##### Table of Contents



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 Ended October 31, 2002

|  |  |                                                                                          
|- |  | -----------------------------------------------------------------------------------------
|o |  | 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 0-9922

EQUIDYNE CORPORATION

(Name of Small Business Issuer in Its Charter)


|                                                                                                     |  |                                                
|---------------------------------------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or Other Jurisdiction of
Incorporation or Organization)                              |  | 04-2608713
(I.R.S. Employer Identification No.)
|11770 Bernardo Plaza Court, Suite 351
San Diego, California
(Address of principal executive offices) |  | 92128
(Zip Code)                               

Issuers telephone number, including area code: (858) 451-7001

Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months
(or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. [X ] YES [  ] NO

The number of shares outstanding of the Companys common stock as at November
30, 2002 was 14,984,803.

Transitional Small Business Disclosure Format (check one): [   ] YES [X] NO





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TABLE OF CONTENTS



|                                      |                                                                     |  |  |  |  |  |  | 
|------------------------------------- | ------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                      | PART I    FINANCIAL INFORMATION                                   
|                                      | Item 1. CONSOLIDATED FINANCIAL STATEMENTS                          
|                                      | Item 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|                                      | Item 3.   CONTROLS AND PROCEDURES                                  
|                                      | PART II  OTHER INFORMATION                                        
|                                      | Item 1.   LEGAL PROCEEDINGS                                        
|                                      | Item 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS                
|                                      | Item 3.   DEFAULTS UPON SENIOR SECURITIES                          
|                                      | Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER       
|                                      | Item 5.   OTHER INFORMATION                                        
|                                      | Item 6.   EXHIBITS AND REPORTS ON FORMS 8-K                        
|SIGNATURES                           
|CHIEF EXECUTIVE OFFICER CERTIFICATION
|CHIEF FINANCIAL OFFICER CERTIFICATION
|EXHIBIT 99.1                         
|EXHIBIT 99.2                         



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##### Table of Contents



EQUIDYNE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT  FORM 10-QSB
THREE MONTHS ENDED OCTOBER 31, 2002

TABLE OF CONTENTS

|        |  |                                                           |  |     
|------- |  | --------------------------------------------------------- |  | ----
|        |  | PART I                                                    |  | Page
|        |  |                                                           |  |     
|Item 1. |  | Consolidated Financial Statements                         |  | 2   
|Item 2. |  | Managements Discussion and Analysis or Plan of Operation |  | 8   
|Item 3. |  | Controls and Procedures                                   |  | 11  
|        |  | PART II                                                   |  |     
|Item 1. |  | Legal Proceedings                                         |  | 12  
|Item 2. |  | Changes in Securities and Use of Proceeds                 |  | 12  
|Item 3. |  | Defaults Upon Senior Securities                           |  | 12  
|Item 4. |  | Submission of Matters to a Vote of Security Holders       |  | 12  
|Item 5. |  | Other Information                                         |  | 12  
|Item 6. |  | Exhibits and Reports on Form 8-K                          |  | 12  
|        |  | Signatures                                                |  | 13  
|        |  | Certifications                                            |  | 14  
|        |  | Exhibits                                                  |  | 16  

Forward Looking Statements

Certain statements contained in this Quarterly Report and other written
material and oral statements made from time to time by us do not relate
strictly to historical or current facts. As such, they are considered
forward-looking statements that provide current expectations or forecasts of
future events. Such statements are typically characterized by terminology such
as believe, anticipate, should, intend, plan, will, expect,
estimate, project, strategy and similar expressions. Our forward-looking
statements generally relate to the prospects for future sales of our products,
the success of our international marketing activities, the success of our
strategic corporate relationships, the adoption and use of needle-free
technology and the success of our diversification activities. These statements
are based upon assumptions and assessments made by our management in light of
its experience and its perception of historical trends, current conditions,
expected future developments and other factors our management believes to be
appropriate. These forward-looking statements are subject to a number of risks
and uncertainties, including the following: our ability to achieve profitable
operations and to maintain sufficient cash to operate our business and meet our
liquidity requirements: our ability to obtain financing, if required, on terms
acceptable to us, if at all; the success of our research and development
activities and our ability to obtain regulatory authorizations for developed
products, if any; competitive developments affecting our current products; our
ability to successfully attract strategic partners and to market both new and
existing products domestically and internationally; difficulties or delays in
manufacturing; trends toward managed care and health care cost containment;
exposure to product liability and other types of lawsuits and regulatory
proceedings; our ability to protect our intellectual property both domestically
and internationally; governmental laws and regulations affecting domestic and
foreign operations; our ability to identify and complete diversification
opportunities; and the impact of acquisitions, divestitures, restructurings,
product withdrawals and other unusual items. Except as required by applicable
law, the Company undertakes no obligation to update any forward-looking
statements, whether as a result of new information, future events or otherwise.

