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

                                   FORM 10-KSB





[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934  For the fiscal year ended October 31, 2001
                                           ----------------

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934  For the transition period from          to
                                                        ----------  -----------
Commission File Number: 000-33151

                               Dakota Imaging Inc.
                               -------------------
             (Exact name of registrant as specified in its charter)
North Dakota                                                         45-0420093
------------                                                         ----------
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)

3727 Kingston Drive, Bismarck, North Dakota                               58503
-------------------------------------------------------------------------------
(Address of principal executive offices)                             (Zip Code)

                                 (701) 222-3330
                                 --------------
              (Registrant's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Act:


   Title of each class registered:    Name of each exchange on which registered:
   -------------------------------    ------------------------------------------

               None                                    None
               ----                                    ----

Securities registered under Section 12(g) of the Act:

    Common Stock, Par Value $.001
    -----------------------------
            (Title of Class)

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.

State issuer's revenues for its most recent fiscal year. $457,940.00

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.) As of January 15, 2002, approximately $0.

As of January 15, 2002, there were 11,723,000 shares of the issuer's $.001 par
value common stock issued and outstanding.

Documents incorporated by reference. There are no annual reports to security
holders, proxy information statements, or any prospectus filed pursuant to Rule
424 of the Securities Act of 1933 incorporated herein by reference.

Transitional Small Business Disclosure format (check one):

                       [ ] Yes            [X] No



                                       1
<PAGE>




                                     PART I

Item 1. Description of Business.
--------------------------------

Our Background. Dakota Imaging Inc., a North Dakota corporation, was
incorporated in the State of North Dakota on January 31, 1991. Our executive
offices are located at 3727 Kingston Drive, Bismarck, North Dakota. Our
telephone number is 701.222.3330.

Our Business. We are a provider of ultrasound imaging services to physicians and
hospitals in western and central North Dakota. Since our inception in 1991, we
have provided ultrasound services in western and central North Dakota. We
believe that our success is the result of the personal service that we provide
to our customers as well as our use of the latest ultrasound technology. We
currently use the HDI 5000 ultrasound system, which is manufactured by Advanced
Technology Laboratories, a subsidiary of Philips Medical Systems. During the
next twelve months, we intend to expand our operations into South Dakota,
Minnesota, Montana and other areas of North Dakota. We intend to expand into
those areas by locating potential customers and attempting to schedule meetings
with potential customers to demonstrate our capabilities and the type of
services they would receive. Our ability to expand into those areas will depend
on our ability to retain qualified personnel and obtain additional ultrasound
equipment.

To effectuate our business plan during the next three to six months, we must
maintain our current customer base, as well as acquire additional equipment so
that we may expand our customer base. We believe that we can lease additional
equipment by using the revenues generated from our current operations. We may
also require the addition of ultrasound technicians, so that we are able to
consistently provide the type of personal service that has been the basis of our
appeal to our current customers. We do not intend to obtain additional equipment
or hire additional personnel unless and until we have secured new customers. We
anticipate that we will initially only offer ultrasound services to new
customers in the areas within which we currently operate, rather than expand our
product offerings into new geographic areas.

We have also contemplated acquiring a third party, merging with a third party or
pursuing a joint venture with a third party in order to support our development.
We have conducted informal discussions with potential acquisition or merger
candidates, although we have not conducted any formal negotiations. We cannot
guaranty that we will acquire or merge with a third party, or that in the event
we acquire or merge with a third party, such acquisition or merger will increase
the value of our common stock.

The Use of Ultrasound Imaging. Medical imaging has been an important element of
medical diagnosis since the introduction of X-ray technology. As imaging
technology has advanced in recent decades, applications of medical imaging have
expanded to address increasingly complex disease states and conditions involving
soft tissues and internal body organs. While X-ray technology is the dominant
method used for visual analysis of hard tissue, such as bone material, the most
widely used imaging methods for visual analysis of soft tissues and organs
include computed tomography, magnetic resonance imaging, nuclear medicine, X-ray
angiography and ultrasound. Each method of soft tissue imaging requires
specialized equipment and has different patterns of use and applications. A
physician selects the soft tissue imaging method to be used based on a variety
of factors, including:

     o    the particular disease state or condition to be studied;
     o    the status of the patient;
     o    image quality; and
     o    the cost of the procedure.

Ultrasound was introduced for medical imaging purposes in the late 1950s as a
safe and noninvasive method to provide real-time, dynamic images of most major
soft tissues and organs. Initially, physicians used ultrasound imaging to assess
the general shape, size and structure of internal soft tissues and organs.
Obstetricians were among the first physicians outside of radiologists to adopt
widespread use of ultrasound imaging. As advances in technology improved the
image quality of ultrasound devices, the use of ultrasound imaging expanded to
other clinical applications, including examinations for gynecological
abnormalities.




                                       2
<PAGE>




Ultrasound systems use low-power, high frequency sound waves emitted by a
transducer to produce soft tissue images. The physician places the transducer on
the skin or in a body cavity near the targeted area. Tissues and fluids reflect
these sound waves and the transducer detects these reflections. Based on these
reflections, the ultrasound system's beamformer organizes the sound waves and
produces an image for visual examination, using digital or analog signal
processing or a combination of the two. Digital signal processing technology
allows an ultrasound device to process with greater signal fidelity. As such,
digital ultrasound machines produce higher resolution images than analog and
analog/digital ultrasound machines.

Standard ultrasound imaging produces a two-dimensional image that physicians use
to diagnose and monitor disease states and conditions by analyzing the relative
shading of tissues or organs. This is known as grayscale imaging, or
two-dimensional imaging when used in cardiology applications. Power Doppler
allows physicians to use ultrasound imaging to detect the presence of blood flow
through the body. Color Doppler ultrasound imaging expands standard ultrasound
imaging further to enable physicians to image the direction and velocity of
blood flow.

Physicians currently use ultrasound imaging in a variety of clinical
applications. In addition to obstetric and gynecological applications,
ultrasound imaging is increasingly used in cardiac imaging. Ultrasound imaging
for cardiac function indications, otherwise known as echocardiography, provides
the physician an enhanced real-time image of the internal heart structure,
including the valves and chambers. The physician uses this image to diagnose
coronary artery disease, valvular disease and congenital heart defects. In
vascular medicine, physicians determine the presence of a disease state or
condition using color Doppler ultrasound to image blood flow in soft tissues,
organs and the vascular system.

Our Ultrasound Services. Physicians utilize ultrasound imaging as an effective
tool for the noninvasive visual examination of soft tissue. However, they do not
have immediate point-of-care access to high-quality ultrasound imaging due to
the cost, size and complexity of existing high-quality ultrasound machines. We
provide mobile ultrasound services to these physicians and their hospitals on a
referral basis. We currently have eleven clients which use our services on a
regular basis.

Customers are serviced on a scheduled basis. Depending on volume, we schedule
services at a certain day or time each week. Occasionally, requests for special
visits are accommodated. The ultrasound equipment and supplies are loaded in a
van, driven to the hospital, unloaded and set up for testing. The technician
performs the tests, loads the equipment and travels to the next location. Later,
the test results are printed and delivered to the personnel responsible for
patient care. The technician provides patient billing information to the
hospitals so that they can bill the payer for the service.

