U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                            ________________________

                                   FORM 10-QSB

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

                  For the quarterly period ended March 31, 2002

                            ________________________

                        Commission File Number: 000-26555

                            ________________________

                           ACCUIMAGE DIAGNOSTICS CORP.
                 (Name of Small Business Issuer in its Charter)


            Nevada                                              33-0713615
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                            Identification Number)


400 Grandview Drive, South San Francisco, California                  94080-4920
________________________________________________________________________________
(Address of principal executive offices)                              (Zip Code)


                    Issuer's telephone number: (650) 875-0192


Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by  Section  13 or 15(d) of the  Securities  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 filing  requirements  within
the past 90 days.
                                 Yes [X] No [ ]


The number of shares  outstanding  of the issuer's  common stock was  22,886,295
shares of common  stock,  par value $.001,  as of March 31,  2002.  No shares of
preferred stock are outstanding.

Transitional Small Business Disclosure Format:

                                 Yes [ ] No [X]


<PAGE>


                           ACCUIMAGE DIAGNOSTICS CORP.
                           ___________________________

                                   Form 10-QSB
                                 March 31, 2002


TABLE OF CONTENTS


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements                                                 3

             Balance Sheets as of March 31, 2002 (unaudited) and
             September 30, 2001 (audited)                                     3

             Statements of Operations & Comprehensive Income
             (unaudited) for the Three and Six Months Ended
             March 31, 2002 and 2001                                          5

             Statements of Cash Flows (unaudited) for the Six
             Months Period Ended March 31, 2002 and 2001                      6

             Notes to Financial Statements                                    7

Item 2.  Management's Discussion and Analysis of
         Financial Condition or Plan of Operations                           11


PART II. OTHER INFORMATION


Item 2.  Changes in Securities                                               14

Item 4.  Submission of Matters to a Vote of Securities Holders               14

Item 5.  Other Information                                                   14

Item 6.  Exhibits and Reports on Form 8-K                                    14


Signature                                                                    15


   The accompanying notes are an integral part of these financial statements.

                                       2


<PAGE>


PART I.  FINANCIAL INFORMATION
         ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                           ACCUIMAGE DIAGNOSTICS CORP.
                                 BALANCE SHEETS
           MARCH 31, 2002 (UNAUDITED) AND SEPTEMBER 30, 2001 (AUDITED)

                                                                              March 31, 2002        September 30, 2001
                                                                                (UNAUDITED)             (AUDITED)
                                                                              ________________________________________
<S>                                                                              <C>                       <C>

ASSETS
Current Assets
              Cash                                                             $  612,792               $   51,422
              Accounts receivable, net of allowance                               463,402                  234,875
                 for doubtful accounts of $9,570 and $15,000
              Employee receivable                                                   1,000                    7,500
              Inventory                                                            86,766                   94,083
              Prepaid expenses                                                     36,249                   17,350
              Other current assets                                                  7,549                    5,216
                                                                              ________________________________________

Total Current Assets                                                            1,207,758                  410,446

Property and Equipment, net of accumulated depreciation                            43,080                   53,549

Other Assets
              Security deposits                                                    15,067                   18,735
              Trade receivable-non-current                                          9,420                   15,075
              Licenses, net of accumulated amortization                            23,257                   29,970
              Goodwill, net of accumulated amortization                           339,970                  370,877
              Investment in AHS                                                   375,000                  375,000
                                                                              ________________________________________
Total Other Assets                                                                762,714                  809,657

TOTAL ASSETS                                                                   $2,013,552               $1,273,652
                                                                              ========================================


   The accompanying notes are an integral part of these financial statements.

</TABLE>


                                       3


<PAGE>

<TABLE>
<CAPTION>


ACCUIMAGE DIAGNOSTICS CORP.
BALANCE SHEETS (CONTINUED)


                                                                              March 31, 2002        September 30, 2001
                                                                                (UNAUDITED)             (AUDITED)
                                                                              ________________________________________
<S>                                                                              <C>                       <C>

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
              Accounts payable                                                $   110,972              $    69,932
              Product warranty reserve                                            140,872                  150,714
              Sales tax payable                                                     4,117                   13,541
              Wages & payroll taxes payable                                         1,184                    4,844
              Other accrued liabilities                                            67,751                  181,965
              Accrued vacation                                                     48,907                   53,726
              Deferred revenue                                                    235,100                  312,100
              Customer deposits                                                    11,755                        -
                                                                              ________________________________________

Total Current Liabilities                                                         620,658                  786,822

Long-Term Liabilities
              Shareholder notes payable                                           250,000                  250,000
              Non-customer deposits                                                 2,948                        -
                                                                              ________________________________________

