<PAGE>
                                          
                         SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
                                          
                                    FORM 10-QSB


(Mark One)
 [X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange
                                    Act of 1934
                    For the quarterly period ended June 30, 1998
                                          
 [ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
                                      of 1934
                   For the transition period from _____ to _____
                                          
                           Commission File Number 0-25136
                                          
                               KINETIC VENTURES, LTD
            (Name of Small Business Issuer as specified in its charter)
                                          
          DELAWARE                                     33-0464753     
--------------------------------------     ------------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

         1095 Pender Street, Suite 850, Vancouver, British Columbia V6E 2M6
         ------------------------------------------------------------------
                (Address of principal executive offices) (Zip Code)

                     Issuer's telephone number, (604) 689-1428
                                                --------------

     Check whether the issuer (1) has filed all reports required by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for the past 90
days:     
YES [X]      NO [   ]


There were 39,933,733 shares of the issuer's Common Stock outstanding as of 
July 27, 1998.


              This Form 10-QSB consists of 10 pages and no exhibits.

<PAGE>

                               KINETIC VENTURES LTD.
                           NOTES TO FINANCIAL STATEMENTS
                        For the Period Ending June 30, 1998
                                    (Unaudited)

1.   Summary of Significant Accounting Policies:

     BASIS OF PRESENTATION:
     
     Although unaudited, the interim financial statements in this report reflect
     all adjustments, consisting of normal recurring accruals, which are, in the
     opinion of management, necessary for a fair statement of financial
     position, results of operations and cash flows for the interim periods
     covered and of the financial condition of the Company at the interim
     balance sheet dates.  The results of operations for the interim periods
     presented are not necessarily indicative of the results expected for the
     entire year.
     
     The year-end balance sheet information was derived from audited financial
     statements, but does not include all disclosures required by generally
     accepted accounting principles.  These financial statements should be read
     in conjunction with the Company's audited financial statements and notes
     thereto included in the Company's Annual Report on Form 10-KSB for the year
     ended December 31, 1997.
     
     The Company has experienced recurring losses from operations and has an
     accumulated deficit of $15,953,216 at June 30, 1998.  These matters raise
     substantial doubt about the Company's ability to continue as a going
     concern.
     
     PROPOSED BUSINESS PLANS:
     
     As of June 30, 1998, the Company has no active business operations. 
     Management intends to attempt to seek to have the Company enter into
     further business operations.  Management is currently reviewing various
     alternatives relating to further business activities for the Company, but
     no specific business activities have been identified and no agreements or
     agreements in principle have been entered into whereby the Company will
     again be engaged in any business activities.  In addition, management has
     made no decision as to any specific industries or geographical areas where
     any such future business activities may be undertaken.  Although management
     believes that its future business activities will be the result of the
     acquisition of an existing business, there can be no assurance with respect
     thereto and the Company may become engaged in such activities through other
     means.  Management may seek to raise additional capital to enable it to
     become engaged in further business activities to finance an acquisition of
     an existing business or it may effectuate the acquisition through a merger,
     consolidation or other issuance of shares of the Company's common stock.

<PAGE>

                               KINETIC VENTURES LTD.
                      NOTES TO FINANCIAL STATEMENTS, CONTINUED
                        For the Period Ending June 30, 1998
                                    (Unaudited)


     There can be no assurance that the Company will be successful in effecting
     the acquisition of any further business operations.  In addition, there can
     be no assurance that the terms of such acquisition may not be dilutive to
     the Company's existing stockholders or that such terms will be advantageous
     to the Company.  There can be no assurance that the Company will be
     successful in its attempts to enter into any further business activities.

     Until such time as the Company is successful in entering into further
     business activities, it should be expected that the Company will not
     realize any material revenues.

2.   Note Payable:

     Note payable consists of the following:

<TABLE>
<CAPTION>

                                               (Unaudited)
                                                June 30,          December 31,
                                                  1998                1997
                                               -----------        ------------
   <S>                                         <C>                <C>
   Note payable due on demand, and 
   non-interest bearing                                 $0            $139,000
                                                        --            --------

</TABLE>

3.   Income Taxes:
     
     At December 31, 1997, the Company had net operating loss carryforwards for
     federal and state purposes of approximately $15,300,000 and $6,130,000
     respectively.  In addition, the Company had research and experimentation
     credit carryforwards for federal and state purposes of approximately
     $323,000 and $139,000, respectively.  The federal credit carryforward
     expires beginning in 2006.  The utilitzation of net operating losses and
     credit carryforwards may be limited under the provisions of Internal
     Revenue Code Section 382 when a change of ownership occurs.

