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

                                   FORM 10-QSB
(Mark One)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

     For the quarterly period ended June 30, 2002

                                       OR

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

     For the transition period from _________ to _________.


                        Commission file number: 333-45464


                        MEDICAL CAPITAL MANAGEMENT, INC.
        (Exact name of small business issuer as specified in its charter)


            Delaware                                             88-0473359
(State or other jurisdiction of                                 (IRS Employer
 incorporation or organization)                              Identification No.)


               3770 Howard Hughes Parkway, Las Vegas, Nevada 89109
                    (Address of principal executive offices)


                    Issuer's telephone number: (800) 824-3700


     As of July 15, 2002, there were 2,000 shares of the registrant's sole class
of common stock issued and outstanding.

     Transitional Small Business Disclosure Format Yes [ ] No [X]
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                        MEDICAL CAPITAL MANAGEMENT, INC.
                                  BALANCE SHEET
                                   (UNAUDITED)

                                                                     June 30,
                                                                       2002
                                                                   ------------
ASSETS
Current assets:
  Cash and cash equivalents ....................................   $  1,428,516
  Medical receivables, net of discount reserves of $ 295,000 ...     30,612,685
  Prepaid trustee fee ..........................................         31,670
  Receivable from Parent and affiliates ........................         30,741
  Income tax receivable ........................................         25,468
  Notes receivable .............................................      4,045,000
                                                                   ------------
        Total current assets ...................................     36,174,080
                                                                   ------------
        Total assets ...........................................   $ 36,174,080
                                                                   ============

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
  Accrued expenses - trade .....................................   $    151,908
  Interest payable, net ........................................        274,608
  Notes payable - current ......................................     13,077,000
                                                                   ------------
        Total current liabilities ..............................     13,503,516

Notes payable - long term, net of deferred offering
  costs of $122,327 and commissions of $1,846,086 ..............     20,617,587
                                                                   ------------
        Total liabilities ......................................     34,121,103
                                                                   ------------
STOCKHOLDER'S EQUITY:
  Preferred stock - par value $0.01 (10,000 shares authorized,
    no shares issued and outstanding) ..........................             --
  Common stock - par value $0.01 (10,000 shares authorized,
    2,000 shares issued and outstanding) .......................             20
  Additional paid-in capital ...................................      3,000,000
  Accumulated deficit ..........................................       (947,043)
                                                                   ------------
        Total stockholder's equity .............................      2,052,977
                                                                   ------------
        Total liabilities and stockholder's equity .............   $ 36,174,080
                                                                   ============

SEE ACCOMPANYING NOTES.
<PAGE>
                        MEDICAL CAPITAL MANAGEMENT, INC.
                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                     Six months ended June 30,    Three months ended June 30,
                                                    --------------------------    ---------------------------
                                                       2002           2001           2002            2001
                                                    -----------    -----------    -----------     -----------
<S>                                                 <C>            <C>            <C>             <C>
DISCOUNT REVENUES:
  Discount fees, including related party
    fees of $681,977 (2002) ..................      $ 1,963,010    $        --    $ 1,060,766     $        --
                                                    -----------    -----------    -----------     -----------
COST OF REVENUES:
  Administration fees, related party .........          478,208             --        313,488              --
                                                    -----------    -----------    -----------     -----------
GROSS PROFIT .................................        1,484,802             --        747,278              --
                                                    -----------    -----------    -----------     -----------
OPERATING EXPENSES:
  Interest expense, net ......................        1,458,357         12,517        862,184          12,065
  Salaries and benefits ......................           66,534             --         66,534              --
  Advertising ................................          188,519             --         99,788              --
  Professional services ......................          184,884         10,230         67,466           6,480
  Service fees, related party ................          135,288             --        109,764              --
  Underwriting expenses, related party........          126,000             --             --              --
  Legal expenses .............................          104,529             --         83,506              --
  Sales commissions ..........................           79,764             --         20,132              --
  Travel and entertainment ...................           70,469          3,257         52,296           3,257
  Trustee fees ...............................           22,622         28,375         13,572          14,187
  Directors' fees ............................           22,000         22,000         11,000          22,000
  Occupancy ..................................            4,291             --          4,291              --
  Other ......................................           41,352         12,922         35,177          12,922
                                                    -----------    -----------    -----------     -----------
      Total operating expenses ...............        2,504,609         89,301      1,425,710          70,911
                                                    -----------    -----------    -----------     -----------