Total Liabilities                                                                 873,606                1,036,822

Stockholders' Equity
Preferred Shares - $0.001 Par Value; 10,000,000                                         -                        -
shares Authorized; None issued or outstanding

Common Shares - $0.001 Par Value; 50,000,000 Authorized;                           22,887                   10,982
22,886,295 and 10,981,534 shares issued and outstanding on
March 31, 2002 and September 30, 2001

Paid-In-Capital                                                                 3,488,346                2,500,253
Accumulated other comprehensive loss                                             (125,000)                (125,000)
Accumulated Earnings (Deficit)                                                 (2,246,287)              (2,149,405)
                                                                              ________________________________________

Total Stockholder's Equity                                                      1,139,946                  236,830

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $ 2,013,552              $ 1,273,652
                                                                              ========================================


   The accompanying notes are an integral part of these financial statements.

</TABLE>


                                       4


<PAGE>

<TABLE>
<CAPTION>


                           ACCUIMAGE DIAGNOSTICS CORP
           STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (UNAUDITED)
                       FOR THE THREE AND SIX MONTHS ENDED
                             MARCH 31, 2002 AND 2001


                                               For the three months     For the six months
                                                 Ended March 31,         Ended March 31,
                                               _____________________  ______________________
                                                  2002        2001       2002        2001
                                               _____________________  ______________________
<S>                                             <C>         <C>       <C>         <C>

REVENUES                                        $965,592    $811,810  $1,712,325  $1,265,048

COST OF GOODS SOLD                               124,040     163,816     200,926     294,563
                                               _____________________  ______________________

GROSS PROFIT                                     841,552     647,994   1,511,399     970,485

SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES
General and
Administrative                                   328,935     344,135     703,691     626,192
Sales and Marketing                              191,522     193,712     350,879     315,748
Research and
Development                                      313,491     203,228     563,370     336,373
                                               _____________________  ______________________
TOTAL SELLING, GENERAL AND ADMINISTRATIVE        833,948     741,075   1,617,940   1,278,313
EXPENSES

                                               _____________________  ______________________
OPERATING INCOME/(LOSS)                            7,604     (93,081)   (106,541)   (307,828)

OTHER (INCOME) AND EXPENSES
          Interest Income                         (1,078)     (7,912)     (1,544)    (15,083)
          Other Income                           (10,667)       (750)    (20,615)       (750)
          Interest Expense                         6,250         -        12,500        -
          Franchise and Other Taxes                  -         3,446                   5,637
                                               _____________________  ______________________

TOTAL OTHER (INCOME) AND EXPENSES                 (5,495)     (5,216)     (9,659)    (10,196)
                                               _____________________  ______________________

NET INCOME/(LOSS)                               $ 13,099    $(87,865) $  (96,882) $ (297,632)
                                               =============================================

INCOME / (LOSS) PER SHARE-BASIC                 $  0.001    $ (0.008) $   (0.005) $   (0.027)
                                               =============================================
INCOME / (LOSS) PER SHARE- DILUTED              $  0.001    $ (0.008) $   (0.005) $   (0.026)
                                               =============================================

Weighted Average Shares Outstanding
                   Basic                      22,886,295  10,981,534  18,517,248  10,981,534
                   Diluted                    22,901,702  11,435,218  18,517,248  11,435,218


   The accompanying notes are an integral part of these financial statements.

</TABLE>


                                       5


<PAGE>

<TABLE>
<CAPTION>



                           ACCUIMAGE DIAGNOSTICS CORP
                      STATEMENTS OF CASH FLOWS (UNAUDITED)
               FOR SIX MONTHS PERIOD ENDED MARCH 31, 2002 AND 2001

                                                                                    March 31,           March 31,
                                                                                      2002                2001
                                                                                    _________           _________
<S>                                                                                 <C>                 <C>

Cash Flows from Operating Activities
              Net Cash provided (used) by Operating Activities:                     $(436,037)          $(485,653)
                                                                                    _____________________________

              Loan to other entity

Cash Flow from Investing Activities:
              Investment in Property and Equipment                                     (2,593)             (5,424)
              Loan to other entity                                                          -             (44,778)
                                                                                    _____________________________

              Net Cash Provided (Used) by Investing Activities                       (438,630)            (50,202)
                                                                                    _____________________________

Cash Flow From Financing Activities:
              Proceeds from Sales of Stock                                          1,000,000                   -

                                                                                    _____________________________

              Net Cash Provided (Used) by Financing Activities                      1,000,000                   -
                                                                                    _____________________________

Increase (Decrease) in Cash                                                           561,370            (535,855)

Cash Balance at beginning of period                                                    51,422             702,903
                                                                                    _____________________________

Cash Balance at end of period                                                       $ 612,792           $ 167,048
                                                                                    =============================


Supplemental Disclosure:
              Interest Paid                                                         $  12,500           $       0
              Income Taxes-Franchise tax                                            $     800           $   3,151


   The accompanying notes are an integral part of these financial statements.

