 1,108,398 |                   
|OTHER ASSETS                                   |                                               | $                 | 1,479,418 |                   
|TOTAL ASSETS                                   |                                               | $                 | 5,755,435 |                   
|LIABILITIES AND SHAREHOLDERS' EQUITY          
|CURRENT LIABILITIES:                           |                                               |                   |           |                   
|                                               | Note payable to bank                          |                   | $         |                  
|                                               | Current maturities of long-term obligations   |                   |           | 41,941            
|                                               | Accounts payable                              |                   |           | 170,310           
|                                               | Accrued salaries, wages, and payroll taxes    |                   |           | 147,720           
|                                               | Accrued consulting fees                       |                   |           | 4,500             
|                                               | Other accrued expenses                        |                   |           | 33,800            
|                                               | Total current liabilities                     |                   | $         | 398,271           
|LONG-TERM OBLIGATIONS, less current maturities |                                               | $                 | 378,230   |                   
|DEFERRED INCOME TAXES                          |                                               |                   | 20,000    |                   
|SHAREHOLDERS' EQUITY:                          |                                               |                   |           |                   
|                                               | Common stock, $0.01 par value                 |                   |           | 17,555            
|                                               | Additional paid-in capital                    |                   |           | 3,332,130         
|                                               | Retained earnings                             |                   |           | 1,666,633         
|                                               | Accumulated other comprehensive income (loss) |                   |           | (57,385           
|                                               | Total shareholders' equity                    |                   |           | 4,958,933         
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     |                                               | $                 | 5,755,435 |                   

See
accompanying notes to consolidated financial statements.

3

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

|                                                                  |         | For the Three Months
Ended December 31,
|----------------------------------------------------------------- | ------- | ---------------------------------------
|
|Net Sales                                                         |         | $                                      
|Cost of Goods Sold                                                |         |                                        
|Gross profit                                                      |         |                                        
|Selling, general and administrative expenses                      |         |                                        
|Operating income                                                  |         |                                        
|Interest expense                                                  |         |                                        
|Interest and other income                                         |         |                                        
|Net income                                                        |         | $                                      
|Income per share from continuing operations:                      |         |                                        
|                                                                  | Diluted |                                        
|Net income per share:                                             |         |                                        
|                                                                  | Basic   |                                        
|                                                                  | Diluted |                                        
|Weighted average common and common equivalent shares outstanding: |         |                                        
|                                                                  | Basic   |                                        
|                                                                  | Diluted |                                        

See
accompanying notes to consolidated financial statements.

4

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

|                                                  |                                                                                   | For the Three Months
Ended December 31,     |          
|------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------- | ---------
|
|CASH FLOWS FROM OPERATING ACTIVITIES:             |                                                                                   |                                             |          
|                                                  | Net income                                                                        |                                             | $        
|                                                  | Adjustments to reconcile net income to net cash provided by operating activities: |                                             |          
|                                                  | Depreciation and amortization                                                     |                                             |          
|                                                  |                                                                                   | Change in operating assets and liabilities: |          
|                                                  | Trade receivables, net                                                            |                                             |          
|                                                  | Inventories                                                                       |                                             |          
|                                                  | Prepaid expenses                                                                  |                                             |          
|                                                  | Other current assets                                                              |                                             |          
|                                                  | Accounts payable                                                                  |                                             |          
|                                                  | Accrued wages, salaries and payroll taxes                                         |                                             |          
|                                                  | Accrued consulting fees                                                           |                                             |          
|                                                  | Other accrued expenses                                                            |                                             |          
|                                                  | Income taxes receivable                                                           |                                             |          
|                                                  | NET CASH PROVIDED BY OPERATING ACTIVITIES                                         |                                             |          
|CASH FLOWS FROM INVESTING ACTIVITIES:             |                                                                                   |                                             |          
|                                                  | Proceeds from sale of business segment                                            |                                             |          
|                                                  | Purchases of property and equipment                                               |                                             |          
|                                                  | Change in other assets                                                            |                                             |          
|                                                  | NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITES                                |                                             |          
|CASH FLOWS FROM FINANCING ACTIVITIES:             |                                                                                   |                                             |          
|                                                  | Net borrowings (payments) under note payable to bank                              |                                             |          
|                                                  | Net proceeds from rights and warrants exercised                                   |                                             |          
|                                                  | Payments on long-term obligation                                                  |                                             |          
|                                                  | NET CASH PROVIDED BY FINANCING ACTIVITIES                                         |                                             |          
|NET INCREASE IN CASH AND CASH EQUIVALENTS         |                                                                                   |                                             | 1,116,735
|CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD |                                                                                   |                                             | 461,108  
|CASH AND CASH EQUIVALENTS, AT END OF PERIOD       |                                                                                   | $                                           | 1,577,843
|Supplemental cash flows information:              |                                                                                   |                                             |          
|                                                  | Cash paid for interest                                                            |                                             | $        
|                                                  | Cash paid for income taxes                                                        |                                             | $        

