SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                       -

                                  FORM 10-KSB

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

                  For the fiscal year ended December 31, 2001
                                            ------------------

                       Image Technology Laboratories, Inc.
                       -----------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                22-3531373
           --------                                ----------
   (State or other jurisdiction of              (I.R.S. Employer
    incorporation or organization)              Identification No.)

  167 Schwenk Drive, Kingston, New York               12401
  -------------------------------------               -----
(Address of principal executive offices)          (Zip Code)

Registrant's telephone number, including area code: (845) 338-3366
                                                    --------------

Securities registered pursuant to Section 12(b) of the Act:  None
                                                             ----

Securities registered pursuant to Section 12(g) of the Act:

                           Common Stock
                           ------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X    No   .
                                      ---     ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]

The issuer's revenues for the most recent fiscal year was $21,375.

The aggregate market value of the voting stock held by non-affiliates of the
registrant, based on the $.50 last sales price reported by NASDAQ/NMS on
4/5/02 (within last 60 days), was $1,991,981.

As of December 31, 2001, the registrant had issued and outstanding
11,272,712 shares of Common Stock.

         DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's Registration Statement Form SB-2/A filed
are incorporated by reference in Part III of this Report.





<PAGE>



PART I

Item 1.  Description of Business

        Image Technology Laboratories, Inc. is a development stage company that
has entered the medical image management segment of the healthcare information
systems market.  We were incorporated in Delaware on December 5, 1997.  Image
Technology has developed a fully integrated "radiology information
system/picture archiving and communications", known as RIS/PACS for use in the
management of medical diagnostic images and patient information by hospitals.
The PACS portion of the system inputs and stores diagnostic images in digital
format from original imaging sources such as:

        Computerized tomography, or CT scans
        Magnetic resonance imaging, or MRIs
        Ultrasound, nuclear imaging
        Digital flouroscopy

The RIS portion of the system inputs and stores patient demographics, along
with the appropriate insurance, billing and scheduling information required to
complete the patient visit.  All of the data is retained in standard formats,
including the DICOM and HL-7 standards.

         Dr. Ryon initially conceived Image Technology's picture archiving and
communications, which we call ITL RIS/PACS, in 1995 for the purpose of
electronically integrating all the diagnostic images and imaging modalities used
at the Kingston Diagnostic Center in Kingston, New York. His goal was to
implement a PACS system at the Center and then to create a wide area network to
provide over-reading services in the five hospital locations in the region. When
he discovered that no commercial vendor at the time had a product which could
provide a solution which met all of the Center's needs, Dr. Ryon assembled a
team to design a better PACS system. Dr. Ryon joined forces with Lewis Edwards,
an expert in networking and image management, and Carlton Phelps, M.D., a
radiologist with several years experience implementing commercial PACS. By late
1997, after more than a year of intensive research, the development team had
completed the specifications for the prototype ITL RIS/PACS system and had
assembled the hardware and software needed to develop the prototype at the
Center. Drs. Ryon, Phelps, and Mr. Edwards decided to form a company to
commercialize their novel RIS/PACS design based on market research which
indicated a growing demand for RIS/PACS in general and an unmet need for a PACS
such as the prototype the founders had designed. An initial command decision was
made to totally integrate, from the ground floor, the ability to incorporate all
Radiology information into the system. The resulting design is known as
RIS/PACS.

     Image Technology installed a beta-version of the ITL RIS/PACS at the Center
during 2001. In this version 2.1, the entire process of patient scheduling,
registration, image acquisition, image display, and radiographic report
generation was totally automated in a way yet to be demonstrated in the
industry. At the heart of the system are software modules referred to as the
workflow executive and the workflow router. This software determines what
resources are available on the enterprise and distributes the various pieces of
work appropriately. For instance, if there are five radiologists logged on to
the system, the unread studies are distributed to the doctor who has the best
expertise to read a particular study. The level of expertise is determined at
the time of logon with a set of defined credentials. Once the study has been
read, it then flows to an available stenographer for transcription. Once the
report has been transcribed, it flows back to the radiologist who reported the
study for proofreading. The workflow router will find that particular
radiologist no matter where he/she is logged on to the system.

