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

                                   FORM 10-QSB

  [X]     Quarterly  report  pursuant  to  section 13 or 15(d) of the Securities
          Exchange  Act  of  1934. FOR THE QUARTERLY PERIOD ENDING SEPTEMBER 30,
          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 practiable date:

            Class                          Outstanding at September 30, 2001
  Common Stock, $.10 par value                        5,929,269

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

                      This document consists of 13 pages.


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

                                       INDEX

                                                                              Page No.
                           PART I.  FINANCIAL INFORMATION


<S>      <C>                                                                     <C>
ITEM 1.  Financial Statements:

           Condensed Balance Sheets as of September 30, 2001 and June 30, 2001     3
           (unaudited)

           Condensed Statement of Operations for the Three Months Ended
            September 30, 2001 and 2000 (unaudited)                                 4

           Condensed Statement of Cash Flows for the Three Months Ended
            September 30, 2001 and 2000 (unaudited)                                 5

           Notes to Condensed Financial Statements (including data applicable to
            unaudited periods)                                                      6

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


                             PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                         13

Item 2.  Changes in Securities and Use of Proceeds                                 13

Item 3.  Defaults Upon Senior Securities                                           13

Item 4.  Submission of Matters to a Vote of Security-Holders                       13

Item 5.  Other Information                                                         13

Item 6.  Exhibits and Reports on Form 8-K                                          13

         Signatures                                                                14
</TABLE>


                                       2.
<PAGE>
<TABLE>
<CAPTION>
PART  I:  FINANCIAL  INFORMATION
ITEM  1:  FINANCIAL  STATEMENTS

                                  IMPLANT SCIENCES CORPORATION
                                    CONDENSED BALANCE SHEETS
                                           (UNAUDITED)

                                                                    SEPTEMBER 30,     JUNE 30,
                                                                        2001            2001
                                                                   ---------------  ------------
<S>                                                                <C>              <C>
ASSETS
Current Assets:
   Cash and cash equivalents                                       $      830,000   $ 1,232,000
   Accounts receivable, net                                               754,000       706,000
   Inventories                                                            263,000       349,000
   Prepaid and other current assets                                        97,000        98,000
                                                                   ---------------  ------------
      Total Current Assets                                              1,944,000     2,385,000

Property and equipment, net                                             3,540,000     3,514,000
Other non-current assets                                                  163,000       183,000
                                                                   ---------------  ------------

      Total Assets                                                 $    5,647,000   $ 6,082,000
                                                                   ===============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable                                                $      363,000   $   322,000
   Accrued expenses                                                       759,000       786,000
   Current portion of long-term debt                                      180,000       176,000
   Obligations under capital leases                                         6,000         6,000
                                                                   ---------------  ------------
      Total Current Liabilities                                         1,308,000     1,290,000
                                                                   ---------------  ------------

Long-term Liabilities:
   Long-term debt, net of current portion                                 208,000       236,000
   Obligations under capital lease                                          4,000         5,000
   Deferred income taxes                                                   29,000        29,000
                                                                   ---------------  ------------
                                                                          241,000       270,000
                                                                   ---------------  ------------
                                                                        1,549,000     1,560,000
                                                                   ---------------  ------------

Stockholders' equity:
   Common stock, $.01 par value; 20,000,000 shares authorized;            593,000       591,000
      5,988,951 and 5,912,770 issued; and 5,965,951 and 5,889,770
      outstanding as of September 30, 2001 and June 30, 2001,
      respectively
   Additional paid-in capital                                          11,013,000    10,930,000
   Accumulated deficit                                                 (7,113,000)   (6,604,000)
   Notes receivable from employees                                       (188,000)     (188,000)
                                                                   ---------------  ------------
                                                                        4,305,000     4,729,000
Less: treasury stock of 23,000 shares at cost                            (207,000)     (207,000)
                                                                   ---------------  ------------
      Total stockholders' equity                                        4,098,000     4,522,000
                                                                   ---------------  ------------

Total Liabilities and Stockholders' Equity                         $    5,647,000   $ 6,082,000
                                                                   ===============  ============
</TABLE>

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


                                       3.
<PAGE>
<TABLE>
<CAPTION>
                          IMPLANT SCIENCES CORPORATION
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


