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 June 30, 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 June 30, 2002. No shares of
preferred stock are outstanding.

Transitional Small Business Disclosure Format:

                                 Yes [ ] No [X]


<PAGE>


                           ACCUIMAGE DIAGNOSTICS CORP.

                                   Form 10-QSB
                                  June 30, 2002


TABLE OF CONTENTS


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements                                                 3

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

             Statements of Operations & Comprehensive Income (unaudited)
             for the Three and Nine Months Ended June 30, 2002 and 2001       5

             Statements of Cash Flows (unaudited) for the Nine Months
             Period Ended June 30, 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                                               13

Item 4.  Submission of Matters to a Vote of Securities Holders               13

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


Signature                                                                    14


                                       2


<PAGE>


PART I.  FINANCIAL INFORMATION
         ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>


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


                                                                   June 30, 2002       September 30, 2001
                                                                    (UNAUDITED)            (AUDITED)
                                                                   _____________       __________________
<S>                                                                 <C>                    <C>

ASSETS
Current Assets
              Cash                                                  $  559,140             $   51,422
              Accounts receivable, net of allowance                    395,581                234,875
                 for doubtful accounts of $1,172 and $15,000
              Employee receivable                                        9,000                  7,500
              Inventory                                                115,356                 94,083
              Prepaid expenses                                          50,319                 17,350
              Other current assets                                         886                  5,216
                                                                    __________             __________

Total Current Assets                                                 1,130,282                410,446

Property and Equipment, net of accumulated depreciation                 45,429                 53,549

Other Assets
              Security deposits                                         15,067                 18,735
              Trade receivable-non-current                                   -                 15,075
              Licenses, net of accumulated amortization                 20,113                 29,970
              Goodwill, net of accumulated amortization                324,517                370,877
              Investment in AHS                                        375,000                375,000
                                                                    __________             __________
Total Other Assets                                                     734,697                809,657

TOTAL ASSETS                                                        $1,910,408             $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)


                                                                   June 30, 2002       September 30, 2001
                                                                    (UNAUDITED)            (AUDITED)
                                                                   _____________       __________________
<S>                                                                 <C>                    <C>

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
              Accounts payable                                      $  111,491             $   69,932
              Product warranty reserve                                 140,871                150,714
              Sales tax payable                                          3,317                 13,541
              Wages & payroll taxes payable                                  -                  4,844
              Other accrued liabilities                                 85,488                181,965
              Accrued vacation                                          48,908                 53,726
              Deferred revenue                                         117,852                312,100
              Customer deposits                                              -                      -
                                                                    __________             __________

Total Current Liabilities                                              507,927                786,822

Long-Term Liabilities
              Shareholder notes payable                                250,000                250,000
              Non-customer deposits                                      2,949                      -
                                                                    __________             __________

Total Liabilities                                                      760,876              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;                22,886                 10,982
22,886,295 and 10,981,534 shares issued and outstanding on
June 30, 2002 and September 30, 2001

Paid-In-Capital                                                      3,488,348              2,500,253
Accumulated other comprehensive loss                                  (125,000)              (125,000)
Accumulated Earnings (Deficit)                                      (2,236,702)            (2,149,405)
                                                                    __________             __________

Total Stockholder's Equity                                           1,149,532                236,830

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $1,910,408             $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 NINE MONTHS ENDED
                             JUNE 30, 2002 AND 2001


                                              For the three months        For the nine months
                                                 Ended June 30,              Ended June 30,
                                           _________________________   _________________________
                                              2002          2001          2002          2001
                                           ___________   ___________   ___________   ___________
<S>                                        <C>           <C>           <C>           <C>

REVENUES                                   $   953,589   $   440,206   $ 2,665,914   $ 1,705,254

COST OF GOODS SOLD                             125,439        82,124       326,365       376,687
                                           _____________________________________________________

GROSS PROFIT                                   828,150       358,082     2,339,549     1,328,567

OPERATING EXPENSES

General and
Administrative                                 349,264       331,333     1,052,955       957,525
Sales and Marketing                            163,424        94,877       514,303       410,625
Research and
Development                                    312,123       239,837       875,493       576,210
                                           _____________________________________________________
TOTAL OPERATING EXPENSES                       824,811       666,047     2,442,751     1,937,360