Our Equipment. A key component of our business is our ultrasound equipment. In
1992, we purchased the first color Doppler imaging system available in our area.
As a result of the growth of our business, we hired a full time ultrasound
technician in 1994. In 1999, we upgraded our equipment to the HDI 5000
Ultrasound System, which is manufactured by Advanced Technologies Laboratories,
a subsidiary of Philips Medical Systems.

In July 1997, Advanced Technologies Laboratories introduced its fifth generation
digital ultrasound system, the HDI 5000 system, for the premium ultrasound
market. The HDI 5000 system is believed to be the world's most powerful
ultrasound system, capable of performing over 14 billion operations per second,
yet is the same physical size as Advanced Technologies Laboratories' previous
premium performance product, the HDI 3000 system. The new system incorporates a
new, more powerful digital beamformer incorporating four new ASICs (Application
Specific Integrated Circuits) which make possible Advanced Technologies
Laboratories' MicroFine Grayscale Imaging that provides more subtle tissue
information and significantly reduced dot size. At the heart of the HDI 5000
system is a patented new Doppler processor which employs multi-dimensional
broadband flow processing to provide new levels of flow sensitivity for deep and
small vessels. The HDI 5000 system uses existing HDI scanheads and also operates
with three new high-performance broadband scanheads. The HDI 5000cv model of
this new system provides advanced performance for the premium cardiology market.

The rapid changes in technology mandate that we replace our equipment every one
to two years even though the technology has a useful life of significantly
longer. Our strategy of frequent equipment upgrades contrasts with our
competitor who retains equipment for a longer period of time. Due to the




                                       3
<PAGE>




frequent upgrading strategy and strong market for used equipment, especially
overseas, we acquired our equipment under an operating lease with the financing
division of Advanced Technologies Laboratories. Our lease agreement expires in
July 2004 and requires monthly payment of $4,354 plus sales tax. The lease
includes a full service maintenance agreement for the term of the lease. At the
end of the lease, we have the option of returning the equipment to Advanced
Technologies Laboratories or purchasing the equipment.

Our Target Markets and Marketing Strategy. We believe that our primary target
market consists of various clinics and hospitals in North Dakota. We intend to
target the hospitals in small or rural areas that are unable to maintain their
own in-house ultrasound imaging services. We also intend to target hospitals in
regions that we do not currently serve. We believe that our current customers
will be a source of referrals. Our marketing strategy will focus on establishing
relationships with potential customers using our current customers as referrals
as well as attempting to schedule meetings with potential customers to
demonstrate our capabilities and the type of services they would receive.

Growth Strategy. Our objective is to become a multi-state provider of ultrasound
imaging services accompanied by reliable personal service. Our strategy is to
continue providing clients with exceptional personal service and ultrasound
imaging services. Key elements of our strategy include:

     o    increase our relationships with clinics and hospitals;
     o    increase our relationships with the providers of our ultrasound
          equipment;
     o    provide additional services for businesses and consumers; and
     o    pursue relationships with joint venture candidates. We will attempt to
          establish joint ventures with companies that will support our
          expansion and business development. For example, a potential joint
          venture candidate could include a provider of a different type of
          service often provided to clinics and hospitals

Our Competition. The existing medical imaging industry in general, and the
existing ultrasound market specifically, is very competitive. The primary bases
of competition are image quality, price and ease of use. Our primary competitor
in our current market area is DMS Medical Imaging, which is located in Fargo,
North Dakota. DMS Medical Imaging is much larger than we are and is a subsidiary
of Ottertail Power Company. DMS Medical Imaging operates with ten to twelve
ultrasound systems and services the entire state of North Dakota and a
significant portion of Minnesota. DMS Medical Imaging also offers a broader
range of services to hospitals and clinics, which provides an advantage in
certain situations where the hospital desires the additional service to be
included in the contract.

We believe that we possess several advantages over DMS Medical Imaging. The size
of our operation allows us to provide timely and consistent services to our
customers. We believe that our customers place a significant value on our past
performance, which has resulted in us retaining our customers for many years
without having to lower our prices. In addition, we provide a higher degree of
personal service, including the personal delivery of test results to the
attending physicians. We believe that this strategy has helped build strong
relationships with physicians who use our services.

Another type of competition is the potential for hospitals and clinics to add
the capacity for ultrasound services themselves. Larger hospitals have done this
and can justify the large investment with the higher volumes. Providing these
services requires a large investment in equipment, approximately $180,000 per
ultrasound machine, and ultrasound technologists who are in short supply. As a
result, unless the hospital or clinic is large, it is unlikely that they would
make such an investment. In addition, hospitals in North Dakota have difficulty
finding and retaining technologists who are willing to travel to rural areas.

It is common for hospitals, physicians, physician groups, and others in the
health care field to form ventures to own and operate medical equipment. We
compete with such groups. There are many companies offering general business
consulting services. The companies that may compete with us in the future and
that currently offer consulting services may be larger and have far greater
financial resources than us. Also, if the cost of a particular medical device is
reduced and the utilization by physicians increases, more hospitals will be able
to afford to acquire their own equipment rather than receive service on a shared
basis.




                                       4
<PAGE>




Government Regulation. Various aspects of our current medical business are
subject to government regulations at the federal, state and local level. Failure
to comply with existing regulations or the enactment of restrictive laws or
regulations could impair our operations. While we believe that our operations
comply with applicable regulations, we have not sought or received interpretive
rulings to that effect. Additionally, we cannot guaranty that subsequent laws,
subsequent changes in present laws or interpretations of such laws will not
adversely affect our operations.

We may be subject to federal, state and local provisions regulating the
discharge of materials into the environment or otherwise for the protection of
the environment. We have not spent any funds for compliance with environmental
laws. Although our current operations have not been significantly affected by
compliance with environmental laws or regulations, federal, state and local
governments are becoming increasingly sensitive to environmental issues, and we
cannot predict what impact future environmental regulations may have on our
operations.

Intellectual Property. We do not presently own any patents, trademarks,
licenses, concessions or royalties. Our success may depend in part upon our
ability to preserve our trade secrets, obtain and maintain patent protection for
our technologies, products and processes, and operate without infringing the
proprietary rights of other parties. However, we may rely on certain proprietary
technologies, trade secrets, and know-how that are not patentable. Although we
may take action to protect our unpatented trade secrets, our technology and our
proprietary information, in part, by the use of confidentiality agreements with
our employees, consultants and certain of our contractors, we cannot guaranty
that:

     o    these agreements will not be breached;
     o    we would have adequate remedies for any breach; or
     o    our proprietary trade secrets and know-how will not otherwise become
          known or be independently developed or discovered by competitors.

We cannot guaranty that our actions will be sufficient to prevent imitation or
duplication of either our products and services by others or prevent others from
claiming violations of their trade secrets and proprietary rights.

Our Research and Development. The high technology ultrasound business is
characterized by rapidly evolving technology, resulting in relatively short
product life cycles and continuing competitive pressure to develop and market
new products and new features for existing products. We are not currently
conducting any research and development activities and do not anticipate
conducting such activities in the near future. If we generate significant
revenues, we may expand our product line by entering into relationships with
third parties.

