FORM 10-QSB

               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549


           Quarterly Report Under Section 13 or 15(d)
             Of the Securities Exchange Act of 1934

                       For Quarter Ended December 31, 2001

                       Commission File Number  33-16531-D

             INTERNATIONAL AUTOMATED SYSTEMS, INC.
             -------------------------------------
     (Exact name of registrant as specified in its charter)

                       UTAH                        87-0447580
                       ----                        ----------
          (State or other jurisdiction of         (IRS Employer
               incorporation or organization)     Identification No.)

                     326 North Sr. 198,
                     Salem, Utah   84653
                     -------------------
            (Address of principal executive offices)

Registrant's telephone number including area code    (801) 423-8132

       Not Applicable             Former Address, if changed since last report


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the proceeding 12 months (or such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes   x        No


As of January 22, 2002 Registrant had 17,199,334 shares of common stock, no par
value per share, issued and outstanding after deducting shares held in the
corporate treasury.




PART I

ITEM 1              FINANCIAL STATEMENTS

             INTERNATIONAL AUTOMATED SYSTEMS, INC.
                 (A Development Stage Company)
                    CONDENSED BALANCE SHEETS
                           (Unaudited)

                                                December 31,       June 30,
                                                   2001              2001
                                                 ----------      ----------
                      ASSETS

Current Assets
 Net investment in direct financing
  leases - related party - current portion       $   32,504      $   35,773
                                                 ----------      ----------
   Total Current Assets                              32,504          35,773
                                                 ----------      ----------
Property and Equipment
 Computer and electronic equipment                   40,215          38,781
 Automobiles                                         51,514          51,514
 Mobile office                                       11,764          11,764
                                                 ----------      ----------
   Total Property and Equipment                     103,493         102,059
 Accumulated depreciation                           (68,126)        (63,527)
                                                 ----------      ----------
   Net Property and Equipment                        35,367          38,532
                                                 ----------      ----------
Other Assets
 Net investment in direct financing leases
  - related party                                    18,832          32,743
 Patents, net of accumulated amortization
  of $72,22 and $66,929                             253,421         258,715
 Deposits                                           209,520         209,520
                                                 ----------      ----------
   Total Other Assets                               481,773         500,978
                                                 ----------      ----------

Total Assets                                     $  549,644      $  575,283
                                                 ==========      ==========

See the accompanying notes to the condensed financial statements.

                                2


                INTERNATIONAL AUTOMATED SYSTEMS, INC.
                    (A Development Stage Company)
                CONDENSED BALANCE SHEETS (CONTINUED)
                             (Unaudited)

                                                December 31,       June 30,
                                                   2001              2001
                                                 ----------      ----------

                  LIABILITIES AND STOCKHOLDER'S EQUITY

Current Liabilities
 Funds drawn in excess of cash in bank           $    1,708      $   14,860
 Accounts payable                                   105,543         172,382
 Accrued  payroll expenses                          160,595         186,216
 Notes payable-current portion                        5,971           5,971
 Obligation under capital leases - long-term         32,504          35,773
                                                 ----------      ----------
   Total Current Liabilities                        306,321         415,202
                                                 ----------      ----------
Long-Term Liabilities
 Notes payable - long term                           17,921          20,403
 Obligation under capital leases - long-term         18,832          32,743
                                                 ----------      ----------
   Total Long-Term Liabilities                       36,753          53,146
                                                 ----------      ----------
Total Liabilities                                   343,074         468,348
                                                 ----------      ----------
Stockholders' Equity
 Preferred stock, Class A, no par value,
  4,400,000 shares authorized, 3,400,000
  shares issued and outstanding                     294,786         294,786
 Preferred stock, Class B, no par value,
  600,000 shares authorized, 300,000 shares
  issued and outstanding                                 --              --
 Common stock, no par value, 45,000,000 shares
  authorized, 17,199,334 and 16,857,934 issued
  and outstanding, respectively                   8,131,914       7,502,561
 Deficit accumulated during the development
  stage                                          (8,220,130)     (7,690,412)
                                                 ----------      ----------
   Total Stockholders' Equity                       206,570         106,935
                                                 ----------      ----------
Total Liabilities and Stockholders' Equity       $  549,644      $  575,283
                                                 ==========      ==========

See the accompanying note to the condensed financial statements.