</TABLE>


                                       6


<PAGE>


NOTES TO THE FINANCIAL STATEMENTS

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

         In  the  opinion  of  the  management,  the  accompanying  consolidated
financial  statements  contain all  adjustments  necessary  (consisting  of only
normal recurring accruals) to present fairly the financial position at March 31,
2002 and September 30, 2001,  the results of its  operations  for the six months
ended March 31, 2002 and 2001, and the cash flow for the periods ended March 31,
2002 and 2001. Certain information and footnote disclosures normally included in
financial  statements that would have been prepared in accordance with generally
accepted  accounting  principles have been condensed or omitted  pursuant to the
rules and  regulations  of the  Securities  and  Exchange  Commission,  although
management  of the Company  believes  that the  disclosures  in these  financial
statements  are  adequate  to  make  the  information   presented   therein  not
misleading.  It is suggested that these condensed financial statements and notes
thereto  be read in  conjunction  with the  financial  statements  and the notes
thereto included in the Company's September 30, 2001 Form 10-KSB. The results of
operations  for the  six  months  ended  March  31,  2002  are  not  necessarily
indicative  of the results of operations to be expected for the full fiscal year
ending September 30, 2002.

CONCENTRATION OF CASH

         The Company at times  maintains cash balances in an account that is not
fully federally  insured.  Uninsured balances as of March 31, 2002 and September
30, 2001 were $471,903 and $52,334, respectively.

INVENTORIES AND COST OF GOOD SOLD

         Inventories  are  stated  at the  lower  of  cost  or  market.  Cost is
determined by the first-in,  first-out  (FIFO)  method.  Interim  period cost of
goods sold is  calculated  using the  perpetual  inventory  record.  The Company
reports any significant  adjustments  that result from reconciling the perpetual
inventory record to periodic and annual physical inventory observations.

SOFTWARE DEVELOPMENT COSTS

         The  Company   capitalizes   certain  software   development  costs  in
accordance with SFAS No. 86, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE TO BE
SOLD,  Leased or  Otherwise  Marketed.  Costs  incurred  internally  to create a
computer  software  product or to develop an enhancement to an existing  product
are  charged  to  expense  when  incurred  as  research  and  development  until
technological  feasibility has been  established for the product or enhancement.
Thereafter,  all software  production  costs are capitalized and reported at the
lower of unamortized cost or net realizable  value.  Capitalization  ceases when
the  product or  enhancement  is  available  for general  release to  customers.
Software  development  costs are  amortized on a product basis at the greater of
the amounts computed using (a) the ratio of current gross revenues for a product
or  enhancement to the total current and  anticipated  future gross revenues for
that product or enhancement,  or (b) the straight-line method over the remaining
estimated  economic  life of the  product or  enhancements,  not to exceed  five
years.  The  Company   evaluates  the  net  realizable  value  of  its  software
development  costs at each period end using  undiscounted  estimated  future net
operating cash flows expected to be derived from the respective software product
or enhancement. If such evaluation indicates that the unamortized software costs
exceed the net realizable  value, the Company writes off the amount by which the
unamortized software development costs exceed net realizable value.

WARRANTY RESERVE

         Based  upon  historical  costs and its sales  agreements,  the  Company
maintains  a  warranty  reserve  based on  product  sales  to cover  anticipated
warranty costs related to software sold. This reserve is continually compared to
actual costs by management and revised as necessary.


                                       7


<PAGE>


(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DEFERRED REVENUE

         The Company recognizes revenues as earned. Amounts billed in advance of
the period in which product is shipped are recorded as liability under "deferred
revenue".

ADVERTISING COSTS

         The  Company   expenses   advertising   costs  as  they  are  incurred.
Advertising  expenses  were $15,242 and $33,079,  and $2,527 and $29,996 for the
three and six months ended on March 31, 2002, and 2001, respectively.

INCOME TAXES

         At September 30, 2001,  the Company has  approximately  $1,900,477  net
operating loss carryforwards available to offset future federal and state income
taxes,  which  expire  through  2010 and 2019.  The Company has elected to fully
reserve all tax benefits  until such time as it is able to reasonably  expect to
realize those benefits.

