~~Electropharmacology,~~SECURITIES Inc. Consolidated Balance Sheets (Unaudited with respect to September 30, 2000) September 30, December 31, 2000 1999 ------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 1,239 $ 6,577 Accounts receivable, net of allowance for doubtful accounts of $30,203 at June 30, 2000 and December 31, 1999 4,562 61,544 Other receivable - 32,612 Inventory 3,172 7,172 Investment - 210,182 Prepaid expenses 45,978 30,031 ---------------------------- Total current assets 54,951 348,128 Property and equipment, net of accumulated depreciation of $308,347 at September 30, 2000 and $255,012 at December 31, 1999 212,622 265,956 Patents, net of accumulated amortization of $30,946 at September 30, 2000 and $26,385 at December 31, 1999 72,409 76,969 Other assets 400 400 ---------------------------- TOTAL ASSETS $ 340,382 $ 691,453 ============================ LIABILITIES AND ~~STOCKHOLDERS'~~EXCHANGE DEFICIT Current liabilities: Accounts payable $ 592,189 $ 403,964 Accrued expenses 421,625 354,606 Accrued expenses - related parties 266,393 63,654 Current portion of long term debt 1,373,882 1,280,890 Current portion of capital leases 13,962 54,504 Total current liabilities 2,668,051 2,157,618 Notes payable - related parties 65,926 65,926 Long term debt, less current portion 25,510 15,503 Long term capital leases, less current portion 6,247 8,188 Mandatorily redeemable convertible preferred stock, $.01 par value, 7,887 shares authorized, issued and outstanding at September 30, 2000 and December 31, 1999 9,561,209 8,886,544 ---------------------------- Total liabilities $12,326,943 $11,133,779 [RESTUBBED TABLE] Stockholders' deficit: Convertible preferred stock, $.01 par value, 9,992,113 shares authorized, no shares issued and outstanding - - Common stock, $.01 par value, 30,000,000 shares authorized; 17,781,292 and 17,268,325 shares issued and outstanding at September 30, 2000 and December 31, 1999, respectively 177,813 172,683 Additional paid-in capital 21,896,522 21,738,152 Accumulated other comprehensive loss - (88,399) Accumulated deficit (34,181,896) (32,506,762) ---------------------------- (12,107,561) (10,684,326) Common stock reserved 121,000 242,000 ---------------------------- Total stockholders' deficit (11,986,561) (10,442,326) ---------------------------- TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $ 340,382 $ 691,453 ============================ The accompanying notes are an integral part of these financial statementsCOMMISSION

~~Electropharmacology~~Washington, ~~Inc~~D. Consolidated Statements of Operations (Unaudited) For the three months ended September 30, ---------------------------- 2000 1999 ---------------------------- Sales revenue $ 44,765 $ 134,697 Grant revenue 15,000 - Total revenues $ 59,765 $ 134,697 ============================ Operating expenses: Cost of sales 49,652 191,683 Selling, general and administrative 217,891 351,484 Research and development 146,601 131,442 ---------------------------- Total operating expenses 414,144 674,609 ---------------------------- Loss from operations (354,379) (539,912) ============================ Other income (expense): Interest income - 8,113 Interest expense (42,883) (36,498) Loss on sale of investment (6,048) (1,310) Loss on disposal of equipment - (82,978) Gain on purchase of minority interest - 1,150,577 ---------------------------- Total other income (expense) (48,931) 1,037,904 ---------------------------- Income (loss) from continuing operations (403,310) 497,992 Minority interest - 211,587 Preferred stock dividend (250,891) (193,008) ---------------------------- Net income (loss) $ (654,201) $ (516,571) ============================ Net income (loss) per share - basic and diluted $ (C.~~04)~~ $ .03 ============================ Weighted average number of common shares outstanding - basic and diluted $17,781,292 $16,295,499 ============================ The accompanying notes are an integral part of these financial statements20549

~~Electropharmacology,~~FORM Inc. Consolidated Statements of Operations (Unaudited) For the nine months ended September 30, ---------------------------- 2000 1999 ---------------------------- Sales revenue $ 164,958 $ 434,772 Grant revenue - 111,500 ---------------------------- Total revenues 276,458 434,772 ============================ Operating expenses: Cost of revenue 193,285 415,334 Selling, general and administrative 722,425 1,631,792 Research and development 181,415 302,917 ---------------------------- Total operating expenses 1,097,125 2,350,043 ---------------------------- Loss from operations (820,667) (1,915,271) ============================ Other income (expense): Interest income 17 32,091 Interest expense (125,468) (104,684) Loss on sale of investment (54,351) (1,310) Loss on disposal of equipment - (82,978) Gain on purchase of minority interest - 1,150,577 ---------------------------- Total other income (expense) (179,802) 993,696 ---------------------------- Loss from continuing operations (1,000,469) (921,575) Minority interest - 671,852 Preferred stock dividend (674,665) (577,675) ---------------------------- Net loss 1,675,134) (827,398) ============================= Net loss per share - basic and diluted $ (.10~~) $ (.05) ============================= Weighted average number of common shares outstanding~~ - ~~basic and diluted $17,556,339 $15,829,749 ============================= The accompanying notes are an integral part of these financial statements~~QSB