                                3

             INTERNATIONAL AUTOMATED SYSTEMS, INC.
                 (A Development Stage Company)
              CONDENSED STATEMENTS OF OPERATIONS
                          (Unaudited)
<TABLE>
<CAPTION>

                                                                                       For the Period
                                                                                       From Inception
                                       For the Three Months       For the Six Months   (September 26,
                                        Ended December 31,        Ended December 31,    1986) Through
                                      -----------------------   -----------------------  December 31,
                                         2001        2000          2001         2000         2001
                                      ----------   ----------   ----------   ----------   ------------
<S>                                  <C>          <C>          <C>          <C>          <C>
Revenue
 Sales                                $       --   $       --   $       --   $       --   $    111,226
 Income from related party                    --           --           --           --         32,348
                                      ----------   ----------   ----------   ----------   ------------
   Total Revenue                              --           --           --           --        143,574

Cost of Sales
 Cost of sales                                --           --           --           --         81,927
 Write down of carrying value
  of inventories                              --           --           --           --        216,186
                                      ----------   ----------   ----------   ----------   ------------
   Total Cost of Sales                        --           --           --           --        298,113
                                      ----------   ----------   ----------   ----------   ------------
Gross Profit (Loss)                           --           --           --           --       (154,539)

Operating Expenses
 General and administrative              319,859       93,130      415,039      726,780      4,055,765
 Research and development expense         51,642       66,569      108,098      124,780      3,716,805
 Amortization expense                      2,647        2,647        5,294        5,294         74,103
 Stockholder class action settlement
  expense                                     --           --           --           --        170,634
                                      ----------   ----------   ----------   ----------   ------------
   Total Operating Expenses              374,148      162,346      528,431      856,854      8,017,307
                                      ----------   ----------   ----------   ----------   ------------
Operating Loss                          (374,148)    (162,346)    (528,431)    (856,854)    (8,171,846)

Other Income and (Expenses)
 Loss on disposal of property
  and equipment                               --           --           --           --        (17,359)
 Forfeiture of deposits                       --           --           --           --        (27,283)
 Interest income                              41           --           57           --         22,485
 Interest expense                           (997)        (791)      (1,344)      (1,058)       (26,127)
                                      ----------   ----------   ----------   ----------   ------------
   Net Other Income (Expense)               (956)        (791)      (1,287)      (1,058)       (48,284)
                                      ----------   ----------   ----------   ----------   ------------
Net Loss                              $ (375,104)  $ (163,137)  $ (529,718)  $ (857,912)  $ (8,220,130)
                                      ==========   ==========   ==========   ==========   ============
Basic and Diluted Loss Per Share      $    (0.02)  $    (0.01)  $    (0.03)  $    (0.04)
                                      ==========   ==========   ==========   ==========
Common and Preferred Shares
 Used In Per Share Calculation        20,821,708   19,622,161   20,723,253   19,190,523
                                      ==========   ==========   ==========   ==========
</TABLE>

See the accompanying notes to the condensed financial statements.

                                4


                      INTERNATIONAL AUTOMATED SYSTEMS, INC.
                          (A Development Stage Company)
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                             For the Period
                                                                             From Inception
                                                     For the Six Months       (September 26,
                                                        December 31,          1986) Through
                                                   -------------------------   December 31,
                                                      2001           2000          2001
                                                   ----------     ----------    -----------
<S>                                               <C>            <C>           <C>
Cash Flows From Operating Activities
 Net loss                                          $ (529,718)    $ (857,912)   $(8,220,130)
 Adjustments to reconcile net income
  (loss) to net cash provided (used)
  by operating activities
   Amortization                                         5,294          5,294         74,103
   Depreciation                                         4,600          9,958        200,070
   Stock based compensation                           219,259        649,000      1,771,763
   Forfeiture of deposits                                  --             --         27,283
   Loss on disposal of fixed assets                        --             --         17,359
   Patents abandoned                                       --             --        130,106
  Changes in current assets and liabilities:
   Accounts payable                                   (66,976)        16,801        105,406
   Accrued liabilities                                   (244)        43,625        185,971
                                                   ----------     ----------    -----------
   Net Cash From Operating Activities                (367,785)      (133,234)    (5,708,069)

