UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549


                               FORM 10-QSB/A NO. 2


[X]     Quarterly  report  pursuant  to  section  13  or 15(d) of the Securities
        Exchange Act of 1934. FOR THE QUARTERLY PERIOD ENDING DECEMBER 31, 2001.

        or

[ ]     Transition  report  pursuant  to  Section  13 or 15(d) of the Securities
        Exchange  Act  of  1934.  For  the  transition period from _____to_____.

                        Commission file number 000-25839


                          IMPLANT SCIENCES CORPORATION
                          ----------------------------
             (Exact name of registrant as specified in its charter)


MASSACHUSETTS                                    04-2837126
-------------------------------------            ---------------------------
(State  or  other  jurisdiction                  (IRS  Employer
of  incorporation  or  organization)             Identification  number)

107  Audubon  Road,  #5                          Wakefield,  MA  01880
-------------------------------------            ---------------------------


                                  781-246-0700
                          (Issuers  telephone  number)

                                 NOT APPLICABLE
                                 --------------
    (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 Securities Exchange Act of 1934 during
the  preceding  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
                                 ---             ---

Indicate  the  number  of  shares outstanding of each of the issuer's classes of
common  equity,  as  of  the  latest  practicable  date:

                 Class                       Outstanding at January 31, 2002
     Common Stock, $.10 par value                       6,177,876

           Transitional small business disclosure format (check one):
                              YES          NO  X
                                  ---         ---


                                       1
<PAGE>
<TABLE>
<CAPTION>
                                     IMPLANT SCIENCES CORPORATION

                                                INDEX


                                                                                         Page No.
                                     PART I. FINANCIAL INFORMATION

ITEM 1.  Financial Statements:
<S>      <C>                                                                              <C>
            Condensed Balance Sheets as of December 31, 2001 and June 30, 2001               2
            (unaudited)

            Condensed Statement of Operations for the Three and Six Months Ended
            December 31, 2001 and 2000 (unaudited)                                           3

            Condensed Statement of Cash Flows for the Six Months Ended December 31,
            2001 and 2000 (unaudited)                                                        4

            Notes to Condensed Financial Statements (including data applicable to
            unaudited periods)                                                               5

Item 2.     Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                                        9

                                     PART II.  OTHER INFORMATION


Item 1.     Legal Proceedings                                                               15

Item 2.     Changes in Securities and Use of Proceeds                                       15

Item 3.     Defaults Upon Senior Securities                                                 15

Item 4.     Submission of Matters to a Vote of Security-Holders                             15

Item 5.     Other Information                                                               15

Item 6.     Exhibits and Reports on Form 8-K                                                15

            Signatures                                                                      16
</TABLE>


                                       1
<PAGE>
<TABLE>
<CAPTION>
PART  I.  FINANCIAL  INFORMATION
Item  1.  Financial  Statements

                                IMPLANT SCIENCES CORPORATION
                                  CONDENSED BALANCE SHEETS
                                         (UNAUDITED)


                                                                 DECEMBER 31,     JUNE 30,
                                                                     2001           2001
                                                                --------------  ------------
<S>                                                             <C>             <C>
ASSETS
Current Assets:
  Cash and cash equivalents, including $167,000 of              $   2,369,000   $ 1,232,000
    restricted cash
  Accounts receivable, net                                            741,000       706,000
  Inventories                                                         722,000       349,000
  Prepaid and other current assets                                    168,000        98,000
                                                                --------------  ------------
    Total Current Assets                                            4,000,000     2,385,000

Property and equipment, net                                         3,687,000     3,514,000
Other non-current assets                                              150,000       183,000
                                                                --------------  ------------

Total Assets                                                    $   7,837,000   $ 6,082,000
                                                                ==============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable                                              $     564,000   $   322,000
  Accrued expenses                                                    822,000       786,000
  Due to shareholders                                                 338,000             -
  Current portion of long-term debt                                   176,000       176,000
  Obligations under capital leases                                     11,000         6,000
                                                                --------------  ------------
    Total Current Liabilities                                       1,911,000     1,290,000
                                                                --------------  ------------

Long-term Liabilities:
Long-term debt, net of current portion                                147,000       236,000
Obligations under capital lease                                        21,000         5,000
Deferred income taxes                                                  29,000        29,000
                                                                --------------  ------------
                                                                      197,000       270,000
                                                                --------------  ------------
                                                                    2,108,000     1,560,000
                                                                --------------  ------------

Stockholders' equity:
Common stock, $0.10 par value; 20,000,000 shares authorized;          611,000       591,000
  6,159,076 and 5,912,770 shares issued; and 6,159,076 and
  5,889,770 shares outstanding as of December 31, 2001
  and June 30, 2001, respectively
Additional paid-in capital                                         12,473,000    10,930,000
Accumulated deficit                                                (7,193,000)   (6,604,000)
Notes receivable from employees                                      (162,000)     (188,000)
                                                                --------------  ------------
                                                                    5,729,000     4,729,000
Less: treasury stock of 23,000 shares at cost at June 30, 2001              -      (207,000)
                                                                --------------  ------------
Total Stockholders' Equity                                          5,729,000     4,522,000
                                                                --------------  ------------

Total Liabilities and Stockholders' Equity                      $   7,837,000   $ 6,082,000
                                                                ==============  ============
</TABLE>

    The accompanying notes are an integral part of these condensed financial
                                  statements.


                                       2
<PAGE>
<TABLE>
<CAPTION>
                                      IMPLANT SCIENCES CORPORATION
                                   CONDENSED STATEMENTS OF OPERATIONS
                                              (UNAUDITED)

                                                        THREE MONTHS ENDED        SIX MONTHS ENDED
                                                    ------------------------  -------------------------
                                                           DECEMBER 31,             DECEMBER 31,
                                                    ------------------------  -------------------------
                                                       2001         2000         2001          2000
                                                    -----------  -----------  -----------  ------------
<S>                                                 <C>          <C>          <C>          <C>
Revenues:
  Product and contract research:
    Medical                                         $1,346,000   $  850,000   $2,464,000   $ 1,589,000
    Semiconductor                                      238,000      151,000      473,000       267,000
                                                    -----------  -----------  -----------  ------------
      Total revenues                                 1,584,000    1,001,000    2,937,000     1,856,000
                                                    -----------  -----------  -----------  ------------

Costs and expenses:
  Cost of product and contract research revenues       811,000      941,000    1,974,000     1,723,000
  Research and development                             258,000      366,000      549,000       816,000
  Selling, general and administrative                  590,000      567,000    1,003,000     1,126,000
                                                    -----------  -----------  -----------  ------------
    Total costs and expenses                         1,659,000    1,874,000    3,526,000     3,665,000
                                                    -----------  -----------  -----------  ------------

Loss from operations                                   (75,000)    (873,000)    (589,000)   (1,809,000)
                                                    -----------  -----------  -----------  ------------

Other income (expense)
  Interest income                                        5,000       47,000       14,000       119,000
  Interest expense                                     (10,000)     (13,000)     (19,000)      (26,000)
  Other expense                                              -            -        5,000        (1,000)
                                                    -----------  -----------  -----------  ------------
                                                        (5,000)      34,000            -        92,000
                                                    -----------  -----------  -----------  ------------

Net loss                                            $  (80,000)  $ (839,000)  $ (589,000)  $(1,717,000)
                                                    ===========  ===========  ===========  ============

Net loss per share - basic                          $    (0.01)  $    (0.14)  $    (0.10)  $     (0.30)
                                                    ===========  ===========  ===========  ============

Net loss per share - diluted                        $    (0.01)  $    (0.14)  $    (0.10)  $     (0.30)
                                                    ===========  ===========  ===========  ============

Weighted average common shares outstanding
  used for basic earnings per share                  6,015,871    5,806,328    5,971,948     5,789,935
                                                    ===========  ===========  ===========  ============

Weighted average common shares outstanding
  used for diluted earnings per share                6,015,871    5,806,328    5,971,948     5,789,935
                                                    ===========  ===========  ===========  ============
</TABLE>

    The accompanying notes are an integral part of these condensed financial
                                  statements.