USE OF ACCOUNTING ESTIMATES

         The  preparation  of  the  financial   statements  in  conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ materially from those estimates.
The actual  results with regard to warranty  expenditures  could have a material
impact on the  financial  statements  of the  Company if the actual rate of unit
failure is greater than what was estimated by the Company in the  calculation of
its warranty reserve.

COMPREHENSIVE INCOME (LOSS)

         The Financial  Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130), which
is effective for financial  statements for periods  beginning after December 15,
1997.  This  pronouncement  establishes  standards  for reporting and display of
comprehensive  income (loss) and its components in a full set of general-purpose
financial statements.  Comprehensive income (loss) consists of net income (loss)
and other gains and losses affecting  Stockholders' equity that, under generally
accepted accounting principles, are excluded from net income (loss). The Company
did not have any  components of  comprehensive  income (loss) for the six months
ended March 31, 2002. For the fiscal year ended  September 30, 2001, the Company
recorded unrealized losses of $125,000 on equity securities available-for-sale.

NET INCOME/LOSS PER SHARE

         The  Company  follows  SFAS  No.  128,   "Earnings  per  Share,"  which
establishes standards for computing and presenting earnings per share ("EPS").

         Basic EPS is computed  by  dividing  net  income/loss  by the  weighted
average number of common shares outstanding.  The dilutive EPS calculation gives
effect  to all  dilutive  potential  common  shares,  such as stock  options  or
warrants,  which were  outstanding  during the period.  Shares issued during the
period and shares repurchased by the Company are weighted for the portion of the
period that they were  outstanding for both basic and diluted EPS  calculations.
The dilutive shares equivalent for the three and six months ended March 31, 2002
and 2001 were 15,407 and 0, and 453,685 and 453,685.


                                       8


<PAGE>


(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


STOCK-BASED COMPENSATION

         The Company  accounts  for its stock based  compensation  plan based on
accounting  Principles  Board  ("APB")  Opinion  No.  25. In October  1995,  the
Financial  Accounting  Standards  Board  issued  SFAS No.  123,  Accounting  for
Stock-Based Compensation.  The Company has determined that it will not change to
the  fair  value  method  and  will  continue  to use  APB  Opinion  No.  25 for
measurement  and  recognition  of any expense  related to  employee  stock based
transactions.  As such,  compensation expense would generally be recorded on the
date of grant only if the current market price of the  underlying  stock exceeds
the exercise price.

         In March 2000, the FASB released Interpretation No. 44, "Accounting for
Certain   Transactions   Involving  Stock   Compensation."  This  Interpretation
addresses  certain practice issues related to APB Opinion No. 25. The provisions
of this  Interpretation  are  effective  July 1, 2000,  and except for  specific
transactions noted in paragraphs 94-96 of this Interpretation,  shall be applied
prospectively  to new  awards,  exchanges  of awards in  business  combinations,
modifications  to an  outstanding  award,  and exchanges in grantee  status that
occur on or after  that  date.  Certain  events  and  practices  covered in this
Interpretation have different  application dates, and events that occur after an
application  date but  prior to July 1,  2000,  shall  be  recognized  only on a
prospective  basis.  Accordingly,  no  adjustment  shall  be made  upon  initial
application of the  Interpretation to financial  statements for periods prior to
July 1, 2000. Thus, any compensation  cost measured upon initial  application of
this  Interpretation  that is  attributed to periods prior to July 1, 2000 shall
not be recognized.  The Company  adopted the  provisions of this  Interpretation
starting July 1, 2000.


ACCOUNTING PRONOUNCEMENTS

         The FASB  issued  SFAS No. 131 on  "Disclosures  about  Segments  of an
Enterprise and Related  Information"  effective in 1998.  The Company  evaluated
SFAS No. 131 and determined that the Company operates in only one segment.

         In  July  2001,  the  Financial   Accounting   Standards  Board  issued
Statements of Financial  Accounting  Standards No. 141, "Business  Combinations"
("FAS 141") and No. 142,  "Goodwill  and Other  Intangible  Assets" ("FAS 142").
SFAS No. 141 requires all business combinations initiated after June 30, 2001 to
be accounted  for using the purchase  method.  Under SFAS No. 142,  goodwill and
intangible  assets with  indefinite  lives are no longer  amortized  but instead
tested for impairment at least annually in accordance with the provisions of FAS
No. 142.  FAS No. 142 will also  require that  intangible  assets with  definite
lives be  amortized  over  their  respective  useful  lives  to their  estimated
residual  values,  and reviewed for impairment in accordance  with SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed  Of." The  provisions  of this  Statement are required to be applied
starting with fiscal years  beginning  after December 15, 2001. The Company will
continue  to amortize  goodwill  existing  at  September  30, 2001 until the new
standard is adopted and goodwill  tested for impairment in accordance  with SFAS
No. 121. The Company is  currently  evaluating  the effect that  adoption of the
provisions of FAS No. 142 will have on its results of  operations  and financial
position.

