United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)

[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
        For the quarterly period ended September 30, 2001
                                                                         or
[    ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
         For the transition period from ______________ to _________________

Commission file number 0-8482

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

      Minnesota                                                                                   41-0946755    
(State or other jurisdiction of                                             (I.R.S. Employer Identification No.)
incorporation or organization)

3500 Holly Lane North, Suite 60, Plymouth, Minnesota 55447-1284
(Address of principal executive office) (Zip Code)

(612) 378-7800
(Issuer's telephone number)

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

Indicate by check mark whether the registrant (1) has 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 ____

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

                                                                                           Yes ____    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: 26,448,943

PART I. FINANCIAL INFORMATION

Astrocom Corporation
Balance Sheets
		September 30, 2001	December 31, 2000
		Unaudited
Assets
Current assets:
	Cash and cash equivalents	$ 95,979	$ 294,472
	Accounts receivable, less allowance	88,396	57,080
	Inventories	569,997	555,751
	Prepaid expenses	27,961	77,812
Total current assets		782,333	985,115
Property and equipment
	Property and equipment	760,306	748,376
	Accumulated depreciation	(695,865)	(654,571)
Net property & equipment		64,441	93,805
License agreements, net		14,909	42,991
Other assets		10,000	10,000
Total assets		$ 871,683	$ 1,131,911
Liabilities and shareholders' equity
Current liabilities:
	Accounts payable	$ 161,883	$ 121,885
	Accrued compensation	315,267	167,214
	Accrued expenses	103,147	74,411
	Convertible Notes	659,462	-
	Current portion of lease settlement costs	1,993	10,835
Total current liabilities		1,241,752	374,345
Lease settlement costs		-	-
Shareholders' equity:
	Preferred stock	-	-
	Common stock	2,644,498	2,644,498
	Additional paid-in capital	9,475,148	9,223,398
	Accumulated deficit	(12,489,715)	(11,110,330)
Total shareholders' equity		(370,069)	757,566
Total liabilities and shareholders' equity		$ 871,683	$ 1,131,911
See accompanying notes to financial statements.

Astrocom Corporation
Statements of Operations (Unaudited)
		Three Months Ended September 30,		Nine Months Ended September 30,
		2001	2000	2001	2000
Net sales		$ 216,747	$ 237,492	$ 482,437	$ 621,679
Cost of products sold		150,416	194,136	380,007	534,105
Gross profit		66,331	43,356	102,430	87,574
Operating expenses
	Selling and administrative	231,674	196,969	811,856	799,309
	Research and development	147,966	154,174	502,054	447,660
Total operating expenses		379,640	351,143	1,313,910	1,246,969
Operating loss		(313,309)	(307,787)	(1,211,480)	(1,159,395)
Other income (expense)
	Interest income	965	12,088	5,979	39,480
	Interest expense	(88,115)	(495)	(172,400)	(1,892)
	Other expense	(279)	(328)	(984)	(962)
Total other income (expense)		(87,429)	11,265	(167,405)	36,626
Net loss before taxes		(400,738)	(296,522)	(1,378,885)	(1,122,769)
Taxes		-	250	500	1,651
Net loss		(400,738)	(296,772)	(1,379,385)	(1,124,420)
Less preferred stock dividends		-	1,500	-	7,500
Loss applicable to common shares		$ (400,738)	$ (298,272)	$ (1,379,385)	$(1,131,920)
Loss per common share - basic and diluted		$ (0.02)	$ (0.01)	$ (0.05)	$ (0.05)
Weighted average number of common shares outstanding		26,448,943	26,231,552	26,448,943	24,193,978
See accompanying notes to financial statements.

