U.S. 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 JUNE 30, 2001
                                             -------------

[ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934
              For the transition period from _________ to _________


                         Commission file number 0-13092
                                                -------

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

               MINNESOTA                               41-1448837
--------------------------------------   ---------------------------------------
     (State or other jurisdiction        (I.R.S. Employer Identification Number)
   of incorporation or organization)

                         14405 21ST AVENUE N, SUITE 111
                          MINNEAPOLIS, MINNESOTA 55447
                  --------------------------------------------
                    (Address of principal executive offices)

                                 (763) 745-4120
                         -------------------------------
                           (Issuer's telephone number)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 ___


The number of shares of the Registrant's common stock, par value $.25 per share,
outstanding on August 8, 2001 was 7,148,813.


Transitional Small Business Disclosure Format (Check one):  Yes ___   No _X_

<PAGE>


                              SPECTRASCIENCE, INC.

                                   FORM 10-QSB

                                  JUNE 30, 2001


                                      INDEX

                                                                            PAGE
                                                                             NO.

Part I -- Financial Information..............................................  3

   ITEM 1.   Financial Statements............................................  3
   ITEM 2.   Management's Discussion and Analysis of Financial Condition
             and Results of Operations.......................................  6

Part II  Other Information...................................................  8

   ITEM 1.   Legal Proceedings...............................................  8
   ITEM 2.   Changes in Securities...........................................  8
   ITEM 3.   Defaults Upon Senior Securities.................................  8
   ITEM 4.   Submission of Matters to a Vote of Security Holders.............  8
   ITEM 5.   Other Information...............................................  9
   ITEM 6.   Exhibits and Reports on Form 8-K................................  9

Signatures................................................................... 10


                                     Page 2
<PAGE>


                              SPECTRASCIENCE, INC.

                                   FORM 10-QSB

<TABLE>
<CAPTION>
                                                             June 30,       December 31,
                                                               2001            2000(1)
                                                           (UNAUDITED)
                                                           ------------     ------------
<S>                                                        <C>              <C>
ASSETS
Current assets:
   Cash and cash equivalents                               $  2,401,473     $  3,734,422
   Inventory                                                    435,556          258,303
   Other current assets                                          59,843           87,878
                                                           ------------     ------------
Total current assets                                          2,896,872        4,080,603

Net fixed assets                                                237,494          268,692
Other assets                                                     20,742           20,742
                                                           ------------     ------------
         TOTAL ASSETS                                      $  3,155,108     $  4,370,037
                                                           ============     ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                        $    120,664     $    117,563
   Note payable - trade creditors                                 8,035           47,597
   Accrued compensation and taxes                               164,311          249,985
   Accrued expenses                                              72,689           68,020
   Accrued clinical research fees                                25,662           25,662
                                                           ------------     ------------
Total current liabilities                                       391,361          508,827

SHAREHOLDERS' EQUITY
Common stock, $.25 par value:
   Authorized--17,000,000 shares
   Issued and outstanding--
     7,148,813 shares on June 30, 2001 and
     7,004,438 shares on December 31, 2000                    1,787,203        1,751,110
Additional paid-in capital                                   53,770,745       53,249,591
Accumulated deficit                                         (52,794,201)     (51,139,491)
                                                           ------------     ------------
         TOTAL SHAREHOLDERS' EQUITY                           2,763,747        3,861,210
                                                           ------------     ------------
         TOTAL LIABILITIES AND
              SHAREHOLDERS' EQUITY                         $  3,155,108     $  4,370,037
                                                           ============     ============
</TABLE>


(1)  THE BALANCE SHEET ON DECEMBER 31, 2000 HAS BEEN DERIVED FROM THE AUDITED
     FINANCIAL STATEMENTS AT THAT DATE BUT DOES NOT INCLUDE ALL OF THE
     INFORMATION AND FOOTNOTES REQUIRED BY GENERALLY ACCEPTED ACCOUNTING
     PRINCIPLES FOR COMPLETE FINANCIAL STATEMENTS.

SEE NOTES TO FINANCIAL STATEMENTS.


                                     Page 3
<PAGE>


                              SPECTRASCIENCE, INC.