         In June 2001,  the FASB  issued  SFAS No.  143,  "Accounting  for Asset
Retirement  Obligations."  SFAS  No.  143  requires  liability  recognition  for
obligations  associated with the retirement of tangible long-lived asset and the
associated  asset  retirement  costs.  The  Statement is effective for financial
statements  issued for fiscal years  beginning  after June 15, 2002 with earlier
application  encouraged.  The  implementation  of SFAS  No.  143 will not have a
material affect on the Company's results of operations or financial position.


                                       9


<PAGE>


(1)   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         In August  2001,  the FASB  issued SFAS No.  144,  "Accounting  for the
Impairment or Disposal of Long-Lived  Assets." SFAS No. 144 supersedes  SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to Be Disposed of", in that it removes goodwill from its impairment scope
and allows for different approaches in cash flow estimation.  However,  SFAS No.
144 retains the  fundamental  provisions of SFAS No. 121 for (a) recognition and
measurement  of  long-lived  assets to be held and used and (b)  measurement  of
long-lived  assets to be disposed of. SFAS No. 144 also  supersedes the business
segment   concept  in  APB   opinion   No.  30,   "Reporting   the   Results  of
Operations-Reporting  the Effects of  Disposal  of a Segment of a Business,  and
Extraordinary,  Unusual and Infrequently  Occurring Events and Transactions," in
that it permits presentation of a component of an entity,  whether classified as
held for sale or disposed of, as a discontinued operation. However, SFAS No. 144
retains the requirement of APB Opinion No. 30 to report discontinued  operations
separately  from  continuing  operations.  The  provisions of this Statement are
effective  for  financial  statements  issued for fiscal years  beginning  after
December 15, 2001 with earlier  application  encouraged.  Implementation of SFAS
No. 144 will not have a material  effect on the Company's  results of operations
or financial position.

FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying value of certain financial instruments, including accounts
receivable, accounts payable and accrued expenses approximates fair value due to
their short maturities.  Based on borrowing rates currently  available for loans
with similar terms,  the carrying values of notes payable  approximates the fair
values.



(2)  RELATED PARTY TRANSACTIONS

         Douglas Boyd,  Ph.D. was the Chairman of The Board and a shareholder in
the Company, and at that time, was also a member of the Board of Directors and a
shareholder  in  Imatron,  Inc. In April,  1999,  the  Company  entered  into an
agreement  with Imatron to distribute  the Company's  products.  On December 19,
2001,  Imatron was acquired by General  Electric  Company and Dr. Boyd became an
employee of  GE/Imatron.  On March 6, 2002,  Dr. Boyd resigned from the Board of
the Company. Dr. Boyd remained employed by GE-Imatron after the purchase.  Sales
to GE/Imatron,  Inc. amounted to $892,744 and $739,603 and represented 52.1% and
58.5% of the Company's total revenue for the six months ended March 31, 2002 and
2001, respectively.

         Douglas Boyd and family  members are majority  shareholders  of Imaging
Technology  Group,  Inc (ITG).  Sales to ITG for the six months  ended March 31,
2002 and 2001, respectively, were $0 and $75,199.

         The following  transactions  took place between the Company and related
parties during the period ended September 30, 2001:

         Leon Kaufman, the CEO advanced to the Company $50,000. The terms of the
note payable  required the Company to repay $25,000  within seven days after the
Company  completing their equity  investment in AHS, and $25,000 is due June 30,
2005. The note payable bears an interest rate of 10% per annum.  The Company has
repaid to Mr.  Kaufman  $25,000 plus  applicable  interest in August  2001.  Mr.
Kaufman has been performing the duties of President and CEO starting February 1,
2001.

         In August 2001, two shareholders advanced to the Company $450,000.  The
note  payable  bears an  interest  rate of 10% per annum.  The terms of the note
payable  required  the  Company to repay  $225,000  within  seven days after the
Company  completing their equity investment in AHS, and $225,000 is due June 30,
2005.  The Company has repaid to these  shareholders  $225,000  plus  applicable
interest in August 2001.