LOSS BEFORE TAXES ............................       (1,019,807)       (89,301)      (678,432)        (70,911)
                                                    -----------    -----------    -----------     -----------
Provision (benefit) for income tax ...........          (25,468)             0              0               0
                                                    -----------    -----------    -----------     -----------
NET LOSS .....................................      $  (994,339)   $   (89,301)   $  (678,432)    $   (70,911)
                                                    ===========    ===========    ===========     ===========
Weighted average number of common
shares outstanding - basic and diluted........            2,000          1,500          2,000           2,000
                                                    ===========    ===========    ===========     ===========
Net loss per common share - basic and
  diluted ....................................      $   (497.17)   $    (59.53)   $   (339.22)    $    (35.46)
                                                    ===========    ===========    ===========     ===========
</TABLE>

SEE ACCOMPANYING NOTES.
<PAGE>
                        MEDICAL CAPITAL MANAGEMENT, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                               Six months ended   Six months ended
                                                                 June 30, 2002      June 30, 2001
                                                                 -------------      -------------
<S>                                                               <C>                <C>
Cash flows used for operating activities:
  Net loss .................................................      $   (994,339)      $    (89,301)
  Adjustments to reconcile net loss to net cash
    provided by (used for) operating activities:
    Amortization of deferred offering costs and
      commissions ..........................................           507,871              2,084
    Amortization of prepaid trustee fee ....................            22,622             28,375
  Changes in assets and liabilities:
    Increase in medical receivables ........................       (15,169,519)                --
    Decrease in interest receivable ........................            35,858                 --
    Increase in prepaid trustee fee ........................           (54,292)           (56,750)
    Increase in due to (from) Parent .......................           (79,748)           (86,808)
    Increase in accrued expenses - trade ...................            93,779             11,750
    Increase in interest payable ...........................           135,539              7,485
    Decrease in income taxes payable .......................           (50,936)                --
                                                                  ------------       ------------
Net cash used for operations ...............................       (15,553,165)          (183,165)
                                                                  ------------       ------------
Cash flows provided by (used for) financing activities:
  Proceeds from issuance of debt, net ......................        17,446,000            576,000
  Payments on offering costs and commissions ...............        (1,308,216)          (169,749)
  Payment of dividend, related party .......................        (1,250,000)                --
  Proceeds from sale of common stock .......................                --            249,910
  Proceeds from paid-in capital ............................                --                 10
                                                                  ------------       ------------
Net cash provided by financing activities ..................        14,887,784            656,171
                                                                  ------------       ------------
Net increase (decrease) in cash and cash equivalents .......          (665,381)           473,006
Cash at beginning of year ..................................         2,093,897                100
                                                                  ------------       ------------
Cash and cash equivalents at end of period .................      $  1,428,516       $    473,106
                                                                  ============       ============
Supplemental disclosure of cash flow items:
  Income taxes paid ........................................      $         --       $         --
  Interest paid ............................................      $  1,305,738       $      6,285
</TABLE>

SEE ACCOMPANYING NOTES.
<PAGE>
                        MEDICAL CAPITAL MANAGEMENT, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1. OPERATIONS OF THE COMPANY

ORGANIZATION:

Medical Capital  Management,  Inc. (the "Company") was incorporated in the state
of Delaware on August 4, 2000.  It maintains  its  corporate  office in Anaheim,
California.  The Company is wholly owned by Medical Capital Holdings,  Inc. (the
"Parent").

BUSINESS ACTIVITY:

The Company was organized to purchase the insured portion of medical receivables
from medical providers including physicians,  clinics, hospitals,  nursing homes
and other  providers of healthcare  services  throughout the United States.  The
medical receivables are purchased at a discount to the full amount of the claim.
The  Company  also seeks  other  investments  that will  enhance  its  financial
position.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES:

The preparation of financial  statements  requires  management to make estimates
and assumptions  that affect certain  reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual amounts could differ from those estimates.