                                   FORM 10-QSB

                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                    THREE MONTHS ENDED                  SIX MONTHS ENDED
                                          JUNE 30                            JUNE 30
                               -----------------------------     -----------------------------
                                   2001             2000             2001             2000
                                   ----             ----             ----             ----
<S>                            <C>              <C>              <C>              <C>
Revenue                        $         --     $         --     $         --     $         --

Cost of products sold                    --               --               --               --
                               ------------     ------------     ------------     ------------
   Gross profit                          --               --               --               --

Operating expenses
   Research and development         508,728          401,432        1,119,160          736,005
   Selling, general and
     Administrative                 319,100          286,505          610,892          529,024
                               ------------     ------------     ------------     ------------
Total operating expenses            827,828          687,937        1,730,052        1,265,029

Interest and other income            29,685           55,038           75,342          107,627
                               ------------     ------------     ------------     ------------

Net loss                       $   (798,143)    $   (632,899)    $ (1,654,710)    $ (1,157,402)
                               ============     ============     ============     ============

Net loss per share             $      (0.11)    $      (0.10)    $      (0.23)    $      (0.18)

Weighted average common
   shares outstanding             7,143,335        6,365,196        7,074,270        6,408,874
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.


                                     Page 4
<PAGE>


                              SPECTRASCIENCE, INC.

                                   FORM 10-QSB

                             STATEMENTS OF CASH FLOW
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                            SIX MONTHS ENDED
                                                                 JUNE 30
                                                      -----------------------------
                                                          2001             2000
                                                          ----             ----
<S>                                                   <C>              <C>
OPERATING ACTIVITIES
  Net loss                                            $ (1,654,710)    $ (1,157,402)
  Adjustments to reconcile net loss to cash
    used in operating activities:
    Depreciation                                            43,299           39,116
    Changes in operating assets
       and liabilities:
         Increase in inventories                          (177,253)         (19,192)
         Decrease in other current assets                   28,035           18,956
         Decrease in current liabilities                  (117,467)        (663,088)
                                                      ------------     ------------

         Net cash used in operating activities          (1,878,096)      (1,781,610)

INVESTING ACTIVITIES
  Purchase of property and equipment                       (12,100)         (29,045)
Decrease in long term commitment                                --          (27,396)
                                                      ------------     ------------
Net cash used in investing activities                      (12,100)         (56,441)

FINANCING ACTIVITIES
  Proceeds from issuance of common stock                   557,247        1,289,938
                                                      ------------     ------------
         Net cash provided by financing activities         557,247        1,289,938
                                                      ------------     ------------

  Net decrease in cash and cash equivalents             (1,332,949)        (548,113)

CASH AND CASH EQUIVALENTS
  AT BEGINNING OF PERIOD                                 3,734,422        4,362,120
                                                      ------------     ------------

CASH AND CASH EQUIVALENTS
  AT END OF PERIOD                                    $  2,401,473     $  3,814,007
                                                      ============     ============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.


                                     Page 5
<PAGE>


                              SPECTRASCIENCE, INC.

                                   FORM 10-QSB

                                  JUNE 30, 2001

         SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995

         Certain statements in this Form 10-QSB constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Words or phrases such as "may," "expects," "will continue," "is
anticipated," "management believes," "estimate," "projects," "hope" or similar
expressions or the negatives thereof identify forward-looking statements. Such
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from historical, currently
anticipated or projected results. We caution you not to place undue reliance on
forward-looking statements. Please refer to Exhibit 99 of the Company's Annual
Report on Form 10-KSB for the year ended December 31, 2000, for certain
important cautionary factors, risks and uncertainties related to forward-looking
statements.


                          NOTES TO FINANCIAL STATEMENTS


NOTE A   BASIS OF PRESENTATION

         The accompanying unaudited financial statements of SPECTRASCIENCE, Inc.
(the "Company" or "we") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the six month period ended June 30, 2001 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2001. These statements should be read in conjunction with the financial
statements and related notes which are incorporated by reference in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2000.

NOTE B   NET LOSS PER SHARE

         Basic earnings per share is based on weighted average shares
outstanding and excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share for the Company is the same
as basic earnings per share because the effect of options and warrants is
anti-dilutive.