                                       3
<PAGE>
<TABLE>
<CAPTION>
                          IMPLANT SCIENCES CORPORATION
                        CONDENSED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

                                                           SIX MONTHS ENDED
                                                       -------------------------
                                                             DECEMBER 31,
                                                       -------------------------
                                                          2001          2000
                                                       -----------  ------------
<S>                                                    <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                             $ (589,000)  $(1,717,000)
  Adjustments to reconcile net loss to net cash
    used by operating activities:
    Depreciation and amortization                         382,000       306,000
    Amortization of deferred compensation                       -        30,000
    Equity in loss in Epsilon Medical                       1,000         1,000
    Write-off of loan financing fees                            -         3,000
    Changes in assets and liabilities:
      Accounts receivable                                 (35,000)      158,000
      Inventories                                        (373,000)     (169,000)
      Prepaid and other current assets                    (70,000)      (61,000)
      Notes receivable                                     26,000         3,000
      Accounts payable                                    242,000      (179,000)
      Accrued expenses                                     36,000      (377,000)
                                                       -----------  ------------

        Net cash used by operating activities            (380,000)   (2,002,000)
                                                       -----------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment                     (528,000)     (785,000)
  Other non-current assets                                  5,000       (92,000)
                                                       -----------  ------------

        Net cash used by investing activities            (523,000)     (877,000)
                                                       -----------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from common stock, net of discount           2,108,000       192,000
    of $300,000
  Repayments of long-term debt                            (68,000)      (90,000)
                                                       -----------  ------------

        Net cash provided by financing activities       2,040,000       102,000
                                                       -----------  ------------

Net increase (decrease) in cash and cash equivalents    1,137,000    (2,777,000)
Cash and cash equivalents, beginning                    1,065,000     4,838,000
                                                       -----------  ------------
Cash and cash equivalents, ending                      $2,202,000   $ 2,061,000
                                                       ===========  ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Interest paid                                        $   19,000   $    26,000
  Obligations under capital lease                          31,000        14,000
</TABLE>

    The accompanying notes are an integral part of these condensed financial
                                  statements.


                                       4
<PAGE>
                          IMPLANT SCIENCES CORPORATION
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                DECEMBER 31, 2001
                                   (UNAUDITED)


1.   DESCRIPTION  OF  BUSINESS

     Implant  Sciences  Corporation  (the  Company)  develops  products  for the
medical device and explosives detection industry using ion implantation and thin
film  coatings  of  radioactive  and non-radioactive materials.  The Company has
received  Food  and  Drug  Administration 510(k) clearance to market its I-Plant
Iodine-125  radioactive  seed for the treatment of prostate cancer.  The Company
also  has  under  development  interventional  cardiology  devices and temporary
coronary  brachytherapy  systems  for the prevention of restenosis (reclosure of
the  artery  after  balloon angioplasty).  In addition, the Company modifies the
surface characteristics of orthopedic joint implants to reduce polyethylene wear
and  thereby increasing the life of the implant and provides ion implantation of
electronic dopants for the semiconductor industry.  Additionally, the Company is
developing  an  explosives detection device to be used in the detection of trace
residues  of  explosives.

2.   INTERIM  FINANCIAL  STATEMENTS

     The  financial information for the three and six months ending December 31,
2001  is  unaudited  but  includes  all  adjustments  (consisting only of normal
recurring  adjustments)  which  the  Company  considers  necessary  for  a  fair
presentation of the financial position at such date and of the operating results
and  cash  flows for these periods. The results of operations and cash flows for
the  three and six months ended December 31, 2001 are not necessarily indicative
of  results  that may be expected for the entire year. The information contained
in  this  Form  10-QSB/A  No. 2 should be read in conjunction with the Company's
audited  financial  statements, included in its Form 10-KSB/A No.3 as of and for
the year ending June 30, 2001 filed with the Securities and Exchange Commission.

3.   NEW  ACCOUNTING  STANDARDS

     In  July  2001, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 141, Business Combinations.  SFAS No. 141 improves the transparency
of  the accounting and reporting for business combinations by requiring that all
business  combinations  are  accounted  for  under a single method, the purchase
method.  This  statement  is  effective  for all business combinations initiated
after  June  30,  2001.

     In  July  2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets.  This  statement applies to intangibles and goodwill acquired after June
30,  2001,  as  well as goodwill and intangibles previously acquired. Under this
statement  goodwill  as well as other intangibles determined to have an infinite
life  will  no  longer  be amortized; however, these assets will be reviewed for
impairment  on a periodic basis. This statement is effective for the Company for
its  first  quarter  of its 2003 fiscal year. Management is currently evaluating
the  impact that this statement will have on the Company's financial statements.

     In  August  2001,  the  FASB  issued  SFAS  No.  143,  Accounting for Asset
Retirement  Obligations.  SFAS  No.  143  addresses  financial  accounting  and
reporting  obligations  associated  with  the  retirement of tangible long-lived
assets and the associated asset retirement costs. It applies to (a) all entities
and  (b)  legal  obligations associated with the retirement of long-lived assets
that  result  from  the acquisition, construction, development and/or the normal
operation of a long-lived asset, except for certain obligations of lessees. SFAS
No.  143 is effective for financial statements issued for fiscal years beginning
after  June  15, 2002. The Company does not anticipate that the adoption of SFAS
No.  143  will  have  a  material  impact  on  its  financial  statements.

     In  October  2001,  the  FASB  issued  SFAS  No.  144,  Accounting  for the
Impairment  or  Disposal  of  Long-Lived  Assets.  SFAS  No.  144  addresses the
financial  accounting and reporting for the impairment or disposal of long-lived
assets.  SFAS  No. 144 supersedes SFAS No. 121, Accounting for the Impairment of
Long-Lived  Assets and for Long-Lived Assets to be Disposed Of, but retains SFAS
No.  121's  fundamental provisions for (a) recognition/measurement of impairment
of  long-lived  assets  to  be  held  and used and (b) measurement of long-lived
assets  to  be  disposed  of  by  sale.  SFAS  No.  144  also  supersedes  the
accounting/reporting provisions of Accounting Principles Board (APB) Opinion No.
30, Reporting the Results of Operations - Reporting the Effects of Disposal of a
Segment  of  a  Business  and  Extraordinary, Unusual and Infrequently Occurring
Events  and  Transactions,  for  segments  of  a  business to be disposed of but


                                       5
<PAGE>
retains  APB  No.  30's requirement to report discontinued operations separately
from  continuing  operations  and  extends  that  reporting to a component of an
entity  that either has been disposed of or is classified as held for sale. SFAS
No.  144  is  effective  for fiscal years beginning after December 15, 2001, and
interim  periods within those fiscal years. The Company does not anticipate that
the  adoption  of  SFAS  No.  144  will  have a material impact on its financial
statements.