                                           _____________________________________________________
OPERATING INCOME/(LOSS)                          3,339      (307,965)     (103,202)     (615,793)

OTHER (INCOME) AND EXPENSES
          Interest Income                       (1,978)       (2,805)       (3,522)      (17,888)
          Other Income                         (10,518)         (100)      (31,133)         (850)
          Interest Expense                       6,250             -        18,750             -
          Franchise and Other Taxes                  -         4,273             -         9,910
                                           _____________________________________________________

TOTAL OTHER (INCOME) AND EXPENSES               (6,246)        1,368       (15,905)       (8,828)
                                           _____________________________________________________

NET INCOME/(LOSS)                          $     9,585   $  (309,333)  $   (87,297)  $  (606,965)
                                           =====================================================

INCOME / (LOSS) PER SHARE-BASIC            $    0.0004   $    (0.028)  $    (0.004)  $    (0.055)
                                           =====================================================
INCOME / (LOSS) PER SHARE- DILUTED         $    0.0004   $    (0.028)  $    (0.004)  $    (0.055)
                                           =====================================================

Weighted Average Shares Outstanding
                   Basic                    22,886,295    10,981,534    19,943,081    10,981,534
                   Diluted                  23,065,045    10,981,534    19,943,081    10,981,534


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 NINE MONTHS PERIOD ENDED JUNE 30, 2002 AND 2001

                                                                    June 30, 2002        June 30, 2001
                                                                    _____________        _____________
<S>                                                                   <C>                  <C>

Cash Flows from Operating Activities
              Net Cash provided (used) by Operating Activities:       $(481,480)           $(443,453)
                                                                      _________            _________

              Loan to other entity

Cash Flow from Investing Activities:
              Investment in Property and Equipment                      (10,802)              (5,424)
              Loan to other entity                                            -              (44,778)
                                                                      _________            _________

              Net Cash Provided (Used) by Investing Activities          (10,802)             (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                                             507,718             (493,655)

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

Cash Balance at end of period                                         $ 559,140            $ 209,248
                                                                      =========            =========


Supplemental Disclosure:
              Interest Paid                                           $   6,250            $       -
              Income Taxes-Franchise tax                              $     800            $   4,273


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 June 30,
2002 and September 30, 2001, the results of its operations for the nine months
ended June 30, 2002 and 2001, and the cash flow for the periods ended June 30,
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 nine months ended June 30, 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 June 30, 2002 and September
30, 2001 were $559,140 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 $7,621 and $13,116, and $40,700 and $43,112 for the
three and nine months ended on June 30, 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 nine months
ended June 30, 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 quarter ended June 30, 2002 was 178,750.
There were no dilutive securities for the nine month period ended June 30, 2002
and the three and nine month periods ended June 30, 2001.


                                       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

         The following transactions took place between the Company and related
parties during the nine month period ended June 30, 2002:

         In the prior fiscal year, the Company received cash from AHS, Inc., an
entity in which the Company has a 5% ownership interest, in the amount of
$312,100 for sales of the Company's products, which were not yet shipped at
September 30, 2001. AHS was not able to take delivery of the products ordered
due to construction delays at their facilities at that time. $312,100 was
recorded as deferred revenue for the fiscal year ended September 30, 2001.
Deferred revenue was reduced to $117,852 due to shipments in the second and
third quarters of fiscal year ended September 30, 2002.



(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 April 1 to June 30, 2002, the Company issued
incentive stock options to its employees and Board members allowing them to
purchase up to 522,500 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.


                                       10


<PAGE>


           Also, the Company issued stock options to its Scientific Advisory
Board allowing them to purchase up to 40,000 share 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 3-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 June 30, 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.