Employees. As of January 15, 2002, we have three full time employees and no part
time employees. We do not currently anticipate that we will hire any employees
in the next six months. We believe our future success depends in large part upon
the continued service of our key senior management personnel and our ability to
attract and retain managerial personnel. From time-to-time, we anticipate that
we will use the services of independent contractors and consultants to support
our expansion and business development.

Facilities. Our executive, administrative and operating offices are located at
3727 Kingston Drive, Bismarck, North Dakota 58503. Lawrence Nieters, our
president and a director, currently provides office space to us in exchange for
$200 per month added to his salary to defray the cost providing that space. Our
shop and storage facilities are located in a separate building in Bismarck,
North Dakota.



                                       5
<PAGE>



Item 2.  Description of Property.
---------------------------------

Property held by us. As of the date specified in the following table, we held
the following property:

====================================== ===============================
              Property                        October 31, 2001
-------------------------------------- -------------------------------
Property and Equipment, net                       $59,109
-------------------------------------- -------------------------------
Cash                                              $42,298
====================================== ===============================


The components of property and equipment consist of the following at October 31,
2001:

         Equipment                                                   $  30,387
         Vehicles                                                    $  99,901
                                                                     ---------
                                                                     $ 130,288
         Less: Accumulated Depreciation                               ($71,179)
                                                                     ---------
         Total                                                       $  59,109

Depreciation is recorded based on the useful life of the fixed assets. The
useful lives of the equipment and vehicles are a five-year life. We lease our
ultrasound equipment on a long-term lease. The current lease expires in July
2004 and requires monthly payments of $4,354 plus sales tax. The lease includes
a full service maintenance agreement for the term of the lease. At the
expiration of the lease, we have the option of returning the equipment to the
lessor, renew the lease at the fair market value, or purchase the equipment at
fair market value.

At October 31, 2001, future minimum lease payments under this operating lease is
as follows:


                               2002                   $52,248
                               2003                   $52,248
                               2004                   $30,248


Total equipment lease expense for the fiscal year ended October 31, 2001 and
2000 is $60,042 and $55,382, respectively.

Our Facilities. Our executive, administrative and operating offices are located
at 3727 Kingston Drive, Bismarck, North Dakota, 58503. The offices are provided,
at no charge, by Lawrence Nieters, our president and a director. We do not have
a written lease or sublease agreement and Mr. Nieters does not expect to be paid
or reimbursed for providing office facilities. We also leased a 2,400 square
foot shop and storage facility located in Bismarck, North Dakota. Our monthly
lease payment is $700 and the term is month to month.

Item 3.  Legal Proceedings.
---------------------------

In July 2001, we were contacted by the State of North Dakota Securities
Commissioner regarding the sale of our securities in North Dakota. The North
Dakota Securities Commissioner requested certain information, including, but not
limited to, information on all persons who purchased our shares in the State of
North Dakota and the dates of those purchases. In August 2001, we provided
responses to the State of North Dakota's inquiries. The North Dakota Securities
Commissioner believes that we failed to timely notify the North Dakota
Securities Commissioner of securities sales pursuant to Regulation D, Rule 506.
Without admitting any culpability, we executed a Consent Order wherein we agreed
that should we sell any securities in the state of North Dakota, we will comply
with North Dakota state law. We also paid a fine of $2,000.

We are not aware of any pending litigation nor do we have any reason to believe
that any such litigation exists.

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

Not applicable.



                                       6
<PAGE>




                                     PART II

Item 5.  Market Price for Common Equity and Related Stockholder Matters.
------------------------------------------------------------------------

Reports to Security Holders. We are a reporting company with the Securities and
Exchange Commission, or SEC. The public may read and copy any materials filed
with the SEC at the SEC's Public Reference Room at 450 Fifth Street N.W.,
Washington, D.C. 20549. The public may also obtain information on the operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The address of that site is http://www.sec.gov.

Prices of Common Stock. Since December 2001, we have been eligible to
participate in the OTC Bulletin Board, an electronic quotation medium for
securities traded outside of the Nasdaq Stock Market, and prices for our common
stock are published on the OTC Bulletin Board under the trading symbol "DAKI".
This market is extremely limited and the prices quoted are not a reliable
indication of the value of our common stock. Since December 2001, our common
stock had a low bid price of $0.00 per share and a high bid price of $0.00 per
share. The bid price is currently approximately $0.00 per share.

831,690 shares of our common stock can be sold pursuant to Rule 144 promulgated
pursuant to the Securities Act of 1933. Rule 144 provides, among other things,
that persons holding restricted securities for a period of one year may each
sell, assuming all of the conditions of Rule 144 are satisfied, in brokerage
transactions every three (3) months an amount of restricted securities equal to
one percent (1%) of our outstanding shares of common stock, or the average
weekly reported volume of trading during the four calendar weeks preceding the
filing of a notice of proposed sale, which ever is more. Rule 144 also provides
that, after holding such securities for a period of two (2) years, a
nonaffiliate of the company may sell those securities without restriction, other
than the requirement that we are current with respect to our information
reporting requirements.

On August 20, 2001, we filed an amendment to our registration statement with the
SEC to register 1,723,000 shares of our common stock for sale by the selling
shareholders. That registration statement was declared effective by the SEC on
September 10, 2001.

There are no outstanding options or warrants to purchase, or securities
convertible into, shares of our common stock. There are no outstanding shares of
our common stock that we have agreed to register under the Securities Act for
sale by security holders. The approximate number of holders of record of shares
of our common stock is sixty four.

There have been no cash dividends declared on our common stock. Dividends are
declared at the sole discretion of our Board of Directors.

Penny Stock Regulation. Shares of our common stock are subject to rules adopted
by the Securities and Exchange Commission that regulate broker-dealer practices
in connection with transactions in "penny stocks". Penny stocks are generally
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in those securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission, which
contains the following:

     o    a description of the nature and level of risk in the market for penny
          stocks in both public offerings and secondary trading;
     o    a description of the broker's or dealer's duties to the customer and
          of the rights and remedies available to the customer with respect to
         violation to such duties or other requirements of securities' laws;
     o    a brief, clear, narrative description of a dealer market, including
          "bid" and "ask" prices for penny stocks and the significance of the
          spread between the "bid" and "ask" price;
     o    a toll-free telephone number for inquiries on disciplinary actions;
     o    definitions of significant terms in the disclosure document or in the
          conduct of trading in penny stocks; and
     o    such other information and is in such form (including language, type,
          size and format), as the Securities and Exchange Commission shall
          require by rule or regulation.



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<PAGE>




Prior to effecting any transaction in penny stock, the broker-dealer also must
provide the customer the following:

     o    the bid and offer quotations for the penny stock;
     o    the compensation of the broker-dealer and its salesperson in the
          transaction;
     o    the number of shares to which such bid and ask prices apply, or other
          comparable information relating to the depth and liquidity of the
          market for such stock; and
     o    monthly account statements showing the market value of each penny
          stock held in the customer's account.

In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
Holders of shares of our common stock may have difficulty selling those shares
because our common stock will probably be subject to the penny stock rules.

Item 6.  Management's Discussion and Analysis of Financial Condition or Plan
of Operation.
----------------------------------------------------------------------------

This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "will", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.