      Now that the system design and implementation have been completed, Image
Technology plans to initiate marketing the ITL RIS/PACS to hospitals and
outpatient centers beginning in the Northeast United States during the fiscal
fourth quarter of 2001. The ITL RIS/PACS will be manufactured, installed and
serviced by Image Technology.

Products
--------

      Image Technology's lead product is ITL RIS/PACS, a unique and proprietary
version of a PACS software system. The ITL RIS/PACS features a unique and
proprietary modular architecture which permits the system to be readily scaled
and easily upgraded. We believe that this will allow us to provide products
tailored to the size of our customers and to keep our customers at the forefront
of future technological advances by enabling us to easily update existing
systems. Other special features of the ITL RIS/PACS include:



<PAGE>

         - Automation of the total workflow,

         - Integration of patient data with digital images,

         - A unique, radiologist designed user interface,

         - Quality review programs which analyze productivity and diagnostic
           accuracy of individual radiologists or entire Radiology centers, and

         - Use of Windows 2000 as the network operating system.

         Image Technology has also designed a proprietary display workstation
that permits the simultaneous viewing of multiple diagnostic images together
with relevant patient data. The display of information emulates the current film
based paradigm using traditional x-ray view boxes for the display of multiple
images. Research has shown that simultaneous image display improves the speed
and accuracy of diagnostic interpretation. The display workstation consists of
proprietary software developed by ITL and commercially available hardware. The
unique feature of the display station is its ability to be able to display any
number of diagnostic images on any number of display surfaces. The software
stitches together any number of monitors of arbitrary resolution into one large
virtual display screen.

         ITL RIS/PACS can be used to create, store, reproduce and transmit
digitized images generated by any of the currently utilized diagnostic imaging
modalities including x-rays, ultrasound, nuclear medicine, digital fluoroscopy,
CT scans, and MRIs. Using ITL RIS/PACS that radiologists can read and interpret
the digital images from any workstation that is logged on to the network. This
includes remote locations connected via encrypted tunnels over the Internet.
This facilitates time-critical transfer of patient information between hospital
departments, such as from radiology to emergency room, as well as rapid off-site
consultations by specialists at remote locations or convenient home viewing by
individual radiologists. Hospitals and other health organizations can use ITL
RIS/PACS to permanently replace film. ITL RIS/PACS has been designed to
interface with hospital information systems so that other patient data, such as
laboratory values, can be integrated with diagnostic images for increased
accuracy of image interpretation.

         ITL RIS/PACS represents an alternative configuration model that has
been designed to provide a unique solution to many of the disadvantages of both
hyperPACS and miniPACS configurations of other companies. The architecture used
in ITL RIS/PACS is built on a foundation of innovative intelligent algorithms.
These algorithms reduce the network bandwidth and on-line storage requirements
of the Image Technology system; the two most important factors in the cost
associated with building a PACS system. Consequently, we hope that through ITL
RIS/PACS we can acquire a significant share of the U.S. market for PACS. By
making full use of the networking database management infrastructure of Windows
2000, Image Technology has leveraged recent advances in operating system design,
software development, and networking tools to produce a product which offers
greater functional capability at lower costs through scalable system
architecture. Its truly modular architecture permits capability to be
distributed incrementally, so a client can start with one piece of hardware,
which operates as a server, viewer and archive, and then expand the system by
distributing those capabilities between multiple PC's. Hardware and software can
be sized exactly to client needs. This enables ITL to offer the lowest possible
entry point purchase price for a PACS system. In addition, ITL RIS/PACS offers
capabilities not found on even the most expensive PACS, including a unique
graphical interface.