         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 June 30, 2002, revenue increased by
$513,383, or 116.6%, over the same period in 2001. Revenues for the quarter
ended June 30, 2002 were $953,589 compared with $440,206 for the same period in
2001. Sales for this quarter to GE/Imatron Inc. decreased slightly by $44,168 to
$236,265, compared to $280,433 for the same period in 2001 and sales to other
customers increased significantly by $557,551 to $717,324, compared to $159,773
for the same period in 2001. GE/Imatron sales accounted for 24.8% and 63.7% of
total revenues for the same period in 2002 and 2001, respectively. Approximately
$200,000 in sales to AHS were recognized in the second and third quarters of
fiscal year ended September 30, 2002.

GROSS PROFIT

         For the three months ended June 30, 2002, gross profit on sales
increased to $828,150, or 86.8%, compared with $358,082, or 81.3% in 2001.


                                       11


<PAGE>


SALES AND MARKETING

         The Company's sales and marketing expenses for the quarter ended June
30, 2002 were $163,424 compared with expenses of $94,877 for the same quarter in
fiscal year 2001. This increase, of $68,547, was due to increased travel and
entertainment expenses, significantly increased tradeshow fees & related
expenses from a greater than prior quarter tradeshows/symposiums presence (seven
shows compared to one), and commissions paid on increased sales.

RESEARCH AND DEVELOPMENT

         The Company spent $312,123 on research and development (R&D) activities
during the quarter ended June 30, 2002 compared with $239,837 for the quarter
ended June 30, 2001. This increase is due primarily to an increase in salary and
related expenses from additional R&D staff over the quarter ended June 30, 2001
offset by decreased spending on external 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 $349,264 for the quarter
ended June 30, 2002, which compares with $331,333 for the same quarter in the
previous year. This increase, of $17,931, is primarily due to higher
administration salaries offset by reduced office rental expenses.

RESULTS OF OPERATIONS

         Revenues increased by $513,383, to $953,589, for the quarter ended June
30, 2002, or approximately 116.6% over the same quarter ended June 30, 2001.
Expenses increased by $158,764, to $824,811, over the same quarter, prior year,
primarily due to increased tradeshow/symposium exhibitions presence, travel
expenses, and marketing materials and commissions, of approximately $75,000, and
research and development salaries and related expenses, of approximately
$83,000.

         This resulted in a net operating loss of ($87,297) for the nine months
ending June 30, 2002, or $519,668 lower than the net operating loss of
($606,965) for the same period in fiscal year 2001. This was primarily due to
significantly increased revenues, of $960,660 or 56.3%, over the same prior
period ($2,665,914 compared to $1,705,254, respectively) offset by a moderate
increase, of $505,391 or 26.1%, in operating expenses due primarily to increased
R&D and Administration headcount and tradeshow expenses.

LIQUIDITY AND CAPITAL RESOURCES

         In the quarter ending June 30, 2002, the Company generated an operating
gain of $3,339 due to increased revenues. On June 30, 2002, the Company had
$559,140 in cash and net accounts receivable of $395,069. Working capital for
the period ended June 30, 2002 equaled $622,355 compared with a deficit of
($376,376) for the period ended September 30, 2001. The current ratio for the
period ended June 30, 2002 was 2.23 compared to 0.52 for the period ended
September 30, 2001. Net operating activities used $481,480 and $443,453 for the
nine months period ended June 30, 2002 and 2001, respectively.

         During the quarter ending June 30, 2002, the Company invested
approximately $11,000 to acquire primarily computer equipment.

         The significant increase in cash, compared to the period ended
September 30, 2001, 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


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<PAGE>


Directors  during the quarter ended December 31, 2001.  This infusion of cash is
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.

         Due to improved sales, inventories, at $115,356, increased by $21,273
over the fiscal year ended September 30, 2001. Prepaid expenses, at $50,319,
increased by $32,969 primarily due to deposits for tradeshows and insurance
premiums. Accounts payable increased to $111,491 due to timing of invoices to
suppliers; this was an increase of $41,559 over the fiscal year ended September
30, 2001.

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 third 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.

PART II - OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES

         None

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

         None


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ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibit  Description
_______  ___________

  99     Certification of Periodic Report


                                   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.

August 13, 2002

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