<PAGE>

     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
             AND RESULTS OF OPERATIONS
     
     On March 20, 1997 the Company completed the sale, pursuant to a Stock 
     Purchase and Option Agreement dated July 17, 1995, of substantially all 
     its assets to Ballard Medical Products ("Ballard").  Reference should be 
     made to the Company's Annual Report on Form 10-KSB for the year ended 
     December 31, 1997 for a description of the transaction and the Company's 
     future business plans.  As a result of the disposition of the Company's 
     assets, and until such time, if ever, that the Company enters into 
     further business operations, the Company will not realize any sales and 
     does not expect to incur any related expenses.

     The following discussion should be read in conjunction with the 
     Financial Statements and Notes thereto appearing elsewhere in this 
     Quarterly Report on Form 10-QSB.  In addition the Company desires to 
     take advantage of certain provisions of the Private Securities 
     Litigation Reform Act of 1995 that provide a "safe harbor" for forward 
     looking statements made by or on behalf of the Company.  Except for the 
     historical information contained herein, the matters discussed herein 
     are forward looking statements, the accuracy of which is necessarily 
     subject to risks and uncertainties. Specifically, the Company wishes to 
     alert readers that the information set forth in "Item 1.  Description of 
     Business -Proposed Business Plans," and the Company's intentions and 
     efforts to enter into further business activities contained herein and 
     in the Company's Annual Report on Form 10-KSB for the year ended 
     December 31, 1997 are forward looking statements. Various factors, 
     including the inability of management to identify, locate and acquire in 
     a timely manner future business activities, among other matters 
     discussed in this Report, may adversely affect the Company's ability to 
     remain in existence.  Failure to locate further business activities 
     could lead to the dissolution of the Company.

     Until the Company is successful in entering into further business 
     activities, it can be expected that its revenues will be nominal.

<PAGE>

     NET SALES

     Net Sales decreased to $Nil for the three months and the six months ended
     June 30, 1998 as compared to $Nil for the three months and $345,450 for the
     six months ended June 30, 1997, a year to date decrease of 100%.  The sale
     of the Company's assets which was completed on March 20, 1997 resulted in
     there being no sales activity in the current year.

     GROSS PROFIT

     Gross Profit decreased to $Nil for the three months and the six months
     ended June 30, 1998 as compared to $Nil for the three months and $91,477
     for the six months ended June 30, 1997 a year to date decrease of 100%. 
     The sale of the Company's assets which was completed on March 20, 1997
     resulted in there being no sales activity in the current year.

     RESEARCH AND DEVELOPMENT 

     Research and Development expenses represent the Company's investment in the
     advancement of less invasive technology in the fields of neuro and vascular
     surgery.  These expenses decreased to $Nil for the three months and the six
     months ended June 30, 1998 as compared to $Nil for the three months and
     $110,919 for the six months ended June 30, 1997, a year to date decrease of
     100%.  This decrease was due to a decrease in personnel and related benefit
     costs and a reduced spending in expenses related to the Company's vascular
     products including clinical and regulatory submissions.  No such expenses
     were incurred subsequent to March 20, 1997.

     SALES AND MARKETING EXPENSES 

     Sales and Marketing expenses were $Nil for the three months and the six
     months ended June 30, 1998 as compared to $Nil for the three months and
     $315,137 for the six months ended June 30, 1997, a year to date decrease of
     100%.  This decrease was the result of the discontinuance of these
     activities after the sale of the Company's assets in March, 1997.

     GENERAL AND ADMINISTRATIVE EXPENSES 

     General and administrative expenses were $14,519 for the three months and
     $21,565 for the six months ended June 30, 1998 as compared to $31,563 for
     the three months and $241,090 for the six months ended June 30, 1997, a
     decrease of 54% and 91% respectively.  The decrease for the three months
     and year to date was due to the sale of the Company's business on March 20,
     1997.

<PAGE>

     NET INCOME (LOSS)

     Net loss was $15,426 for the three months and $22,472 for the six months
     ended June 30, 1998.  Net loss was $35,055 for the three months and net
     income was $1,190,584 for the six months ended June 30, 1997, a decrease of
     $19,629 and $1,213,056 respectively.  The prior year income is primarily
     attributable to the gain on sale of the Company's assets.

     LIQUIDITY AND CAPITAL RESOURCES

     Working capital was a deficit of $18,209 at June 30, 1998 as compared to
     working capital deficiency of $163,755 at June 30, 1997 or an decrease of
     $145,546.  The Company's cash resources at June 30, 1998 were minimal. 

     The Company had, at June 30, 1998, no commitments for any other credit
     facilities such as revolving loans or lines of credit that could provide
     additional working capital.

<PAGE>

                            PART II - OTHER INFORMATION



ITEMS 1,2,3,4, AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K   

          a)   No exhibits have been filed with this Report.




                                     SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                        KINETIC VENTURES LTD.