See
accompanying notes to consolidated financial statements.

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OXBORO MEDICAL, INC.    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS    December 31, 2000

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 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 year financial statements have been reclassified for comparative purposes to conform with the presentation in the current year financial statements.
These reclassifications had no effect on net income or shareholders' equity.

Note 2Inventories

|                        |                | December 31, 2000 |         | September 30, 2000
|----------------------- | -------------- | ----------------- | ------- | ------------------
|Inventories consist of: |                |                   |         |                   
|                        | Raw materials  |                   | $       | 490,043           
|                        | Finished goods |                   |         | 278,353           
|                        |                | $                 | 768,396 |                   

Note 3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 December 31, 2000 and 1999, 138,116 and 35,003 shares of common stock equivalents were included in the computation of diluted net income per share respectively.

Options
to purchase 52,900 and 50,400 shares of common stock with a weighted average exercise price of $5.51 and $6.81 were outstanding at December 31, 2000 and 1999,
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 4Income Taxes

The Company utilized net operating loss carryforwards to offset income tax expense during the three months ended December 31, 2000. Accordingly, the
Company did not report income tax expense. Remaining net operating loss carryforwards available to offset future income tax total approximately $1,100,000.

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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 three-month period ended December 31, 2000 were $1,159,128 as compared to $1,154,429 for the corresponding period in the previous
fiscal year. This represents an increase of approximately 0.4%. 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 three months of fiscal 2001 and 2000 was 64.0% and 67.0%, 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.

Net
income for the first three months of fiscal year 2001 was $170,909 as compared to net income of $263,481 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. As of December 31, 2000, the Company had working
capital of $2,769,348 as compared to $2,602,601 at September 30, 2000, and long-term debt of $420,171. As of December 31, 2000, the Company had $1,577,843 in cash as compared
to $461,108 at September 30, 2000.

During
the three months ended December 31, 2000, the Company generated $101,720 in net cash from operating activities primarily due to net income and receipt of income taxes
receivable offset by the payment of accrued consulting fees and purchases of inventory. The Company used $76,979 in investing activities during the three months ended December 31, 2000,
primarily due to the purchases of equipment and deposits made on other assets. The Company generated $1,091,994 in cash from financing activities due to the net proceeds from its stock rights offering
completed on November 30, 1999 offset by payments made on outstanding long term obligations.

As
of December 31, 2000, the Company had $550,000 available at the rate of prime plus .50% under a line of credit agreement which expires March 31, 2001. No amounts were
outstanding on this line of credit at December 31 or September 30, 2000.

In
November 2000, the Company received a commitment from a mortgage company to refinance the existing mortgage on the building. The refinancing and new mortgage was completed
on December 15, 2000. The new mortgage was for $975,000 with monthly installments of $8,175 including interest at 8.5% and due in 10 years. The current portion of long term debt includes
this refinancing.

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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 5. Other information

On March 30, 1999 the Company was notified by Mr. Rasmusson, a former Chief Executive Officer and a former director of the Company, that it was
in default of royalty agreements related to certain medical products because of nonpayment of royalties. At the time of the notification the Company believed and continues to believe that no events of
default have occurred. The Company has continued to pay royalties to Mr. Rasmusson and has received no correspondence from Mr. Rasmusson regarding this matter since June 17, 1999.

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



None.



On
October 24, 2000, the Company filed a current report on Form 8-K, announcing that Allan D. Anderson had been appointed to the
Board of Directors at the Company, effective October 6, 2000. The Company also announced that it had hired J. David Berkley as President, effective October 16, 2000, and that Linda
Erickson had resigned effective October 31, 2000 as the Chief Financial Officer of the Company.

8

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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: February 14, 2001 |  | By:                 
|Date: February 14, 2001 |  | By:                 

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