4.   EARNINGS  PER  SHARE

     Basic  earnings  per  share  is computed based only on the weighted average
number  of  common  shares  outstanding  during the period. Diluted earnings per
share  is  computed  by  using  the  weighted  average  number  of common shares
outstanding  during  the  period,  plus  the dilutive effects of shares issuable
through  the  exercise  of stock options (common stock equivalents) unless their
inclusion would be antidilutive.  In calculating diluted earnings per share, the
dilutive  effect of stock options is computed using the average market price for
the  period.

5.   COMPREHENSIVE  INCOME

     The  Company  does  not  have  any  items of other comprehensive income and
accordingly,  net  loss  and  comprehensive  loss  are  the same for all periods
presented.

6.   ACCOUNTS  RECEIVABLE

     Contract  revenue under cost sharing research and development agreements is
recognized  as  eligible  expenses  are  incurred.  Invoicing  of  research  and
development  contracts  occurs  in  accordance  with  the terms of the contract.
Revenue recognized but unbilled is recorded as unbilled accounts receivable.  At
December  31,  2001 unbilled accounts receivable represented approximately 9% of
total  accounts  receivable.  Generally, there are no prerequisites necessary to
bill.

7.   CREDIT  ARRANGEMENT

     The  Company had a Revolving Credit Facility ("Credit Facility") and has an
Equipment  Term  Loan  ("Term Loan") pursuant to a Loan Agreement with its bank.
The  Revolving  Credit  Facility  is  unsecured  and  the Equipment Term Loan is
cross-collateralized and cross-defaulted. The Loan Agreement has a first lien on
substantially  all  of  the  Company's  assets.

     On  September  30, 2000, the Company's Credit Facility expired. The Company
chose  not to renew the Credit Facility and the Company has no further borrowing
rights  or availability. Additionally, the Company has no borrowings outstanding
with  respect  to  the  expired  Credit  Facility  as  of  December  31,  2001.

     The  Company's Term Loan provided a facility of $1,500,000, of which it had
utilized  $750,000. Interest is payable monthly at 1% above the bank's base rate
commencing  February  1998. As of December 31, 2001, the balance outstanding was
approximately $323,000 and no further borrowings are permitted on the Term Loan.

     The  Company's  Loan  Agreement  requires  compliance  with  two  financial
covenants including minimum levels of net worth and net loss limits. At June 30,
2001,  the  Company's net loss covenant was greater than the required amount. On
September 28, 2001, the Company and Stephen N. Bunker, a director and officer of
the  Company,  (collectively, the "Pledgors") fully collateralized the Term Loan
with  $167,000  and  $200,000  of  cash  (the  "Collateral"),  respectively, and
executed  pledge  agreements  with respect to the collateral. As of December 31,
2001,  the  Collateral  was $367,000. The Pledgors deposited the Collateral with
the  Company's  bank.  The  Collateral must remain with the Company's bank in an
amount  that  is sufficient to collateralize only the balance outstanding on the
Term  Loan at any point in time until such Term Loan is paid in full. The pledge
agreements  allows  the  Company's  bank  to  use  the Collateral to fulfill the
obligations of the Term Loan in the event of a default by the Company in payment
of the principal or interest of the Term Loan. The Company's bank has waived its
rights  under the Loan Agreement with respect to this financial covenant at June
30,  2001  through  and  including  June  30,  2002.

     On  October  10,  2001,  the Company entered into a $500,000 Line of Credit
Facility  ("Line of Credit") with CardioTech International, Inc. ("CardioTech"),
a  related  party  (See Note 10). The Line of Credit provides for funding at the
discretion of the Company, is subject to a security agreement providing a second
lien  on  substantially  all of the Company's assets, and provides for a $15,000
commitment  fee  payable on the earlier of the date the Company first draws down
on  the  Line  of Credit or April 15, 2002. The Line of Credit bears interest at
the  prime  rate  (5.5%  as of October 10, 2001) plus 2% and expires October 12,

                                       6
<PAGE>
2002. All amounts borrowed under the Line of Credit are due on October 12, 2002.
For  the  period  from  October 10, 2001 through December 31, 2001 there were no
amounts  drawn  on  this  Line of Credit. As of December 31, 2001, there were no
borrowings  outstanding.

8.   PRIVATE  PLACEMENT

     The Company received $1,500,000 in a private placement with an investor and
issued  145,349  Units, each consisting of one share of its common stock and one
common stock purchase warrant. Two warrants are exercisable for one share of its
common  stock  at  an  exercise  price  of $12.90 per share. Total consideration
received  was  $1,500,000,  which  reflected  a  discount of 20% from the market
price.  This  discount  reflects  the best terms available to the Company in the
private  placement  market  during  its  second  fiscal  quarter  of  2001.

     In  connection with the transaction, the Company issued additional warrants
to the investor's general counsel to purchase 10,000 shares at an exercise price
of  $12.90  per share and a document preparation fee of $5,000. The Company also
engaged  two placement agent's who received warrants to purchase an aggregate of
12,000  shares  of the Company's common stock at an exercise price of $12.90 per
share  and an placement agent received a placement fee of $105,000. All warrants
pursuant  to  this transaction are exercisable at any time prior to December 12,
2006.  Mr. Pasquale Ruggieri, a member of the Company's Board of Directors, also
serves as an investment banker for one of the placement agent in connection with
this  transaction.

     The  Company  has  recorded the proceeds from the private placement, net of
the  discount  of  $300,000  and  offering  costs  of  $130,000 paid in cash and
warrants  having  a  fair  value  of  $55,000,  as  a  capital  contribution.

9.   WARRANT  EXERCISE

     Between  December 18, 2001 and January 3, 2002, warrants to purchase 70,900
shares  of  the  Company's  common  stock were exercised at an exercise price of
$9.00  per  share.  Although  warrant  exercises such as this were registered in
connection  with the Company's initial public offering, the Company's prospectus
had not been updated to include developments in the Company's business since the
initial  public  offering.  To  the  extent that purchasers of these shares were
damaged,  the  Company  could  be  exposed  to  liability,  including, possibly,
liability  for  rescission  of  their  purchases.

     As  of  December  31,  2001,  warrants  representing  52,100  shares of the
Company's  common  stock  were  exercised at $9.00 per share. As of December 31,
2001, the Company received gross proceeds of approximately $338,000 and was owed
$131,000  of  cash  pursuant to the exercise of these warrants from its transfer
agent.  Until the prospectus is declared effective, the Company has recognized a
liability  of $338,000 as amounts due to shareholders and segregated the related
proceeds  to  reflect  the potential amount necessary to rescind the exercise of
the  warrants.  During  the  period  in  which  the warrants were exercised, the
Company's  stock  price ranged from $11.00 to $14.07 per share; however, at this
date  the  Company  is  unable to determine whether or at what price each of the
purchasers  may  have  disposed  of  the  shares they acquired by exercising the
warrants  and  if  any  of  the  purchasers  were  damaged.

     In  addition, the Securities and Exchange Commission may have the authority
to  impose  a variety of remedies, including, possibly, fines. The Company is in
the  process  of  evaluating the impact of the aforementioned exercise, but does
not  believe that its liability, if any, to such purchasers would be material to
its  financial  condition  or  results  of  operations.

10.  RELATED  PARTY  TRANSACTIONS

     Statement  of  Financial  Accounting  Standards  No.  57,  "Related  Party
Disclosures,"  specifies  the  nature of information that should be disclosed in
financial  statements regarding related party transactions. CardioTech, a public
company,  is  a  related  party  with  the  Company by virtue of its significant
business  relationships.