1



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##### Table of Contents






PART I    FINANCIAL INFORMATION




Item 1. CONSOLIDATED FINANCIAL STATEMENTS

EQUIDYNE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share amounts)

|                                         |                                                                                                                                |                            |                                            |        |             |        |          |        |        |        | 
|---------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | ------------------------------------------ | ------ | ----------- | ------ | -------- | ------ | ------ | ------ | 
|                                         |                                                                                                                                |                            |                                            |        | October 31, |        | July 31,
|                                         |                                                                                                                                |                            |                                            |        | 2002        |        | 2002    
|                                         |                                                                                                                                |                            |                                            |        |             |        |         
|                                         |                                                                                                                                |                            |                                            |        | (Unaudited) |        |          |        |       
|Assets                                   |                                                                                                                                |                            |                                            |        |             |        |          |       
|Current Assets:                          |                                                                                                                                |                            |                                            |        |             |        |          |       
|                                         | Cash and cash equivalents                                                                                                      |                            | $                                          | 11,622 |             |        | $        | 13,092 |       
|                                         | Accounts receivable, net                                                                                                       |                            |                                            | 44     |             |        |          | 52     |       
|                                         | Inventories, net                                                                                                               |                            |                                            | 198    |             |        |          | 234    |       
|                                         | Deferred costs                                                                                                                 |                            |                                            | 26     |             |        |          | 20     |       
|                                         | Deferred income taxes                                                                                                          |                            |                                            | 2,184  |             |        |          | 1,921  |       
|                                         | Refundable income taxes                                                                                                        |                            |                                            | 3,446  |             |        |          | 3,446  |       
|                                         | Prepaid and other current assets                                                                                               |                            |                                            | 285    |             |        |          | 64     |       
|                                         |                                                                                                                                |                            |                                            |        |             |        |          |        |       
|                                         |                                                                                                                                | Total current assets       |                                            |        | 17,805      |        |          |        | 18,829 |       
|Property and equipment, net              |                                                                                                                                |                            | 105                                        |        |             |        | 133      |       
|Deposits on tooling, machinery and other |                                                                                                                                |                            | 66                                         |        |             |        | 46       |       
|Patents, net                             |                                                                                                                                |                            | 1,573                                      |        |             |        | 1,612    |       
|                                         |                                                                                                                                |                            |                                            |        |             |        |          |        |       
|                                         |                                                                                                                                |                            | Total assets                               |        | $           | 19,549 |          |        | $      | 20,620 | 
|                                         |                                                                                                                                |                            |                                            |        |             |        |          |        |       
|Liabilities
& Stockholders Equity       |                                                                                                                                |                            |                                            |        |             |        |          |       
|Current Liabilities:                     |                                                                                                                                |                            |                                            |        |             |        |          |       
|                                         | Accounts payable                                                                                                               |                            | $                                          | 400    |             |        | $        | 334    |       
|                                         | Accrued liabilities                                                                                                            |                            |                                            | 1,146  |             |        |          | 1,382  |       
|                                         | Accrued income taxes                                                                                                           |                            |                                            | 2,321  |             |        |          | 2,612  |       
|                                         | Deferred revenue                                                                                                               |                            |                                            | 32     |             |        |          | 26     |       
|                                         |                                                                                                                                |                            |                                            |        |             |        |          |        |       
|                                         |                                                                                                                                | Total current liabilities  |                                            |        | 3,899       |        |          |        | 4,354  |       
|Commitments
& Contingencies              |                                                                                                                                |                            |                                            |        |             |        |          |       
|Stockholders Equity:                    |                                                                                                                                |                            |                                            |        |             |        |          |       
|                                         | Common
stock, $.10 par value; Authorized  35,000,000 shares;
issued  16,481,903 shares at October 31, 2002 and July 31, 2002 |                            |                                            | 1,648  |             |        |          | 1,648  |       
|                                         | Additional paid-in capital                                                                                                     |                            |                                            | 26,593 |             |        |          | 26,593 |       
|                                         | Accumulated deficit                                                                                                            |                            |                                            | (7,278 | )           |        |          | (6,662 | )     
|                                         |                                                                                                                                |                            |                                            |        |             |        |          |        |       
|                                         |                                                                                                                                |                            | 20,963                                     |        |             |        | 21,579   |       
|                                         | Treasury stock, at cost (1,497,100 shares)                                                                                     |                            |                                            | (5,313 | )           |        |          | (5,313 | )     
|                                         |                                                                                                                                |                            |                                            |        |             |        |          |        |       
|                                         |                                                                                                                                | Total stockholders equity |                                            |        | 15,650      |        |          |        | 16,266 |       
|                                         |                                                                                                                                |                            |                                            |        |             |        |          |        |       
|                                         |                                                                                                                                |                            | Total liabilities and stockholders equity |        | $           | 19,549 |          |        | $      | 20,620 | 
|                                         |                                                                                                                                |                            |                                            |        |             |        |          |        |       

See accompanying notes.