                                                       THREE MONTHS ENDED
                                                    ------------------------
                                                          SEPTEMBER 30,
                                                    ------------------------
                                                       2001         2000
                                                    -----------  -----------
<S>                                                 <C>          <C>
Revenues:
   Product and contract research:
      Medical                                       $1,118,000   $  739,000
      Semiconductor                                    235,000      115,000
                                                    -----------  -----------
         Total revenues                              1,353,000      854,000
                                                    -----------  -----------

Costs and expenses:
   Cost of product and contract research revenues    1,163,000      784,000
   Research and development                            291,000      448,000
   Selling, general and administrative                 413,000      558,000
                                                    -----------  -----------
      Total costs and expenses                       1,867,000    1,790,000
                                                    -----------  -----------

Loss from operations                                  (514,000)    (936,000)
                                                    -----------  -----------

Other income (expense)
   Interest income                                       8,000       73,000
   Interest expense                                     (8,000)     (13,000)
   Other income (expense)                                5,000       (2,000)
                                                    -----------  -----------
                                                         5,000       58,000
                                                    -----------  -----------

Net loss                                            $ (509,000)  $ (878,000)
                                                    ===========  ===========

Net loss per share - basic                          $    (0.09)  $    (0.15)
                                                    ===========  ===========

Net loss per share - diluted                        $    (0.09)  $    (0.15)
                                                    ===========  ===========

Weighted average common shares outstanding
   used for basic earnings per share                 5,968,951    5,773,575
                                                    ===========  ===========

Weighted average common shares outstanding
   used for diluted earnings per share               5,968,951    5,773,575
                                                    ===========  ===========
</TABLE>

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


                                       4.
<PAGE>
<TABLE>
<CAPTION>
                          IMPLANT SCIENCES CORPORATION
                        CONDENSED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

                                                      THREE MONTHS ENDED
                                                   -------------------------
                                                         SEPTEMBER 30,
                                                      2001          2000
                                                   -----------  ------------
<S>                                                <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                           $ (509,000)  $  (878,000)
Adjustments to reconcile net loss to net cash
  used in operating activities:
  Depreciation and amortization                       173,000       144,000
  Amortization of deferred compensation                     -        15,000
  Equity in loss in Epsilon Medical                     1,000         1,000
  Changes in assets and liabilities:
    Accounts receivable                               (48,000)      206,000
    Inventories                                        86,000       (99,000)
    Prepaid and other current assets                        -       (74,000)
    Notes receivable                                        -         3,000
    Accounts payable                                   41,000      (283,000)
    Accrued expenses                                  (27,000)     (477,000)
                                                   -----------  ------------

      Net cash used by operating activities          (283,000)   (1,442,000)
                                                   -----------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment                   (186,000)     (418,000)
Other non-current assets                                7,000             -
                                                   -----------  ------------

      Net cash used by investing activities          (179,000)     (418,000)
                                                   -----------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock                             85,000       191,000
Repayments of long-term debt                          (25,000)      (45,000)
                                                   -----------  ------------

      Net cash provided by financing activities        60,000       146,000
                                                   -----------  ------------

Net decrease in cash and cash equivalents            (402,000)   (1,714,000)
Cash and cash equivalents, beginning                1,232,000     4,838,000
                                                   -----------  ------------
Cash and cash equivalents, ending                  $  830,000   $ 3,124,000
                                                   ===========  ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid                                      $    8,000   $    13,000
Obligations under capital lease                        10,000        16,000
</TABLE>

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


                                       5.
<PAGE>
                          IMPLANT SCIENCES CORPORATION
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001
                                   (UNAUDITED)


1.   DESCRIPTION  OF  BUSINESS

     Implant  Sciences  Corporation  (the  Company)  develops  products  for the
medical  device  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.

2.   INTERIM  FINANCIAL  STATEMENTS

     The financial information for the three months ending September 30, 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
months  ended  September 30, 2001 are not necessarily indicative of results that
may  be  expected  for  the  entire year.  The information contained in the Form
10-QSB  should  be  read  in  conjunction  with  the Company's audited financial
statements,  included  it its Form 10-KSB 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 issue 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  amends  SFAS No. 19, Financial Accounting and Reporting by Oil and Gas
Producing Companies, and 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.