     In March 2000, the Company entered into a $250,000 joint research agreement
with  CardioTech  to  develop a proprietary porous polymer biocompatible coating
technology as a platform for the Company's proprietary radioactive brachytherapy
technology.  Through  December  31,  2001,  the Company paid CardioTech $115,000
pursuant  to  the  aforementioned  agreement.

     Certain directors of the Company hold positions as directors of CardioTech.
The CEO and Chairman of the Board of Directors of the Company is also a director
of  CardioTech.  The CEO and Chairman of the Board of Directors of CardioTech is


                                       7
<PAGE>
also  a  director  of  the  Company.  The  acting Chief Financial Officer of the
Company is also the acting Chief Financial Officer of CardioTech. As of December
31,  2001,  approximately  $35,000  was  due and payable to the Company's acting
Chief  Financial  Officer.

     On  October  10,  2001,  CardioTech provided the Company a $500,000 Line of
Credit  Facility  (See  Note  7).

     Accounts  receivable from related parties as of December 31, 2001 consisted
of  a  loan of $138,000 to the Company's chief executive officer, which was used
to  exercise options for 50,000 shares of the Company's common stock on December
9,  1997. The loan is due and payable upon the disposal of the 50,000 shares and
the  loan  bears  interest at 6% per annum. Additionally, loans totaling $55,000
were  also  made to five employees to exercise stock options. As of December 31,
2001,  approximately  $25,000  of  loans  to two (2) employees were outstanding.
These  loans  are  due  and  payable on January 7, 2002 and bear interest at 6%.
These  transactions  were  reported  as  a  reduction  of  stockholders' equity.

      In  January  2000,  the  Company  received  notice of the award of a joint
research grant. Funding is provided through a $100,000 Phase I grant by the U.S.
Department  of Health and Human Services, National Heart, Lung & Blood Institute
to CardioTech and sub-grants to the Company and Stanford University. The Company
acted  as  a  subcontractor  to  CardioTech  and  received a total of $25,000 in
payments  through September 2000. There are no further amounts to be received by
the  Company  pursuant  to  this  grant.


                                       8
<PAGE>
ITEM 2.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS  OF  OPERATIONS

     The  following  management  discussion  and  analysis  should  be  read  in
conjunction  with  the  financial  statements  and notes thereto as filed in the
Company's  Form  10-KSB/A No. 3 for the year ended June 30, 2001. In addition to
historical  information,  this  Form  10-QSB/A  No.  2  contains forward-looking
statements.  The  forward-looking  statements  are  subject to certain risks and
uncertainties  that  could  cause actual results to differ materially from those
reflected in such forward-looking statements. Readers are cautioned not to place
undue  reliance  on these forward-looking statements, which reflect management's
opinions  only  as  of  the date hereof. The Company undertakes no obligation to
revise  or publicly release the results of any revision to these forward-looking
statements.  Readers  should  carefully  review documents that the Company files
from  time  to  time  with the Securities and Exchange Commission, including the
Company's  Quarterly  Reports  and Annual Reports filed by the Company in fiscal
2001  and  2002.

RESULTS  OF  OPERATIONS

Comparison  for  the  three  months  ended  December  31,  2001  and  2000

     Revenues.  Total revenues for the three months ended December 31, 2001 were
$1,584,000  as  compared  to $1,001,000 for the comparable prior year period, an
increase  of $583,000 or 58%.  The increase is attributable primarily to revenue
recognized  from  the new I-PlantTM seed which the Company began shipping in the
first  half  of  fiscal  2001.  I-Plant prostate seed sales for the three months
ended  December 31, 2001 were approximately $665,000 as compared to $121,000 for
the comparable prior year period. Over the three month period ended December 31,
2001,  the I-PlantTM prostate seed sales have grown at a compounded average rate
of  17% per month.  Although management believes the prostate seed business will
maintain a trend of strong growth, management believes that a 17% monthly growth
rate  will  decline  as  the  product  matures.  The Company's revenues from the
I-PlantTM  prostate  seeds  increased  primarily  because  of an increase in the
number  of  customers  and  an  increase in the volume of the I-PlantTM prostate
seeds  shipped.  Revenues  from  medical  coatings  for  the  three months ended
December 31, 2001 were $501,000 as compared to $451,000 for the comparable prior
year  period,  an  increase  of  $50,000  or 11%.  The increase in revenues from
medical  coatings  is  primarily  a result of the addition of two new customers.
Revenues  from  semiconductors for the three months ended December 31, 2001 were
$206,000  as  compared  to  $151,000  for  the  comparable prior year period, an
increase  of  $55,000  or  36%.  The increase in the semiconductor business is a
result  of the addition of new customers who require outsourced ion implantation
services  for research and development activities.  These gains were offset by a
6%  decrease  in  government  contract  and  grant revenue.  Less than 5% of all
revenues  were  derived  from  foreign  sources.

     The  Company's  two  major  customers,  the Howmedica/Osteonics Division of
Stryker  Corporation  and  Biomet, Incorporated, combined, accounted for 26% and
32%  of  revenue  for  the  three  months  ended  December  31,  2001  and 2000,
respectively.  The  Company's  sales to these customers as a percentage of total
sales  decreased  as  a  result  of  the  increasing sales volume of I-Plant(TM)
prostate  seeds.  MED-TEC  Iowa,  Inc. ("MED-TEC Inc."), the Company's exclusive
distributor  of  prostate  seeds,  accounted for 42% and 12% of revenues for the
three  months  ended  December  31,  2001  and 2000, respectively. The Company's
government  contract  and grant revenue accounted for 13% and 22% of revenue for
the  three  months ended December 31, 2001 and 2000, respectively. The Company's
grant  revenues, principally Small Business Innovative Research (SBIR) programs,
fluctuate  due  to: (a) the desire of the Company to obtain external funding for
its  research  and  development  efforts;  (b)  the  availability  of government
funding;  and  (c)  the time required to obtain approval of a grant application.
The  Company  has  been  successful  in obtaining SBIR grants in fiscal 2002 and
2001. The Company expects to continue to seek continuation or replacement of its
existing  SBIR  grants  during  fiscal  2002  and  beyond.

     Cost  of  Product  and  Contract  Research  Revenues.  Cost  of product and
contract  research  revenues  for  the three months ended December 31, 2001 were
$811,000  as  compared  to  $941,000  for  the  comparable  prior year period, a
decrease  of  $130,000  or  14%.  The  decrease  in cost of product and contract
research  revenues  is  primarily  a result of costs incurred in 2001 associated
with  the start-up of prostate seed production and reduced costs associated with
research grants. This decrease in cost is offset by increases in cost of product
sales  due  to:  (a)  overall increase in sales volume; and (b) additional costs
related  to  the  introduction  of  the  radioactive  prostate seed, principally
personnel  costs  and  depreciation  expense  related  to  new  equipment.  As a
percentage  of  revenues,  the  cost  of  product and contract research revenues
decreased to 51% for the three months ended December 31, 2001 as compared to 94%
for  the  comparable prior year period. This decrease in cost as a percentage of
revenues  is  primarily  attributable  to  the  increased volume of sales of the
I-Plant  radioactive  prostate  seed. The cost of I-PlantTM radioactive prostate


                                      9
<PAGE>
seed  has a high fixed cost component and as the volume of sales of the prostate
seed increases management anticipates continued improvements in gross margins as
a percentage of revenues. During fiscal 2001 and 2000, the Company utilized SBIR
grants  as  a  significant  source  of  funding for its research and development
efforts. The Company will continue to use SBIR grants as a source of funding for
its  research  and  development efforts in fiscal 2002. The Company's obligation
with respect to these grants is to perform the research on a best-efforts basis.
Periodically,  the  Company  may  continue  its research and development efforts
related  to  these  projects at its own expense. The Company has classified such
costs  as cost of product and contract research revenues to permit comparability
between  periods.  This  cost  is  considered  company-funded  research  and
development.

