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 March 31, 2002

                       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 May 14, 2002 Registrant had 17,249,334 shares of common stock, no par
value per share, issued and outstanding after deducting shares held in the
corporate treasury.

                                        1

PART I

ITEM 1              FINANCIAL STATEMENTS

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

                                                      March 31,    June 30,
                                                         2002        2001
                                                      ----------   ----------
                             ASSETS

Current Assets
 Cash                                                $    1,122   $         -
 Net investment in direct financing leases -
  related party - current portion                         35,474       35,773
                                                      ----------   ----------
    Total Current Assets                                  36,596       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                                (77,940)     (63,527)
                                                      ----------   ----------
    Net Property and Equipment                            25,553       38,532
                                                      ----------   ----------
Other Assets
 Net investment in direct financing leases
  - related party                                          6,352       32,743
 Patents, net of accumulated amortization of
  $74,869 and $66,929                                    250,775      258,715
 Deposits                                                209,520      209,520
                                                      ----------   ----------

    Total Other Assets                                   466,647      500,978
                                                      ----------   ----------

Total Assets                                          $  528,796   $  575,283
                                                      ==========   ==========

            See the accompanying notes to the acccompanying condensed
                              financial statements.

                                        2


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

                                                      March 31,    June 30,
                                                         2002        2001
                                                      ----------   ----------

              LIABILITIES AND STOCKHOLDER'S EQUITY

Current Liabilities
 Funds drawn in excess of cash in bank                $        -   $   14,860
 Accounts payable                                        138,372      172,382
 Accrued  payroll expenses                               157,976      186,216
 Notes payable-current portion                             5,971        5,971
 Obligation under capital leases - long-term              35,474       35,773
                                                      ----------   ----------
    Total Current Liabilities                            337,793      415,202
                                                      ----------   ----------

Long-Term Liabilities
 Notes payable - long term                                16,901       20,403
 Obligation under capital leases - long-term               6,352       32,743
                                                      ----------   ----------
    Total Long-Term Liabilities                           23,253       53,146
                                                      ----------   ----------
Total Liabilities                                        361,046      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, 17,249,334 and 16,857,934 issued
  and outstanding, respectively                        8,220,686    7,502,561
 Deficit accumulated during the development stage     (8,347,722)  (7,690,412)
                                                      ----------   ----------

    Total Stockholders' Equity                           167,750      106,935
                                                      ----------   ----------

Total Liabilities and Stockholders' Equity            $  528,796   $  575,283
                                                      ==========   ==========

           See the accompanying notes to the acccompanying 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 Nine Months   (September 26,
                                       Ended March 31,           Ended March 31,     1986) Through
                                   ------------------------  ------------------------   March 31,
                                      2002         2001         2002         2001          2002
                                   -----------  -----------  -----------  -----------  -----------
<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 Loss                                  --           --           --           --     (154,539)

Operating Expenses
 General and administrative             58,181      179,353      473,220      906,133    4,113,946
 Research and development expense       65,902      622,339      174,000      747,119    3,782,707
 Amortization expense                    2,646           --        7,940        5,294       76,749
 Stockholder class action
  settlement expense                        --           --           --           --      170,634
                                   -----------  -----------  -----------  -----------  -----------

   Total Operating Expenses            126,729      801,692      655,160    1,658,546    8,144,036
                                   -----------  -----------  -----------  -----------  -----------

Operating Loss                        (126,729)    (801,692)    (655,160)  (1,658,546)  (8,298,575)

Other Income and (Expenses)
 Loss on disposal of property
  and equipment                             --           --           --           --      (17,359)
 Forfeiture of deposits                     --           --           --           --      (27,283)
 Interest income                           (41)          --           16           --       22,444
 Interest expense                         (822)        (488)      (2,166)      (1,546)     (26,949)
                                   -----------  -----------  -----------  -----------  -----------

   Net Other Income (Expense)             (863)        (488)      (2,150)      (1,546)     (49,147)
                                   -----------  -----------  -----------  -----------  -----------

Net Loss                           $  (127,592) $  (802,180) $  (657,310) $(1,660,092) $(8,347,722)
                                   ===========  ===========  ===========  ===========  ===========

Basic and Diluted Loss Per Share   $     (0.01) $     (0.04) $     (0.03) $     (0.09)
                                   ===========  ===========  ===========  ===========

Common and Preferred Shares Used
 In Per Share Calculation           20,941,469   19,697,991   20,795,038   19,383,375
                                   ===========  ===========  ===========  ===========
</TABLE>

           See the accompanying notes to the acccompanying 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
                                                                      (September 26,
                                                For the Nine Months    1986) Through
                                               -----------------------   March 31,
                                                 2002        2001          2002
                                               ----------  -----------  ------------
<S>                                           <C>         <C>          <C>
Cash Flows From Operating Activities
 Net loss                                      $ (657,310) $(1,660,092) $ (8,347,722)
 Adjustments to reconcile net income (loss)
  to net cash provided (used) by operating
  activities
   Amortization                                     7,940        5,294        76,749
   Depreciation                                    14,413       15,557       209,883
   Stock based compensation                       244,500    1,191,500     1,797,004
   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                               (34,010)      74,817       138,372
   Accrued liabilities                            (28,240)      99,617       157,975
                                               ----------  -----------  ------------

    Net Cash From Operating Activities           (452,707)    (273,307)   (5,792,991)

Cash Flows From Investing Activities
 Purchases of property and equipment               (1,434)      (7,374)     (239,957)
 Purchase of rights to technology                      --      (28,119)     (455,749)
 Organization costs                                    --           --        (1,880)
 Net cash loaned to related party                      --     (411,420)   (1,413,234)
 Proceeds from capital lease receivable                --           --        44,220
 Repayment of cash loaned to related party             --           --        53,254
                                               ----------  -----------  ------------