                                       6.
<PAGE>
     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
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.   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 contact.
Revenue recognized but unbilled is recorded as unbilled accounts receivable.  At
September  30, 2001 unbilled accounts receivable represented approximately 19.7%
of  total  accounts  receivable.

6.   CREDIT  ARRANGEMENT

     The  Company  financed its operations utilizing a Revolving Credit Facility
("Credit  Facility")  and  an  Equipment  Term  Loan  ("Term Loan") under 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 is currently seeking a new credit
facility  on  terms  more  favorable  to  the  Company

     The Company has a term loan facilities of $1,500,000 at September 30, 2001,
of  which  it had utilized $750,000. Interest is payable monthly at 1% above the
bank's base rate commencing February 1998. As of September 30, 2001, the balance
outstanding  was  approximately  $388,000.

     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 a director and officer of the Company fully
collateralized  the  Term Loan with $167,000 and $200,000 of cash, respectively,
and  executed  pledge  agreements  with respect to the collateral. 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.


                                       7.
<PAGE>
     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 7). The Line of Credit provides for funding at the
discretion  of  the  Company  and is subject to a security agreement providing a
second  lien  on  substantially  all of the Company's assets. 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.

7.   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
International Inc. ("CardioTech"), a public company, is a related party with the
Company  by  virtue of its significant business relationships.  During the three
month  period  ended  September  30, 2001, CardioTech's corporate staff provided
certain  financial  and  accounting services to the Company.  Amounts of $35,000
are  due  and  payable  at  September  30,  2001  related  to  such  services.

     In March 2000, the Company entered into a $250,000 joint research agreement
with  CardioTech  International  to  develop  a  proprietary  porous  polymer
biocompatible  coating  technology  as  a platform for the Company's proprietary
radioactive brachytherapy technology. During the three months ended September 30
2001,  the  Company  made  no payments 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
also  a  director  of  the  Company.  The  acting Chief Financial Officer of the
Company  is  also  the  acting  Chief  Financial  Officer  of  CardioTech.

     On  October  10,  2001,  CardioTech provided the Company a $500,000 Line of
Credit  Facility  (See  Note  6).

     Accounts receivable from related parties as of September 30, 2001 consisted
of  a  loan  of $138,000 to a principle shareholder and loans to four employees,
totaling  $50,000  all  of  which  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  International  and  sub-grants  to  the  Company  and  Stanford
University.


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

RESULTS OF OPERATIONS

Comparison for the three months ended September 30, 2001 and 2000

     Revenues.  Total  revenues  for  the  three months ended September 30, 2001
were $1,353,000 as compared to $854,000 for the comparable prior year period, an
increase  of $499,000 or 58%.  The increase is attributable primarily to revenue
recognized  from  the  new  I-Plant seed which the Company began shipping in the
first  quarter of fiscal 2001.  I-Plant prostate seed sales for the three months
ended  September  30,  2001  were  approximately  $524,000.  Over the nine month
period ended September 30, 2001, the I-Plant prostate seed sales have grown at a
compounded average rate of 28% per month. In addition to the marked increase and
growth in I-Plant seed sales since commercial introduction, the Company has also
recognized  an  approximate 12% increase in medical coating revenues, and a 105%
increase  in  our semiconductors business over the comparable prior year period.
These  gains  were  offset  by  a  40% 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 28% of
revenue  for the three months ended September 30, 2001 and 46% of revenue in the
three  months  ended  September  30, 2000. MED-TEC Inc., the Company's exclusive
distributor  of  prostate  seeds,  accounted  for  39% of revenues for the three
months  ended  September  30,  2001. The Company's government contract and grant
revenue accounted for 7% and 19% of revenue for the three months ended September
30,  2001  and  2000,  respectively.

     Cost  of  Product  and  Contract  Research  Revenues.  Cost  of product and
contract  research  revenues  for the three months ended September 30, 2001 were
$1,163,000  as  compared  to  $784,000  for the comparable prior year period, an
increase  of  $379,000  or 48%. As a percentage of revenues, the cost of product
and  contract  research  revenues  decreased  to  86% for the three months ended
September 30, 2001 as compared to 92% for the comparable prior year period. This
decrease  in  cost is primarily attributable to the increased volume of sales of
the  I-Plant radioactive prostate seed. The cost of I-Plant 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.