Cash Flows From Investing Activities
 Purchases of property and equipment                   (1,435)          (642)      (239,958)
 Purchase of rights to technology                          --        (26,146)      (455,749)
 Organization costs                                        --             --         (1,880)
 Net cash loaned to related party                    (171,683)      (290,159)    (1,584,917)
 Proceeds from capital lease receivable                    --             --         44,220
 Repayment of cash loaned to related party                 --             --         53,254
                                                   ----------     ----------    -----------
   Net Cash Used By Investing Activities             (173,118)      (316,947)    (2,185,030)

Cash Flows From Financing Activities
 Proceeds from issuance of common stock               139,287         32,000      1,835,019
 Cash from controlling shareholder                    417,250        401,699      6,089,554
 Payments for treasury stock                               --             --         (3,325)
 Payments for stock offering costs                         --             --        (56,509)
 Increase (decrease) in bank overdraft                (13,152)         9,922          1,708
 Proceeds from net borrowings from related
  party                                                    --             --         78,101
 Proceeds from notes payable                               --             --         29,857
 Payments on note payable and obligations under
  capital lease                                        (2,482)        (2,355)       (81,306)
                                                   ----------     ----------    -----------
   Net Cash Provided by Financing Activities          540,903         441,266     7,893,099
                                                   ----------     -----------   -----------
Net Increase (Decrease) In Cash and Cash Equ               --          (8,915)           --

Cash and Cash Equivalents at Beginning of Pe               --           8,915            --
                                                   ----------     -----------   -----------
Cash and Cash Equivalents at End of Period         $       --     $        --   $        --
                                                   ==========     ===========   ===========
Supplemental Cash Flow Information
 Cash Paid for Interest                             $   1,344      $    1,058   $    24,029

</TABLE>

See the accompanying notes to the condensed financial statements.

                                5


             INTERNATIONAL AUTOMATED SYSTEMS, INC.
            NOTES TO CONDENSED FINANCIAL STATEMENTS


NOTE 1--INTERIM FINANCIAL STATEMENTS

     The  accompanying financial statements have been prepared by  the  Company,
     and are unaudited. In the opinion of management, the accompanying unaudited
     financial   statements   contain  all  necessary   adjustments   for   fair
     presentation,  consisting  of  normal  recurring  adjustments   except   as
     disclosed herein.

     The accompanying unaudited interim financial statements have been condensed
     pursuant  to  the  rules  and regulations of the  Securities  and  Exchange
     Commission;  therefore,  certain  information  and  disclosures   generally
     included  in  financial statements have been condensed  or  omitted.  These
     financial statements should be read in connection with the Company's annual
     financial statements included in the Company's annual report on Form 10-KSB
     as  of  June 30, 2001. The financial position and results of operations  of
     the interim periods presented are not necessarily indicative of the results
     to be expected for the year ended June 30, 2002.

NOTE 2--RELATED PARTY TRANSACTIONS

     For  the  six  months  ending December 31, 2001 and 2000,  the  controlling
     shareholder, Neldon Johnson, contributed $417,250 and $401,699 for research
     as  additional  paid-in capital, respectively. No additional  preferred  or
     common stock was issued.

     For  the  six  months ended December 31, 2001, the Company loaned  U-Check,
     Inc.  (U-Check), a corporation solely owned by Mr. Johnson, $171,683. These
     receivables consist of operating capital and labor costs paid  for  by  the
     Company on behalf of U-Check.