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EQUIDYNE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

|                                             |                          |   |                                |     |      |   |        |       |  
|-------------------------------------------- | ------------------------ | - | ------------------------------ | --- | ---- | - | ------ | ----- | -
|                                             |                          |   | Three Months Ended October 31,
|                                             |                          |   |                               
|                                             |                          |   | 2002                           |     | 2001
|                                             |                          |   |                                |     |     
|Net sales                                    |                          | $ | 22                             |     |      | $ | 281    |      
|Cost of goods sold                           |                          |   | 25                             |     |      |   | 290    |      
|                                             |                          |   |                                |     |      |   |        |      
|                                             | Gross loss               |   |                                | (3  | )    |   |        | (9    | )
|                                            
|Selling, general and administrative expenses |                          |   | 847                            |     |      |   | 3,074  |      
|Research and development                     |                          |   | 81                             |     |      |   | 124    |      
|                                             |                          |   |                                |     |      |   |        |      
|                                             | Total operating expenses |   |                                | 928 |      |   |        | 3,198 |  
|                                             |                          |   |                                |     |      |   |        |      
|Operating loss                               |                          |   | (931                           | )   |      |   | (3,207 | )    
|                                            
|Other income:                                |                          |   |                                |     |      |   |        |      
|                                             | Interest and other       |   |                                | 53  |      |   |        | 234   |  
|                                             |                          |   |                                |     |      |   |        |      
|                                             |                          |   | 53                             |     |      |   | 234    |      
|                                             |                          |   |                                |     |      |   |        |      
|Loss before income tax benefit               |                          |   | (878                           | )   |      |   | (2,973 | )    
|                                            
|Income tax benefit                           |                          |   | (262                           | )   |      |   | (820   | )    
|                                             |                          |   |                                |     |      |   |        |      
|Net loss                                     |                          | $ | (616                           | )   |      | $ | (2,153 | )    
|                                             |                          |   |                                |     |      |   |        |      
|Net loss per common share, basic             |                          | $ | (0.04                          | )   |      | $ | (0.14  | )    
|                                             |                          |   |                                |     |      |   |        |      
|Net loss per common share, diluted           |                          | $ | (0.04                          | )   |      | $ | (0.14  | )    
|                                             |                          |   |                                |     |      |   |        |      

See accompanying notes.

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EQUIDYNE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

|                                                                            |                                              |                                                |                                       |      |                               |        |        |      |      |        |  
|--------------------------------------------------------------------------- | -------------------------------------------- | ---------------------------------------------- | ------------------------------------- | ---- | ----------------------------- | ------ | ------ | ---- | ---- | ------ | -
|                                                                            |                                              |                                                |                                       |      | Three Months Ended October 31
|                                                                            |                                              |                                                |                                       |      |                              
|                                                                            |                                              |                                                |                                       |      | 2002                          |        | 2001  
|                                                                            |                                              |                                                |                                       |      |                               |        |       
|Operating activities:                                                       |                                              |                                                |                                       |      |                               |        |        |     
|Net loss                                                                    |                                              | $                                              | (616                                  | )    |                               | $      | (2,153 | )   
|Adjustments to reconcile net loss to net cash
used in operating activities: |                                              |                                                |                                       |      |                               |        |        |     
|                                                                            | Depreciation and amortization                |                                                |                                       | 65   |                               |        |        | 121  |     
|                                                                            | Deferred income taxes                        |                                                |                                       | (263 | )                             |        |        | (820 | )   
|                                                                            | Changes in operating assets and liabilities: |                                                |                                       |      |                               |        |        |      |     
|                                                                            |                                              | Accounts receivable                            |                                       |      | 8                             |        |        |      | (21  | )     
|                                                                            |                                              | Inventories                                    |                                       |      | 36                            |        |        |      |    |       
|                                                                            |                                              | Other assets                                   |                                       |      | (227                          | )      |        |      | (281 | )     
|                                                                            |                                              | Accounts payable and other current liabilities |                                       |      | (455                          | )      |        |      | (213 | )     
|                                                                            |                                              |                                                |                                       |      |                               |        |        |     
|                                                                            |                                              |                                                | Net cash used in operating activities |      |                               | (1,452 | )      |      |      | (3,367 | )
|                                                                           
|Investing activities:                                                       |                                              |                                                |                                       |      |                               |        |        |     
|Proceeds from held to maturity securities                                   |                                              |                                                |                                     |      |                               |        | 94     |     
|Purchase of property and equipment and deposits on
tooling and equipment    |                                              |                                                | (18                                   | )    |                               |        | (721   | )   
|                                                                            |                                              |                                                |                                       |      |                               |        |        |     
|                                                                            |                                              |                                                | Net cash used in investing activities |      |                               | (18    | )      |      |      | (627   | )
|                                                                           
|Financing activities:                                                       |                                              |                                                |                                      |      |                               |        |       |     
|                                                                           
|Decrease in cash and cash equivalents                                       |                                              |                                                | (1,470                                | )    |                               |        | (3,994 | )   
|                                                                           
|Cash and cash equivalents, beginning of period                              |                                              |                                                | 13,092                                |      |                               |        | 15,405 |     
|                                                                            |                                              |                                                |                                       |      |                               |        |        |     
|Cash and cash equivalents, end of period                                    |                                              | $                                              | 11,622                                |      |                               | $      | 11,411 |     
|                                                                            |                                              |                                                |                                       |      |                               |        |        |     
|Supplemental cash flow information:                                         |                                              |                                                |                                       |      |                               |        |        |     
|Income taxes paid                                                           |                                              | $                                              | 291                                   |      |                               | $      | 300    |     
|Non-cash transactions  exercise of stock options                           |                                              |                                                |                                     |      |                               |        | 3      |     

