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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2001
Securities and Exchange Commission File Number
000-26369

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Dicom Imaging Systems, Inc.(Exact name of registrant as specified in its charter)

Nevada(State or other jurisdiction of
incorporation or organization)

88-0422026(I.R.S. Employer
Identification Number)


#20115047 Marine Drive
White Rock, British Columbia
Canada V6B 1C5(Address of principal executive offices, including zip code)

(604) 531-2521(Registrant's Telephone Number, Including Area Code)

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 requirements for the past
90 days. Yes /x/  No / /

The
number of issued and outstanding shares of the Registrants Common Stock, $0.001 par value, as of June 30, 2001, was 21,600,000.

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DICOM IMAGING SYSTEMS, INC.

|                                                                                               |                                                                                                                 | Page
|---------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------- | ----
|PART IFINANCIAL INFORMATION                                                                   |                                                                                                                 |     
|Item 1. Financial Statements:                                                                  |                                                                                                                 | 4   
|                                                                                               | Consolidated Balance Sheets as at June 30, 2001 and December 31, 2000                                           |     
|                                                                                               | Consolidated Statements of Operations for the three-months and six-months ended June 30, 2001 and June 30, 2000 |     
|                                                                                               | Consolidated Statement of Stockholders' Equity for the six months ended June 30, 2001                           |     
|                                                                                               | Consolidated Statements of Cash Flows for the six months ended June 30, 2001 and June 30, 2000                  |     
|Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |                                                                                                                 | 9   
|PART IIOTHER INFORMATION                                                                      |                                                                                                                 |     
|Item 1. Legal Proceedings.                                                                     |                                                                                                                 | 10  
|Item 2. Changes in Securities.                                                                 |                                                                                                                 | 11  
|Item 3. Defaults Upon Senior Securities.                                                       |                                                                                                                 | 11  
|Item 4. Submission of Matters to a Vote of Security Holders                                    |                                                                                                                 | 11  
|Item 5. Other Information                                                                      |                                                                                                                 | 11  
|Item 6. Exhibits and Reports on Form 8-K.                                                      |                                                                                                                 | 12  
|Signatures                                                                                     |                                                                                                                 | 14  
|Exhibits                                                                                       |                                                                                                                 | 14  

2

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Forward-looking Statements

Certain statements in this Quarterly Report on Form 10-QSB, as well as statements made by Dicom Imaging Systems, Inc. ("Dicom" or
"the Company") in periodic press releases, oral statements made by the company's officials to analysts and shareholders in the course of presentations about the company, constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause
the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements.
Such factors include, among other things, (1) general economic and business conditions; (2) interest rate changes; (3) the relative stability of the debt and equity markets;
(4) competition; (5) demographic changes; (6) government regulations; (7) required accounting changes; (8) disputes or claims regarding the Dicom's proprietary
rights to its software and intellectual property; and (9) other factors over which Dicom has little or no control.

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PART IFINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets  (Expressed in U.S. dollars)  As At June 30, 2001 and December 31, 2000  (Unaudited)

|                                            |  | June 30,
2001 |            | December 31,
2000 |  
|------------------------------------------- |  | ------------- | ---------- | ----------------- | -
|Assets                                      |  |               |            |                   |  
|Current assets:                             |  |               |            |                   |  
|Cash and cash equivalents                   |  | $             | 14,895     |                   | $
|Accounts receivable                         |  |               | 82,029     |                   |  
|Inventory                                   |  |               | 21,003     |                   |  
|Prepaid expenses                            |  |               | 16,215     |                   |  
|                                            |  |               |            |                   |  
|                                            |  |               | 134,142    |                   |  
|Intangible assets                           |  |               | 229,672    |                   |  
|Equipment                                   |  |               | 90,069     |                   |  
|                                            |  |               |            |                   |  
|                                            |  | $             | 453,883    |                   | $
|                                            |  |               |            |                   |  
|Liabilities and Stockholders' Deficit       |  |               |            |                   |  
|Current liabilities:                        |  |               |            |                   |  
|Accounts payable                            |  | $             | 403,150    |                   | $
|Accrued liabilities                         |  |               | 348,615    |                   |  
|Payables to related parties                 |  |               | 149,420    |                   |  
|Loans from related parties (note 3)         |  |               | 756,685    |                   |  
|Deferred revenue                            |  |               | 185,117    |                   |  
|                                            |  |               |            |                   |  
|                                            |  |               | 1,842,987  |                   |  
|Stockholders' deficit:                      |  |               |            |                   |  
|Authorized:                                 |  |               |            |                   |  
|10,000,000 preferred stock, $.001 par value |  |               |            |                   |  
|50,000,000 common stock, $.001 par value    |  |               |            |                   |  
|Issued:                                     |  |               |            |                   |  
|21,600,000 common stock                     |  |               | 21,600     |                   |  
|Additional paid in capital                  |  |               | 1,202,527  |                   |  
|Deficit                                     |  |               | (2,613,231 | )                 |  
|                                            |  |               |            |                   |  
|                                            |  | $             | 453,883    |                   | $
|                                            |  |               |            |                   |  
|Continuing Operations (note 1)              |  |               |            |                   |  