     Due  to  adverse financial conditions experienced by U-Check,  the  Company
     does  not  feel  that  the  amount  due  from  U-Check  will  be  realized.
     Accordingly,  the Company has written off the entire balance.  Because  Mr.
     Johnson  is the sole shareholder of U-Check, the write-off of $171,683  was
     treated as a capital distribution to Mr. Johnson.

NOTE 3-CONTINGENCIES AND COMMITMENTS

     Legal  Contingencies - On September 23, 1998, the Company was  notified  by
     the  U.S. Securities and Exchange Commission (SEC) of formal action against
     the  Company,  its  president,  and members  of  his  family  for  possible
     securities   violations.   The   action   stems   from   alleged   material
     misrepresentations by the Company and the Company's employees regarding new
     technology developed by the Company. The SEC is seeking disgorgement of the
     proceeds  from the sale of stock by the Company's principles that  occurred
     between June 1995 and June 1996.

     At  the  end of July 2001, the president of the Company, on behalf  of  the
     Company, approved a settlement recommendation to be presented to the SEC as
     a  full  compromise of the matter. Pursuant to the terms of the settlement,
     the  Company  consents to permanently restrain from engaging  in  acts  and
     practices  which  constitute  and  will constitute  violations  of  Federal
     Securities laws and regulations.

                                6

     As  part of this settlement agreement, the Company's President consents  to
     pay   a  civil  penalty,  disgorgement  and  pre-judgement  interest.  This
     judgement  will  be  settled by the transfer of  the  President's  personal
     shares  of  IAS  stock  into receivership for sale  to  satisfy  the  civil
     penalty, disgorgement and pre-judgement interest.

     Because  the judgement of penalties, interest and disgorgement are  against
     the president and his family, no provision for this liability has been made
     in the accompanying financial statements.

     Pursuant to SEC regulations and policies, this offer has been presented  to
     the SEC for approval. It is anticipated that this process will take several
     more months.

     Payroll  Tax Contingency - During the year ended June 30, 2001, the Company
     did  not  pay payroll taxes for several months, and has unpaid federal  and
     state  withholding tax liabilities as of December 31, 2001. These balances,
     including  potential  penalties and interest, have been  reflected  in  the
     financial statements.

NOTE 4--BUSINESS CONDITION

     The accompanying financial statements have been prepared on a going concern
     basis, which contemplates the realization of assets and the satisfaction of
     liabilities  in  the  normal course of business. The  Company  has  had  no
     revenue for the six month periods ended December 31, 2001 and 2000.  During
     the  six  month  periods  ended December 31, 2001  and  2000,  the  Company
     incurred  net losses of $529,718 and $857,912, respectively. As of December
     31,   2001,  the  Company's  losses  accumulated  from  inception   totaled
     $8,220,130. These factors, among others, indicate that the Company  may  be
     unable to continue as a going concern for a reasonable period of time.  The
     financial  statements  do  not  include any  adjustments  relating  to  the
     recoverability and classification of recorded asset amounts or  the  amount
     and  classification  of  liabilities that might  be  necessary  should  the
     Company be unable to continue as a going concern. The Company's ability  to
     continue  as  a  going  concern is dependent upon its ability  to  generate
     sufficient cash flow to meet its obligations on a timely basis,  to  obtain
     additional  financing  as  may  be  required,  and  ultimately  to   attain
     successful operations. Management is in the process of negotiating  various
     sales  agreements and is hopeful these sales will generate sufficient  cash
     flow for the Company to continue as a going concern.

NOTE 5 -EQUITY

     Common Stock - During the year ended June 30, 2001 and the six months ended
     December  31,  2001,  the  Company placed  500,000  and  5,000,000  shares,
     respectively,  of  common  stock in escrow with an  attorney  to  be  sold.
     Proceeds  of  the  stock  sales from the escrow account  are  placed  in  a
     separate  escrow  account to be used at the Company's  and  the  attorney's
     discretion. At December 31, 2001, there was a balance 5,050,000 shares left
     in  escrow.  During the six months ended December 31, 2001, 138,400  shares
     were  sold for proceeds of $119,287 at prices ranging from $0.67  to  $1.11
     per  share. The $119,287 in proceeds was used to pay professional fees.  At
     December  31,  2001  there was a remaining balance of $2,485  cash  in  the
     escrow account.