<PAGE>

Business Strategy
-----------------

         The completed RIS/PACS solution was introduced at the Radiologic
Society of North America annual meeting in November of 2001. At this time we
began our regional marketing campaign within three hundred miles of our
corporate headquarters. At present, we are focusing our management efforts on
raising significant additional funds through a secondary offering, the proceeds
of which will be used largely to hire marketing and sales staff to prepare for
the nationwide product launch in late 2002. National marketing will culminate at
the Radiological Society of North America meeting in December of 2002.
Product sales will be made in the form of:

         System installation,
         Software license agreements, installation service agreements,
         Continuing services and support agreements.

         For the next two years, Image Technology expects to remain focused on
developing additional capabilities and enhancing ITL RIS/PACS, maximizing sales
of this product in the United States, and providing continuing customer service
and product upgrades.

Markets and Marketing Plan
--------------------------

         Recent market research by Frost & Sullivan shows that the market for
RIS/PACS sales in 2001 was $151 million and will attain a market size between
$500 million and $784 million annually in 2004. According to Frost & Sullivan
data, the United States presently accounts for 60% of such sales. They further
estimate that PACS have been installed in less than 12% of radiology centers in
the U.S. although that number is expected to grow to between 28% and 40% by
2002.

         Image Technology plans to launch its ITL RIS/PACS in the northeastern
United States where the reputations of its founders and the product
demonstration site at the Kingston Diagnostic Center are expected to enhance
interests in the product and generate sales leads. Image Technology plans to
market a fourth generation medical information management system that we believe
is more open, usable and scalable than any currently available product. We plan
to market ITL RIS/PACS through an in-house sales force supported by product
advertising and promotion at industry trade shows, including the December 2002
meeting of the Radiological Society of North America. We will offer the product
at a price point which is well within the reach of even the smallest hospital or
imaging facility. We believe that we can offer systems with superior
price/performance characteristics because of their unique, proprietary
architecture. Assuming profitable regional sales, we intend to expand our sales
force to market ITL RIS/PACS throughout the United States. We plan to distribute
our PACS products via three channels:


         Relationships with original equipment manufacturers,
         Partnerships, and
         Direct distribution through our sales representatives.

         There are several large companies committed to entering the PACS
market, but have failed to either develop or acquire the technology needed to
gain market share. We plan to identify an appropriate partner whose in-house
marketing, sales and support resources can be leveraged to propel Image
Technology's products into national and international markets.

         We have identified several companies whose interests are complementary
with our goals. Image Technology will pursue mutually advantageous partnerships
with firms which can provide access to markets, technology or service and
support. We have begun discussions with Alpha Medical, Yonkers N.Y. who sells
and services diagnostic imaging equipment in our regional area. This company is
offering to sell and maintain ITL RIS/PACS through their network of sales and
maintenance representatives in exchange for non-exclusive rights to sell Image
Technology's products. We feel that such an arrangement will give Image
Technology immediate access to a large customer base.



<PAGE>

         We intend to maintain an in-house sales and marketing staff to provide
direct sales locally and nationally. They will advertise the product through
trade shows, print advertisements, and through our site on the Web. Image
Technology will sell primarily to two target buyer groups; those who already
have a PACS system in place and want a cost effective way of growing their
system and small hospitals and imaging centers who want to start small and enter
the PACS arena gradually.

         Image Technology will sell a license to use the ITL RIS/PACS software
along with third party hardware preloaded with our proprietary software, as a
package, in order to eliminate the possibility of incompatibilities. Image
Technology eventually plans to sell third-party hardware components, at a
profit, to customers who wish to purchase system hardware from Image Technology
in conjunction with their purchase of an ITL RIS/PACS. However, we have no plan
to institute hardware-only sales in conjunction with the ITL RIS/PACS product
launch and do not believe that supplying the hardware needs of our software
customers is necessary to the competitive success of ITL RIS/PACS. As an
alternative, ITL will offer installations on a per use basis. For this form of
installation, clients will be charged for each study that passes through the
system, and billed on a monthly basis. This is an attractive approach for the
smaller client as there is no capital outlay, and the cost is expensed.