See accompanying notes.

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EQUIDYNE CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   Description of Business and Summary of Significant Accounting Policies

Description of Business

Equidyne Corporation (the Company) is a holding company, which since its
formation in 1977, has invested in various medical device companies and
technologies. The Company presently has three wholly-owned subsidiaries:
Equidyne Systems, Inc. (ESI), a California corporation acquired in May 1998,
Equidyne Holdings (Holdings), a Massachusetts Business Trust formed in August
2000, and Dynamic Dental Systems, Inc. (DDS), a Georgia corporation acquired
in May 1998, which is currently inactive. ESI, since its formation in August
1993, has been engaged in developing, manufacturing and selling its patented,
needle-free drug delivery systems, principally the reusable INJEX System.
Since January 1999, the Company has focused on the development of ESIs
needle-free technologies. Other lines of business at that time were
discontinued or divested.

During fiscal 2002, the Companys new executive management began an
evaluation of the Companys technologies, markets and production capabilities.
They concluded that a change in the strategic focus of the Company was
necessary as the Companys production capabilities were not cost effective nor
were its sales and marketing programs generating satisfactory results. The
Company believed that more stockholder value could be created through licensing
agreements and/or strategic partnerships with pharmaceutical, biotech, medical
device or other interested companies. The Company believed such programs would
be further enhanced by the progress the Company was making in developing
disposable systems. In addition, the Company began evaluating various
diversification strategies, including, but not limited to, investing in
business opportunities not necessarily related to the medical device field.
This evaluation is on-going.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements
contain all adjustments (consisting of normal recurring accruals) which are, in
the opinion of management, necessary for a fair and accurate presentation of
the Companys financial position at October 31, 2002 and the results of its
operations for the three month periods ended October 31, 2002 and October 31,
2001. These interim financial statements should be read in conjunction with the
Companys audited consolidated financial statements and notes thereto included
in its Annual Report on Form 10-KSB for the year ended July 31, 2002. Interim
results are not necessarily indicative of those to be expected for the full
year.

The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries. All material intercompany transactions have
been eliminated.

Revenue Recognition

The Company recognizes revenue in accordance with Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements.The Companys
products are sold subject to rights of return of generally between 90 days and
180 days, as defined by the sales agreement. In addition, the Companys INJEX
System has a limited shelf life, and certain retailers and wholesalers can
return these products to the Company up to six months beyond this expiration
date. As a result of these rights of return and the current availability of
historical trends in sales and product returns, the Company defers recognition
of revenues and the related cost of inventory shipped until the expiration of
all such rights of return. As of October 31, 2002 and July 31, 2002, deferred
revenue was approximately $32,000 and $26,000, respectively. The related cost
of the inventory shipped of approximately $26,000 and $20,000 at October 31,
2002 and July 31, 2002, respectively has also been deferred, to be recognized
concurrent with the recognition of the related revenue.

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Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires the Companys management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Recent Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board (FASB) has issued
Statement No. 146, Accounting for Costs Associated with Exit or Disposal
Activities(FAS 146). The standard requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. Previous
accounting guidance was provided by Emerging Issue Task Force (EITF) Issue
No. 94-3, Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring).FAS 146 replaces Issue No. 94-3. FAS 146 is to be applied
prospectively to exit or disposal activities initiated after December 31, 2002.
FAS 146 is not expected to have any material effect on the Companys financial
statements.