The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. No assurance can be
given that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and we assume no obligation
to update any such forward-looking statements.

Liquidity and Capital Resources. We had cash of $42,298 as of October 31, 2001.
Our total assets (including cash, accounts receivable, property and equipment,
deferred tax benefit) were approximately $248,726 and our total liabilities were
approximately $64,966 as of October 31, 2001. At October 31, 2001, our total
assets exceeded our total liabilities by $183,760.

Results of Operations.

Revenue. For the fiscal year ended October 31, 2001, we generated revenues of
approximately $457,940 compared to $408,701 for the fiscal year ended October
31, 2000. Our cost of revenues for the fiscal year ended October 31, 2001
included $254,299 for salaries, and $60,042 for equipment leasing, compared to
$234,272 for salaries and $55,382 for the fiscal year ended October 31, 2000.
Our gross profit for the fiscal year ended October 31, 2001 was $143,599,
compared to a gross profit of $119,047 for the fiscal year ended October 31,
2000.

Operating Expenses. For the fiscal year ended October 31, 2001, operating
expenses totaled $389,595 compared to $149,193 for the fiscal year ended October
31, 2000. A majority of the expenses for the fiscal year ended October 31, 2001
relate to payment of consulting fees and professional fees, which were $170,156
for consulting fees, and $65,437 for professional fees. During the fiscal year
ended October 31, 2001, we also incurred auto expenses of $18,181, advertising
expenses of $1,984, depreciation expenses of $19,817, telephone expenses of
$3,621, rent of $9,654, employee benefit expenses of $44,333, payroll taxes of
$8,199, supply expenses of $12,400, and other expenses of $35,813. Our net loss
from operations was $245,996 for the fiscal year ended October 31, 2001,
compared to $30,146, for the fiscal year ended October 31, 2000. The increase in
our net loss was primarily due to an increase in consulting fees and
professional fees.



                                       8
<PAGE>




Our Plan of Operation for the Next Twelve Months. We are a provider of
ultrasound imaging services to physicians and hospitals in western and central
North Dakota. During the next twelve months, we intend to expand our operations
into South Dakota, Minnesota, Montana and other areas of North Dakota. We intend
to expand into those areas by locating potential customers and attempting to
schedule meetings with potential customers to demonstrate our capabilities and
the type of services they would receive. Our ability to expand into those areas
will depend on our ability to retain qualified personnel and obtain additional
ultrasound equipment.

To effectuate our business plan during the next twelve months, we must maintain
our current customer base as well as expand our customer base. We may also
require the addition of ultrasound technicians, so that we can consistently
provide the type of personal service that has been the basis of our appeal to
our current customers. We anticipate that we will use revenues we generate to
expand our operations as well as the services that we provide.

However, we may not be able to expand our operations effectively. Our failure to
market and promote our ultrasound imaging services will harm our business and
future financial performance. We anticipate that we may need to raise additional
capital to expand our operations. We may need enough additional funds to obtain
additional equipment or hire additional personnel. We do not anticipate that we
will need to obtain those additional funds unless and until we have secured new
customers. We have not identified any known sources of funding. Such additional
capital may be raised through public or private financing as well as borrowings
and other sources. We cannot guaranty that additional funding will be available
on favorable terms, if at all. If adequate funds are not available, then our
ability to expand our operations may be adversely affected.

In the opinion of management, available funds coupled with our anticipated
revenues will satisfy our working capital requirements through the next twelve
months. Our forecast for the period for which our financial resources will be
adequate to support our operations involves risks and uncertainties and actual
results could fail as a result of a number of factors. We anticipate that we may
need to raise additional capital to develop and conduct our operations. Such
additional capital may be raised through public or private financing as well as
borrowings and other sources. We cannot guaranty that additional funding will be
available on favorable terms, if at all. If adequate funds are not available, we
believe that our current sources of revenue will be sufficient to continue our
current operations.

We have also contemplated acquiring a third party, merging with a third party or
pursuing a joint venture with a third party in order to support our development.
We have conducted informal discussions with potential acquisition or merger
candidates, although we have not conducted any formal negotiations. We cannot
guaranty that we will acquire or merge with a third party, or that in the event
we acquire or merge with a third party, such acquisition or merger will increase
the value of our common stock.

We are not currently conducting any research and development activities and do
not anticipate conducting such activities in the next twelve months. If we
generate significant revenues, we may expand our product line by entering into
relationships with third parties. We do not anticipate that we will purchase or
sell any significant equipment in the next six to twelve months unless we
generate significant revenues.

We do not anticipate that we will hire any employees in the next six to twelve
months, unless we generate significant additional revenues. We believe our
future success depends in large part upon the continued service of our key
personnel.



                                       9
<PAGE>



Item 7.  Financial Statements
-----------------------------





                               DAKOTA IMAGING INC.





                          Audited Financial Statements

                                October 31, 2001













                               Clyde Bailey, P.C.
                           Certified Public Accountant
                            10924 Vance Jackson #404
                            San Antonio, Texas 78230





                                       10
<PAGE>



CLYDE BAILEY P.C.
------------------------------------------------------------------------------
                                                    Certified Public Accountant
                                                       10924 Vance Jackson #404
                                                       San Antonio, Texas 78230
                                                           (210) 699-1287(ofc.)
                                           (888) 699-1287  (210) 691-2911 (fax)

                                                                        Member:
                                                    American Institute of CPA's
                                                         Texas Society of CPA's


Board of Directors
Dakota Imaging Inc.


                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------

We have audited the accompanying balance sheet of Dakota Imaging Inc. (Company)
as of October 31, 2001 and the related statement of operations, statement of
stockholders' equity, and the statement of cash flows for the years then ended
October 31, 2001 and 2000. These financial statements are the responsibility of
the Company's management. My responsibility is to express an opinion on these
statements based on my audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of October 31, 2001
and the results of its operations for the years ended October 31, 2001 and 2000
in conformity with accounting principles generally accepted in the United
States.


                                  Clyde Bailey
                           Certified Public Accountant


San Antonio, Texas
December 28, 2001



                                       11
<PAGE>




                              Dakota Imaging Inc.
                                  Balance Sheet
                             As of October 31, 2001


<TABLE>
<CAPTION>
<S>                                                                  <C>                  <C>
                                   A S S E T S
                                   -----------
    Current Assets
    --------------
        Cash                                                $          42,298
        Accounts Receivable                                            52,779
                                                            ------------------
              Total Current Assets                                                          95,077
    Investments                                                                             58,070
    -----------

    Fixed Assets
    ------------
        Property and Equipment                                        130,288
        Less: Accumulated Depreciation                                (71,179)
                                                            ------------------
              Total Fixed Assets                                                            59,109

    Other Assets
    ------------
        Deferred Tax Benefit                                           36,470               36,470
                                                            ------------------
                                                                                -------------------
              Total Assets                                                      $          248,726
                                                                                ===================

                              L I A B I L I T I E S
                              ---------------------
    Current Liabilities
    -------------------
        Accrued Expenses                                                9,920
        Accrued Payroll Liabilities                                       236
        Notes Payable                                                   8,814
                                                            ------------------

              Total Current Liabilities                                                     18,970

    Long-Term Liabilities
    ---------------------
        Notes Payable                                                  45,996               45,996
                                                            ------------------
                                                                                -------------------
              Total Liabilities                                                             64,966

        Commitments and Contingencies                                                            -

                      S T O C K H O L D E R S ' E Q U I T Y
                      -------------------------------------
    Preferred Stock
       50,000,000 authorized shares, par value $.001
       no shares issued and outstanding
    Common Stock                                                                            11,723
       100,000,000 authorized shares, par value $.001
       11,723,000 shares issued and outstanding

    Deferred Consultant's Contract                                              $         (201,094)
    Additional Paid-in-Capital                                                             429,027
    Accumlulated other comprehensive income (loss)                                          (3,945)
    Accumulated Surplus                                                                    (51,951)
                                                                                -------------------
              Total Stockholders' Equity (Deficit)                                         183,760
                                                                                -------------------
              Total Liabilities and Stockholders' Equity                        $          248,726
                                                                                ===================
</TABLE>






              The accompanying notes are an integral part of the
                       Consolidated Financial Statements.