Competition and Competitive Advantage

         Image Technology will compete with a variety of companies in the United
States which are marketing or developing PACS for the medical community. A
number of highly competitive, smaller companies specialize in image management
software and equipment and a smaller number of larger medical and computer
equipment vendors have added PACS to their product line. To date no single
company has captured a predominant share of the current market for PACS. In
addition, a number of large hospital radiology centers are presently developing
their own PACS for internal use. This trend may reduce the market for the ITL
RIS/PACS among larger institutions. It may also result in the introduction of
additional competitive products in the market to the extent that such
proprietary systems are being developed in collaboration with computer software
and hardware vendors who may be given the opportunity to commercialize such
products upon completion. Image Technology, together with all other PACS
manufacturers, will also continue to compete for sales to some extent with
producers of older diagnostic imaging technologies such as film-based x-rays,
which remain the predominant medical imaging modalities.

         Currently, the top five vendors for RIS/PACS as identified by Frost and
Sullivan are Siemens Medical, Cerner Corp., Meditech Information Technology,
Inc., IDX Systems Corp., and McKesson Corp. IBM has also entered the PACS market
as a pure systems integrator, selling and installing other vendors' products.

         We believe that most available RIS/PACS systems have significant
drawbacks such as:

         Poor user interfaces,
         Lack of scalability, and
         Prohibitive entry point purchase prices.

         We believe that such drawbacks account in part for the fact that none
of our competitors have been able to capture more than 30% of the market in
recent years.

Protection of Proprietary Technology

         Our ability to market a competitive RIS/PACS product depends, in part,
on our success in protecting our proprietary interest in the ITL RIS/PACS
software so that competitors cannot duplicate its innovative design. The
principal forms of protection available for software such as ITL RIS/PACS are
copyright laws and common law trade secret protection. Image Technology has
secured from its founders an assignment of all their rights and titles to the
ITL RIS/PACS software developed prior to Image Technology's incorporation and
therefore, believes it owns the full rights to copyright the ITL RIS/PACS



<PAGE>


software. In addition, each founder is employed under an agreement containing
continuing obligations of confidentiality, non-disclosure, assignment of
work-product and right-to-inventions as well as obligations of non-competition
which continue for a period of two years from termination of his employment.
Image Technology plans to require substantially similar obligations from all key
employees hired in the future. By licensing rather than selling our software, we
expect to retain maximum trade secret protection for our product technology.
However, there can be no assurance that all elements of our software are
sufficiently original to qualify for copyright protection or that we will be
successful in preventing the unauthorized disclosure of our trade secrets. As a
result, we may face competition from sales of products which are substantially
similar to our own from which we will not benefit or we may not be entirely able
to prevent such sales even though we may have the right to sue a person who
makes unauthorized disclosure of our trade secrets.

         We plan to pursue patent protection to the limited extent that patent
protection is available and advisable for any element of our products. Patent
protection may be available for certain aspects of our workstation technology
and for certain limited components of our software, including certain
proprietary algorithms developed for use in ITL RIS/PACS.

Product Approval Process

         ITL RIS/PACS is regulated as a medical device under the Food and Drug
Act administered by the FDA. The RIS/PACS solution developed by ITL has been
deemed exempt from the pre-market authorization process based on recent changes
in the rules. Our products have been declared substantially equivalent to
already approved products, and require no further approval.

         Although Image Technology is aware that there is an international
market for products such as ITL RIS/PACS, we have no present plans to market ITL
RIS/PACS in other countries, largely due to limited resources. However, should
we decide to market ITL RIS/PACS in other countries, we would have to comply
with the laws of, and meet the applicable regulatory procedures and standards in
each jurisdiction in which we sought to market our products. Approval in one
jurisdiction does not assure approval in another as the various federal, state,
and local regulatory authorities are independent of each other.


         A medical device and its manufacturer are subject to continuing
regulatory review even after a device is approved for marketing. Later discovery
of previously unknown problems with a product or manufacturer, or an increase in
the incidence of previously known problems, may result in restrictions on the
product and/or manufacturer. The restrictions could include withdrawal of the
product from the market. See "Risk Factors" on page 10.