2.   Inventories

Inventories consist of the following (in thousands):

|               |  |             |     |          |  |   |     | 
|-------------- |  | ----------- | --- | -------- |  | - | --- | 
|               |  | October 31, |     | July 31,
|               |  | 2002        |     | 2002    
|               |  |             |     |         
|Raw materials  |  | $           | 94  |          |  | $ | 96  | 
|Finished goods |  |             | 104 |          |  |   | 138 | 
|               |  |             |     |          |  |   |     | 
|               |  | $           | 198 |          |  | $ | 234 | 
|               |  |             |     |          |  |   |     | 

3.   Earnings (Loss) per Share

Basic loss per share is based upon the weighted average number of common
shares outstanding during the period. Diluted loss per share reflects the
effect of dilutive securities, if any, principally stock options and warrants.
Dilutive securities were not included in the calculation of diluted weighted
average shares for the three months ended October 31, 2002 and 2001, due to
their anti-dilutive effect. The following table sets forth the computation of
basic and diluted loss per share (in thousands, except per share amounts):

|                                       |  |                    |        |      |  |   |        |  
|-------------------------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                                       |  | Three Months Ended
|                                       |  | October 31        
|                                       |  |                   
|                                       |  | 2002               |        | 2001
|                                       |  |                    |        |     
|Net loss                               |  | $                  | (616   | )    |  | $ | (2,153 | )
|                                       |  |                    |        |      |  |   |        |  
|Weighted-average shares                |  |                    | 14,985 |      |  |   | 14,985 |  
|                                       |  |                    |        |      |  |   |        |  
|Net loss per share (Basic and Diluted) |  | $                  | (0.04  | )    |  | $ | (0.14  | )
|                                       |  |                    |        |      |  |   |        |  

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4.   Contingencies

On February 4, 2002, a former non-executive officer of the Company filed a
complaint in the United States District Court, Northern District of Georgia,
against the Company, asserting claims of breach of contract, retaliation and
violation of 29 U.S.C. Section 621 of the Age Discrimination in Employment Act.
The complaint sought unspecified amounts of back pay, compensatory damages,
fees and costs. The Company filed an answer in April 2002 denying the
allegations in the complaint and asserted counterclaims of unjust enrichment
and violation of 15 U.S.C. §78p(b). On October 18, 2002, the parties reached
a settlement under which the Company paid $125,000 to resolve the dispute, all
of which was charged to operations in the fourth quarter of fiscal year 2001.

In the ordinary course of conducting its business, the Company has become
subject to litigation and claims regarding various matters. There exists a
reasonable possibility that the Company will not prevail in all cases.
Although sufficient uncertainty exists in these cases to prevent the Company
from determining the amount of its liability, if any, the ultimate exposure
upon the resolution of any such litigation or claims is not expected to
materially adversely affect the Companys financial condition or results of
operations.

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Item 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

Equidyne Corporation (the Company) is a holding company, which since its
formation in 1977, has invested in various medical device companies and
technologies. The Company presently has three wholly-owned subsidiaries:
Equidyne Systems, Inc. (ESI), a California corporation acquired in May 1998,
Equidyne Holdings (Holdings), a Massachusetts Business Trust formed in August
2000, and Dynamic Dental Systems, Inc. (DDS), a Georgia corporation acquired
in May 1998, which is currently inactive. ESI, since its formation in August
1993, has been engaged in developing, manufacturing and selling its patented,
needle-free drug delivery systems, principally the reusable INJEX System.

From January 1999 to December 2001, the Companys focus, through ESI, was
centered on the sales, marketing and production of its reusable INJEX 30 and
INJEX 50 Systems. The Company launched its INJEX 30 System to the U.S.
diabetes market in July 2000, utilizing a direct sales force of more than 50
persons. Since this original launch, the Company entered into distribution
agreements with several large distribution partners to expand distribution
channels and obtained Generic Product Indicator (GPI) codes for the purpose
of facilitating reimbursement through health insurance plans and pharmacy
benefit managers. However, none of the Companys sales and marketing efforts
resulted in the volume of sales anticipated by the Companys prior management.
Since January 1999, other than the needle-free technology of ESI, the Companys
other lines of business at that time were discontinued or divested.

In December 2001, the Companys Board of Directors appointed Marcus R.
Rowan, a director of the Company, as Chief Executive Officer and appointed Mark
C. Myers, a consultant to the Company, as President. New management concluded
after an evaluation of the needle-free industry and the status of the Companys
competitors that a change in the strategic focus of the Company was necessary
as the Companys sales and marketing programs were not generating satisfactory
results. The evaluation also determined that the Companys research program
should focus on continuing the development of disposable systems (both
pre-filled and variable dosage devices) that could potentially serve as the
basis for licensing agreements and/or strategic partnerships with
pharmaceutical, biotech, medical device or other interested companies.