     Research  and  Development.  Research and development expense for the three
months  ended  December  31,  2001  was $258,000 as compared to $366,000 for the
comparable  prior  year  period, a decrease of $108,000 or 30%. This decrease is
primarily  a  result  of the completion of development costs associated with the
I-Plant  seed  in  connection with the commercial product introduction in fiscal
2001.  The  Company  anticipates increases in future expenditures resulting from
new  product  development  plans.

     Selling,  General  and  Administrative. Selling, general and administrative
expenses  for the three months ended December 31, 2001 were $590,000 as compared
to  $567,000 for the comparable prior year period, an increase of $23,000 or 4%.
The  increase  is  primarily  attributable  to  normal  increases in expenses in
connection  with  the  increased sales activity. However, the increase is only a
slight  increase  and  reflects  managements  continued  enforcement  of  cost
containment  efforts.  Theses cost containment efforts were initially undertaken
in  the second half of fiscal 2001. Cost containment measures included, but were
not  limited  to,  the  elimination  of  discretionary spending not essential to
achieving critical business objectives, replacement of certain members of senior
staff and management with consultants experienced in a manufacturing environment
focused on operational efficiencies, reduction of legal expenses associated with
patent  application  preparation,  cancellation of the Company's previous public
relations  firm's  contract,  and  a  reduction  of  purchases  of  spare  parts
inventory.

     Other  Income, Net. For the three month period ended December 31, 2001, the
Company  recorded  other expense, net of $5,000 as compared to other income, net
of $34,000. The decrease is primarily a result of a lower available cash balance
upon  which  to  generate  interest  income.

     Net  Loss.  Net loss for the three month period ended December 31, 2001 was
$80,000 as compared to $839,000 for the comparable prior year period, a decrease
in  net loss of $759,000 or 90%. This reduction is attributable, in part, by the
marked  increase  in  total  revenues,  especially the growth in the sale of the
I-Plant(TM)  prostate  seed,  and  the  maintenance of stable operating expenses
pursuant  to  the  Company's  cost  containment measures. The Company's earnings
before  interest,  taxes, depreciation and amortization ("EBITDA") for the three
months ended December 31, 2001 were a positive EBITDA of $134,000 as compared to
a  negative  EBITDA  of  $711,000  for  the  comparable  prior  year  period, an
improvement  in  EBITDA  of  $845,000  or 119%. The Company calculated EBITDA by
adding  depreciation  and amortization of $209,000 and $162,000 to the loss from
operations of $75,000 and $873,000 for the three month period ended December 31,
2001  and 2000, respectively. EBITDA is not comparable to earnings determined in
accordance with generally accepted accounting principles. Accordingly, EBITDA as
determined  by  the  Company  may not be comparable to similarly titled measures
reported  by  other  companies.  We  believe  that this computation is useful in
analyzing  operating  performance,  but  should be used only in conjunction with
results  reported  in  accordance with generally accepted accounting principles.
This  improvement  in  EBITDA  primarily  reflects  the  positive  impact of the
increasing  sales  volume of the I-Plant prostate seed compared to the Company's
manufacturing fixed cost structure. The basic and diluted net loss per share for
the  three  months  ended  December  31, 2001 was $0.01 per share as compared to
$0.14  per share for the comparable prior year period, a decrease in net loss of
$0.13  or  93%.

Comparison for the six months ended December 31, 2001 and 2000

     Revenues.  Total  revenues  for the six months ended December 31, 2001 were
$2,937,000  as  compared  to $1,856,000 for the comparable prior year period, an
increase  of  $1,081,000  or  58%.  The  increase  is  attributable primarily to
revenue  recognized from the new I-PlantTM seed which the Company began shipping
in  the  first  half  of fiscal 2001.  I-PlantTM prostate seed sales for the six
months  ended  December  31,  2001  were approximately $1,189,000 as compared to
$133,000  for the comparable prior year period.  Over the six month period ended
December  31, 2001, the I-PlantTM prostate seed sales have grown at a compounded
average  rate  of 17% per month.  Although management believes the prostate seed
business  will maintain a trend of strong growth, management believes that a 17%
monthly growth rate will decline as the product matures.  The Company's revenues


                                      10
<PAGE>
from  the I-PlantTM prostate seeds increased primarily because of an increase in
the  number of customers and an increase in the volume of the I-PlantTM prostate
seeds shipped.  Revenues from medical coatings for the six months ended December
31,  2001  were  $995,000  as compared to $888,000 for the comparable prior year
period,  an  increase of $107,000 or 12%.  The increase in revenues from medical
coatings  is  primarily a result of the addition of two new customers.  Revenues
from  semiconductors for the six months ended December 31, 2001 were $443,000 as
compared  to  $267,000  for  the  comparable  prior  year period, an increase of
$176,000  or 66%.  The increase in the semiconductor business is a result of the
addition  of  new customers who require outsourced ion implantation services for
research  and development activities.  These gains were offset by a 21% decrease
in  government  contract  and  grant revenue.  Less than 5% of all revenues were
derived  from  foreign  sources.


     The  Company's  two  major  customers,  the Howmedica/Osteonics Division of
Stryker  Corporation  and  Biomet, Incorporated, combined, accounted for 27% and
39%  of  revenue  for  the  six  months  ended  December  31,  2001  and  2000,
respectively.  The  Company's  sales to these customers as a percentage of total
sales  decreased  as  a  result  of  the  increasing sales volume of I-Plant(TM)
prostate seeds.  MED-TEC  Inc., the Company's  exclusive distributor of prostate
seeds,  accounted  for  40% and 7% of revenues for the six months ended December
31,  2001  and  2000,  respectively. The Company's government contract and grant
revenue  accounted  for 11% and 21% of revenue for the six months ended December
31, 2001 and 2000, respectively. The Company's grant revenues, principally Small
Business  Innovative  Research (SBIR) programs, fluctuate due to: (a) the desire
of  the  Company  to  obtain  external  funding for its research and development
efforts;  (b)  the availability of government funding; and (c) the time required
to  obtain  approval  of a grant application. The Company has been successful in
obtaining  SBIR grants in 2002 and 2001. The Company expects to continue to seek
continuation  or  replacement of its existing SBIR grants during fiscal 2002 and
beyond.

     Cost  of  Product  and  Contract  Research  Revenues.  Cost  of product and
contract  research  revenues  for  the  six  months ended December 31, 2001 were
$1,974,000  as  compared  to $1,723,000 for the comparable prior year period, an
increase  of $251,000 or 15%. The increases in cost of product sales are due to:
(a)  overall  increase  in sales volume; and (b) additional costs related to the
introduction  of  the radioactive prostate seed, principally personnel costs and
depreciation  expense related to new equipment. As a percentage of revenues, the
cost  of  product  and  contract  research revenues decreased to 67% for the six
months  ended December 31, 2001 as compared to 93% for the comparable prior year
period.  This  decrease  in  cost  as  a  percentage  of  revenues  is primarily
attributable  to  the  increased  volume  of  sales  of  the I-Plant radioactive
prostate  seed.  The  cost  of  I-Plant(TM) radioactive prostate seed has a high
fixed  cost  component and as the volume of sales of the prostate seed increases
management  anticipates  continued improvements in gross margins as a percentage
of  revenues. During fiscal 2001 and 2000, the Company utilized SBIR grants as a
significant  source  of  funding  for  its research and development efforts. The
Company will continue to use SBIR grants as a source of funding for its research
and development efforts in fiscal 2002. The Company's obligation with respect to
these  grants  is to perform the research on a best-efforts basis. Periodically,
the  Company  may continue its research and development efforts related to these
projects  at  its  own expense. The Company has classified such costs as cost of
product  and contract research revenues to permit comparability between periods.
This  cost  is  considered  company-funded  research  and  development.