Manufacturing

         We do not expect to have any manufacturing operations for hardware or
software. We expect to be able to produce sufficient copies of ITL RIS/PACS
software for licenses using the software duplication capabilities of our beta
site equipment. In the unlikely event that demand for copies of ITL RIS/PACS
exceeds our capacity to produce them, we believe that we could quickly and
inexpensively obtain copies from a computer service bureau in our area. Any
hardware we sell will be purchased fully assembled from the original equipment
manufacturer. We intend to contract with third parties for any required
customization of hardware supplied to our customers.

Insurance

         Prior to product launch, we intend to obtain product liability
insurance coverage for claims arising from the use of ITL RIS/PACS if this is
available on reasonable terms. We risk exposure to product liability claims if
the use of our products is alleged to have caused harm to a patient. The claims
might be made directly by patients or by medical organizations and medical
personnel who face liability for care rendered in conjunction with the use of
our products. There can be no assurance that the coverage obtained will be
adequate to cover claims. Product liability insurance is becoming increasingly
expensive. We may have problems:


<PAGE>


         Maintaining such insurance,

         - Obtaining additional insurance,
         - Obtaining additional insurance at a reasonable cost or
         - Obtaining additional insurance in sufficient amounts to protect
           against losses which individually or in the aggregate could have
           a material adverse effect on our business.

         Under the terms of our executive employment agreements we are obligated
to maintain term life insurance for the benefit of Drs. Ryon and Mr. Edwards
each in the amount of $300,000 if this can be obtained on commercially
reasonable terms.

Material Contracts

         In order to complete development of the ITL RIS/PACS while minimizing
capital outlays, we have leased access to a sophisticated state-of-the-art
computer hardware system containing the full complement of the equipment which
the ITL RIS/PACS is intended to run on. We have access to this system under the
terms of a facility usage and equipment lease agreement with Rockland Radiology
Group, P.C., now known as Mid Rockland Imaging Partners, or Mid Rockland.

         The agreement gives us the right to use approximately 450 square feet
of office space in the Center for access to Kingston's computer system and other
purposes during normal business hours for so long as the agreement remains in
effect. We believe our need for office space will remain modest, even when we
are fully staffed for 2002, due to the fact that most employees are expected to
telecommute. Therefore we believe that we could replace our existing space in
the Center quickly and inexpensively with no material impact on our business in
the unlikely event of early termination of the agreement. The agreement has been
approved by all the disinterested directors of Image Technology due to the
potential for conflict of interest in relation to Dr. Ryon's ownership of
Kingston and his obligations to use the leased equipment pursuant to the
agreement.

         The Board of Directors considers the facility usage and equipment lease
agreement to be on terms at least as favorable as could be obtained through
arm's length bargaining with a disinterested third party.


Item 2. Description of Property

         Image Technology's principal executive office currently occupies
approximately 450 square feet of leased space located at 167 Schwenk Drive,
Kingston, NY 12401. Image Technology's telephone number is (845) 338-3366 and
its facsimile number is (845) 338-8880.

         Image Technology believes that its current facilities will meet Image
Technology's office needs until the end of 2002.

<PAGE>


Item 3. Legal Proceedings

         We are aware of no legal proceedings against Image Technology.

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

         There were no matters submitted to a vote of security holders during
the fourth quarter of the fiscal year ended December 31, 2001.

Item 5. Market For Common Equity and Related Stockholder Matters

         Image Technology's Common Stock and Warrants currently trade on the
Over-the-Counter Bulletin Board ("OTCBB") under the symbols "IMTL", "IMTLW" and
"IMTLZ", respectively. These securities commenced trading on December 15, 2000.