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Consolidated Statements of Operations  (Expressed in U.S. dollars)  (Unaudited)

|                                             |           | Three Months
Ended
June 30, 2001 |          | Three Months
Ended
June 30, 2000 |   | Six Months
Ended
June 30, 2001 |            | Six Months
Ended
June 30, 2000 |          
|-------------------------------------------- | --------- | -------------------------------- | -------- | -------------------------------- | - | ------------------------------ | ---------- | ------------------------------ | ---------
|Revenue                                      |           | $                                | 519,462  |                                  | $ | 447,430                        |            | $                              | 1,095,849
|Cost of sales                                |           |                                  | 236,887  |                                  |   | 229,482                        |            |                                | 549,038  
|                                             |           |                                  |          |                                  |   |                                |            |                                |          
|Gross profit                                 |           |                                  | 282,575  |                                  |   | 217,948                        |            |                                | 546,811  
|                                             |           |                                  |          |                                  |   |                                |            |                                |          
|Operating expenses:                          |           |                                  |          |                                  |   |                                |            |                                |          
|Depreciation                                 |           |                                  | 28,359   |                                  |   | 33,948                         |            |                                | 57,006   
|General and administrative                   |           |                                  | 342,098  |                                  |   | 327,334                        |            |                                | 841,458  
|Research and development                     |           |                                  | 38,303   |                                  |   | 136,490                        |            |                                | 86,975   
|Selling and marketing                        |           |                                  | 124,492  |                                  |   | 113,451                        |            |                                | 278,678  
|                                             |           |                                  |          |                                  |   |                                |            |                                |          
|                                             |           |                                  | 533,252  |                                  |   | 611,223                        |            |                                | 1,264,117
|                                             |           |                                  |          |                                  |   |                                |            |                                |          
|Net loss                                     |           | $                                | (250,677 | )                                | $ | (393,275                       | )          | $                              | (717,306 
|                                             |           |                                  |          |                                  |   |                                |            |                                |          
|Net loss per common share, basic and diluted |           | $                                | (0.01    | )                                | $ | (0.02                          | )          | $                              | (0.03    
|Weighted average common shares outstanding,  |           |                                  |          |                                  |   |                                |            |                                |          
|                                             |  basic   |                                  |          | 21,600,000                       |   |                                | 21,600,000 |                                |          
|                                             |  diluted |                                  |          | 22,763,802                       |   |                                |            |                                |          

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Consolidated Statements of Stockholders' Equity  (Expressed in U.S. dollars)  Three months ended June 30, 2001  (Unaudited)

|                                                            |  | Common stock |  |   |        |  |   |           |  
|----------------------------------------------------------- |  | ------------ |  | - | ------ |  | - | --------- | -
|
|
|Balance at December 31, 2000                                |  | 21,600,000   |  | $ | 21,600 |  | $ | 1,189,042 |  
|Compensatory value of stock options issued to non-employees |  |              |  |   |        |  |   | (8,737    | )
|Issuance of convertible loans (note 4)                      |  |              |  |   |        |  |   | 22,222    |  
|Net loss                                                    |  |              |  |   |        |  |   |           |  
|                                                            |  |              |  |   |        |  |   |           |  
|Balance at June 30, 2001                                    |  | 21,600,000   |  | $ | 21,600 |  | $ | 1,202,527 |  
|                                                            |  |              |  |   |        |  |   |           |  