Astrocom Corporation
Statements of Cashflows (Unaudited)
	Nine Months Ended September 30,
	2001	2000
Cash flows from operating activities
Net loss	$ (1,379,385)	$ (1,124,419)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	195,585	92,642
Loss on disposal of equipment	-	299
Changes in operating assets and liabilities:
Accounts receivable	(31,316)	13,951
Inventories	(14,246)	(222,002)
Prepaid expenses	49,851	(74)
Accounts payable	39,996	(56,933)
Accrued expenses	176,796	(14,294)
Net cash used in operating activities	(962,719)	(1,310,830)
Cash flows from investing activities
Purchases of equipment	(11,932)	(16,485)
Purchase of license agreements	-	(40,824)
Proceeds from sale of equipment	-	(299)
Net cash used in investing activities	(11,932)	(57,608)
Cash flows from financing activities
Proceeds from sale of stock	-	1,583,990
Net proceeds from issuance of convertible debt	785,000	-
Payments on lease settlement obligations	(8,842)	(25,157)
Cash provided by financing activities	776,158	1,558,833
Net decrease (increase) in cash	(198,493)	190,395
Cash at beginning of period	294,472	557,637
Cash at end of period	$ 95,979	$ 748,032
See accompanying notes to financial statements.

Astrocom Corporation
Notes to Financial Statements
September 30, 2001

1. Basis of Presentation

The financial statements in this Form 10-QSB have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments necessary for a fair presentation of financial position, results of operations and cash flows. These financial statements should be read in conjunction with the financial statements and notes included in the Company's annual report on Form 10-KSB for the year ended December 31, 2000.

2. Inventories

Inventories are stated at the lower of cost or market, determined on an average cost basis, and consisted of the following:

	September 30, 2001  (Unaudited)	December 31, 2000
Raw materials	$477,823	$503,059
Work in process	249,068	184,037
Finished goods	97,523	109,905
Less obsolescence reserve	(254,417)	(241,250)
	$569,997	$555,751

3. Loss Per Share

The Company follows Financial Accounting Standards Board Statement No. 128, "Earnings Per Share." Basic earnings per share exclude the dilutive effect of options, warrants and convertible securities, while diluted earnings per share include such effects. For all periods presented, the Company's basic and diluted loss per share are the same because the effects of all options, warrants and convertible securities were antidilutive.

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

This Report contains certain forward-looking statements that project or estimate future events. When used in this Form 10-QSB, the words "believes," "expects," "anticipates," "intends," and similar expressions are intended to identify forward-looking statements. These statements are subject to various risks and uncertainties which could cause actual results to differ materially from historical results or those currently projected. Readers are cautioned not to place undue reliance on these forward-looking statements.

Results of Operations

The following table sets forth selected information derived from the Company's interim statement of operations expressed as percentages of net sales:

Three Months Ended September 30, % Increase (Decrease) Nine Months Ended September 30, % Increase (Decrease)

	2001	2000		2001	2000
Net Sales	100.0%	100.0%	(8.7)%	100.0%	100.0%	(22.4)%
Cost of Sales	69.4	81.7	(22.5)	78.8	85.9	(28.9)
Gross Profit	30.6	18.3	53.0	21.2	14.1	17.0
Selling and Administrative	106.9	82.9	17.6	168.3	128.6	1.6
Research and Development	68.3	64.9	(4.0)	104.1	72.0	12.2
Operating Loss	(144.6)	(129.6)	1.8	(251.1)	(186.5)	4.5
Other Income (Expense)	(40.3)	4.7	(876.1)	(34.7)	5.9	(557.1)
Net Loss	(184.9)%	(125.0)%	35.0%	(285.9)%	(180.9)%	22.7%

     Net Sales. Net sales for the three month and nine month periods ended September 30, 2001 were $216,747 and $482,437, respectively, reflecting decreases of 8.7% and 22.4% over the comparable periods of 2000. The decline in sales is the result of a continued slowdown from customers for our legacy CSU/DSU products, and from a longer than anticipated sales cycle for our new PowerLink^TM Aggregator. The PowerLink^TM aggregates multiple WAN (Wide Area Network) services - i.e.: T1, xDSL, cable, ISDN, wireless, etc. - and provides fail-over protection to virtually eliminate network down time. Its sales cycle, however, has been extended by customer line installation schedules, longer evaluation periods and necessary Astrocom software improvements/enhancements. One of the most significant recently released enhancements is that the PowerLink^TM now supports VPN (Virtual Private Networks); a number of potential customers have been waiting for this feature before they evaluate the product. There are over 40 evaluation units outstanding - some will be converted to sales for the month of October and others are being evaluated by major organizations for marketing programs. The Company believes that its investment in this product line will lead to increased revenues over the coming months.