         Between December 15, 2000 and April 11, 2002, Image Technology's common
stock closed highest on May 11, 2001, at $0.94 and closed lowest on November 5,
2001, at $0.27. Between December 15, 2000 and April 11, 2002, the IMTLW (.40
wt.) closed at the highest on October 1, 2001, at $0.25 and closed the lowest on
October 1, 2001, at $0.05. Between December 15, 2000 and April 11, 2002, the
IMTLZ (.50 wt.) closed at the highest on May 14, 2001, at $0.25 and closed the
lowest on September 17, 2001, at $0.05.

         As of December 31, 2001, the number of holders of record of Common
Stock, Warrant IMTLW and Warrant IMTLZ was approximately 251, 44, and 220
respectively.

         Dividend Policy

         The Company does not anticipate paying any cash dividends on its common
stock in the foreseeable future because it intends to retain its earnings to
finance the expansion of its business. Thereafter, the declaration of dividends
will be determined by the Board of Directors in light of conditions then
existing, including, without limitation, the Company's financial condition,
capital requirements and business condition.

         During the past three years, the Registrant has sold the securities
listed below pursuant to exemptions from registration under the Securities Act.
The information below is presented on a post-stock split basis.

         In January 2000, Image Technology issued 500,000 shares of preferred
stock to each of its three founders in conjunction with the commencement of
their employment agreements. The preferred shares were valued at $.30 per share
based on the price of units that the Company was offering for sale through a
private placement. The aggregate fair value of the preferred shares of $450,000
will be charged to the Company's results of operations over the terms of the
respective employment contracts.

         During March 2000, Image Technology completed an offering of units for
a total consideration of approximately $240,000 before offering expenses of
approximately $60,000. Each unit consisted of one share of common stock and one,
one-year warrant to purchase one share of common stock at an exercise price of
$0.40 per share, for an aggregate of 799,729 units, to a limited number of
accredited investors. The sales were made in reliance upon exemptions from
registration provided under Section 4(2) of the 1933 Act and Rule 506 of
Regulation D. The purchasers of these units acquired these securities for their
own account and not with a view to any distribution thereof to the public.

         During February 2000, Image Technology issued one-year warrants to
purchase 250,000 shares of common stock at an exercise price of $0.40 per share
to Robert Oakes in consideration for services rendered, valued at $60,000, in
reliance upon the exemptions from registration provided under Section 4(2) of
the 1933 Act. During March 2000, Image Technology issued 250,000 shares of
common stock to Bondy & Schloss LLP in consideration for services rendered,
valued at $75,000, in reliance upon the exemptions from registration provided
under Section 4(2) of the 1933 Act.

         In January 2002, we sold 400,000 shares of our common stock to Dr.
Ryon, our President and Chief Executive Officer for $100,000 or $.25 per share.


<PAGE>


         The issuances described above were made in reliance upon the exemptions
from registration set forth in Section 4(2) of the Securities Act relating to
sales by an issuer not involving any public offering. None of the foregoing
transactions involved a distribution or public offering. No underwriters were
engaged in connection with the foregoing issuances of securities, and no
underwriting commissions or discounts were paid.

Item 6. Management's Discussion and Analysis or Plan of Operations
------------------------------------------------------------------

Overview

         The following is a discussion of certain factors affecting Image
Technology's results of operations, liquidity and capital resources. You should
read the following discussion and analysis in conjunction with Image
Technology's audited and related notes which are included elsewhere in this
Annual Report on Form 10-KSB.

Business and Summary of Significant Accounting Policies:

        Image Technology Laboratories, Inc. is a development stage company that
has entered the medical image management segment of the healthcare information
systems market.  We were incorporated in Delaware on December 5, 1997.  Image
Technology has developed a fully integrated "radiology information
system/picture archiving and communications", known as RIS/PACS for use in the
management of medical diagnostic images and patient information by hospitals.
The PACS portion of the system inputs and stores diagnostic images in digital
format from original imaging sources such as:

        Computerized tomography, or CT scans
        Magnetic resonance imaging, or MRIs
        Ultrasound, nuclear imaging
        Digital flouroscopy

The RIS portion of the system inputs and stores patient demographics, along
with the appropriate insurance, billing and scheduling information required to
complete the patient visit.  All of the data is retained in standard formats,
including the DICOM and HL-7 standards.