     Research  and  Development.  Research  and  development expense for the six
months  ended  December  31,  2001  was $549,000 as compared to $816,000 for the
comparable  prior  year  period, a decrease of $267,000 or 33%. This decrease is
primarily  a  result  of the completion of development costs associated with the
I-Plant  seed  in  connection with the commercial product introduction in fiscal
2001.  The  Company  anticipates increases in future expenditures resulting from
new  product  development  plans.

     Selling,  General  and  Administrative. Selling, general and administrative
expenses  for the six months ended December 31, 2001 were $1,003,000 as compared
to  $1,126,000  for  the comparable prior year period, a decrease of $123,000 or
11%.  The  decrease  is  primarily  a  result  of  the  Company's continued cost
containment efforts that were undertaken in the second half of fiscal 2001. Cost
containment  measures  included,  but  were  not  limited to, the elimination of
discretionary  spending not essential to achieving critical business objectives,
replacement  of  certain members of senior staff and management with consultants
experienced  in a manufacturing environment focused on operational efficiencies,
reduction  of  legal  expenses  associated  with patent application preparation,
cancellation  of the Company's public relations firm's contract, and a reduction
of  purchases  of  spare  parts  inventory.


                                      11
<PAGE>
     Other  Income,  Net.  For  the six month period ended December 31, 2001 the
Company  recorded  no  other  income,  net  as  compared to other income, net of
$92,000.  The  decrease  is primarily a result of a lower available cash balance
upon  which  to  generate  interest  income.

     Net  Loss.  Net  loss  for the six month period ended December 31, 2001 was
$589,000  as  compared  to  $1,717,000  for  the comparable prior year period, a
decrease  in  net  loss of $1,128,000 or 66%. This reduction is attributable, in
part,  by  the  marked  increase in total revenues, especially the growth in the
sale  of  the I-Plant(TM) prostate seed, and the maintenance of stable operating
expenses  pursuant  to  the  Company's  cost containment measures. The Company's
earnings  before  interest,  taxes, depreciation and amortization ("EBITDA") for
the six months ended December 31, 2001 were a negative $207,000 as compared to a
negative  $1,503,000  for  the  comparable  prior year period, an improvement in
EBITDA  of  $1,296,000  or  86%.  The  Company  calculated  EBITDA  by  adding
depreciation  and  amortization  of  $382,000  and  $306,000  to  the  loss from
operations  of  $589,000  and $1,809,000 for the six month period ended December
31, 2001 and 2000, respectively. EBITDA is not comparable to earnings determined
in accordance with generally accepted accounting principles. Accordingly, EBITDA
as  determined by the Company may not be comparable to similarly titled measures
reported  by  other  companies.  We  believe  that this computation is useful in
analyzing  operating  performance,  but  should be used only in conjunction with
results  reported  in  accordance with generally accepted accounting principles.
This  improvement  in  EBITDA  primarily  reflects  the  positive  impact of the
increasing  sales  volume of the I-Plant prostate seed compared to the Company's
manufacturing fixed cost structure. The basic and diluted net loss per share for
the  six months ended December 31, 2001 was $0.10 per share as compared to $0.30
per  share  for  the  comparable  prior year period, a decrease of $0.20 or 67%.

LIQUIDITY  AND  CAPITAL  RESOURCES

     As  of  December 31, 2001, the Company had approximately $2,369,000 in cash
in the form of cash and short-term investments.  Included in cash is $167,000 of
restricted cash required to partially collateralize the Company's Equipment Term
Loan,  as  discussed  below.  During  the  six  months  ended December 31, 2001,
operating  activities  used  cash  of  approximately $380,000.  Net cash used by
operating  activities  primarily  reflects  the  $589,000  net  loss,  a $35,000
increase  in accounts receivable and a $373,000 increase in inventory; offset by
a  $242,000  increase  in  accounts payable and depreciation and amortization of
$382,000.  During  the  six months ended December 31, 2001, investing activities
used  cash of approximately $523,000, which was attributable to $528,000 use for
the  purchases  of  property and equipment. During the six months ended December
31,  2001,  financing  activities provided approximately $2,040,000 in cash. Net
cash  provided  by  financing  activities  primarily  includes proceeds from the
exercise of stock options in the approximate amount of $129,000; the exercise of
warrants  in  the  approximate amount of $469,000, net of cash receivable on the
exercise  of  warrants  of $131,000; the sale of treasury stock in the amount of
$253,000;  and  the  issuance  of  $1,500,000  of common stock through a private
placement,  net of $130,000 of transaction costs. The proceeds from the issuance
of  equity  were  offset  by  payments  on  the  Company's  equipment term loan.

     The  Company had a Revolving Credit Facility ("Credit Facility") and has an
Equipment  Term  Loan  ("Term Loan") pursuant to a Loan Agreement with its bank.
The  Revolving  Credit  Facility  is  unsecured  and  the Equipment Term Loan is
cross-collateralized  and  cross-defaulted.  The Loan Agreement has a first lien
on  substantially  all  of  the  Company's  assets.

     On  September 30, 2000, the Company's Credit Facility expired.  The Company
chose  not to renew the Credit Facility and the Company has no further borrowing
rights or availability.  Additionally, the Company has no borrowings outstanding
with  respect  to  the  expired  Credit  Facility  as  of  December  31,  2001.

     The  Company's Term Loan provided a facility of $1,500,000, of which it had
utilized $750,000.  Interest is payable monthly at 1% above the bank's base rate
commencing  February 1998.  As of December 31, 2001, the balance outstanding was
$323,000  and  no  further  borrowings  are  permitted  on  the  Term  Loan.

     The  Company's  Loan  Agreement  requires  compliance  with  two  financial
covenants including minimum levels of net worth and net loss limits. At June 30,
2001,  the  Company's net loss covenant was greater than the required amount. On
September 28, 2001, the Company and Stephen N. Bunker, a director and officer of
the  Company,  (collectively, the "Pledgors") fully collateralized the Term Loan
with  $167,000  and  $200,000  of  cash  (the  "Collateral"),  respectively, and
executed  pledge  agreements  with  respect  to  the  collateral.  The  Pledgors
deposited  the  Collateral  with  the Company's bank. The Collateral must remain
with  the  Company's  bank in an amount that is sufficient to collateralize only
the  balance  outstanding  on the Term Loan at any point in time until such Term
Loan  is paid in full. The pledge agreement allows the Company's bank to use the


                                      12
<PAGE>
Collateral to fulfill the obligations of the Term Loan in the event of a default
by  the  Company  in  payment of the principal or interest of the Term Loan. The
Company's  bank  has  waived its rights under the Loan Agreement with respect to
this  financial  covenant  at June 30, 2001 through and including June 30, 2002.