The accompanying  financial  statements  include all adjustments  (consisting of
only  normal  recurring  accruals)  which are,  in the  opinion  of  management,
necessary for a fair  presentation  of the results of operations for the periods
presented.  Interim results are not necessarily  indicative of the results to be
expected for the full year ending December 31, 2002. These financial  statements
should be read in  conjunction  with the  financial  statements  included in the
annual  report of the  Company on Form  10-KSB for the year ended  December  31,
2001.

CASH AND CASH EQUIVALENTS:

For the  purposes  of the  statement  of cash flows,  cash and cash  equivalents
include all highly liquid debt  instruments  with  original  maturities of three
months or less that are not securing any corporate obligations.

The Company  maintains its cash in bank deposit  accounts,  which at times,  may
exceed the federally insured limits.  The Company has not experienced any losses
in its accounts.

DISCOUNTS EARNED ON MEDICAL RECEIVABLES:

Medical  receivables  are recorded at cost when purchased by the Company.  Gross
receivables are adjusted to cost for the purchase discount and reserves based on
the  estimated  ultimate  collectible  amount due to the  Company.  Discounts on
medical  receivables  are  recognized as earned over a period ranging from 1-270
days using a method that approximates the interest method.
<PAGE>
The Company has established a "discount reserve" on a per client basis based
upon its preliminary underwriting criteria, collection history, and ongoing
credit and underwriting policies. These reserves are deducted from discount
revenue. The Company anticipates the receivables upon which these reserves are
based to be collected and earned within the provider contract period. As of June
30, 2002, this reserve was $295,000.

PROVIDER CONCENTRATION:

As of June 30,  2002,  medical  receivables  purchased by the Company from three
providers amounted to approximately 81% of the outstanding  balance of the total
receivables due to the Company.

RESERVE FOR LOSSES:

The reserve for losses on medical receivables is increased by provisions charged
against  operations  and reduced by  receivables  charged off, as  determined by
management.  The reserve is maintained at a level considered adequate to provide
for potential losses on medical  receivables  based on management's  evaluation.
Under the terms by which the medical receivables are purchased,  the Company has
significant  collateral,  including  substitution  of receivables  exceeding the
contractual  period ranging from 1-270 days.  Accordingly,  charge-offs  are not
expected  to be  material  to the  Company's  financial  position  or results of
operations.  During the six months ended June 30, 2002 and 2001, no reserves for
losses were needed.

COMMISSIONS:

Commissions  paid  to  outside  and  related  parties  in  connection  with  the
origination  of  medical  receivables  are  expensed  as  incurred.  Commissions
incurred on the  acquisition of investor funds (notes  payable) are  capitalized
and amortized over the period the debt is outstanding using the interest method.
For the six  months  ended  June 30,  2002 and  2001,  the  Company  capitalized
commissions of $1,292,773 and $32,077,  respectively, and amortized $442,824 and
$2,084, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS:

Unless  otherwise  indicated,  the fair value of all reported assets (except for
cash and cash equivalents,  which approximate fair value) and liabilities, which
represent  financial  instruments,  none of which are held for trading purposes,
approximate carrying values of such accounts.

INCOME TAXES

The Company uses the liability method of accounting for income taxes pursuant to
SFAS No.  109,  "Accounting  for Income  Taxes."  Deferred  income tax assets or
liabilities  result from  temporary  differences  when certain income or expense
amounts  are  recognized  or  deducted  for  financial  statement  purposes in a
different  reporting period than when they are recognized or deducted for income
tax  purposes.  For  federal  and state  income  tax  purposes,  the  Company is
consolidated  with  its  Parent.  The  Company  is  allocated  its  share of the
consolidated tax liability  approximating the separate return method,  estimated
at 40% of net income before taxes. For the period ending June 30, 2002 and 2001,
the  Company's  provision  (benefit)  for  income  taxes was  $(25,468)  and $0,
respectively.
<PAGE>
3. NOTES RECEIVABLE

The Company  entered into agreements  with three medical  providers  whereby the
Company  provided cash loans,  which are secured by real  property.  These notes
receivables are as follows:

                                                                   2002
                                                                ----------
     Physician-Client, 18%, interest only paid monthly,
        due July 15, 2002 (1)                                   $  300,000

     Skilled Nursing Facility, 16%, interest only paid
        monthly, due September 18, 2002                            745,000
     Medical Group, 16%, interest only paid monthly,
        due November 12, 2002                                    3,000,000
                                                                ----------
                                                                $4,045,000
                                                                ----------

(1)  Expecting to extend an additional six months.