                                       12
<PAGE>




                               Dakota Imaging Inc.
                             Statement of Operations


                                                      For the Years Ended
Revenues:                                                 October 31
---------                                        -------------------------------
                                                      2001             2000
                                                 ----------------  -------------
Revenues                                         $       457,940        408,701
--------                                         ----------------  -------------
          Total Revenues                                 457,940        408,701

Cost of Revenues
----------------
      Salaries                                   $       254,299        234,272
      Equipment Leasing                                   60,042         55,382
                                                 ----------------  -------------
          Gross Profit                                   143,599        119,047
Expenses:
---------
      Auto Expenses                                       18,181         21,545
      Advertising                                          1,984          1,501
      Consulting                                         170,156              -
      Depreciation Expense                                19,817         13,890
      Telephone                                            3,621          3,533
      Professional Fees                                   65,437          8,273
      Rent                                                 9,654          7,300
      Employee Benefits                                   44,333         45,956
      Payroll Taxes                                        8,199         13,307
      Supplies                                            12,400          7,809
      Other Expenses                                      35,813         26,079
                                                 ----------------  -------------
          Total Expenses                                 389,595        149,193

          Net Income (Loss) from Operations      $      (245,996)  $    (30,146)

Other Income:
-------------
      Interest Income                                        477            454
      Capital Gains (Losses) on Investments              (15,548)        14,609
      Interest Expense                                    (2,077)        (1,516)
                                                 ----------------  -------------

          Total Other Income (Loss)                      (17,148)        13,547

          Net Income (Loss) Before Tax                  (263,144)       (16,599)

Provision for Income Taxes:
---------------------------
      Income Tax Benefit (Expense)                        31,944          2,490
                                                 ----------------  -------------
          Net Income (Loss)                      $      (231,200)  $    (14,109)
                                                 ================  =============

Basic and Diluted Earnings Per Common Share                (0.02)         (0.00)
                                                 ----------------  -------------

Weighted Average number of Common Shares              11,611,323     10,000,000
                                                 ================  =============
      used in per share calculations  *


      * - Retroactively Restated




              The accompanying notes are an integral part of the
                       Consolidated Financial Statements.

                                       13
<PAGE>




                               Dakota Imaging Inc.
                        Statement of Stockholders' Equity
                             As of October 31, 2001

<TABLE>
<CAPTION>
                                                                                           Accumulated
                                                                               Deferred       Other
                                                          $0.001    Paid-In   Consultants' Comprehensive  Accumulated  Stockholders
                                            Shares     Par Value   Capital     Contract    Income (Loss)     Surplus       Equity
                                        ------------- ---------- ----------- ------------- ------------- ------------ -------------
  <S>                                         <C>           <C>       <C>            <C>         <C>         <C>            <C>
Balance, November 1, 1999                 10,000,000  $   10,000 $        -   $         -  $        709  $   193,358  $    203,358

 Comprehensive Income (Loss):
     Net Income                                                                                              (14,109)      (14,109)
     Unrealized Gain (Loss) on securities                                                       (12,246)                   (12,246)
                                                                                                                      -------------
  Total Comprehensive Income (Loss)                                                                                        (26,355)
                                        ---------------------------------------------------------------- --------------------------
Balance October 31, 2000                  10,000,000      10,000          -             -       (11,537)     179,249       177,712

  Stock Issued for Consulting Services     1,485,000       1,485    369,765                                                371,250

  Deferred Consultants' Contract                                                 (201,094)                                (201,094)

  Stock Issued for Cash                      238,000         238     59,262                                                 59,500

 Comprehensive Income (Loss):
     Net Income                                                                                             (231,200)     (231,200)
     Unrealized Income on securities                                                              7,592                      7,592
                                                                                                                      -------------
  Total Comprehensive Income (Loss)                                                                                       (223,608)

                                        ------------- ---------- ------------ ------------- ------------ ------------ -------------
Balance October 31, 2001                  11,723,000  $   11,723 $  429,027   $  (201,094)       (3,945) $   (51,951) $     183,760
                                        ============= ========== ============ ============= ============ ============ =============
</TABLE>





              The accompanying notes are an integral part of the
                       Consolidated Financial Statements.

                                       14
<PAGE>



                               Dakota Imaging Inc.
                             Statement of Cash Flows

<TABLE>
<CAPTION>
                                                                        For the Years Ended
                                                                            October 31
                                                               --------------------------------------
  <S>                                                                <C>                  <C>
 Cash Flows from Operating Activities:                               2001                2000
 -------------------------------------                         ------------------  ------------------
 Net Income (Loss)                                             $        (231,200)  $         (14,109)

 Adjustments to reconcile net income (loss) to net cash provided (used)
 to operating activities:
     Depreciation /Amortization                                           19,817              13,890
     Accounts Receivable                                                     501                 785
     Stock Issued for Services                                           170,156                   -
     Deferred Tax Benefit                                                (31,944)                  -
     Accrued Expenses                                                      9,920                   -
     Payroll Liabilities                                                  (2,216)                513
     Capital Gains(Losses) on Investments                                 15,548             (14,609)
                                                               ------------------  ------------------
     Total Adjustments                                                   181,782                 579
                                                               ------------------  ------------------
 Net Cash (Used in) Provided from Operating Activities         $         (49,418)  $         (13,530)

 Cash Flows from Investing Activities:
 -------------------------------------
     Proceeds from Sale of Investments                                    80,000              80,000
     Purchase of Investments                                             (31,358)            (67,754)
     Capital Expenitures                                                 (34,641)            (19,000)
                                                               ------------------  ------------------
 Net Cash (Used in) Provided from Investing Activities         $          14,001   $          (6,754)
                                                               ------------------  ------------------
 Cash Flows from Financing Activities:
--------------------------------------
     Note Payable                                                         14,747             (10,437)
     Common Stock                                                         59,500                   -
                                                               ------------------  ------------------
 Net Cash (Used in) Provided from Financing Activities         $          74,247   $          (10,437)
                                                               ------------------  ------------------

 Net Increase (Decrease) in Cash                               $          38,830   $         (30,721)

 Cash Balance,  Begin Period                                               3,468              34,189
                                                               ------------------  ------------------
 Cash Balance,  End Period                                     $          42,298   $           3,468
                                                               ==================  ==================


 Supplemental Disclosures:
     Cash Paid for interest                                    $          (2,077)  $            1,515
     Cash Paid for income taxes                                $               -   $                -
     Stock Issued for Services                                        1,485,000
</TABLE>





              The accompanying notes are an integral part of the
                       Consolidated Financial Statements.