    Net Cash From Investing Activities             (1,434)    (446,913)   (2,013,346)

Cash Flows From Financing Activities
 Proceeds from issuance of common stock           175,198      163,445     1,870,930
 Cash from controlling shareholder                298,427      578,513     5,970,731
 Payments for treasury stock                           --           --        (3,325)
 Payments for stock offering costs                     --           --       (56,509)
 Decrease in bank overdraft                       (14,860)          --            --
 Proceeds from net borrowings from related party       --           --        78,101
 Proceeds from notes payable                           --           --        29,857
 Payments on note payable and obligations under
  capital lease                                    (3,502)      (3,873)      (82,326)
                                               ----------  -----------  ------------

    Net Cash From Financing Activities            455,263      738,085     7,807,459
                                               ----------  -----------  ------------

Net Increase In Cash and Cash Equivalents           1,122       17,865         1,122

Cash and Cash Equivalents at
 Beginning of Period                                   --        8,915            --
                                               ----------  -----------  ------------

Cash and Cash Equivalents at End of Period     $    1,122  $    26,780  $      1,122
                                               ==========  ===========  ============
Supplemental Cash Flow Information
 Cash Paid for Interest                        $    1,344  $     1,625


</TABLE>

           See the accompanying notes to the acccompanying 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  nine  months ending March 31, 2002, the controlling  shareholder,
     Neldon  Johnson,  contributed $483,249 as additional  paid-in  capital. No
     additional preferred or common stock was issued to Mr. Johnson in  relation
     to these contributions.

     For  the nine months ended March 31, 2002, the Company loaned U-Check, Inc.
     (U-Check),  a  corporation  controlled  by  Mr.  Johnson,  $184,822.  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 controls U-Check,  the  write-off  of
     $184,822 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.


                                        6

     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.

     As  part of this settlement agreement, the Company's President consents  to
     pay  a civil penalty, disgorgement and pre-judgment interest. This judgment
     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-judgment interest. Because the judgment 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 March 31, 2002.  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 nine-month periods ended March 31, 2002 and 2001.  During
     the  nine-month periods ended March 31, 2002 and 2001, the Company incurred
     net  losses of $657,310 and $1,660,092, respectively. As of March 31, 2002,
     the  Company's losses accumulated from inception totaled $8,347,722.  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  nine  months
     ended  March  31,  2002, 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 March 31, 2002, there was a balance 5,000,000 shares left in


                                        7

     escrow.  During the nine months ended March 31, 2002, 188,400  shares  were
     sold  for  proceeds of $155,198 at prices ranging from $0.67 to  $1.11  per
     share. The $155,198 in proceeds was used to pay professional fees. At March
     31,  2002  there  was  a remaining balance of $1,213  cash  in  the  escrow
     account.

     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
     $298,427 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  March 31, 2002, total current assets were $36,596 and total assets  were
$528,796  compared to total current assets $35,773 and total assets $575,283  as
of June 30, 2001.

As  of  March  31,  2002,  Registrant  had total  liabilities  of  $361,046  and
shareholders'  equity of $167,750 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 $8,347,722 as of March  31,  2002,
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 March 31,  2002,
the  ratio  of current assets to current liabilities was approximately  0.11  to
one.

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
  Obligations               Total         year         years
---------------           --------      --------      --------
Long-Term Debt            $ 22,872      $  5,971      $ 16,901
Capital lease
  obligations               41,826        35,474         6,352
                          --------      --------      --------
Total Contractual
     Cash Obligations     $ 64,698      $ 41,445      $ 23,253
                          ========      ========      ========


                                        9


Results of Operations

Three Months Ended March 31, 2002 compared to Three Months Ended March 31, 2001

For  the  nine  months  ended  March 31, 2002 and 2001  the  Registrant  had  no
revenues.  For  the  nine  months ended March 31,  2002,  registrant  had  total
operating  expenses of $655,160  compared to expenses of $1,658,546  during  the
same  nine month period for a year earlier. For the nine months ended March  31,
2002, general and administrative expenses were $473,220 compared to $906,133 and
research  and  development expenses were $174,000 compared to  $747,119  a  year
earlier. For the nine months, the Registrant had a net loss of $657,310 compared
to  a net loss of $1,660,092 for the same nine month period a year earlier.  For
the  nine  months ended March 31, 2002 the net loss per share was $0.03 compared
to  $0.09  for  the  same period a year earlier. The decrease  in  net  loss  is
primarily  due  to  a decrease in general and administrative  and  research  and
development  due to the absence of an employee stock compensation  given  during
the same period a year earlier.

Nine Months Ended March 31, 2002 compared to Nine Months Ended March 31, 2001

For  the  quarter ended March 31, 2002 and 2001 the Registrant had no  revenues.
For the quarter ended March 31, 2002, registrant had total operating expenses of
$126,731  compared  to expenses of $801,692 during the same quarter  of  a  year
earlier.   For the quarter Registrant had a net loss of $127,592 compared  to  a
net  loss of $802,180 for the same quarter a year earlier.  For the quarter, the
net  loss  per  share was $0.01 compared to $0.04 for the same  quarter  a  year
earlier.   For  the  quarter  ended March 31, 2002, general  and  administrative
expenses  were  $58,181 compared to $179,353 and research  development  expenses
were  $65,902 compared to $622,339 a year earlier. The decrease in net  loss  is
primarily  due  to  a decrease in general and administrative  and  research  and
development  due to the absence of an employee stock compensation  given  during
the same period a year earlier.

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.


                                        10


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.

                                        11


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: May 20, 2002

                               International Automated Systems, Inc.

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


                                        12