~~Electropharmacology, Inc. Consolidated Statements of Cash Flows~~ (~~Unaudited)~~Mark ~~For the nine months ended September 30, ---------------------------- 2000 1999 ---------------------------- Operating activities Net Loss $(1,675,134~~One) $ (827,398) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 57,894 80,220 Amortization of warrants - 228,574 Issuance of common stock for services 42,500 167,822 Loss attributable to minority interest - (671,852) Loss on disposal of equipment - 82,978 Loss on sale of available for sale securities 54,090 1,310 Accretion of preferred stock dividend 674,665 577,675 Gain on purchase of minority interest - (1,150,577) Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 56,992 (25,261) Decrease in trade notes and other receivables 32,612 2,706 Decrease in inventory 4,000 - (Increase) decrease in prepaid expenses (15,947) 79,723 Decrease in deposits - 7,950 Increase (decrease) in accounts payable 188,225 (84,991) Increase in accrued expenses 67,019 178,346 Increase in accrued expenses - related parties 202,739 - ---------------------------- Net cash used in operating activities (310,345) (1,352,775) Investing activities Sales of marketable securities 244,491 - Purchases of property and equipment - (51,610) Loan to related party - (85,000) Repayment of loan to related party - 70,000 Net cash provided by (used in) investing 244,491 (66,610) activities [RESTUBBED TABLE] Financing activities Proceeds from notes payable and capital lease obligations 140,315 - Repayment of notes payable and capital lease obligations (79,799) (114,686) Proceeds from issuance of common stock - 1,400,000 ---------------------------- Net cash provided by financing activities 60,516 1,285,314 ---------------------------- Net increase (decrease) in cash (5,338) (134,071) Cash at beginning of period 6,577 160,011 ---------------------------- Cash at end of period $ 1,239 $ 25,940 ============================ Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 8,131 $ 40,112 Income taxes $ - $ - ---------------------------- Supplemental disclosure of non-cash investing and financing activities: Issuance of common stock for services $ 42,500 $ 111,879 ============================

[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

[ ]TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

From the transition period from ___________ to ____________.

Commission File Number

0-25828

ELECTROPHARMACOLOGY, Inc.

(Exact name of small business issuer as specified in its charter)

Delaware 95-4315412

(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)

PMB 191, 2342 Shattuck Avenue, Berkeley, California 94704

(Address of principal executive offices)

(510) 666-1214

(Issuer's telephone number)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (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 : No 9

As of August 20, 2001 there were 17,784,308 shares of Common Stock of the issuer were outstanding.

ELECTROPHARMACOLOGY, INC.

FORM 10-QSB

INDEX

Part I

Item 1.	Financial Statements	F-3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	F-7

Part II

Item 1.	Legal Proceedings	F-8

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

	Signatures	F-8

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ELECTROPHARMACOLOGY, INC. CONDENSED BALANCE SHEET

		June 30,
		2001
		(Unaudited)
ASSETS

Cash	$ -

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Notes payable and capital leases	$1,780,047
Notes payable - stockholder	110,950
Accounts payable	598,683
Accrued expenses	224,724
Accrued expenses - related party	167,401
Total current liabilities	2,881,805

Mandatorily redeemable convertible preferred stock, $.01 par value, 7,887 shares authorized, issued and outstanding	10,281,088

Stockholders' deficit:
Convertible preferred stock, $.01 par value, 9,990,113 shares
Authorized, no shares issued and outstanding	-
Common stock, $.001 par value, 30,000,000 shares
Authorized: 17,784,308 shares issued and outstanding:	177,843
Additional paid-in capital	23,047,069
Accumulated deficit	(36,508,805)
Total stockholders' deficit	(13,283,893)
Common stock reserved	121,000
	$ -

See accompanying notes to interim condensed financial statements.