     Research  and  Development.  Research and development expense for the three
months  ended  September  30,  2001 was $291,000 as compared to $448,000 for the
comparable  prior  year  period, a decrease of $157,000 or 35%. 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 September 30, 2001 were $413,000 as compared
to $558,000 for the comparable prior year period, a decrease of $145,000 or 26%.
The  decrease  in  selling,  general  and administrative expenses is primarily a
result  of  the  Company's cost containment measures that were undertaken in the
fourth  quarter  of fiscal 2001. This included a minor reduction in nonessential
personnel  and  reduction  of  costs  associated  with  outside  services.

     Other  Income,  Net. Other income, net for the three months ended September
30, 2001 was $5,000 as compared to $58,000 for the comparable prior year period,
a  decrease  of  $53,000 or 91%. The decrease is primarily a result of a $65,000
decrease  in  interest  income  on  available  cash  balances.


                                      9.
<PAGE>
     Net  Loss. Net loss for the three month period ended September 30, 2001 was
$509,000  as  compared  to  $878,000  for  the  comparable  prior year period, a
decrease  of  $369,000  or  42%. This reduction is attributable, in part, by the
marked  increase  in  total  revenues,  especially the growth in the sale of the
I-Plant  prostate  seed,  and the reduction in operating expenses. The Company's
earnings  before  interest,  taxes, depreciation and amortization ("EBITDA") for
the  three months ended September 30, 2001 were $341,000 as compared to $792,000
for  the  comparable  prior  year  period,  a  decrease of $451,000 or 57%. This
decrease  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 September 30, 2001 was $.09 per share as compared to $.15
per  share  for  the  comparable  prior  year period, a decrease of $.06 or 40%.

LIQUIDITY  AND  CAPITAL  RESOURCES

     As  of September 30, 2001 the Company had approximately $830,000 in cash in
the  form  of  cash  and  short-term investments.  During the three months ended
September  30,  2001,  operating activities used cash of approximately $283,000.
Net  cash used by operating activities primarily reflects the $509,000 net loss,
a  $48,000  increase  in  accounts  receivable and a $27,000 decrease in accrued
expenses;  offset  by  an  $86,000  decrease in inventory, a $41,000 increase in
accounts  payable,  and  depreciation  and amortization of $173,000.  During the
three  months  ended  September  30,  2001,  investing  activities  used cash of
approximately  $179,000.  Net  cash  used  by investing activities was primarily
attributable  to  $186,000  used  in  the  purchases  of property and equipment.
During  the three months ended September 30, 2001, financing activities provided
approximately  $60,000  in  cash.  Net  cash  provided  by  financing activities
primarily  includes  proceeds  from  the  exercise  of  stock  options offset by
payments  on  the  Company's  equipment  term  loan.

     Through  September  30,  2001, the Company had available a Revolving Credit
Facility  ("Credit  Facility")  and an Equipment Term Loan ("Term Loan") under 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 is currently seeking a new credit
facility on terms more favorable to the Company. There were no borrowings on the
Credit Facility during the three months ended September 30, 2001 and no balances
outstanding  as  of  September  30,  2001.

     The  Company  has  a  term  loan  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 September 30, 2001, the balance outstanding was
$388,000.

     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 a director and officer of the Company fully
collateralized  the  Term Loan with $167,000 and $200,000 of cash, respectively,
and  executed  pledge  agreements  with respect to the collateral. 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.  The Line of Credit provides for funding at the discretion of
the  Company  and  is subject to a security agreement providing a second lien on
substantially  all of the Company's assets. 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  due  under  the Line of Credit are due on October 12, 2002.


                                      10.
<PAGE>
     The accompanying financial statements have been presented on the assumption
that  the  Company  is  a  going  concern, which contemplates the realization of
assets  and  the  satisfaction  of liabilities in the normal course of business.
During  fiscal  2000 and 2001, the Company incurred significant operating losses
and  utilized  significant  amounts  of  cash to fund operations. The Company is
reaching  a  critical stage in its growth as it has transitioned from a research
and  development  company to a commercial company with complete sales, marketing
and  production  capabilities. The Company received Food and Drug Administration
510(k)  clearance  to  market  its I-PlantTM Iodine-125 radioactive seed for the
treatment  of  prostate  cancer.  On  February  2,  2000,  the  Company signed a
distribution  agreement with MED-TEC Inc. for the exclusive U.S. distribution of
our  I-Plant Iodine-125 seed. During this time the Company increased its overall
operating  expenses  and overhead to be positioned to further increase its sales
and  production  capabilities.