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Consolidated Statements of Cash Flows  (Expressed in U.S. dollars)  (Unaudited)

|                                                 |  | Six Months Ended
June 30, 2001 |          | Six Months Ended
June 30, 2000 |  
|------------------------------------------------ |  | ------------------------------ | -------- | ------------------------------ | -
|Operations:                                      |  |                                |          |                                |  
|Loss for the period                              |  | $                              | (717,306 | )                              | $
|Items not involving cash:                        |  |                                |          |                                |  
|Stock based compensation                         |  |                                | (8,737   | )                              |  
|Depreciation and amortization                    |  |                                | 57,006   |                                |  
|Loss on sale of assets                           |  |                                |          |                                |  
|Non-cash interest expense                        |  |                                | 22,222   |                                |  
|Changes in operating assets and liabilities:     |  |                                |          |                                |  
|Accounts receivable                              |  |                                | (3,461   | )                              |  
|Inventory                                        |  |                                | 86,337   |                                |  
|Prepaid expenses                                 |  |                                | 26,966   |                                |  
|Accounts payable                                 |  |                                | 148,643  |                                |  
|Accrued liabilities                              |  |                                | 81,237   |                                |  
|Payable to related parties                       |  |                                | 28,678   |                                |  
|Deferred revenue                                 |  |                                | 28,646   |                                |  
|                                                 |  |                                |          |                                |  
|Net cash used in operating activities            |  |                                | (249,769 | )                              |  
|Investments:                                     |  |                                |          |                                |  
|Sale of equipment                                |  |                                |         |                                |  
|Purchase of equipment                            |  |                                | (8,486   | )                              |  
|Purchase of medical license                      |  |                                |         |                                |  
|Purchase of trademarks                           |  |                                |         |                                |  
|                                                 |  |                                |          |                                |  
|Net cash used in investing activities            |  |                                | (8,486   | )                              |  
|                                                 |  |                                |          |                                |  
|Financing:                                       |  |                                |          |                                |  
|Loan from related party                          |  |                                | 200,000  |                                |  
|                                                 |  |                                |          |                                |  
|Net cash provided by financing activities        |  |                                | 200,000  |                                |  
|                                                 |  |                                |          |                                |  
|Increase (decrease) in cash and cash equivalents |  |                                | (58,255  | )                              |  
|Cash and cash equivalents, beginning of year     |  |                                | 73,150   |                                |  
|                                                 |  |                                |          |                                |  
|Cash and cash equivalents, end of year           |  | $                              | 14,895   |                                | $
|Supplementary information:                       |  |                                |          |                                |  
|Interest paid                                    |  | $                              | 215      |                                | $
|Income taxes paid                                |  |                                |         |                                |  
|Non-cash transactions:                           |  |                                |          |                                |  
|Issuance of stock options                        |  |                                | (8,737   | )                              |  
|Issuance of convertible loans                    |  |                                | 22,222   |                                |  

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1.  Continuing operations

These consolidated financial statements have been prepared on a going concern basis in accordance with United States generally accepted accounting principles.
The going concern basis of presentation assumes the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments
in the normal course of business. Certain conditions, described below, currently exist which raise substantial doubt upon the validity of this assumption. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

The
Company's future operations are dependent upon the market's acceptance of its product and the Company's ability to license its product around the world. There can be no assurance
that the Company's product will be able to secure market acceptance or that the Company will be able to license its product. As of June 30, 2001, the Company has not generated sufficient
revenues to fund expenses and has experienced negative cash flow from operations. Operations have primarily been financed through working capital loans provided by a controlling shareholder. The
intention of management is to generate revenue from the sale of software licenses. Additional debt or equity financing may be required and may not be available on reasonable terms. If the Company is
unable to generate sufficient cash flow to support its existing level of operations, it may be obligated to reduce its activities or declare insolvency and seek protection under the bankruptcy laws.
The Company estimates that it currently has available cash flow to sustain itself until September 3, 2001. Failure to obtain additional financing at this time may result in liquidation, leading
to values which may be much lower than their carrying value.