    Gross Profit. Gross profit margin for the three and nine month periods ended September 30, 2001 were 30.6% and 21.2%, respectively, as compared to 18.3% and 14.1% for the comparable periods of 2000. This increase is reflective of reduced labor and subcontract expenses as well as an improved price structure for the PowerLink^TM family. While the Company has reduced expenses in production, gross margins will continue to be affected by sales volume, product mix and the sales channel used.

     Operating Expenses. Selling and administrative expenses were $231,674 for the three month period ended September 30, 2001, an increase of 17.6% from the comparable period of 2000. For the nine month period ended September 30, 2001, selling and administrative expenses were $811,856, an increase of 1.6% from the comparable period of 2000. Sales and marketing expenses decreased by 27.1% when compared to the same quarter in 2000 which reflects less fees paid for professional services and a reduction in travel and advertising. Administrative expenses increased by 200% in the third quarter over the same period last year; this increase was mostly due to Mr. Thomas' voluntary salary reduction recorded in the third quarter of 2000.

Research and development expenses were $147,966 for the three month period ended September 30, 2001, a decrease of 4.0% from the comparable period in 2000. For the nine month period ended September 30, 2001, research and development expenses were $502,054, an increase of 12.2% from the comparable period of 2000. The Company expects research and development expenses to continue to increase in future quarters as it further enhances the PowerLink^TM and invests in new product development.

     Other Income (Expense). Other income, net, for the three month period ended September 30, 2001 decreased to $(87,429) from $11,265 in the comparable period in 2000. For the nine month period ended September 30, 2001, other income, net, decreased to $(167,405) from $36,626 in the comparable period in 2000. The increase in expenses for 2001 is reflective of the interest expenses associated with the bridge financing obtained in the first and second quarters.

     Net Loss. The Company reported a net loss of $400,738 and $1,379,385, respectively, for the three and nine month periods ended September 30, 2001, compared to a net loss of $296,772 and $1,124,420 for the comparable periods of 2000. The increased loss is primarily due to lower sales revenue and increased expenditures for new product development and sales and marketing.

Liquidity and Capital Resources

     Net working capital decreased to a deficit of $459,419 for the third quarter from a deficit of $78,353 on June 30, 2001. Cash decreased to $95,979 from $259,135 on June 30, 2001.

     During the first half of 2001, the Company raised $785,000 (net) via convertible bridge financing. The Company has initiated efforts to raise between $200,000 and $1,000,000 in additional funds to allow pursuit of the opportunities that it has with the new product line of the PowerLink^TMWAN line aggregators; to date the Company has received $150,000 and has commitments for another $50,000. The additional funds are required to expand the product line with added features, to increase marketing and sales efforts and to prepare for full product production. Without these additional funds, management believes that the Company would be unable to adequately promote the new product line due to lack of market visibility and potential manufacturing constraints.

     The Company currently believes that raising the minimum of $200,000 will be adequate to finance operations for six months. Further, if $1,000,000 is raised, the Company believes that that would be adequate to finance operations through 2002.

PART II. OTHER INFORMATION

Item 5. Other Information

a.)    S. Albert D. Hanser resigned from the Astrocom Board of Directors effective August 16, 2001. Mr. Hanser said that his move to Florida and involvement in a new business precluded him from devoting the time and providing the active participation necessary to perform the duties of director. The Board subsequently elected Mr. Marius Poliac to fill the vacated position; Mr. Poliac is a substantial investor and provides consulting services to the Company through his engineering consulting firm.

Item 6. Exhibits and Reports on Form 8-K

None

SIGNATURES

Pursuant to the requirement 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: November 14, 2001

ASTROCOM CORPORATION

By:_______________________
Ronald B. Thomas
President and Chief Executive Officer

By:_______________________
John M. Bucher
Director of Operations and Corporate Controller