ELECTROPHARMACOLOGY, INC. CONDENSED STATEMENT OF OPERATIONS (Unaudited)

	Three months ended June 30,				Six months ended June 30,
	2001		2000		2001		2000

Sales		$ -		$ 158,781		$ -		$ 216,693
Cost of sales		-		77,731		-		143,633
Gross margin		-		81,050		-		73,060

Operating expenses:
Selling, general and administrative		5,000		237,125		25,397		504,534
Research and development		-		15,205		-		34,814
Impairment		-		-		-		-
Total operating expenses		5,000		252,330		25,397		539,348

Loss from operations		(5,000)		(171,280)		(25,397)		(466,288)

Other income (expense):
Interest expense		(31,081)		(42,750)		(62,162)		(82,585)
Other income (expense)		-		-		-		17
Loss on sale of securities		-		(15,554)		-		(48,303)
		(31,081)		(58,304)		(62,162)		(130,871)

Net loss		(36,081)		(229,584)		(87,559)		(597,159)
Preferred dividends		(261,510)		(217,055)		(505,890)		(423,774)
Net income (loss)		$ (297,591)		$ (446,639)		$ (593,449)		$ (1,020,933)

Basic and diluted income (loss) per common share		$ (0.02)		$ (0.03)		$ (0.03)		$ (0.06)

Weighted average shares outstanding		17,784,308		17,497,630		17,784,308		17,382,977

See accompanying notes to interim condensed financial statements.


	Six months ended June 30,
	2001	2000


Cash flows from operating activities:
Net loss	$ (87,559)	$ (597,159)
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization	-	38,629
Loss on sale of available for sale securities	-	54,090
Issuance of common stock for services	-	42,500
Changes in operating assets and liabilities
Accounts receivable	-	31,495
Trade notes and other receivables	-	32,612
Inventory	3,172	4,000
Prepaid expenses	400	(41,025)
Accounts payable	(89,633)	51,927
Accrued expenses	65,850	14,252
Accrued expenses - related party	8,060	47,673
Net cash used in operating activities	(99,710)	(321,006)

Cash flows from investing activities:
Sales of available for sale securities	-	232,357
Purchase of equipment	-	-
	-	232,357
Cash flows from financing activities:
Proceeds from notes payable	100,000	150,315
Payments on notes and capital leases payable	(3,882)	(59,857)
	96,118	90,458

Net increase (decrease) in cash and cash equivalents	(3,592)	1,809
Cash and cash equivalents at beginning of period	3,592	6,577
Cash and cash equivalents at end of period	$ -	$ 8,386

Cash paid for:
Interest	$ -	$ 4,242

See accompanying notes to interim condensed financial statements.

ELECTROPHARMACOLOGY, INC.

NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

June 30, 2001

Note 1: PRESENTATION

The condensed balance sheet of the Company as of June 30, 2001, the related condensed statements of operations for the three and six months ended June 30, 2001 and 2000 and the statements of cash flows for the six months ended June 30, 2001 and 2000 included in the condensed financial statements have been prepared by the Company without audit. In the opinion of management, the accompanying condensed financial statements include all adjustments (consisting of normal, recurring adjustments) necessary to summarize fairly the Company's financial position and results of operations. The results of operations for the six months ended June 30, 2001 are not necessarily indicative of the results of operations for the full year or any other interim period. The information included in this Form 10-QSB should be read in conjunction with Management's Discussion and Analysis and Financial Statements and notes thereto included in the Electropharmacology, Inc.'s December 31, 2000 Form 10-KSB.

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

This report contains 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 Company's actual results could differ materially from those set forth on the forward looking statements as a result of the risks set forth in the Company's filings with the Securities and Exchange Commission, general economic conditions, and changes in the assumptions used in making such forward looking statements.

General

Electropharmacology, Inc., (the "Company") a Delaware corporation was incorporated in August 1990 in California under the name Magnetic Resonance Therapeutics, Inc., and reorganized through a merger in February 1995 with Electropharmacology, Inc.

The Company canceled its license agreement with Elan Pharmaceuticals and as a result of this, and other factors ceased operations effective in March 2001.

After resolving obligations with its creditors, The Company plans to locate and consummate a reverse merger or reverse acquisition with an unidentified private entity. The Company's ability to commence operations is contingent upon its ability to identify a prospective target business. Therefore, any comparisons to operating results in prior periods are irrelevant.

PART II - OTHER INFORMATION

ITEM 1: Legal Proceedings - None

Item 2. Changes in Securities and Use of Proceeds - None

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits

None

b) Reports on Form 8-K

None

SIGNATURES

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

ELECTROPHARMACOLOGY, INC.

Date: August 24, 2001 By:______________________________

/s/ Gary Jennings,

President Secretary and Director

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