2.  Significant accounting policies

These
unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States and the rules and
regulations of the Securities and Exchange Commission. The unaudited interim consolidated financial statements include all adjustments, consisting solely of normal recurring adjustments, which in
management's opinion are necessary for a fair presentation of the financial results for the interim period. The unaudited interim consolidated financial statements have been prepared on a basis
consistent with the annual audited
financial statements of the Company and should be read in conjunction therewith. The Company's results of operations for any interim period are not necessarily indicative of the results of operations
for any other interim period or for a full fiscal year.

The
preparation of the unaudited interim consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and recognized revenues and
expenses for the reporting periods. In these unaudited interim consolidated financial statements, the significant areas requiring the use of estimates include the valuation of long-lived
assets, including intangible assets, the fair value of stock options and the recognition of revenue. Actual results may significantly differ from these estimates.

3.  Loans from related parties

On July 3, 2001, the Company entered into a Convertible Loan Agreement (the "Convertible Loan Agreement") with Torchmark Holdings Ltd.
("Torchmark"), a related party, for $906,105 (the "Loan") at a rate of 10%, due September 3, 2001. Under the terms of the Convertible Loan Agreement, the

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lender may convert the Loan in whole or in part into common shares at a conversion rate equal to 90% of the market price of the shares on the date of the Loan. The Convertible Loan Agreement allows
the Company to borrow an additional $100,000. The Loan constitutes restructuring of certain debt previously owed by the Company to Torchmark pursuant to Promissory Notes dated
(i) November 7, 2000 ($255,684.93, plus accrued interest of $17,006.82); (ii) November 7, 2000 ($250,000 plus accrued interest of $16,628.69);
(iii) December 21, 2000 ($51,000 plus accrued interest of $2,743.34); (iv) February 14, 2001 ($200,000 plus accrued interest of $7,618.92) and License and Distribution
Agreements dated (v) November 1, 2000 ($50,000 plus accrued interest of $2,888.26); and (vi) November 30, 2000 ($50,000 plus accrued interest of $2,533.56).

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

The following discussion should be read in conjunction with the accompanying unaudited interim consolidated financial statements for the three-month and
six-month periods ended June 30, 2001 and June 30, 2000, and the Form 10-KSB for the fiscal year ended December 31, 2000. These unaudited
interim consolidated financial statements have been prepared by management and have not been reviewed by the Company's auditor.

Revenue

Revenue for the three-month period ended June 30, 2001 ("2Q01") was $519,462, compared to $447,430 in the three-month period ended June 30, 2000
("2Q00"), representing an increase in overall revenue of 16% over the comparable period last year. The revenue in 2Q01 was derived from the sale of hardware and software licenses primarily to dentists
in the United States. The revenue in 2Q00 included $78,112 in previously-deferred license agreements, and $369,318 from the sale of hardware and software licenses. Sales of hardware and software
licenses to dentists increased by 41% in 2Q01 over 2Q00. Revenue for the six-month period ending June 30, 2001 ("1H01") was $1,095,849 compared to $1,195,658 in the
six-month period ended June 30, 2000 ("1H00"). Revenue in 1H01 was derived solely from the sale of hardware and software licenses primarily to dentists in the United States, whereas
revenue in 1H00 included $578,112 in previously-deferred license agreement revenue.

Cost of Sales

The cost of sales was 45.6% in 2Q01 compared to 51.3% in 2Q00. The lower cost of sales is due to the Company's focus on software sales rather than hardware.
Cost of sales was 50.1% in 1H01 compared to 30.5% in 1H00, reflecting the inclusion of $578,112 in previously-deferred license agreement revenue in 1H00.

Gross Profit

Gross profit was $282,575 or 54.4% of revenue in 2Q01, compared to $217,948 or 48.7% of revenue in 2Q00, again reflecting the Company's focus on software sales
rather than hardware. Software sales have a higher margin than hardware. Gross profit was 49.9% in 1H01 compared to 69.5% in 1H00, again reflecting the inclusion of previously-deferred license
agreement revenue in 1H00. The gross profit margin in 1H01 is considered more representative of current business operations.

Operating Expenses

Depreciation expense was $28,359 for 2Q01 compared to $33,948 for 2Q00. There were no material purchases of capital assets during 2Q01. Depreciation expense
was $57,006 in 1H01 compared to $41,683 in 1H00.