         The  Company  received  cash  from  AHS,  Inc.,  an entity in which the
Company has a 5% ownership  interest,  in the amount of $312,100 during the year
ended  September 30, 2001, for sales of the Company's  products,  which were not
yet  shipped at  September  30,  2001.  AHS is not able to take  delivery of the
products ordered due to construction  delays at their  facilities.  $312,100 was
recorded as deferred  revenue for the fiscal year ended  September  30, 2001 and
was still held as deferred  revenue at the start of the quarter  ended March 31,
2002.  Deferred  revenue was reduced to $235,100  due to shipments in the second
quarter of fiscal year ended September 30, 2002.


                                       10


<PAGE>


(3)   EQUITY TRANSACTIONS

COMMON STOCK TRANSACTIONS

         Effective  December 10,  2001,  the Company  concluded  the sale of its
common shares through a private placement offering.  The Company sold 11,904,761
shares of unregistered,  restricted common stock for $999,999.92, completing the
full offering.  The shares were issued at a price of $0.084 per share, which was
at a discount from the market price. Under this private placement offering,  the
Company sold 2,976,189 of these shares to related parties, which include members
of the Board of Directors and their relatives.  Additionally,  Dr. C. Allen Wall
purchased  6,378,576  shares and became a member of the Board of Directors.  Dr.
Wall was elected as Chairman of the Board on March 6, 2002.

STOCK OPTIONS

         During the period October 1, 2001 to March 31, 2002, the Company issued
incentive stock options to its employees allowing them to purchase up to 385,000
shares of common stock.  The exercise price is equivalent to the market price on
the date of the grant.  The exercise period for the options is for 10 years from
the date of the grant, and the options vest equally over a 4-year period.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF  FINANCIAL CONDITION OR PLAN OF
         OPERATIONS

         The following  discussion  and analysis  should be read in  conjunction
with the Company's  Consolidated  Financial Statements and related Notes thereto
contained  elsewhere with this document.  Operating  results for the three-month
period ended March 31, 2002 are not  necessarily  indicative of the results that
may be  expected  for any  future  periods,  including  the  full  fiscal  year.
Reference should also be made to the Annual Financial Statements, Notes thereto,
and Management's  Discussion and Analysis of Financial  Condition and Results of
Operations contained in the Company's Form 10-KSB, filed on January 14, 2002.

         AccuImage  is  engaged in the  development,  marketing  and  support of
software for the visualization, analysis and management of medical imaging data.
The software's primary function is to enhance physicians' interpretation of data
from medical imaging modalities such as computed tomography, magnetic resonance,
and ultrasound  through the application of  three-dimensional  computer graphics
and image processing technologies. This enhanced analysis can support physicians
in clinical diagnosis, surgical planning and medical research. Three-dimensional
visualization  allows  communication of findings in a form readily understood by
physicians and others without the specialized  training  otherwise  required for
interpreting the images generated by the medical imaging modalities.  Efficiency
gains and cost savings may be realized  through  automated  reporting  tools and
provision  for  electronic   distribution   of  the  medical  imaging  data  and
post-processed results via internal networks and the Internet.

         The AccuImage software was conceived and developed on the same hardware
platform that it is now distributed  on:  standard,  high-performance,  low cost
personal computer ("PC") workstations  running the Windows operating system from
Microsoft.  The software  interfaces with various medical imaging modalities via
the standard  medical  imaging DICOM protocol and uses the Internet and standard
PC networks for subsequent  distribution of images and  post-processed  results.
Through  this  combination  of  standard   underlying  products  and  protocols,
AccuImage  is  able to  offer  to  physicians  cost-effective,  easy-to-use  yet
powerful visualization, analysis and laborsaving tools for everyday use.


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<PAGE>


         The Company  markets its  products to  radiology  departments,  imaging
centers and original  equipment  manufacturers  of  diagnostic  imaging  systems
through a direct sales force,  non-exclusive  distributors  in the United States
and independent distributors in international markets.

REVENUE

         For the  three  months  ended  March 31,  2002,  revenue  increased  by
$153,782 or 18.9%, over the same period in 2001.  Revenues for the quarter ended
March 31, 2002 were $965,592 compared with $811,810 for the same period in 2001.
Sales to GE/Imatron Inc. increased slightly by $46,472 to $451,300,  compared to
$404,828 for the same period in 2001 and sales to other  customers  increased by
$107,310  to  $514,292,  compared  to  $406,982  for the  same  period  in 2001.
GE/Imatron  sales  accounted for 46.7% and 49.9% of total  revenues for the same
period in 2002 and 2001, respectively.

GROSS PROFIT

         For the three  months  ended  March  31,  2002,  gross  profit on sales
increased to $841,552, or 87.2%, compared with $647,994, or 79.8%, in 2001.