4. DEFERRED OFFERING COSTS

Deferred offering costs consist of costs incurred for the Company's registration
of debt  securities  on Form SB-2,  as filed with the  Securities  and  Exchange
Commission  on February 6, 2001 and January 18, 2002.  These costs are amortized
over the weighted term of the securities using the interest method.  For the six
months ended June 30, 2002 and 2001, the Company paid and  capitalized  deferred
offering costs of $15,250 and $137,672,  respectively, and amortized $67,047 and
$0,  respectively.  The  amortization  was included in the net interest  expense
during the applicable period.

5. NOTES PAYABLE

The  Company  issues  notes that are  secured by medical  receivables,  for cash
through several broker-dealers,  as filed on its registration statement with the
Securities and Exchange Commission. These notes consist of the following:

            Rate                   Maturity Date                 June 30, 2002
            ----                   -------------                 -------------
Class A     9.00%            1 year from issuance date           $   5,410,000
Class A     8.00%            1 year from issuance date               7,425,000
Class B     9.75%            2 years from issuance date              3,212,000
Class B     8.75%            2 years from issuance date              4,678,000
Class C     10.25%           3 years from issuance date              2,650,000
Class C     9.25%            3 years from issuance date              2,401,000
Class C     9.75%            3 years from issuance date                 46,000
Class D     10.75%           4 years from issuance date              3,257,000
Class D     9.75%            4 years from issuance date              6,584,000
                                                                 -------------
Total face value of notes payable.........................          35,663,000
Less unamortized offering costs and commissions...........          (1,968,413)
                                                                 -------------
                                                                    33,694,587
Less current maturities...................................          13,077,000
                                                                 -------------
                                                                 $  20,617,587
                                                                 =============
<PAGE>
The maturities of notes payable as of June 30, 2002 are as follows:

                     June 30,                      Amount
                     --------                  ------------
                       2003                    $ 13,077,000
                       2004                      11,005,000
                       2005                       6,108,000
                       2006                       5,473,000
                                               ------------
                                               $ 35,663,000
                                               ============

6. INTEREST TO SECURED NOTEHOLDERS

Interest  on all  secured  notes is paid  monthly in arrears on the tenth of the
following  month to the  noteholder  of  record  as of the last day of the month
preceding the month in which the interest payment date occurs.  Interest is paid
without any compounding.  Each class of notes has a different  maturity date and
accrues interest at different rates. The current rates on the Company's  secured
notes are presented in Note 5. The effective interest rates are approximately 4%
higher than the stated rates due to the amortization of deferred  offering costs
and commissions, which are accounted for as interest expense.

7. STOCKHOLDER'S EQUITY

On April 23,  2002,  the  Company's  Board of  Directors  approved a dividend of
$1,250,000 to our stockholder and Parent, Medical Capital Holdings, Inc.

8. RELATED PARTY TRANSACTIONS

Several  affiliates that are wholly owned by the Parent provide  services to the
Company. These related parties and services are as follows:

     The Company has entered  into an  Administrative  Services  Agreement  with
     Medical Capital Corporation ("MCC"), who is the administrator in purchasing
     and monitoring the healthcare  receivables  the Company  purchases.  MCC is
     compensated  for the  underwriting  and  administration  of the  healthcare
     receivables  purchased,  as well as for accounting and financial  services.
     For the six  months  ended June 30,  2002 and 2001,  the  Company  incurred
     administrative fees provided by MCC of $478,208 and $0,  respectively.  For
     the six  months  ended  June  30,  2002  and  2001,  the  Company  incurred
     underwriting fees provided by MCC of $126,000 and $0, respectively.

     The Company has entered  into a Master  Servicing  Agreement  with  Medical
     Tracking  Services,  Inc.  ("MTS").  MTS is  compensated  for servicing the
     receivables that are purchased.  Servicing fees incurred for the six months
     ended June 30, 2002 and 2001 were $135,288 and $0, respectively.