     DATED: JULY 27, 1998               BY: /S/ BRIAN BAYLEY
                                            ----------------
                                            BRIAN BAYLEY, PRESIDENT 
                                            (PRINCIPAL EXECUTIVE OFFICER)

<PAGE>

      PART I - FINANCIAL INFORMATION

      Item 1.    Financial Statements


                             KINETIC VENTURES LTD.
                                 Balance Sheets

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------
                                                         June 30,   December 31,
                                                           1998         1997
--------------------------------------------------------------------------------
                                                       (UNAUDITED)
<S>                                                  <C>            <C>
ASSETS
Current assets:
      Cash                                            $        838      179,228 
      --------------------------------------------------------------------------
Total Assets                                          $        838      179,228 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
      Accounts payable and accrued liabilities        $     19,047       13,412 
      Note payable                                             -        139,000 
      Income tax payable                                       -         22,553 
--------------------------------------------------------------------------------
                                                            19,047      174,965 
Shareholders' deficit:
      Common stock, $0.001 par value,                       39,934       39,934 
      40,000,000 shares authorized;39,933,733 shares
      outstanding
      Additional paid in capital                        15,895,073   15,895,073
      Accumulated deficit                              (15,953,216) (15,930,744)
      --------------------------------------------------------------------------
                                                           (18,209)       4,263 
--------------------------------------------------------------------------------
                                                      $        838      179,228 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

</TABLE>

    The accompanying notes are in integral part of the financial statements.

<PAGE>

                             KINETIC VENTURES LTD.
                          Statements of Income (Loss)
        For the six months and three months ended June 30, 1998 and 1997
                                  (Unaudited)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                  Three months ended       Six months ended
                                        June 30                 June 30 
                                   1998        1997        1998         1997
--------------------------------------------------------------------------------
<S>                            <C>           <C>        <C>           <C>
Sales                          $       -           -           -        345,450 
Cost of goods sold                     -           -           -        253,974 
--------------------------------------------------------------------------------
                                       -           -           -         91,476 
--------------------------------------------------------------------------------

Operating expenses:
      Research and development         -           -           -        110,919 
      Sales and marketing              -           -           -        315,137 
      General and administrative    14,519      31,563      21,565      241,090 
      --------------------------------------------------------------------------
                                    14,519      31,563      21,565      667,146 
      --------------------------------------------------------------------------

Other income (expense):
      Interest expense, net              -      (3,492)          -      (72,105)
      Gain on sale of assets             -           -           -    1,828,338 
      Other                              -           -           -       13,021 
      --------------------------------------------------------------------------
                                         -      (3,492)          -    1,769,254 
      --------------------------------------------------------------------------

Net income (loss) before
provision for
income taxes                       (14,519)    (35,055)    (21,565)   1,193,584 
Provision for state income
taxes                                 (907)          -        (907)      (3,000)
--------------------------------------------------------------------------------
Net income (loss)              $   (15,426)    (35,055)    (22,472)   1,190,584 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Net income (loss) per common
share                          $         -           -           -         0.12 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Weighted average number of
common shares outstanding       39,933,733   9,933,733  39,933,733    9,933,733 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

</TABLE>

    The accompanying notes are in integral part of the financial statements.

<PAGE>

                             KINETIC VENTURES LTD.
                            Statements of Cash Flows
                For the six months ended June 30, 1998 and 1997
                                  (UNAUDITED)

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------
                                                               1998         1997
--------------------------------------------------------------------------------
<S>                                                     <C>          <C>
Cash flows from operating activities:
      Net income (loss) for the period                  $  (22,472)   1,190,584 
      --------------------------------------------------------------------------

      Adjustments to reconcile net income (loss) to net
      cash used by operating activities:
         Net effect from sale of assets to Ballard               -   (1,828,338)
         Depreciation and amortization                           -       25,283 
         Decrease in accounts receivable                         -      182,982 
         Decrease in inventory                                   -       59,074 
         Decrease in prepaid expenses                            -       11,695 
         Increase in accounts payable and accrued
         liabilities                                         5,635       78,195 
         Decrease in note payable                         (139,000)           - 
         Decrease in income tax payable                    (22,553)           - 
         -----------------------------------------------------------------------
                                                          (155,918)  (1,471,109)
         -----------------------------------------------------------------------

      Net cash used by operating activities               (178,390)    (280,525)
      
Cash provided by financing activities:
      Net proceeds from notes payable                            -      180,000 
      Payments & current maturities of capital lease             -         (321)
      obligations
      Redemption of preferred stock                              -       (2,281)
      --------------------------------------------------------------------------
                                                                 -      177,398 
      --------------------------------------------------------------------------
Decrease in cash                                          (178,390)    (103,127)

Cash, beginning of period                                  179,228      105,204 
--------------------------------------------------------------------------------

Cash, end of period                                     $      838        2,077 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

</TABLE>

    The accompanying notes are in integral part of the financial statements.