                                       15
<PAGE>







                              Dakota Imaging, Inc.
                          Notes to Financial Statements

Note 1  -  Summary of Significant Accounting Policies
-----------------------------------------------------

Organization
------------
Dakota Imaging Inc. ("the Company") was incorporated under the laws of the State
of North Dakota on January 31, 1991 for the purpose to promote and carry on any
lawful business for which a corporation may be incorporated under the laws of
the State of North Dakota. The company has a total of 100,000,000 authorized
common shares with a par value of $.001 per share and with 10,000,000 common
shares issued and outstanding as of October 31, 2000. The Company has a total of
50,000,000 authorized shares of preferred stock with a par value of $.001 and no
shares are outstanding. On November 17, 2000, the Company filed a Certificate of
Amendment to the Articles of Incorporation with the North Dakota Corporation
Commission to increase the authorized common shares to 100,000,000, authorize
50,000,000 in preferred shares, and change the par value to $.001. These
financial statements reflect the changes to the Articles of Incorporation.

Revenue Recognition
-------------------
Revenues and directly related expenses are recognized in the period in which
they occur. Revenues and related expenses are recognized from the use of the
ultra-sound equipment on patients when the services are rendered at various
clinics in the North Dakota area. The billings for the services are billed
directly to the clinics at the end of the month of the service.

During 1999, the Company adopted the U.S. Securities and Exchange Commission's
("SEC") Staff Accounting Bulletin 101, "Revenue Recognition" ("SAB 101"), which
provides guidance on the recognition, presentation, and disclosure of revenue in
financial statements filed with the SEC. The adoption of SAB 101 did not have a
material effect on the Company's business, financial condition, results of
operations or cash flows

Federal Income Tax
------------------
The Company has adopted the provisions of Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes. The Company accounts for income
taxes pursuant to the provisions of the Financial Accounting Standards Board
Statement No. 109, "Accounting for Income Taxes", which requires an asset and
liability approach to calculating deferred income taxes. The asset and liability
approach requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax basis of assets and liabilities. The Company has a net
operating loss carryover of $100,653 that will begin to expire in 2020.

Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure on
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Accounting Method
-----------------
The Company's financial statements are prepared using the accrual method of
accounting. Revenues are recognized when earned and expenses when incurred.
Fixed assets are stated at cost. Depreciation and amortization using the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes.




                                       16
<PAGE>



                              Dakota Imaging, Inc.
                          Notes to Financial Statements

Note 1  -  Summary of Significant Accounting Policies (con't)
-------------------------------------------------------------

Earnings per Common Share
-------------------------
The Company adopted Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share," which simplifies the computation of earnings per share requiring the
restatement of all prior periods.

Basic earnings per share are computed on the basis of the weighted average
number of common shares outstanding during each year.

Diluted earnings per share are computed on the basis of the weighted average
number of common shares and dilutive securities outstanding. Dilutive securities
having an anti-dilutive effect on diluted earnings per share are excluded from
the calculation.

Fair Value of Financial Instruments
-----------------------------------
The carrying value of financial instruments including marketable securities,
notes and loans receivables, accounts payable and notes payable approximate
their fair values at October 31, 2001.

Long-Lived Assets
-----------------
Statement of Financial Accounting Standards No. 121 "Accounting for Impairment
of Long-Lived Assets to be Disposed of " requires, among other things,
impairment loss of assets to be held and gains or losses from assets that are
expected to be disposed of be included as a component of income from continuing
operations before taxes on income. The Company has not identified any such
impairment losses to date.

Comprehensive Income
--------------------
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No.130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.

Segments of an Enterprise and Related Information
-------------------------------------------------
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about
Segments of an Enterprise and Related Information, supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS 131
establishes standards for the way that public companies report information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS 131 defines
operating segments as components of a company about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. The Company has evaluated this SFAS and does not believe it is
applicable at this time.




                                       17
<PAGE>



                              Dakota Imaging, Inc.
                          Notes to Financial Statements


Note 1  -  Summary of Significant Accounting Policies (con't)
------------------------------------------------------------

Employers' Disclosure about Pensions and Other Postretirement Benefits
----------------------------------------------------------------------
Statement of Financial Accounting Standards (SFAS) 132, "Employers' Disclosure
about Pensions and Other Postretirement Benefits," revises standards for
disclosures regarding pensions and other postretirement benefits. It also
requires additional information on changes in the benefit obligations and fair
values of plan assets that will facilitate financial analysis. This statement
does not change the measurement or recognition of the pension and other
postretirement plans. The financial statements are unaffected by implementation
of this new standard. For the year ended October 31, 2001 and 2000, the Company
contributed $33,599 and $33,488 to the employees Simplified Employee Pension
Plans (SEPP). The Company is not required to match any portion of this amount
and there is no un-funded liability.

Accounting for Derivative Instruments and Hedging Activities
------------------------------------------------------------
Statement of Financial Accounting Standards (SFAS) 133, "Accounting for
Derivative Instruments and Hedging Activities," establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. If certain conditions are
met, a derivative may be specifically designated as (a) a hedge of the exposure
to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows
of a forecasted transaction, or (c) a hedge of the foreign currency exposure of
a net investment in a foreign operation, an unrecognized firm commitment, an
available-for sale security, or a foreign-currency-denominated forecasted
transaction. Because the Company has no derivatives, this accounting
pronouncement has no effect on the Company's financial statements

Goodwill and Other Intangible Assets
------------------------------------
In July 2001, the Financial Accounting Standards Board issued Statements of
Financial Standards ("SFAS") No. 141, "Business Combinations" and No. 142,
"Goodwill and Other Intangible Assets". SFAS No. 141 established accounting and
reporting standards for business combinations and eliminates the
pooling-of-interests method of accounting for combinations for those
combinations initiated after July 1, 2001. SFAS No, 141 also includes new
criteria to recognize intangible assets separately from goodwill. SFAS No. 142
establishes the accounting and reporting standards from goodwill and intangible
lives. Goodwill and intangibles with indefinite lives will no longer be
amortized, but, alternatively will be reviewed periodically for indicators of
impairment. Separate intangible assets that are not deemed to have an indefinite
life will continue to be amortized over their useful lives. The Company does not
anticipate that the adoption of SFAS No. 141 and SFAS No. 142 will have a
significant effect on its results of operations or financial position.




                                       18
<PAGE>




                              Dakota Imaging, Inc.
                          Notes to Financial Statements
Note 2 - Fixed Assets
---------------------
The Company's fixed assets consists of the following at October 31, 2001:

          Equipment                                            30,387
          Vehicles                                             99,901
                                                          ------------
                                                              130,288
          Less: Accumulated Depreciation                      (71,179)
                                                          ------------
          Total                                           $    59,109
                                                          ============

Depreciation is recorded based on the useful life of the fixed assets. The
useful lives of the equipment and vehicles is a five-year life.