     For the six months  ended June 30,  2002,  the  Company  purchased  medical
     receivables of various providers from its Parent and affiliates with a book
     value of  $7,646,949,  for which it paid a  consideration  of $6,964,973 in
     cash with the balance  included  in the  calculation  of  discount  revenue
     earned and reserved (deferred).
<PAGE>
9. TRUSTEE FEES

The Company  pledges  collateral to an  independent  bank  trustee.  The pledged
collateral  secures all of the Company's Series I notes,  regardless of when the
collateral  was acquired or when the notes were issued.  The fees to the trustee
are prepaid on an annual basis and amortized  monthly.  For the six months ended
June 30, 2002 and 2001, the Company prepaid trustee fees of $54,292 and $56,750,
respectively, of which, $22,622 and $28,375 were amortized, respectively.

10. EARNINGS PER SHARE

The Company  computes  net  earnings  (loss) per share  following  SFAS No. 128,
"Earnings  Per Share." Under the  provisions  of SFAS No. 128,  basic net income
(loss) per share is computed  by dividing  the net income  (loss)  available  to
common  shareholders  for the period by the  weighted  average  number of common
shares  outstanding  during the period.  Diluted net income  (loss) per share is
computed  by  dividing  the net income  (loss)  for the  period by the  weighted
average number of common equivalent shares  outstanding during the period. As of
June 30, 2002 and 2001, there were no common stock equivalents.

11. SIGNIFICANT AGREEMENTS

The Company has entered into several broker-dealer agreements for the purpose of
offering,  selling,  and distributing  certain secured notes of the Company on a
best efforts basis. The effective term of each of the  broker-dealer  agreements
is generally for one year.

12. RECLASSIFICATION

As of June 30, 2002,  certain  prior period  amounts have been  reclassified  to
conform with the current period presentation.
<PAGE>
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS. (UNAUDITED)

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001

The Company was formed on August 4, 2000 and  operations  did not commence until
after the first quarter of 2001.  Therefore,  the Company had no revenue for the
six months ended June 30, 2001.

REVENUES.  For the six months ended June 30, 2002, the Company purchased medical
receivables  carrying an estimated net  realizable  value ("ENR") of $22,374,306
and earned  discount fees on these  purchases of $1,963,010,  including  related
party discount fees of $681,164 from its Parent and affiliates.

The Company  presently  holds  $295,000 in discount  reserves  which reduced the
Company's  discount revenue.  Management  anticipates the receivables upon which
these  reserves  are based to be fully  collectible  and the  discount fee to be
earned within the provider contract period.

GROSS  PROFIT.  The gross  profit  during the six months ended June 30, 2002 was
$1,484,802,  which arose from gross discount  revenues of  $2,062,174,  less the
change in discount  reserves of $99,164,  and  administration  fees  incurred of
$478,208. The administration fees, related party, were 2.1% of the total ENR.

OPERATING  EXPENSES.  The Company's total operating  expenses for the six months
ended June 30, 2002 were $2,504,609.  Expenses consisted primarily of $1,458,357
in interest  expense,  which  consists of interest  expense of  $1,282,940  plus
amortized  commissions  of $442,824  and  amortized  deferred  offering  cost of
$65,047 less interest earned of $332,454.  Interest earned included  $312,167 on
the Company's notes  receivables of $4,045,000  from various medical  providers,
and $20,287 on cash and cash equivalents.  The Company also incurred $188,519 in
advertising expense, which is expensed as incurred, and professional services of
$184,884.  For the six months ended June 30, 2001, the Company's total operating
expenses were $89,301.

INCOME  TAX  EXPENSE.  For the six months  ending  June 30,  2002 and 2001,  the
provision  (benefit) for income taxes was $(25,468)  and $0,  respectively.  For
Federal and state income taxes, the Company is consolidated with its Parent. The
Company is  allocated  its share of the  consolidated  tax  liability  using the
separate return method.

NET LOSS.  The  Company had a net loss of $994,339 or basic and diluted net loss
per common share of $497.17 for the six months ended June 30, 2002. The net loss
of the  Company  resulted  primarily  from  gross  profit of  $1,484,802  on the
purchase  of medical  receivables  for the six months  ended June 30, 2002 being
less than  administration  and  operating  expenses  over the same  period.  The
Company had anticipated  greater year to date sales of its notes from its public
offering,  which the Company offered at attractive interest rates, thereby being
able to purchase more medical receivables and earn greater revenues. The Company
still  anticipates  greater  sales of its notes during the remainder of 2002 and
expects  its  revenues  and profit  margin to rise during the rest of the fiscal
year ending December 31, 2002.