     On  October  10,  2001,  the Company entered into a $500,000 Line of Credit
Facility ("Line of Credit") with CardioTech, a related party. The Line of Credit
provides  for funding at the discretion of the Company, is subject to a security
agreement  providing a second lien on substantially all of the Company's assets,
and provides for a $15,000 commitment fee payable on the earlier of the date the
Company  first  draws  down on the Line of Credit or April 15, 2002. The Line of
Credit  bears  interest  at the prime rate (5.5% as of October 10, 2001) plus 2%
and  expires October 12, 2002. All amounts borrowed under the Line of Credit are
due  on  October 12, 2002. For the period from October 10, 2001 through December
31,  2001 there were no amounts drawn on this Line of Credit. As of December 31,
2001,  there  were  no  borrowings  outstanding.

     The Company received $1,500,000 in a private placement with an investor and
issued  145,349  Units, each consisting of one share of its common stock and one
common stock purchase warrant. Two warrants are exercisable for one share of its
common  stock  at  an  exercise  price  of $12.90 per share. Total consideration
received  was  $1,500,000,  which  reflected  a  discount of 20% from the market
price.  This  discount  reflects  the best terms available to the Company in the
private  placement  market  during  its  second  fiscal  quarter  of  2001.

     In  connection with the transaction, the Company issued additional warrants
to the investor's general counsel to purchase 10,000 shares at an exercise price
of  $12.90  per share and a document preparation fee of $5,000. The Company also
engaged  two  placement agents who received warrants to purchase an aggregate of
12,000  shares  of the Company's common stock at an exercise price of $12.90 per
share and one placement agent received a placement fee of $105,000. All warrants
pursuant  to  this transaction are exercisable at any time prior to December 12,
2006.  Mr. Pasquale Ruggieri, a member of the Company's Board of Directors, also
serves  as  an  investment  banker for one of the placement agents in connection
with  this  transaction.

     The  Company  has  recorded the proceeds from the private placement, net of
the  discount  of  $300,000  and  offering  costs  of  $130,000 paid in cash and
warrants  having  a  fair  value  of  $55,000,  as  a  capital  contribution.

     Between  December 18, 2001 and January 3, 2002, warrants to purchase 70,900
shares  of  the  Company's  common  stock were exercised at an exercise price of
$9.00  per  share.  Although  warrant  exercises such as this were registered in
connection  with the Company's initial public offering, the Company's prospectus
had not been updated to include developments in the Company's business since the
initial  public  offering.  To  the  extent that purchasers of these shares were
damaged,  the  Company  could  be  exposed  to  liability,  including, possibly,
liability  for  rescission  of  their  purchases.

     As  of  December  31,  2001,  warrants  representing  52,100  shares of the
Company's  common  stock  were  exercised at $9.00 per share. As of December 31,
2001, the Company received gross proceeds of approximately $338,000 and was owed
$131,000  of  cash  pursuant to the exercise of these warrants from its transfer
agent.  Until the prospectus is declared effective, the Company has recognized a
liability  of $338,000 as amounts due to shareholders and segregated the related
proceeds  to  reflect  the potential amount necessary to rescind the exercise of
the  warrants.  During  the  period  in  which  the warrants were exercised, the
Company's  stock  price ranged from $11.00 to $14.07 per share; however, at this
date  the  Company  is  unable to determine whether or at what price each of the
purchasers  may  have  disposed  of  the  shares they acquired by exercising the
warrants  and  if  any  of  the  purchasers  were  damaged.

     In  addition, the Securities and Exchange Commission may have the authority
to  impose  a variety of remedies, including, possibly, fines. The Company is in
the  process  of  evaluating the impact of the aforementioned exercise, but does
not  believe that its liability, if any, to such purchasers would be material to
its  financial  condition  or  results  of  operations.

     The Company is developing several explosive detection systems that could be
used  in  airports,  public  and  government  buildings,  and  sporting  event
facilities.  The  systems use our proprietary technology, which includes the use
of  laser beams in combination with ion mobility spectrometry, to electronically
detect  minute  quantities  of  explosive  vapor  molecules  in  the  air.


                                      13
<PAGE>
     This  project has been ongoing at the Company since approximately May 1999.
This  project  involved  a  certain  amount  of  one Company employee's time and
certain outside contractors. Total costs of this project have been approximately
$150,000  in  the aggregate over the project period. This project was undertaken
by  research  personnel  within  the  Company who are constantly researching new
applications  for  this  technology.  The  development  of  new  applications is
typically  funded through government grants or internal funding. Originally, the
Company  funded  a research and development program for the electronic detection
system  to  produce  enough  data to write grant proposals for the Department of
Defense  to  detect  unexploded  bombs  and  mines.

     The  Department  of  Transportation  has  stated  that the U.S. could spend
between $1.9 billion and $2.5 billion on equipment for detection of bulk amounts
and  trace  amounts  of  explosives. However, the Company does not know how much
will  be  allocated to each of trace and bulk equipment or how much allocated to
equipment  for the detection of trace amounts of explosives will be allocated to
devices  like  the  Company's  devices.

     In  June  2000,  the  Company  developed  its first generation device which
demonstrated  sensitivity  to  the  explosive  TNT.  In  June  2001, the Company
developed  a  second  generation  prototype  with  increased  sensitivity  and
selectivity.  This  device  can  detect  and  specify  an  increasing  number of
compounds  within  various  explosive  materials.  The explosives that have been
tested  to  date are TNT, RDX, PETN, EGDN, and DNT. RDX is the primary component
of  C3 and C4 explosives, such as Datasheet and Semtex, as well as certain types
of  black powder explosives. The Company believes these explosives represent the
majority  of  the  explosives  presently used in terrorist activities. After the
attack on the World Trade Center occurred on September 11, 2001, management made
the  decision  to continue the internal funding of the project rather than await
funding  through  government  grants. In December 2001, the Company successfully
demonstrated  its working prototype electronic detection system to several third
parties.  The  Company's  electronic  detection  system  has  been  subjected to
controlled testing by third parties and successfully detected a sample of C4. As
a  result  of  the  successful  demonstration,  the  Company  believed  it  was
appropriate  to  further  pursue  the  commercial  development of its electronic
detection  system.  The  Company  is  developing  a  pre-production  electronic
detection  system  that  it  believes  will be completed prior to the end of the
fiscal  year  ending  June  30,  2002.  This pre-production electronic detection
system  will  form the basis of a commercial unit and will be submitted to third
parties  for  testing  and  evaluation.

     The electronic detection system detects microscopic quantities of explosive
molecules  in  the  air.  The  device does not use X-rays and does not produce a
danger to personnel operating the device or scanned by the device. The device is
a  sensor  that  receives  signals  that  are  already  in  the environment. Two
companies  market  trace  electronic detection systems (Ion Track Instruments, a
U.S. privately held company, and Smiths Plc, a U.K. publicly held company). Both
of  these  competitors use Ion Mobility Spectrometry in their respective devices
for  the detection and classification of explosive molecules. Additionally, both
of  these  competitors  use  Nickel-63,  a  radioactive  source,  to  ionize the
explosive  vapors.  The  Company's  electronic  detection  system  also uses Ion
Mobility  Spectrometry  technology  to detect and classify explosives molecules,
however,  the  Company's electronic detection system uses a laser beam to ionize
the explosive molecules. The laser yields greater sensitivity than Nickel-63 and
has the potential to detect explosives without physically rubbing or swiping the
outside  of  a  container  or luggage. Currently, the trace electronic detection
systems  require  the  operator  to  physically  rub or swipe the articles to be
tested.  The  swab or cloth is then placed into the electronic detection system,
heated  to  evaporate  some  of  the explosive particles, and then directs these
vapors  into  the  Ion  Mobility  Spectrometry  device. The Company's electronic
detection  system uses a sensor that does not require physical contact to screen
the  article  to detect trace residues and detects the explosives from the vapor
alone.  Since  the  Company's  device  does not use any X-ray source, management
believes  it  is safer than trace explosives residue detection systems currently
in  use.