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General and administrative expense was $342,098 in 2Q01 compared to $327,334 in 2Q00. The increase in general and administrative expense in 2Q01 was due to the following: financial
consulting fees of $60,000; increased legal fees of $18,437; interest expense on the Torchmark financing agreements of $21,482; and increased insurance expense of $41,330; offset by reduced expenses
for investor relations of $65,731 and reductions in numerous other expenses of $60,754. Comparing 1H01 to 1H00, general and administrative expense increased from $458,135 in 1H00 to $841,458 in 1H01.

Research
and development expense was $38,303 in 2Q01 compared to $136,490 in 2Q00. The reduced expense reflects the Company's lower staffing levels in software development. Research
and development expense was $86,975 in 1H01 compared to $210,572 in 1H00, due primarily to lower staffing levels.

Selling
and marketing expense was $124,492 in 2Q01 compared to $113,451 in 2Q00, reflecting higher levels of trade show activity and travel expense. Selling and marketing expense was
$278,678 in 1H01 compared to $194,555 in 1H00, as a result of higher trade show activity and associated travel expense.

The
net loss for 2Q01 was $250,677 compared to a net loss of $393,275 in 2Q00. The net loss for 1H01 was $717,306 compared to a net loss of $74,160 in 1H00.

Operations
in the six-month period ending June 30, 2001 were funded out of available cash balances.

Dicom
has a history of losses and accumulated deficit and this trend of losses may continue in the future. The Company's ability to obtain and sustain profitability will depend, in
part, upon the successful marketing of its existing products and the successful and timely introduction of new products. There can be no assurance that Dicom will ever be profitable.

The
auditors' report on Dicom's December 31, 2000 consolidated financial statements, as filed in Form 10-KSB on May 17, 2001, includes an explanatory
paragraph that states that the Company has suffered recurring losses and negative cash flows from operations and has a capital deficiency, conditions that raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements do not include any adjustment as a result of this uncertainty.

Dicom
does not believe it can continue to satisfy its cash requirements from funds generated from operations at existing levels of revenues, and implemented a downsizing of management
staff in the
first quarter of 2001. Further reductions in operating expenses are continuing to be made. In order to continue to fund operations, the Company requires additional sources of funds that may not be
readily available.

PART IIOTHER INFORMATION

Item 1. Legal Proceedings.

In March 2001, Dicom was named as a Defendant in now settled legal proceedings, instituted by Don Williams, Dicom's former President and Chief Operating
Officer. On March 2, 2001, the Company terminated Mr. Williams' employment with Dicom. On March 26, 2001, Mr. Williams instituted legal proceedings against the Company in
the Supreme Court of British Columbia (No. S011718), alleging that the Company owed Mr. Williams approximately $56,482 in outstanding bonuses and severance pay. On April 23, 2001, the
Company settled Mr. Williams' claim for approximately $17,742. On April 23, 2001, the Company and Mr. Williams consented to and filed, and the Registrar of the Supreme Court of
British Columbia entered, a Consent Dismissal Order with the Court, dismissing the legal proceedings.

In
March 2001, Dicom was named as a Defendant in now settled legal proceedings, instituted by Richard Bergin, Dicom's former Vice President Marketing. On March 2, 2001,
the Company

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terminated Mr. Bergin's employment with Dicom. On March 26, 2001, Mr. Bergin instituted legal proceedings against the Company in the Supreme Court of British Columbia (No.
S011719), alleging that the Company owed Mr. Bergin approximately $50,563 in outstanding bonuses and severance pay. On April 23, 2001, the Company settled Mr. Bergin's claim for
approximately $17,742. On April 23, 2001, the Company and Mr. Bergin consented to and filed, and the Registrar of the Supreme Court of British Columbia entered, a Consent Dismissal Order
with the Court, dismissing the legal proceedings.

On
November 22, 2000, a former employee, Mr. Ross Paterson, filed a Writ and Statement of Claim against the Company for wrongful dismissal, in the New Westminster
Registry of the Supreme Court of British Columbia. Mr. Paterson is claiming unspecified damages for breach of contract. At a court hearing held on May 14, 2001, the Company requested,
and was granted, an adjournment of the proceeding until July 2001. In July 2001, the case was adjourned again for the foreseeable future. The Company cannot predict the outcome of this
litigation matter. An adverse determination on this matter could result in a material adverse effect on the Company's financial condition and results of operations.