Still, due to numerous economic, competitive and regulatory risks, any or all of
which may have a material  adverse impact upon the Company's  operations,  there
can be no assurance  that it will be able to  successfully  purchase  healthcare
receivables  and/or acquire a business which generates  significant  revenues or
achieves a level of profits  which will permit the  Company to pay the  interest
and principal  payments on notes when due.  However,  the Company  believes cash
available from the net offering  proceeds will be sufficient to fund all general
and administrative expenses of the Company.
<PAGE>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001

The Company was formed on August 4, 2000 and  operations  did not commence until
after the first quarter of 2001.  Therefore,  the Company had no revenue for the
three months ended June 30, 2001.

REVENUES.  For the three  months  ended June 30,  2002,  the  Company  purchased
medical  receivables  carrying an  estimated  net  realizable  value  ("ENR") of
$13,941,891 and earned discount fees on these purchases of $1,060,766, including
related  party  discount fees of $202,422  from its Parent and  affiliates,  and
increased the discount reserve by $30,000.

GROSS  PROFIT.  The gross profit during the three months ended June 30, 2002 was
$747,278, which arose from gross discount revenues of $1,090,766 less the change
in discount reserves of $30,000, and administration fees incurred of $313,488.

OPERATING EXPENSES.  The Company's total operating expenses for the three months
ended June 30, 2002 were $1,425,710. Expenses consisted primarily of $862,184 in
interest expense,  which consists of interest expense of $735,876 plus amortized
commissions  of $250,633 and  amortized  deferred  offering cost of $33,650 less
interest earned of $157,975.  Interest earned included $148,867 on the Company's
notes  receivables of $4,045,000 from various medical  providers,  and $9,108 on
cash and cash  equivalents.  The Company also incurred  $67,466 in  professional
services,  $109,764 in service fees,  $99,788 in advertising  expense,  which is
expensed as incurred,  For the three months ended June 30, 2001,  the  Company's
total operating expenses were $89,301.

INCOME TAX  EXPENSE.  For the three  months  ending June 30, 2002 and 2001,  the
provision  (benefit) for income taxes was $0 and $0,  respectively.  For Federal
and state income taxes, the Company is consolidated with its Parent. The Company
is allocated  its share of the  consolidated  tax  liability  using the separate
return method.

NET LOSS.  The  Company had a net loss of $678,432 or basic and diluted net loss
per common share of $339.22 for the three  months  ended June 30, 2002.  The net
loss of the  Company  resulted  primarily  from gross  profit of $989,682 on the
purchase of medical  receivables  for the three months ended June 30, 2002 being
less than  administration  and  operating  expenses  over the same  period.  The
Company had anticipated  greater year to date sales of its notes from its public
offering,  which the Company offered at attractive interest rates, thereby being
able to purchase more medical receivables and earn greater revenues.

Still, due to numerous economic, competitive and regulatory risks, any or all of
which may have a material  adverse impact upon the Company's  operations,  there
can be no assurance  that it will be able to  successfully  purchase  healthcare
receivables  and/or acquire a business which generates  significant  revenues or
achieves a level of profits  which will permit the  Company to pay the  interest
and principal  payments on notes when due.  However,  the Company  believes cash
available from the net offering  proceeds will be sufficient to fund all general
and administrative expenses of the Company.

LIQUIDITY AND CAPITAL RESOURCES

During the six months ended June 30, 2002, the Company  received  $17,737,000 in
cash from the issuance of secured  notes by the Company on its public  offering,
and received  collections on medical receivables of $5,554,199.  During the same
period,  the  Company  used  $19,293,590  of  these  funds to  purchase  medical
receivables,  and had $291,000 in notes mature. As of June 30, 2002, the Company
maintained $1,428,516 in cash and cash equivalents, which it seeks to utilize in
purchasing  additional  medical  receivables  and in the  acquisition  of  other
possible investments.
<PAGE>
From the Company's inception on August 4, 2000 to June 30, 2002, the Company has
received  $35,954,000  from the sale of its notes,  and received  $9,373,366  in
collections  on medical  receivables.  Over the same  period,  the Company  used
$37,744,825 to purchase medical  receivables,  and made cash loans of $4,045,000
to  providers.  The  Company  had  $291,000  in notes  that have  matured  since
inception.