SALES AND MARKETING

         The Company's sales and marketing  expenses for the quarter ended March
31, 2002 were  $191,522  compared with expenses of $193,712 for the same quarter
in fiscal year 2001.  This  slight  decrease,  of $2,190,  was due to lower than
prior period travel  expenses offset by the production and purchase of marketing
materials reflecting new product offerings.

RESEARCH AND DEVELOPMENT

         The Company spent $313,491 on research and development (R&D) activities
during the quarter  ended March 31, 2002  compared with $203,228 for the quarter
ended March 31, 2001.  This  increase is due  primarily to an increase in salary
and related  expenses from additional R&D staff over the quarter ended March 31,
2001 as well as  increased  spending on R&D  consultants.  The Company  does not
intend to reduce its research and  development  effort  since  maintenance  of a
competitive  position in the  marketplace  where the Company  operates  requires
constant  improvement  and  high-level  development  of the  Company's  software
products.

OPERATIONAL AND ADMINISTRATIVE

          Operational and administrative  expenses were $327,492 for the quarter
ended March 31, 2002,  which  compares with $344,135 for the same quarter in the
previous  year.  This decrease,  of $16,643,  is primarily due reduced legal and
audit fees and an $8,000 workers'  compensation  insurance premium reimbursement
offset by higher  salaries and related  expenses.  Patent expenses were $911 for
the quarter  ended March 31, 2002 and $0 for the quarter  ended March 31,  2001.
Rent  expenses  were  $43,043 for the quarter  ended March 31, 2002  compared to
$30,768 for the same  quarter  ended in fiscal year 2001 due to slightly  higher
expense  for the  current  headquarters  location.  The  lease  for  the  former
headquarters,  at 400 Oyster Point Blvd., was terminated  effective December 31,
2001.

RESULTS OF OPERATIONS

         Revenues  increased to $965,592 for the period ended March 31, 2002, or
approximately  18.9% over the same quarter  ended March 31,  2001.  Expenses for
general and administrative and sales & marketing decreased slightly,  by $16,643
and $2,190,  respectively;  these  savings were offset by  increased  research &
development expenses of $110,263.

         This resulted in a net operating  loss of $(105,098) for the six months
ending  March  31,  2002,  or  $202,730  lower  than the net  operating  loss of
$(307,828) for the same period in fiscal year 2001.


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<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         In the  quarter  ending  March  31,  2002,  the  Company  generated  an
operating  gain of $9,047 due to  increased  revenues and reduced  expenses.  On
March 31, 2002, the Company had $612,792 in cash and net accounts  receivable of
$463,402.  Working capital for the period ended March 31, 2002 equaled  $587,100
compared with  ($376,376)  for the period ended  September 30, 2001. The current
ratio for the period  ended  March 31,  2002 was 1.95  compared  to 0.52 for the
period ended September 30, 2001.

         The significant increase in cash was due to the conclusion of a sale of
11,904,761  shares of the  Company's  common stock  through a private  placement
offering on  December  10,  2001.  This  private  placement  offering  generated
$999,999.92  in cash.  The  shares  were  issued at a price of $0.084 per share,
which was at a discount  from the market  price.  Under this  private  placement
offering,  the Company sold 2,976,189 of these shares to related parties,  which
include members of the Board of Directors and their relatives. Additionally, Dr.
C. Allen  Wall  purchased  6,378,576  shares and became a member of the Board of
Directors during the quarter ended December 31, 2001. This infusion of cash will
be used for short-term working capital requirements to generate future sales.

         The Company anticipates that cash requirements for the remainder of the
fiscal year will be met by a combination  of existing cash on hand,  operational
income, and financing.

FOREIGN CURRENCY TRANSACTIONS

         All the Company's  transactions  are  negotiated,  invoiced and paid in
U.S. dollars.

INFLATION

         Management  believes the Company's  operations and financial  condition
have suffered no adverse material effect due to inflation.

SHARE PRICE VOLATILITY

         During the second  quarter of fiscal  year 2001,  the  Company's  share
price experienced some price decline and volatility  compared to the same period
in the prior fiscal year. The trading price of the Company's  common stock could
be subject to wide fluctuations in response to quarter-to-quarter  variations in
operating results,  changes in earnings estimates by analysts,  announcements of
technological  innovations  or new  products by the Company or its  competitors,
general  conditions in the software and computer  industries and other events or
factors.  In  addition,  in recent  years the stock  market in general,  and the
shares of technology  companies in particular,  have  experienced  extreme price
fluctuations.  This volatility has had a substantial  effect on the market price
of securities  issued by many  companies for reasons  unrelated to the operating
performance  of the  specific  companies.  These broad market  fluctuations  may
adversely affect the market price of the common stock.