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

(a)      BUSINESS

         SPECTRASCIENCE, Inc. (the "Company" or "SPECTRASCIENCE") develops and
manufactures innovative, Laser Induced Fluorescence spectrophotometry systems
capable of determining whether tissue is normal, pre-cancerous or cancerous
without removing tissue from the body. The Optical Biopsy System is
SPECTRASCIENCE's first fully developed product to incorporate its proprietary
Laser Induced Fluorescence technology for worldwide clinical use. SPECTRASCIENCE
received FDA approval and European CE mark approval in the last quarter of the
year 2000.


                                     Page 6
<PAGE>


         The Company's corporate offices are located at 14405 21st Avenue N,
Suite 111, Minneapolis, Minnesota 55447. The Company's telephone number is (763)
745-4120, its fax number is (763) 745-4126, and its e-mail address is
info@spectrascience.com. The Company also has a web-site that can be accessed at
http://www.spectrascience.com. The Company's Common Stock is traded on the
Over-The-Counter Bulletin Board under the symbol SPSI.


(b)      RESULTS OF OPERATIONS

         The Company recorded no revenue for the three and six months ended June
30, 2001 and June 30, 2000. The Company had no cost of products sold or gross
profit for the same periods.

         Overall research and development expenses for the three and six months
ended June 30, 2001 were $508,728 and $1,119,160, compared to $401,432 and
$736,005 for the same periods in 2000. Research and development expenses related
specifically to new product and application development for the three and six
months ended June 30, 2001 were $429,386 and $973,301, compared to $401,432 and
$736,005 for the same periods in 2000, reflecting expense increases of 7.0% and
32.2% respectively. For the three month period ended June 30, 2001, the Company
continued to see increased expenses related to the ongoing cost-effectiveness
and outcome based clinical studies, as well as increased expenses related to
design R&D and consulting services for development of a next generation product.
The increased expenses for this period were partially offset by reduced legal
fees associated with regulatory filings and intellectual property. The 32.2%
increase for the six months ended June 30, 2001 was primarily due to increased
expenses related to the above mentioned clinical studies, new product
development, and related consulting expenses.

         Research and development expenses related to the development of
manufacturing operations and processes for the three and six months ended June
30, 2001 were $79,342 and $145,859, compared to $0 for the same periods in 2000.
The increase was primarily due to (i) the hiring of a manufacturing engineer and
an assembler, and (ii) an increase in tools and supplies expense. We expect to
continue to have increased expenses for manufacturing operations as we prepare
for anticipated sales.

         Selling, general and administrative expenses for the three and six
months ended June 30, 2001 were $319,100 and $610,892 compared to $286,505 and
$529,024 for the same periods in 2000. The 11.4% and 15.5% increase for the
three and six months ended June 30, 2001 was primarily due to increased salary
expense in the sales and marketing department for a new hire that was not in
place during the same periods last year. The increase was partially offset by
reduced legal and consulting expenses.

         Interest and other income for the three and six months ended June 30,
2001 was $29,685 and $75,342, compared to $55,038 and $107,627 for the same
periods in 2000. The decreases were primarily due to lower balances in cash and
cash equivalents.

         As a result of the above, the net loss for the three and six months
ended June 30, 2001 was $798,143 and $1,654,710, compared to a net loss of
$632,899 and $1,157,402 for the same periods in 2000. The net loss per share for
the three and six months ended June 30, 2001 was $0.11 and $0.23 compared to
$0.10 and $0.18 for the same periods in 2000.


(c)      LIQUIDITY AND SOURCES OF CAPITAL

         Cash and cash equivalents on June 30, 2001 were $2,401,473, compared to
$3,734,422 on December 31, 2000. The decrease in the cash position from December
31, 2000 to June 30, 2001 was primarily due to the net loss incurred during the
period.


                                     Page 7
<PAGE>


         The working capital of the Company on June 30, 2001 was $2,505,511,
compared to $3,571,776 on December 31, 2000. The decrease in working capital was
primarily due to the reduction of cash and cash equivalents used for operations.

         Net cash used in operating activities for the six months ended June 30,
2001 was $1,878,096, compared to $1,781,610 for the same period in 2000. This
increase was primarily due to the higher net loss for the six months ended June
30, 2001, and to a lesser extent, an increase in inventory.

         Net cash used in investing activities for the six months ended June 30,
2001 was $12,100, compared to $56,441 for the same period in 2000. The decrease
was primarily due to the reduction of a long-term commitment the Company was
subject to during this period in 2000.