Management  believes  current  conditions  of the stock  exchanges and financial
markets  are  expected  to have some  impact on the  issuance  of the  Company's
secured notes,  yet due to the favorable and fixed interest rates offered on its
notes,  the Company  believes this impact will not be  significant.  The Company
does not believe that inflation has had a significant impact on its operations.

The Company's  management  consists of officers and  employees  employed by MCC.
Their  salaries and benefits are paid by MCC. The Company's  operating  expenses
will be reimbursed  from the net offering  proceeds or from cash flow  generated
from its operations.

RELATED PARTY TRANSACTIONS

The Medical  Capital  Holdings Group has  substantial  experience and success in
identifying  and  evaluating   healthcare   providers  desiring  to  sell  their
healthcare receivables. The Company intends to use the services and expertise of
Medical  Capital  Holdings  and its  subsidiaries  to  purchase a  portfolio  of
healthcare  receivables.  It has  entered  into  contracts  with  MCC  and  MTS,
affiliated  companies,  to provide the  appropriate  system for  purchasing  and
tracking  its   healthcare   receivables.   Reimbursement   for  these  services
approximates  the costs to these affiliated  entities which management  believes
equals the prevailing market rates for comparable services of this nature.

For the six  months  ended  June 30,  2002 and  2001,  MCC was  compensated  for
administration  of the  healthcare  receivables  which the Company  purchased of
$478,208 and $0, respectively.  For the six months ended June 30, 2002 and 2001,
the Company  incurred  underwriting  fees  provided  by MCC of $126,000  and $0,
respectively.  For  the six  months  ended  June  30,  2002  and  2001,  MTS was
compensated  for  servicing  the  Company's  receivables  of  $135,288  and  $0,
respectively.

For  the  six  months  ended  June  30,  2002,  the  Company  purchased  medical
receivables  of various  providers  from its Parent and  affiliates  with a book
value of  $7,646,949,  for which it paid a  consideration  of $6,964,973 in cash
with the balance  included in the  calculation  of discount  revenue  earned and
reserved (deferred).

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
141 "Business Combinations." SFAS No. 141 supersedes Accounting Principles Board
("APB") No. 16 and requires that any business combinations  initiated after June
30,  2001  be  accounted  for  as  a  purchase;   therefore,   eliminating   the
pooling-of-interest method defined in APB 16. The statement is effective for any
business  combination  initiated  after  June 30,  2001 and  shall  apply to all
business combinations accounted for by the purchase method for which the date of
acquisition is July 1, 2001 or later. The adoption of the statement did not have
a material impact on the Company's  financial  position or results of operations
since the Company has not  participated  in any  activities  covered  under this
pronouncement.

In July 2001,  the FASB issued SFAS No. 142,  "Goodwill and Other  Intangibles."
SFAS No. 142 addresses the initial recognition,  measurement and amortization of
intangible assets acquired individually or with a group of other assets (but not
those  acquired  in a  business  combination)  and  addresses  the  amortization
provisions for excess cost over fair value of net assets acquired or intangibles
acquired in a business combination.  The statement is effective for fiscal years
<PAGE>
beginning  after  December  15,  2001,  and is  effective  July 1,  2001 for any
intangibles  acquired in a business  combination  initiated after June 30, 2001.
The Company  does not expect the  adoption  to have any impact on the  Company's
financial position or results of operations.