Note 3  -  Common Stock
-----------------------

In 1991, a total of 1,000 shares of stock were issued for assets and founder
services to the founders of the Company. On November 20, 2000, the Company
approved a 1000/1 forward split of the common shares making the total shares
outstanding as 10,000,000 as of November 20, 2000. These financial statements
reflect this forward reverse and have been retroactively restated.

On November 22, 2000, the Company approved the issuance of 1,485,000 shares to
five individuals pursuant to a two-year consulting agreement. The Company has
valued the shares at $.25 per share and the expense will be recognized over the
term of the consulting agreements.

In December of 2000 the Company completed a Private Placement Memorandum (dated
December 4, 2000 with 35 Investors. The issue was priced at $.25 per share for a
total of 238,000 shares making the total outstanding shares of 11,723,000.

Note 4 - Comprehensive  Income
------------------------------

The carrying amounts of marketable securities as shown in the accompanying
balance sheet and their approximate market values at October 31, 2001 are as
follows:
<TABLE>
<CAPTION>
                                                       Gross                  Gross
                                                    Unrealized             Unrealized               Market
                                 Cost                  Gains                 Losses                 Value
                           -----------------      -----------------     -----------------      -----------------
<S>                               <C>                     <C>                   <C>                  <C>
Available for sale:
      Mutual Funds         $         64,047       $              -      $          5,977       $         58,070

                           -----------------      -----------------     -----------------      -----------------
                           $         64,047       $              -      $          5,977       $         58,070
</TABLE>

Sales of available for sale securities were $80,000 and $ 80,000 for the years
ended October 31, 2001 and 2000, respectively. These sales resulted in a $14,609
gain in the year ended October 31, 2000 and a loss of $20,151 in the year ended
October 31, 2000. The market value as of October 31, 2001 was derived at by
using the market values of the mutual funds as of October 31, 2001.

Unrealized gains and losses on securities available for sale at October 31, 2001
are shown net of income taxes as a component of stockholders' equity.




                                       19
<PAGE>




                              Dakota Imaging, Inc.
                          Notes to Financial Statements

Note 5 - Operating Leases
-------------------------

The Company leases its Ultrasound equipment on a long-term lease. The current
lease expires in July 2004 and requires monthly payments of $4,354 plus sales
tax. The lease includes a full service maintenance agreement for the term of the
lease. At the expiration of the lease, the Company has the option of returning
the equipment to the lessor, renew the lease at the fair market value, or
purchasing the equipment at fair market value. The lease is for a total of five
years and the Company believe the economic useful life of the asset is longer
than the lease,

At October 31, 2001, future minimum lease payments under this operating lease is
as follows:

           2002                                            52,248
           2003                                            52,248
           2004                                            30,248

Total rent expense for the fiscal year ended October 31, 2001 and 2000 is $
55,382 and $55,382, respectively. There are other leases on month-to-month or
short-term leases.

Note 6 - Long Term Debt
-----------------------

The Company had the following debt obligations at October 31, 2001:


        GMAC - North Dakota
        Loan on '97 Astro Van origanally dated December           $      1,270
        20, 1996. The note calls for an interest rate of 3.9%
        with monthly payments of interst and principle of
        $515.24 maturing on January 4, 2002.

        GMAC - North Dakota
        Loan on '00 Chev Flletside Truck originally dated on            23,164
        March 18, 2000. The Company is using an interest rate
        of 12% with monthly payments of interest and principle
        of $555.44 and maturing on March 18, 2003 with a balloon
        payment of $18,903 due at maturity.


        GMAC - North Dakota
        Loan on '02 Chev Flletside Truck originally dated on            10,724
        October 4, 2001. The note calls for 0% interest rate
        with monthly payments of interest and principle of
        $297.90 and maturing on Nov 18,2004


        GMAC - North Dakota
        Loan on '01 Chev Astro Van dated August 28, 2001.               19,652
        The note calls for an interest rate of 2.8% with
        monthly payments of interest and principle of $356.20
        maturing in October 2006.
                                                                   -----------





                                       20
<PAGE>



                              Dakota Imaging, Inc.
                          Notes to Financial Statements

Note 6 - Long Term Debt (con't)
-------------------------------

        Total Long-Term Debt                                            54,810
                               Less current maturities                  (8,814)
                                                                 --------------
                         Notes Payable- Long Term                $      45,996
                                                                 ==============


Note 7 - Earnings Per Share
---------------------------

Basic earnings per share are computed by dividing earnings available to common
stockholders by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflect per share amounts that would have
resulted if dilutive potential common stock had been converted to common stock.
The following reconciles amounts reported in the financial statements:
<TABLE>
<CAPTION>

                                                          Income                  Shares               Per-share
                                                        (Numerator)            (Denominator)             Amount
<S>                                                         <C>                     <C>                    <C>

Income from continuing operations                  $           (231,200)
Less preferred stock dividends                                        -

                                                   ---------------------
Income available to common stockholders
- Basic earnings per share                                     (231,200)             11,611,323      $         (0.02)

Effect of dilutive securities
       no dilutive securities

                                                   ---------------------    --------------------
Income available to common stockholders
- Diluted earnings per share                       $           (231,200)    $        11,611,323      $         (0.02)
                                                   =====================    ====================
</TABLE>



Note 8 - Economic Dependency
----------------------------

The Company has contracts with eight customers located in Western and Central
North Dakota. Four or five of the customers represent over 10% of the Company's
gross revenue, but management is confident that the current revenue will be
maintained from these customers due the long-term business relationships that
have been derived from them.



                              Dakota Imaging, Inc.
                          Notes to Financial Statements

Note 9  -  Related Parties
--------------------------

The Organization had significant related party transactions and/or relationships
with the following individuals or entities in 2001 and 2000.

      Lawrence Nieters - President and Major Shareholder - Salary of $162,500
      JoEll Nieters    - Secretary and Major Shareholder - Salary of $16,000

The Company is provided office space by these related parties and the Company
has included $200 per month in the salary of the President to defray any costs
associated with the office space.

Note 10  -  Subsequent Events
-----------------------------

There were no other material subsequent events that have occurred since the
balance sheet date that warrants disclosure in these financial statements.

Copies of the financial statements specified in Regulation 228.310 (Item 310)
are filed with this Annual Report on Form 10-KSB.


                                       21
<PAGE>




Item 8.  Changes in and Disagreements with Accountants.
-------------------------------------------------------

There have been no changes in or disagreements with our accountants since our
formation required to be disclosed pursuant to Item 304 of Regulation S-B.

                                    PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons.
----------------------------------------------------------------------

Our directors and principal executive officers are as specified on the following
table:

========================== ========== ==========================================
Name                         Age      Position
-------------------------- ---------- ------------------------------------------
Lawrence Nieters              47      president, treasurer and a director
-------------------------- ---------- ------------------------------------------
JoEll Nieters                 47      vice president, secretary and a director
-------------------------- ---------- ------------------------------------------
Frances Hedman                78      director
========================== ========== ==========================================

Lawrence Nieters. Mr. Nieters has been our president, treasurer and one of our
directors since 1991. Mr. Nieters performs ultrasound procedures at rural
hospitals for cardiologists, pulmonologists, and radiologists. For the past ten
years, Mr. Nieters has been responsible for securing and maintaining
relationships with our contracted hospitals. Mr. Nieters has also maintained the
upkeep of the ultrasound equipment and vehicles, manages accounts, and handles
all public relations with physicians and physician groups. Mr. Nieters is not an
officer or a director of any reporting company.