     The Company believes its explosive detection system is roughly 833 to 4,500
times  more  sensitive  than an explosives-sniffing dog. This belief is based on
the  assumption that an explosives-sniffing dog is as sensitive to explosives as
it  is  to  narcotics.

     The  Company  has  tested  for false positives and false negatives by using
numerous  non-explosive organic vapors. The electronic detection system properly
did  not  register  the  existence  of  non-explosives.  The  accepted  testing
methodology  for  false  positives  requires testing on a commercially available
electronic  detection  system  and  is  usually  performed  in  the context of a
specific  application,  such as baggage screening, personnel screening, locating
bombs in buildings, and cargo or auto screening. The official false positive and
false  negative  testing  must  be  done  by  an independent third party agency,
however,  such  independent  testing  has  not  yet  been  performed.

     Management believes the material competitive disadvantage of its electronic
detection  system  is the cost. The Company believes that its device will be 30%
to  40%  more  expensive than current Ion Mobility Spectrometry based electronic
detection  systems  ,  which  are  approximately  $40,000  to  $50,000 per unit.
However,  the  Company  believes that the efficiency of its electronic detection
system  and  the resultant improvement in throughput of the quantity of carry-on
articles  and  personnel that can be screened will provide a cost justification.


                                      14
<PAGE>
     Consistent  with  the  Company's  policy  to  protect  its  proprietary
technologies,  the  Company  plans  to  submit  at  least two preliminary patent
applications  to  the  United  States  Patent and Trademark Office. These patent
applications  will cover specific design configurations that are responsible for
the  Company's  improved  vapor  detection  sensitivity.

     The  Company  is  developing several versions of the systems to serve these
markets. The Company is developing a table-top unit, which can be used to screen
passengers  and  carry-on  baggage in airports. The Company is also developing a
portable  system,  which  can  be  used  to  replace bomb-sniffing dogs to clear
buildings,  aircrafts,  or  ships  where hidden bombs are believed to exist. The
Company  plans to first market these systems to U.S. government agencies for use
in  airports  and  government  buildings.

     The  electronic  detection  system  does  not  change the Company's current
operational  and  spending focus. The Company's operations and spending continue
to  focus  on  the  sales  of  its  current  semiconductor, medical coatings and
prostate seed products. Additionally, the Company continues to fund research and
development  through  government grants in accordance with the provisions of the
respective grant awards. The Company will require additional funding in order to
advance  the  commercial  development  of  the  electronic detection system. The
Company  will  attempt to obtain such financing by: (i) a government grant, (ii)
the exercise of the IPO warrants, or (iii) private financing. However, there can
be  no  assurance  that  the  Company  will  be  successful  in  its attempts to
raise  such  additional  financing.

     The  Company  will  require  substantial  funds  for  further  research and
development,  future  pre-clinical  and  clinical  trials, regulatory approvals,
continued  expansion  of  commercial-scale  manufacturing  capabilities, and the
marketing of its products. The Company's capital requirements depend on numerous
factors,  including  but  not  limited  to,  the  progress  of  its research and
development  programs;  the  progress  of pre-clinical and clinical testing; the
time  and  costs involved in obtaining regulatory approvals; the cost of filing,
prosecuting, defending and enforcing any intellectual property rights; competing
technological  and  market developments; changes in the Company's development of
commercialization  activities  and  arrangements; and the purchase of additional
facilities  and  capital  equipment.

     As  of  December  31,  2001, the Company was conducting its operations with
approximately  $2,369,000  in  cash  and cash equivalents (including $167,000 of
restricted cash). The Company estimates such amounts combined with its cash flow
from  operations  and  borrowing  arrangements, as provided by CardioTech in the
form  of the Line of Credit previously discussed, will be sufficient to fund its
working  capital  and  research  and  development  activities in the next twelve
months.  Future  expenditures  for  product  development, especially relating to
outside  testing and clinical trials, are discretionary and, accordingly, can be
adjusted,  as can certain selling, general and administrative expenses, based on
the  availability of cash.and administrative expenses, based on the availability
of  cash.


                                      15
<PAGE>
PART  II:  OTHER  INFORMATION

Item  1.  Legal  Proceedings

          Not  Applicable

Item  2.  Changes  in  Securities  and  Use  of  Proceeds

          On December 11, 2001, the Company sold 145,349 units to an independent
     third-party  investor.  Each unit consists of one share of common stock and
     one  common  stock  purchase  warrant. Two warrants are exercisable for one
     share of common stock at an exercise price of $12.90 per share. The Company
     received  gross  proceeds  of $1,500,000, which reflected a discount of 20%
     from  the  market price. This discount reflects the best terms available to
     the  Company  in  the  private  placement  market  during its second fiscal
     quarter  of  2001.

          In connection with the transaction, the Company issued warrants to the
     investor's  general counsel to purchase 10,000 shares of common stock at an
     exercise price of $12.90 per share and paid them a document preparation fee
     of  $5,000.  The  Company  also  engaged  two placement agents who received
     warrants  to purchase an aggregate of 12,000 shares of the Company's common
     stock  at  an  exercise  price  of $12.90 per share and one placement agent
     received  a  placement  fee  of  $105,000.  All  warrants  pursuant to this
     transaction  are  exercisable  at  any time prior to December 12, 2006. Mr.
     Pasquale  Ruggieri,  a  member  of  the  Company's Board of Directors, also
     serves  as  an  investment  banker  for  one  of  the  placement  agents in
     connection  with  this  transaction.

          This  private  placement  was  exempt  from  registration  pursuant to
     Section  4(2)  of  the  Securities  Act  of  1933,  as  amended.

Item  3.  Defaults  Upon  Senior  Securities

          Not  Applicable

Item  4.  Submission  of  Matters  of  a  Vote  to  Security-Holders

     The  Company  held  its  annual  shareholders meeting on December 14, 2001.
Anthony  Armini, Stephen Bunker, Shunkuchi Shimizu, Michael Szycher and Pasquale
Ruggieri  were elected as directors of the Company to hold office until the 2002
annual  meeting  of  the  shareholders.  The  results  for  this proposal was as
follows:

                    NAME                   FOR          WITHHELD
               Anthony Armini           5,058,941        3,250
               Stephen Bunker           5,058,941        3,250
               Shunkuchi Shimizu        5,059,991        2,200
               Michael Szycher          5,059,991        2,200
               Pasquale Ruggieri        5,059,991        2,200


Item  5.  Other  Information

          Not  Applicable

Item  6.  List  of  Exhibits  and  Reports  on  Form  8-K

          (a)  There are no exhibits, required by Item 601 of Regulation S-B, to
               be filed as part of this Quarterly Report on Form 10-QSB/A No. 1.

          (b)  The  registrant  filed  no reports on Form 8-K during the quarter
               ended  December 31, 2001.


                                      16
<PAGE>
                                   SIGNATURES

Pursuant  to  the  requirements  of the Securities and Exchange Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.

                                          Implant  Sciences  Corporation

Date:  April  30,  2002                   /s/  Anthony  J.  Armini
                                          ------------------------------
                                          Anthony  J.  Armini
                                          President  and  CEO

Date:  April  30,  2002                   /s/  David  C.  Volpe
                                          ------------------------------
                                          David  C.  Volpe
                                          Acting Chief Financial Officer
                                          (Principal  Financial  and
                                          Accounting  Officer)


                                      17
<PAGE>