While the Company is continuing sales of the INJEX 30 System into the
diabetes market from its existing inventories, the Company has increased its
efforts to develop strategic partnerships and licensing arrangements with
pharmaceutical, biotech, medical device and other interested companies.
Through an agreement with the Companys former wholly-owned subsidiary, Rosch
AG, the Company has participated in a licensing arrangement with Pharmacia AB
for the worldwide use of the Injex System for human growth hormone treatment.
The Company believes more stockholder value can be derived from licensing its
intellectual property than from retail sales activities, and the focus of the
Company has shifted from an exclusive focus on its reusable devices to one
which places additional emphasis on technology development, licensing
opportunities for the Companys existing technology and evaluating other
diversification opportunities for the Company. As part of this change in
focus, the Company has postponed ramping up manufacturing of the INJEX 50
System pending successful development of a strategic partnership or licensing
arrangement designed to facilitate the introduction of the INJEX 50 System into
the market.

As a result of the Boards decision to change the Companys strategic
direction, the Company recorded a pre-tax charge of $5.5 million principally
related to asset impairment losses in the fiscal year ended July 31, 2002.
Since the second half of fiscal 2002, the Company has been evaluating various
diversification strategies, including, but not limited to, investing in
business opportunities not necessarily related to the medical device field.
This evaluation is on-going.

Results of Operations

Consolidated net sales (sales) were $22,000 for the three months ended
October 31, 2002 compared to $281,000 for the three months ended October 31,
2001, a decrease of $259,000, or 92%. The decrease in

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sales through the Companys distribution partners (Rite-Aid and CVS)
reflects the Companys change in strategic focus described above and the
cessation of advertising and co-marketing expenditures in the third quarter of
the prior fiscal year. Such advertising and marketing expenditures had not
proven to be cost effective in generating sales.

Cost of sales for the three months ended October 31, 2002 and 2001 were
$25,000 and $290,000, respectively, a decrease of $265,000, or 91%. The
production cost of the consumable components of the Companys product (the
polycarbonate plastic ampules and vial adapters) were in excess of the
respective selling prices both in the current quarter and in the prior fiscal
year, primarily resulting from low production volumes. Cost of sales for both
periods were impacted by a write-down of the Companys ampule and adapter
inventories to reduce their respective carrying values to the lower of cost or
selling price. However, the Company believes the high cost structure for
production will continue until demand for its products enables it to achieve
greater production volumes.

Selling, general and administrative (SG&A) expenses for the three months
ended October 31, 2002 were $847,000, compared to $3,074,000 for the three
months ended October 31, 2001, a decrease of $2,227,000, or 72%. The decrease
principally reflects lower total salary expense, recruiting and travel related
costs resulting from the reductions of the Company sales force and other
administrative staff between October 2001 and March 2002. The Company reduced
its sales force by 18 sales representatives in October 2001 and made reductions
in other administrative staff between January and March 2002. Total headcount
was reduced from 47 employees in July 2001 to 10 employees as of October 2002.
Prior year SG&A expenses included $150,000 of severance costs related to the
October 2001 workforce reduction. Consulting and other professional service
expenditures decreased by approximately $436,000 (including approximately
$75,000 related to audit and tax services) from the first quarter in the prior
fiscal year as a the Company has scaled-back operations and changed its
strategic focus and thus required fewer such services. The aforementioned
cessation of advertising and co-marketing expenditures reduced current quarter
SG&A expense by approximately $738,000 as compared to the first quarter of the
prior fiscal year. Depreciation and amortization expense decreased
approximately $55,000 as the result of the write-off of the Companys
manufacturing equipment in the second quarter of fiscal 2002.

Research and development expenses decreased 35% to $81,000 for the three
months ended October 31, 2002 from $124,000 for the three months ended October
31, 2001. The decrease in research and development was primarily the result of
the Company performing fewer clinical trial tests during the current year first
quarter than in the first quarter of the prior fiscal year. The Company
continues its developmental efforts in fiscal 2003 to enhance its needle-free
system offerings, particularly its disposable, single-use models, and a
newly-designed glass-lined pre-filled ampule, which would allow the Company to
have product offerings that could serve as the basis for licensing agreements
and/or strategic partnerships with pharmaceutical, biotech, medical device or
other interested companies.

The Companys income tax benefit for the three months ended October 31,
2002 and 2001 were $262,000 and $820,000, respectively. The tax benefits in
both periods are based on the Companys ability to carry back the operating
losses incurred to recapture a portion of the taxes paid in fiscal year 2001.

Liquidity and Capital Resources

At October 31, 2002, the Company had working capital of $13.9 million,
compared to working capital of $14.5 million at July 31, 2002. The decrease of
approximately $0.6 million resulted primarily from the net effect of Companys
first quarter operating losses.

The Company believes that funds on hand, combined with cash generated from
investment income and tax refunds, will be sufficient to finance operations and
capital expenditures through 2003. In addition, the Company may consider
enhancing future growth through investments in or acquisitions of companies,
technologies or products in related or other lines of business, as well as
through expansion of the existing

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product lines. There is no assurance that management will find suitable
opportunities or effect the necessary financial arrangements for such
investments or, provide the working capital needed for the acquired activities.