FORWARD-LOOKING STATEMENTS

         The discussion  contained in this  Management  Discussion & Analysis is
"forward  looking" as that term is contemplated by Section 27A of the Securities
Act of 1933 and Section 12E of the Securities  exchange Act of 1934,  including,
without limitation,  statements regarding the Company's  expectations,  beliefs,
intentions or strategies  regarding  future  business  operations  and projected
earnings  from its products and services,  which are subject to many risks.  All
forward-looking  statements  included in this document are based on  information
available  to the  Company  on the  date  hereof,  and the  Company  assumes  no
obligation to update any such forward-looking  statements.  The Company's actual
results may differ  materially as a result of certain  factors,  including those
set forth  hereafter  and  elsewhere in this Form 10-QSB and as disclosed in the
Company's  other  filings with the Security and Exchange  Commission.  Potential
investors should consider  carefully the previously  stated factors,  as well as
the more detailed  information  contained elsewhere in this Form 10-QSB,  before
making a decision to invest in the common stock of the Company.


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<PAGE>


PART II - OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES

         None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

         At the Company's  Annual Meeting of Stockholders  held on March 6, 2002
         at the  Company's  South  San  Francisco  headquarters,  the  following
         matters were submitted to a vote of the stockholders of the Company.

         (i)      The  election  of  Douglas P. Boyd,  John Klock,  Alexander R.
                  Margulis,  Chris  Shepherd,  and C. Allen Wall as directors to
                  serve a  one-year  term  until  the  2003  Annual  Meeting  of
                  Shareholders or until their respective  successors are elected
                  and qualified.

         NOMINEES                    SHARES VOTED IN FAVOR       SHARES WITHHELD

         Douglas P. Boyd             17,037,311                  20,100

         John C. Klock               17,037,311                  20,100

         Alexander R. Margulis       17,037,311                  20,100

         Chris Shepherd              17,037,311                  20,100

         C. Allen Wall               17,037,311                  20,100

         (ii)     The amendment to the AccuImage  Stock Option Plan reserving an
                  additional  2,000,000 shares of the Company's Common Stock for
                  issuance  thereunder  was  approved  by a total of  15,454,207
                  votes  in  favor,  57,500  votes  against,  and  5,000  shares
                  abstaining.

         (iii)    The ratification of the appointment of Pohl, McNabola,  Berg &
                  Company,  L.L.P. as the Company's independent  accountants was
                  approved by a total of 17,009,411 votes in favor, 23,000 votes
                  against, and 4,900 shares abstaining.

ITEM 5.  OTHER INFORMATION

         (a)      On  April 23, 2002, the  Company announced the election of Dr.
                  Hirsch  Handmaker,  M.D. to the Board of Directors.  A copy of
                  the press  release  appears as Exhibit 99-2 to this 10-QSB and
                  is incorporated herein.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits:

                  Exhibit 99-1,  press release on March 19, 2002  announcing the
                  resignation  of the  Chairman  of the Board,  Douglas M. Boyd,
                  Ph.D.,  the  election of Dr. C. Allen Wall as the new Chairman
                  of the Board,  and the election to the Board of Dr.  Julius R.
                  Krevans, M.D., and Dr. Louis J. Kearn, Ph.D.



         (b)      Form 8-K Reports:

                  On March 19, 2002,  the Company filed a Current Report on Form
                  8-K reporting  the  resignation  of Douglas M. Boyd,  Ph.D. as
                  Chairman of the Board and the election of Dr. C. Allen Wall as


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<PAGE>

                  Chairman.  Also  announced was the election of two  additional
                  Board  members,  Dr. Julius R. Krevans,  M.D. and Dr. Louis J.
                  Kearn,  Ph.D.  A Press  Release was issued on the same day and
                  this was filed as an exhibit with the 8-K. A copy of the press
                  release  appears  as  Exhibit  99-1  to  this  10-QSB  and  is
                  incorporated herein.


                                   SIGNATURES

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

                                               ACCUIMAGE DIAGNOSTICS CORP.

May 13, 2002

                                                 By:  /s/  LEON KAUFMAN
                                                     ___________________________
                                                     Leon Kaufman
                                                     Chief Executive Officer






                                       15


<PAGE>



                                  EXHIBIT INDEX




EXHIBIT NUMBER                              DESCRIPTION
______________                              ___________

  99-1                         Press Release dated March 19, 2002.

  99-2                         Press Release dated April 23, 2002.





























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