                               7

     In  July 2001, the Company issued 25,000 shares of common restricted  stock
     to an individual in exchange for services performed during February through
     July 2001. The shares were valued at $28,500 or $1.14 per share.

     During  October 2001, the Company filed an S-8 Registration  Statement  for
     the  issuance of 150,000 common shares. Of the 150,000 shares, 100,000 were
     pursuant to a consulting agreement and the remaining 50,000 were for  legal
     services  to  two different firms. The shares were valued  at  $216,000  or
     $1.44 per share.

     During December 2001, the Company issued 28,000 shares of restricted common
     stock to an individual in exchange for $20,000 in cash, or $0.71 per share.

     As  discussed in Note 2, the controlling shareholder contributed a  net  of
     $245,567 to additional paid-in capital.


                                8

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

Forward Looking Statements

This report contains forward looking statements regarding the
Company's plans, objectives, expectations and intentions.  All forward
looking statements are subject to risks and uncertainties that could
cause the Company's actual results and experience to differ materially
from such projections.  Such risks include delays in product
development, the development of marketing and distribution channels,
and market acceptance of its products.  Other risks may be beyond the
control of the Company.

Liquidity and Capital Resources

As of December 31, 2001, total current assets were $32,504 and total
assets were $549,644 compared to total current assets $35,773 and
total assets $575,283 as of June 30, 2001.

As of December 31, 2001, Registrant had total liabilities of $343,074 and
shareholders' equity of $206,570 as compared to total liabilities of
$468,348 and shareholders'  equity of $106,935 as of June 30, 2001.
The deficit accumulated during the development stage was $8,220,130 as
of December 31, 2001, compared to $7,690,412 as of June 30, 2001.  At
this time the Company is not generating sufficient funds to sustain
its operations.  The Company's operations involve significant risks
regarding the development of technology and products that may not be
commercially acceptable and profitable.  As of December 31, 2001, the ratio
of current assets to current liabilities was approximately 0.11 to one.

For the six months ended December 31, 2001, Registrant had total
revenues of $0 compared to total revenues of $0 for the same period a
year earlier. For the six months ended December 31, 2001, registrant
had total operating expenses of $528,431 compared to expenses of
$856,854 during the same six month period for a year earlier. Cost of
sales was $0 compared to cost sales of $0 during the six months ended
December 31, 2001 and 2000 respectively. For the six months ended
December 31, 2001, general and administrative expenses were $415,039
compared to $726,780 and research and development expenses were $108,098
compared to $124,780 a year earlier. For the six months, the Registrant
had a net loss of $529,718 compared to a net loss of $857,912 for the same
six month period a year earlier. The decrease in net loss is primarily due to
a decrease in general and administrative expenses secondary to the absence
of an employee stock compensation given during the same period a year earlier.


The Registrant's contractual obligations include a note payable to a financing
company that is due in November 2005, and capital lease obligations for
various equipment. The lease obligations expire in May 2003. The following is
a schedule by year of the payments on these contractual obligations.

                         Payments Due by Period
                    ----------------------------------
                              Less
     Contractual             than 1    1 - 3    4 - 5
     Obligations      Total   year     years    years
----------------    -------  -------  -------  -------
Long-Term Debt      $23,892  $ 5,971  $11,942  $ 5,979
Capital lease
  obligations        51,336   32,504   18,832
                    -------  -------  -------  -------
Total Contractual
  Cash Obligations  $75,228  $38,475  $30,774  $ 5,979
                    =======  =======  =======  =======