Significant Accounting Policies

The Consolidated Financial Statements have been prepared in accordance
accounting principles generally accepted in the United States, which require
the Company to make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the Consolidated Financial Statements,
and revenues and expenses during the periods reported. Actual results could
differ from those estimates. The Company believes the following are the
critical accounting policies which could have the most significant effect on
the Companys reported results and require the most difficult, subjective or
complex judgments by management.

Excess and Obsolete Inventory

Inventories are stated at the lower of cost or market, with cost
determined at a weighted average of purchased costs. In evaluating whether
inventory is stated at the lower of cost or market, management considers such
factors as the amount of inventory on hand, expiration dates, and the estimated
time to sell such inventory. As appropriate, provisions are made to reduce
inventories to their net realizable value. Historically, cost of inventories
that potentially may not sell prior to expiration or are deemed of no
commercial value have been written-off when identified.

Revenue Recognition

The Company recognizes revenue in accordance with Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements.The Companys
products are sold subject to rights of return of generally between 90 days and
180 days, as defined by the sales agreement. In addition, the Companys INJEX
System has a limited shelf life, and certain retailers and wholesalers can
return these products to the Company up to six months beyond this expiration
date. As a result of these rights of return and the current availability of
historical trends in sales and product returns, the Company defers recognition
of revenues and the related cost of inventory shipped until the expiration of
all such rights of return.

Impairment of Long-Lived Assets

The Company periodically evaluates the carrying value of the unamortized
balances of its long-lived assets (property and equipment and patents) to
determine whether any impairment of these assets has occurred or whether any
revision to the related amortization periods should be made. This evaluation is
based on managements projections of the undiscounted future cash flows
associated with each class of asset. If managements evaluation indicates that
the carrying values of these assets were impaired, such impairment is
recognized by a reduction of the applicable asset carrying value to its
estimated fair value and expensed through operations.

Income Taxes

In preparing the Companys consolidated financial statements, management
is required to estimate the Companys income taxes in each of the jurisdictions
in which it operates. This process involves estimating actual current tax
liabilities together with assessing temporary differences resulting from
differing treatment of items for tax and accounting purposes. These
differences result in deferred tax assets and liabilities which are included
within the consolidated balance sheet, as applicable. The Companys deferred
tax assets consist primarily of net operating losses carried back and the
effects of certain reserves not yet deductible for tax purposes. Management
will then assess the likelihood that deferred tax assets will be recovered from
future taxable income, and, to the extent that it is believed that recovery is
not more likely than not, a valuation allowance is established. Although the
Company believes that Federal deferred tax assets will be realized via future
carry back of operating losses, the Company determined that it does not have
sufficient taxable income

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available for future carry back with respect to State income taxes.
Therefore, the Company believes it was appropriate to record a valuation
allowance against its State deferred tax assets. The State deferred tax assets
are still available for the Company to use in the future to offset State
taxable income, which would result in the recognition of a tax benefit and a
reduction to the Companys effective tax rate.

New Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board (FASB) has issued
Statement No. 146, Accounting for Costs Associated with Exit or Disposal
Activities(FAS 146). The standard requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. Previous
accounting guidance was provided by Emerging Issue Task Force (EITF) Issue
No. 94-3, Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring).FAS 146 replaces Issue No. 94-3. FAS 146 is to be applied
prospectively to exit or disposal activities initiated after December 31, 2002.
FAS 146 is not expected to have any material effect on the Companys financial
statements.




Item 3.   CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.



| |  |  | The Companys Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of the design and operation of the Companys
disclosure controls and procedures (as such term is defined in Rules
13(a) -14(c) and 15(d)-14(c) under the Securities Exchange Act of 1934,
as amended (the Exchange Act)) as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date). Based on
such evaluation, such officers have concluded that, as of the Evaluation
Date, the Companys disclosure controls and procedures are effective to
ensure that such officers are alerted on a timely basis to material
information relating to the Company (including its consolidated
subsidiaries) required to be included in the Companys reports filed or
submitted under the Exchange Act and that such information is recorded,
processed and reported as and when required.
| |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b) Changes in Internal Controls.



| |  |  | Since the Evaluation Date, there have not been any significant changes in
the Companys internal controls or in other factors that could
significantly affect such controls.
| |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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PART II  OTHER INFORMATION




Item 1.   LEGAL PROCEEDINGS

On February 4, 2002, a former non-executive officer of the Company filed a
complaint in the United States District Court, Northern District of Georgia,
against the Company, asserting claims of breach of contract, retaliation and
violation of 29 U.S.C. Section 621 of the Age Discrimination in Employment Act.
The complaint sought unspecified amounts of back pay, compensatory damages,
fees and costs. The Company filed an answer in April 2002 denying the
allegations in the complaint and asserted counterclaims of unjust enrichment
and violation of 15 U.S.C. §78p(b). On October 18, 2002, the parties reached
a settlement under which the Company paid $125,000 to resolve the dispute, all
of which had been charged to operations in the fourth quarter of fiscal year
2001.