JoEll Nieters. Ms. Nieters has been our vice president, secretary, and one of
our directors since 1991. For the past ten years, Ms. Nieters has been
responsible for our day-to-day operations such as invoicing, accounts payable,
accounts receivable, payroll, and all aspects of office management. Ms. Nieters
is not an officer or a director of any reporting company.

Frances Hedman. Ms. Hedman is one of our founding shareholders and is currently
one of our directors. Ms. Hedman is responsible for assisting in the operations
of the office such as bookkeeping. For the past five years prior to becoming one
of our directors, Ms. Hedman was retired. Ms. Hedman is not an officer or a
director of any reporting company.

Lawrence Nieters, our president, treasurer and one of our directors, is the
spouse of JoEll Nieters, our vice president, secretary, and one of our
directors. Frances Hedman is the mother of JoEll Nieters. There are no orders,
judgments, or decrees of any governmental agency or administrator, or of any
court of competent jurisdiction, revoking or suspending for cause any license,
permit or other authority to engage in the securities business or in the sale of
a particular security or temporarily or permanently restraining any of our
officers or directors from engaging in or continuing any conduct, practice or
employment in connection with the purchase or sale of securities, or convicting
such person of any felony or misdemeanor involving a security, or any aspect of
the securities business or of theft or of any felony, nor are any of the
officers or directors of any corporation or entity affiliated with us so
enjoined.

Our directors will serve until the next annual meeting of stockholders. Our
executive officers are appointed by our Board of Directors and serve at the
discretion of the Board of Directors.

Section 16(a) Beneficial Ownership Reporting Compliance. We believe that our
officers, directors, and principal shareholders have filed all reports required
to be filed on, respectively, a Form 3 (Initial Statement of Beneficial
Ownership of Securities), a Form 4 (Statement of Changes of Beneficial Ownership
of Securities), or a Form 5 (Annual Statement of Beneficial Ownership of
Securities).




                                       22
<PAGE>



Item 10.  Executive Compensation
--------------------------------

Executive Compensation. Any compensation received by our officers, directors,
and management personnel will be determined from time to time by our Board of
Directors. Our officers, directors, and management personnel will be reimbursed
for any out-of-pocket expenses incurred on our behalf.

Summary Compensation Table. The table set forth below summarizes the annual and
long-term compensation for services in all capacities to us payable to our chief
executive officer and our other executive officers during the fiscal year ending
October 31, 2001. Our Board of Directors may adopt an incentive stock option
plan for our executive officers which would result in additional compensation.
<TABLE>
<CAPTION>
=================================== ======= ============= ============= ===================== =====================
<S>                                   <C>       <C>            <C>                <C>                  <C>
Name and Principal Position          Year      Annual      Bonus ($)        Other Annual           All Other
                                             Salary ($)                   Compensation ($)        Compensation
----------------------------------- ------- ------------- ------------- --------------------- ---------------------
Lawrence Nieters - president,
treasurer                            2001       $154,073      None              None                  None
----------------------------------- ------- ------------- ------------- --------------------- ---------------------
JoEll Nieters - vice president,
secretary                            2001       $19,333       None              None                  None
=================================== ======= ============= ============= ===================== =====================
</TABLE>

Compensation of Directors. Our directors who are also our employees receive no
extra compensation for their service on our Board of Directors.

Item 11. Security Ownership of Certain Beneficial Owners and Management.
------------------------------------------------------------------------

The following table sets forth certain information regarding the beneficial
ownership of our common stock as of January 15, 2002, by each person or entity
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of
our directors and executive officers as a group.
<TABLE>
<CAPTION>
Title of Class      Name and Address of Beneficial        Amount and Nature of Beneficial        Percent of Class
                                Owner                                  Owner
----------------  --------------------------------     ------------------------------------   -----------------------
<S>                               <C>                                   <C>                             <C>
Common Stock      Lawrence Nieters                               5,000,000 shares                     42.65%
                  3727 Kingston Drive
                  Bismarck, North Dakota 58503

Common Stock      JoEll Nieters                                  4,400,000 shares                     37.53%
                  3727 Kingston Drive
                  Bismarck, North Dakota 58503

Common Stock      Frances Hedman                                  120,000 shares                      1.02%
                  Rt. 1 Box 67
                  Scranton, North Dakota 58653

Common Stock                                              All directors and named executive          81.20%
                                                          officers as a group
</TABLE>

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In accordance with Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become
exercisable within 60 days of the date of the table are deemed beneficially
owned by the optionees. Subject to community property laws, where applicable,
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially
owned by them.




                                       23
<PAGE>




Changes in Control. Our management is not aware of any arrangements which may
result in "changes in control" as that term is defined by the provisions of Item
403(c) of Regulation S-B.

Item 12.  Certain Relationships and Related Transactions.
---------------------------------------------------------

Related Party Transactions. There have been no related party transactions,
except for the following:

Lawrence Nieters, our president, treasurer and one of our directors, currently
provides office space to us at no charge.

For the fiscal year ended October 31, 2001, Lawrence Nieters, our president,
treasurer and one of our directors and principal shareholders, was paid $154,073
as compensation for his services. For the fiscal year ended October 31, 2001,
JoEll Nieters, our secretary, vice president and one of our directors and
principal shareholders, was paid $19,333 as compensation for her services.

With regard to any future related party transaction, we plan to fully disclose
any and all related party transactions, including, but not limited to, the
following:

     o    disclosing such transactions in prospectuses where required;
     o    disclosing in any and all filings with the Securities and Exchange
          Commission, where required;
     o    obtaining disinterested directors consent; and
     o    obtaining shareholder consent where required.

Item 13.  Exhibits and Reports on Form 8-K

(a) Exhibit No.
---------------

3.1                     Articles of Incorporation*
                        (Charter Document)

3.2                     Certificate of Amendment to Articles of Incorporation*
                        (Charter Document)

3.3                     Bylaws*

*    Included in the registration statement on Form SB-2 filed on February 23,
     2001.

(b) Reports on Form 8-K
-----------------------

None.




                                       24
<PAGE>



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 in the City of Bismarck, North Dakota, on January 15, 2002.

                                      Dakota Imaging Inc.,
                                      a North Dakota corporation


                                      By:
                                               --------------------------
                                               Lawrence Nieters
                                      Its:     president, treasurer, director

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Dakota Imaging Inc.

By:     /s/ Lawrence Nieters                                  January 15, 2002
        ------------------------------------
        Lawrence Nieters
Its:    president, treasurer, director



By:     /s/ JoEll Nieters                                     January 15, 2002
        ------------------------------------
        JoEll Nieters
Its:    vice president, secretary, director



By:     /s/ Frances Hedman                                    January 15, 2002
        ------------------------------------
        Frances Hedman
Its:    director






                                       25
<PAGE>