     During the second half of fiscal 2001 and first quarter of fiscal 2002, the
Company  implemented  a  number  of  programs to reduce its consumption of cash,
including  operating  expense  reductions,  increase  sales  of I-Plant prostate
seeds,  and  provide  additional  working  capital  financing. Management of the
Company  has  outlined  a  plan of appropriate action steps to attempt to ensure
that  the Company has adequate sources of cash to meet its working capital needs
and  research and development activities for at least the next twelve months. In
May  2001,  management  of  the  Company  received  approval  from  the Board of
directors  to  implement  this action plan. The key elements of the plan were as
follows:

          -    Further  operating  expense  reductions  to  eliminate  certain
               expenditures  that  are  not  essential  to  achieving  critical
               business  objectives  at this time (e.g., discretionary spending,
               further  development  efforts);

          -    Pursuit  of strategic financing alternatives including additional
               financing  through the form of a $500,000 working capital line of
               credit  with  a  related party, which was executed on October 10,
               2001;

          -    Replaced  certain  members  of senior management with consultants
               experienced in a manufacturing environment focused on operational
               efficiencies.  These consultants also come at a much reduced cost
               that  will  save the Company approximately $150,000 in salary and
               benefits

          -    Introduction  of its new radioactive prostate seed product, which
               occurred  in  August  2000;

          -    Execution in August 2001 of a key contract with a hospital in the
               Southeast  US that has had the affect of increasing the Company's
               planned  prostate  seed  sales  for  fiscal  2002;  and

          -    Discontinued nonessential research and development efforts, other
               than  grants  and  contracts,  that will reduce significantly the
               costs  incurred  during  fiscal  2002.

     As a result of implementing the above actions, management believes that its
existing  cash  resources and cash from operations will meet working capital and
research  and  development  requirements over the next twelve months and improve
operating  results.  However,  unanticipated  decreases  in  operating revenues,
delays  in government funding of grants, increases in expenses or further delays
in  product  development  may  adversely  impact the Company's cash position and
require  further  cost  reductions.  No  assurance can be given that the Company
will  be  able  to  operate  profitably  on  a  consistent  basis.


                                      11.
<PAGE>
     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  September  30, 2001, the Company was conducting its operations with
approximately  $830,000  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  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.


                                      12.
<PAGE>
PART  II:  OTHER  INFORMATION

Item 1.  Legal  Proceedings

         Not  Applicable

Item 2.  Changes  in  Securities  and  Use  of  Proceeds

         Not  Applicable

Item 3.  Defaults  Upon  Senior  Securities

         Not  Applicable

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

         Not  Applicable

Item 5.  Other  Information

         Not  Applicable

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

          (a)  The  following  exhibits, required by Item 601 of Regulation S-B,
               are  filed  as  part  of  this  Quarterly  Report on Form 10-QSB.
               Exhibit  numbers,  where  applicable,  in  the  left  hand column
               correspond  to  those  of  Item  601  of  Regulation  S-B.

                  None.

          (b)  The  registrant  has  filed  no  reports  on  Form 8-K during the
               quarter  ended  September  30,  2001.

                  None.


                                      13.
<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:  November 13, 2001               /s/  Anthony  J.  Armini
                                       --------------------------------------
                                       Anthony  J.  Armini
                                       President  and  CEO

Date:  Novemebr 13, 2001               /s/  David  C.  Volpe
                                       --------------------------------------
                                       David  C.  Volpe
                                       Acting Chief Financial Officer
                                       (Principal  Financial  and
                                       Accounting  Officer)

Date:  November  13, 2001              /s/  Stephen  N.  Bunker
                                       -------------------------------------
                                       Stephen  N.  Bunker
                                       Vice President and Chief Scientist,
                                       Director

Date:  November 13, 2001               /s/  Shunkuchi  Shimizu
                                       --------------------------------------
                                       Shunkuchi  Shimizu
                                       Director

Date:  Novemeber 13, 2001              /s/  Michael  Szycher
                                       --------------------------------------
                                       Michael  Szycher
                                       Director


                                      14.
<PAGE>