Item 2. Changes in Securities.

Pursuant
to a Software Purchase Agreement dated July 3, 2001, by and between the Company and Torchmark Holdings Ltd., a Turks and Caicos Islands corporation
("Torchmark"), the Company issued 5,032,653 shares of common stock of the Company. Pursuant to a Convertible Loan Agreement dated July 3, 2001, by and between the Company and Torchmark (the
"Convertible Loan Agreement"), the Company issued a convertible promissory note for $906,105, which is convertible into common stock of the Company at 90% of the closing price per share of common
stock of the Company on July 3, 2001. The closing price per share for the common stock of the Company on July 3, 2001, as quoted by the NASD Over-the-Counter
Electronic Bulletin Board ("OTC BB"), was $0.10 per share. Additionally, pursuant to the Convertible Loan Agreement, on July 11, 2001, the Company issued a convertible promissory note for
$25,000, which is convertible into common stock of the Company at 90% of the closing price per share of common stock of the Company on July 11, 2001. The closing price per share for the common
stock of the Company on July 11, 2001, as quoted by the OTC BB, was $0.08 per share. These offers and sales of securities were exempt from registration pursuant to Rule 903(b)(3) of
Regulation S, promulgated under the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities.

Dicom defaulted on certain principal and interest payments due as at May 6, 2001 with respect to certain Senior Securities. On July 3, 2001,
Dicom restructured the Senior Securities that were in default, by entering into a convertible loan agreement with Torchmark Holdings Ltd. on July 3, 2001, as reported by the Company in
its Current Report on Form 8-K (File No. 000-26369) filed on July 23, 2001. The Company does not currently have the ability to pay past due debts. Such
non-payment of past due debts may result in a default upon some or all of the obligations to Torchmark described above.

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

None.

Item 5. Other Information.

On August 1, 2001, Torchmark (and others, as a members of a group), filed a Schedule 13D (File No. 005-61815) with the SEC,
stating, among other things, that it "expects to enforce the terms of the Security Agreement if the Company does not repay the Loan [the Loan referenced in Item 3 of this Quarterly
Report] by September 3, 2001." As of the date of this filing, the Company does not expect to

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be in a position to repay the Loan on or before September 3, 2001. Accordingly, the Board of Directors of the Company is currently evaluating all of the operational, financial and legal issues
facing the Company, and is analyzing all options available to the Company to protect and preserve value for shareholders, creditors, lenders, and other vendors of the Company, including, but not
limited to, the possible filing of a petition for bankruptcy under Chapter 7 or Chapter 11 of the United States Bankruptcy Code.

It
is unlikely that the Company will be able to meet its future capital needs. On July 23, 2001, Dicom stated that it has sufficient cash flow to sustain operations until
September 3, 2001, although there can be no assurance in this regard. In order to continue operations beyond that date, Dicom will require additional, substantial capital infusion. The Company
does not believe that this additional capital will be available.

The
Company has explored, and continues to explore, strategic alternatives for the Company, which might include a merger, asset sale, or another comparable transaction or financial
restructuring. In the event, however, the Company is unsuccessful in completing one of these strategic alternatives, the Company will be required to cease operations by approximately
September 3, 2001. In that case, the Company would be unable to meet its future capital requirements. This would result in a default under all the Company's indebtedness. Potential investors in
Dicom's securities should consider the risk that the Company may be in default under these obligations and, in that event, the Company's common stock would have no value.

On
April 24, 2001, the OTC BB, the principal market on which the Company's common stock is traded, appended The Company's trading symbol, "DCIM", with an "E" because it had not
timely filed its Annual Report on Form 10-KSB for the fiscal year ended 2000 with the Securities and Exchange Commission. On May 17, 2001, the Company filed its
Form 10-KSB. On June 4, 2001, the Company filed its Form 10-QSB, and the "E" symbol was removed by the OTC BB on June 6, 2001.

On
June 19, 2001, the Company terminated the engagement of its financial consultants Merchant Capital Group Incorporated.