Results of Operations

For the quarter ended December 31, 2001, Registrant had total revenues of
$0 compared to total revenues of $0 for the same period a year
earlier.  For the quarter ended December 31, 2001, registrant had total
operating expenses of $374,148 compared to expenses of $162,346 during
the same quarter of a year earlier.  As of  December 31, 2001, cost of
sales was $0 as compared to cost of sales of $0 during the same
quarter a year earlier.  For the quarter Registrant had a net loss of
$375,104 compared to a net loss of $163,137 for the same quarter a
year earlier.    For the quarter, the net loss per share was $0.02
compared to $0.01 for the same quarter a year earlier.  For the
quarter ended December 31, 2001, general and administrative expenses were
$319,859 compared to $93,130 and research development expenses were
$51,642 compared to $66,569 a year earlier. The increase in net loss is
primarily due to an increase in general and administrative expenses
as compared to the same quarter a year earlier. In particular, the 100,000
common shares issued to an individual for consulting expenses accounted for
$144,000 in general and administrative expenses.

Future Business

The Company's ability to continue its activities is dependent on it
receiving funds either as loans, advances, or sales of equity.
Previously, the major shareholder has provided funds, but there is no
formal agreement between the Company and the majority shareholder to
continue providing funds in the future.  If the Company had to seek
funds from another source, there is no assurance that funds would be
available at all or on terms acceptable to the Company.


Part II - OTHER INFORMATION

Item 1.  Legal Proceedings

On September 23, 1998, the Company was notified by the U.S. Securities
and Exchange Commission (SEC) of formal action against the Company, its
president, and members of his family for possible securities violations.
The action stems from alleged material misrepresentations by the Company
regarding new technology developed by the Company. Acting in what they
believe to be the best interest of the Company, Neldon Johnson, IAS, and
the Relief Defendants have, without admitting or denying the allegations
of the Complaint, consented to a settlement. The basics of the  settlement
are that Neldon Johnson and IAS agree they will not engage in acts and
practices which constitute and will constitute violations of specific
Security Acts and Rules and that a total amount of disgorgement, pre-
judgment interest and civil penalties due and owing by Neldon Johnson,
and the Relief Defendants of $2,099,596 shall be collectively satisfied
by the transfer of 1,749,664 shares of IAS stock held in the name of
Neldon Johnson to a Special Agent appointed by the courts. The
appointed Special Agent will sell the IAS shares in a manner designed
to maximize the proceeds from such sales without unduly disrupting or
depressing the market for IAS shares in order to pay the amount due.
The Settlement Agreement is still awaiting final approval.

The Company has filed a civil action complaint in the United States
District Court for the District of Utah Central Division against Optimal
Robotics Corp. and PSC, Inc. alleging patent infringement arising under the
patent laws of the United States, and more specifically, under Title 35,
U.S.C. Sections 271, 281, 283, 284 and 285. Discovery is presently
in progress.

The Company has filed a civil action complaint in the United States District
Court for the district of Utah Central division against The Kroger
Company alleging patent infringement arising under the patent infringement
arising under the patent laws of the United States, and more specifically,
under Title 35, U.S.C., section 271, 281, 283, 284, and 285.

Item 2.  Changes in Securities

During October 2001, the Company placed 5,000,000 shares of common stock in
escrow with an attorney. Proceeds of the stock sales from the escrow account
are placed in a separate account to be used at the Company's and the attorney's
discretion.

During October 2001, the Company filed an S-8 Registration Statement for the
issuance of 150,000 common shares. Of the 150,000 shares, 100,000 were pursuant
to a consulting agreement and the remaining 50,000 were for legal services to
two different firms.

During December 2001, the Company issued 28,000 shares of restricted common
stock to an individual in exchange for $20,000 in cash.

Item 3.  Defaults Upon Senior Securities.

     None.

Item 4.  Matters Submitted to a Vote of the Company's Shareholders.

     None.

Item 5.  Other Information.

     None.

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

     None.



    SIGNATURES

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


     Date: February 12, 2001

                               International Automated Systems, Inc.

                               By: \s\ Neldon Johnson
                               ----------------------
                               Neldon Johnson
                               President and Chief Executive Officer