In the ordinary course of conducting its business, the Company has become
subject to litigation and claims regarding various matters. There exists a
reasonable possibility that the Company will not prevail in all cases.
Although sufficient uncertainty exists in these cases to prevent the Company
from determining the amount of its liability, if any, the ultimate exposure
upon the resolution of any such litigation or claims is not expected to
materially adversely affect the Companys financial condition or results of
operations.




Item 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

None.




Item 3.   DEFAULTS UPON SENIOR SECURITIES

None.




Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER

None.




Item 5.   OTHER INFORMATION

None




Item 6.   EXHIBITS AND REPORTS ON FORMS 8-K

(a)  Exhibits

See Index to Exhibits included in this quarterly report.

(b)  Reports on Form 8-K:

None

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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.

EQUIDYNE CORPORATION

(Registrant)

|                         |  |     |                                              | 
|------------------------ |  | --- | -------------------------------------------- | 
|Dated: December 12, 2002 |  | By: | /s/ Marcus R. Rowan                         
|                         |  |     | Marcus R. Rowan                              | 
|                         |  |     | Chief Executive Officer                      | 
|                        
|                         |  | By: | /s/ Jeffery B. Weinress                     
|                         |  |     | Jeffery B. Weinress                          | 
|                         |  |     | Chief Financial Officer                      | 
|                         |  |     | (principal financial and accounting officer) | 

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CHIEF EXECUTIVE OFFICER CERTIFICATION



|   |  | I, Marcus R. Rowan, Chief Executive Officer of Equidyne Corporation,
certify that:                                                                                                                                                                                                                                                                                                               
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|1. |  | I have reviewed this quarterly report on Form 10-QSB of Equidyne
Corporation (Equidyne);                                                                                                                                                                                                                                                                                                       
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;                                                                   
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of Equidyne as of, and for, the periods presented in this quarterly
report;                                                                                            
|  
|4. |  | Equidynes other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures and
internal controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for Equidyne and have:                                                                                                                                                   
|  
|   |  | a)                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | b)                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | c)                                                                                                                                                                                                                                                                                                                                                                                               
|  
|5. |  | Equidynes other certifying officer and I have disclosed, based on our
most recent evaluation, to Equidynes auditors and the audit committee of
Equidynes board of directors:                                                                                                                                                                                                                  
|  
|   |  | a)                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | b)                                                                                                                                                                                                                                                                                                                                                                                               
|  
|6. |  | Equidynes other certifying officer and I have indicated in this
quarterly report whether or not there were any significant changes in
Equidynes internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

|                         |  |     |                        
|------------------------ |  | --- | -----------------------
|Date: December 12, 2002. |  | By: | /s/ Marcus R. Rowan    
|                         |  |     | Marcus R. Rowan        
|                         |  |     | Chief Executive Officer

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CHIEF FINANCIAL OFFICER CERTIFICATION



|   |  | I, Jeffery B. Weinress, Chief Financial Officer of Equidyne Corporation,
certify that:                                                                                                                                                                                                                                                                                                           
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  |                                                                                                                                                                                                                                                                                                                                                                                                  
|1. |  | I have reviewed this quarterly report on Form 10-QSB of Equidyne
Corporation (Equidyne);                                                                                                                                                                                                                                                                                                       
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;                                                                   
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of Equidyne as of, and for, the periods presented in this quarterly
report;                                                                                            
|  
|4. |  | Equidynes other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures and
internal controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for Equidyne and have:                                                                                                                                                   
|  
|   |  | a)                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | b)                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | c)                                                                                                                                                                                                                                                                                                                                                                                               
|  
|5. |  | Equidynes other certifying officer and I have disclosed, based on our
most recent evaluation, to Equidynes auditors and the audit committee of
Equidynes board of directors:                                                                                                                                                                                                                  
|  
|   |  | a)                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | b)                                                                                                                                                                                                                                                                                                                                                                                               
|  
|6. |  | Equidynes other certifying officer and I have indicated in this
quarterly report whether or not there were any significant changes in
Equidynes internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

|                         |  |     |                        
|------------------------ |  | --- | -----------------------
|Date: December 12, 2002. |  | By: | /s/ Jeffery B. Weinress
|                         |  |     | Jeffery B. Weinress    
|                         |  |     | Chief Financial Officer

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EQUIDYNE CORPORATION
INDEX TO EXHIBITS

|            |             |                                                                                                                                                                        
|----------- | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. | Description
|            |            
|99.1*       |             | Certification by Marcus R. Rowan, Chief Executive Officer, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.   
|99.2*       |             | Certification by Jeffery B Weinress, Chief Financial Officer,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.



|* |  | filed herewith
|- |  | --------------

16