In October 2001, the FASB issued SFAS No. 143,  "Accounting for Asset Retirement
Obligations,"  which requires  companies to record the fair value of a liability
for asset retirement  obligations in the period in which they are incurred.  The
statement  applies  to  a  company's  legal  obligations   associated  with  the
retirement  of a tangible  long-lived  asset that results from the  acquisition,
construction,  and  development or through the normal  operation of a long-lived
asset. When a liability is initially recorded,  the company would capitalize the
cost,  thereby  increasing  the  carrying  amount  of  the  related  asset.  The
capitalized asset retirement cost is depreciated over the life of the respective
asset while the liability is accreted to its present value.  Upon  settlement of
the liability,  the obligation is settled at its recorded  amount or the company
incurs a gain or loss.  The  statement is effective  for fiscal years  beginning
after June 30, 2002. The Company does not expect the adoption to have any impact
to the Company's financial position or results of operations.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of  Long-Lived  Assets".  SFAS No. 144  addresses  the  accounting  and
reporting for the  impairment or disposal of  long-lived  assets.  The statement
provides a single  accounting  model for disposition of long-lived  assets.  New
criteria  must be met to  classify  the  asset as an asset  held-for-sale.  This
statement  also focuses on reporting the effects of a disposal of a segment of a
business.  This statement is effective for fiscal years beginning after December
15,  2001.  The Company  does not expect the  adoption to have any impact on the
Company's financial position or results of operations.

In April 2002, the FASB issued Statement No. 145, "Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections." This Statement rescinds FASB Statement No. 4, "Reporting Gains and
Losses from  Extinguishment  of Debt", and an amendment of that Statement,  FASB
Statement  No.  64,  "Extinguishments  of  Debt  Made  to  Satisfy  Sinking-Fund
Requirements"  and FASB Statement No. 44,  "Accounting for Intangible  Assets of
Motor Carriers".  This Statement  amends FASB Statement No. 13,  "Accounting for
Leases",  to eliminate an  inconsistency  between the  required  accounting  for
sale-leaseback  transactions  and the  required  accounting  for  certain  lease
modifications  that have  economic  effects  that are similar to  sale-leaseback
transactions. The Company does not expect the adoption to have any impact to the
Company's financial position or results of operations.
<PAGE>
FORWARD LOOKING STATEMENTS

This  report  contains  forward  looking  statements  within the  meaning of the
Private Securities Litigation Reform Act of 1995. Forward looking statements can
be  identified  by the  use  of  words  like  "believes,"  "could,"  "possibly,"
"anticipates,"  "estimates,"  "projects,"  "expects,"  "may," "will,"  "should,"
"intend,"  "plan,"  "consider"  or the  negative of these  expressions  or other
variations,   or  by   discussions   of   strategies   that  involve  risks  and
uncertainties. The Company based these forward looking statements on its current
expectations  and  projections  about future  events and  information  currently
available to it.  Although the Company  believes that the  assumptions for these
forward looking statements are reasonable, any of the assumptions could prove to
be inaccurate.  The Company's actual results could differ  materially from those
anticipated in the forward  looking  statements due to risks,  uncertainties  or
actual events differing from the assumptions underlying these statements.
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES.

On February  6, 2001,  the  Securities  and  Exchange  Commission  declared  the
Registrant's Registration Statement on Form SB-2, File No. 333-45464, effective.
Shortly  thereafter,  the  Registrant  commenced  the  public  offering  of  its
Redeemable Secured Notes, Series I ("Notes").  The proceeds of the offering were
used primarily to acquire healthcare receivables.  At of the end of the offering
period,  the  Registrant had received net proceeds from the offering of Notes in
the amount of $22,509,704,  net of deferred offering costs of $272,138 and sales
commissions of $1,680,158.

On January  18,  2002,  the  Company  filed a  registration  statement  with the
Securities  and  Exchange   Commission,   registering  the  public  offering  of
$100,000,000 in Redeemable  Secured Notes.  The proceeds of the offering will be
used primarily to acquire  healthcare  receivables.  These Notes are offered for
sale by means  of a final  prospectus.  The  Registrant's  offering  of Notes is
currently ongoing. As of June 30, 2002, the Registrant has received net proceeds
from the  offering  of Notes  in the  amount  of  $10,460,518,  net of  deferred
offering costs of $15,250 and sales commissions of $725,232.


                                   SIGNATURES

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

                                        MEDICAL CAPITAL MANAGEMENT, INC.


Date: August 13, 2002                   By /s/ Sidney M. Field
                                           -------------------------------------
                                           Sidney M. Field, President, Chief
                                           Executive Officer and Director


Date: August 13, 2002                   By /s/ Alan Meister
                                           -------------------------------------
                                           Alan Meister, Chief Accounting
                                           Officer (Chief Financial Officer)