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

|REGULATION
SB NUMBER |  | EXHIBIT                                                                                                     
|-------------------- |  | ------------------------------------------------------------------------------------------------------------
|10.11(1)             |  | Software Purchase Agreement dated July 3, 2001, between Dicom and Torchmark                                 
|10.12(1)             |  | Convertible Loan Agreement dated July 3, 2001, between Dicom and Torchmark                                  
|10.13(1)             |  | Security Agreement dated July 3, 2001 between Dicom and Torchmark                                           
|10.14                |  | Amendment No. 1 to Software Purchase Agreement dated July 30, 2001 between Dicom and Torchmark Holdings Ltd.

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On
July 23, 2001, Dicom filed a Current Report on Form 8-K (File No. 000-26369) stating under "Item 1. Changes in Control of Registrant"
that it had issued 5,032,653 common shares to Torchmark in order to purchase certain image archiving, retrieval and enhancement software, and that Torchmark now owns 51% of the voting securities of
Dicom. In addition, under "Item 5. Other Events", Dicom

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stated generally the reasons why it had entered into the Convertible Loan Agreement and Software Purchase Agreement, and stated that if a certain loan from Torchmark is not repaid or renegotiated by
September 3, 2001, then Torchmark will have the right pursuant to the terms of the Security Agreement, to require the Company to deliver and/or assign all or any portion of the Company's assets
and any and all certificates of title and other documents relating thereto to Torchmark.

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SIGNATURES

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

|                      |  | DICOM IMAGING SYSTEMS, INC.
|--------------------- |  | ---------------------------
|Date: August 14, 2001 |  | By:                        

EXHIBIT INDEX

|Exhibit No. |  | Description of Exhibit                                                                                                                                                                                                                       
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1(1)      |  | Articles of Incorporation of the Registrant                                                                                                                                                                                                  
|3.2(1)      |  | Bylaws of the Registrant                                                                                                                                                                                                                     
|10.1(2)     |  | License Agreement dated March 17, 2000 between Dicom and CLG Investments Limited                                                                                                                                                             
|10.2(3)     |  | Settlement Agreement dated September 26, 2000 between Dicom and CLG Investments Limited                                                                                                                                                      
|10.3(4)     |  | Marketing Agreement dated October 4, 2000, between Dicom and Eastman Kodak Company                                                                                                                                                           
|10.4(4)     |  | Software Bundling and Co-Marketing Agreement dated February 13, 2001, between Dicom and Olympus America Inc.                                                                                                                                 
|10.5(4)     |  | Authorized Dealer Agreement dated April 6, 2001, between Dicom and Dental X Change, Inc.                                                                                                                                                     
|10.6(5)     |  | Executive Employment Agreement dated November 22, 2000, between Dicom and Paul Fernandez                                                                                                                                                     
|10.7(5)     |  | Promissory Note dated November 7, 2000 between Dicom and Torchmark Holdings Ltd. This Promissory Note replaces the Promissory Note dated August 16, 2000 that was included in Form 10-QSB, file number 000-26369, filed on November 14, 2000.
|10.8(5)     |  | Convertible Loan Agreement dated November 7, 2000 between Dicom and Torchmark Holdings Ltd.                                                                                                                                                  
|10.9(5)     |  | Convertible Loan Agreement dated December 21, 2000 between Dicom and Torchmark Holdings Ltd.                                                                                                                                                 
|10.10(5)    |  | Convertible Loan Agreement dated February 14, 2001 between Dicom and Torchmark Holdings Ltd.                                                                                                                                                 
|10.11(6)    |  | Software Purchase Agreement dated July 3, 2001 between Dicom and Torchmark Holdings Ltd.                                                                                                                                                     
|10.12(6)    |  | Convertible Loan Agreement dated July 3, 2001 between Dicom and Torchmark Holdings Ltd.                                                                                                                                                      

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|10.13(6) |  | Security Agreement dated July 3, 2001 between Dicom and Torchmark Holdings Ltd.                             
|-------- |  | ------------------------------------------------------------------------------------------------------------
|10.14    |  | Amendment No. 1 to Software Purchase Agreement dated July 30, 2001 between Dicom and Torchmark Holdings Ltd.

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