         Net cash provided by financing activities for the six months ended June
30, 2001 was $557,247, compared to $1,289,938 for the same period in 2000. The
cash provided was from warrant exercises to purchase 136,875 shares of common
stock and from stock option exercises to purchase 7,500 shares of common stock.

         Management believes that the amount of cash and cash equivalents is
adequate to fund operations at least through December 2001.

PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Not applicable.


ITEM 2.  CHANGES IN SECURITIES

         Not applicable.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Reference is made hereby to the Company's definitive proxy statement
(Form DEF 14A) for the Annual Meeting of Shareholders held on May 10, 2001, as
filed with the Securities and Exchange Commission on March 12, 2001, File No.
0-13092.

(a)      The Annual Meeting of Shareholders of SPECTRASCIENCE, Inc. (the
         "Meeting") was held on May 10, 2001.

         Shareholders of record at the close of business on February 20, 2001,
(the "Record Date") were entitled to receive notice of and to vote at the
Meeting and any adjournment thereof. On the Record Date, 7,004,438 shares of
SPECTRASCIENCE, Inc. Common Stock (the "Shares"), were entitled to vote at the
Meeting, of which a total of 3,670,198 Shares, or 52.4% of the total Shares
outstanding, were represented at the Meeting.


                                     Page 8
<PAGE>


(b)      The following individuals were elected to serve as directors of the
         Company:

                  Chester E. Sievert, Jr.
                  Johan A.P.M de Hond
                  Terrence W. Glarner
                  Delwin K. Ohrt, M.D.

         The first item submitted to a vote of the shareholders was the proposal
to elect four (4) persons to serve as directors until the next annual meeting of
shareholders or until their respective successors shall be elected and
qualified. All of the nominees for directors were elected by the shareholders.
The final votes for each of the nominees were as follows:

<TABLE>
<CAPTION>
Name                        No. of Votes     AS % OF TOTAL     No. of Votes     AS % OF TOTAL
                                 FOR          SHARES VOTED       WITHHELD       SHARES VOTED
-----------------------------------------------------------------------------------------------
<S>                           <C>                <C>               <C>              <C>
Chester E. Sievert, Jr.       3,611,657          98.4%             57,461           1.6%
Johan A.P.M. de Hond          3,612,737          98.4%             57,461           1.6%
Terrence W. Glarner           3,610,851          98.4%             59,347           1.6%
Delwin K. Ohrt, M.D.          3,590,847          97.8%             79,351           2.2%
</TABLE>

         There were no broker non-votes for this item.

         The second item submitted to a vote of the shareholders was approval of
the adoption of the SPECTRASCIENCE 2001 Stock Plan. The amendment was ratified
by the shareholders. The final votes for the proposal were as follows:

<TABLE>
<CAPTION>
                                                                   AS % OF TOTAL
                Position               No. of Votes                SHARES VOTED
                ------------------------------------------------------------------
<S>                                      <C>                           <C>
                FOR                      3,529,036                     96.2%
                AGAINST                    122,010                      3.3%
                ABSTAIN                     19,152                      0.5%
</TABLE>

         There were no broker non-votes for this item.

         The final item submitted to a vote of the shareholders was ratification
of the appointment of Ernst & Young LLP as independent public accountants for
SPECTRASCIENCE for the current fiscal year ending December 31, 2001. The
appointment was ratified by 99.4% of total shares voted. There were no broker
non-votes.


ITEM 5.  OTHER INFORMATION

CLINICAL STUDIES

         The three clinical studies initiated during the first quarter of 2001
were ongoing during the second quarter of 2001.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

FORM 8-K:   No reports on Form 8-K were filed by the Company during the quarter
            covered by this report.


                                     Page 9
<PAGE>


                              SPECTRASCIENCE, INC.

                                   FORM 10-QSB

                                  JUNE 30, 2001


                                   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.




                                    SPECTRASCIENCE, INC.
                              -------------------------------------
                                       (Registrant)



     AUGUST 14, 2001            /s/ CHESTER E. SIEVERT, JR.
-------------------------       -----------------------------------
          Date                  CHESTER E. SIEVERT, JR.
                                Chairman, Chief Executive Officer, and President
                                (Principal Executive Officer,
                                Principal Financial and Accounting Officer)


                                    Page 10