As of December 31, 2001, the Company's operations have been limited to
organizational activities and have not generated any significant revenues from
operations through that date. Accordingly, the Company is considered a
"development stage company" for financial reporting purposes.

As of December 31, 2001, the Company has cash and cash equivalents of
approximately $152,000 and working capital of approximately $109,000. However,
since inception, the Company has incurred losses resulting in an accumulated
deficit of approximately $1,834,000 at December 31, 2001. The Company currently
has no significant sources of revenues and expects to incur additional losses
for the foreseeable future. In addition, the Company has only recently
introduced its product to market and does not expect to generate any significant
revenues prior to the second quarter of the year ending December 31, 2002.
Further, as of December 31, 2001, the stockholders have deferred until 2003
approximately $421,000 of compensation due them under their employment
agreements.



<PAGE>


On April 4, 2002, the Company entered into a letter of intent with a company for
the purchase of one of the Company's systems at fair market value and a service
agreement. The Company is anticipating to generate approximately $700,000 in
annual fees under this agreement. The agreement is anticipated to close no later
than May 1, 2002, unless mutually extended. In addition, the Company is
currently negotiating similar agreements with other companies.

If the aforementioned contract does not close, as anticipated, the Company
estimates that it will need additional financing of $200,000, either by debt or
equity financing to fund its planned operations beyond its current level over
the next 12 months over and above the $100,000 it received in January 2002 from
the sale of 400,000 shares of common stock in a private placement. At the
present time, except for the commitment of the Company's principal stockholder
to fund the $200,000, the Company has no commitments for additional financing
and there can be no assurance that such financing will be available on
satisfactory terms, if at all. Management believes that even if the principal
stockholder funds the additional working capital of $200,000 it will enable the
Company to meet its obligations and fund its operations through at least
December 31, 2002.

Use of estimates:
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

Revenue recognition:
Sales are recognized when revenue is realized or becomes realizable and has been
earned. In general, revenue is recognized when the earnings process is complete
and collectibility is assured, which is usually when the Company delivers the
diagnostic images in digital format to the customer. During the year ended
December 31, 2001 and the period from January 1, 1998 (date of inception) to
December 31, 2001, the Company earned revenue of $21,375 from Kingston
Diagnostic Radiology, P.C., a company wholly-owned by one of the principal
stockholders.

Equipment:
Equipment is stated at cost, net of accumulated depreciation. Depreciation is
provided using accelerated methods over the estimated useful lives of the
assets, which range from five to seven years.




<PAGE>


Income taxes:
As of December 31, 2001, the Company had net operating loss carryforwards of
approximately $1,413,000 available to reduce future Federal and state taxable
income which will expire at various dates through 2021. The Company's only other
material temporary difference as of that date was approximately $421,000 of
accrued officers' compensation. Due to the uncertainties related to, among other
things, the future changes in the ownership of the Company, which could subject
those loss carryforwards to substantial annual limitations, and the extent and
timing of its future taxable income, the Company offset the deferred tax assets
attributable to the potential benefits of approximately $734,000 related to the
net operating loss carryforwards ($566,000) and future deductibility of the
officers' compensation ($168,000) by an equivalent valuation allowance as of
December 31, 2001.

The Company had also offset the potential benefits from net operating loss
carryforwards of approximately $227,000, $7,600 and $7,200 by an equivalent
valuation allowance as of December 31, 2000, 1999 and 1998, respectively and
accrued officers' compensation of approximately $119,000 as of December 31,
2000. Although the Company had pre-tax losses in each period, income tax benefit
is included in the accompanying statements of operations as a result of the
increases in the valuation allowance of $388,000, $338,400, $400 and $7,200 in
2001, 2000, 1999 and 1998, respectively.


RESULTS OF OPERATIONS FOR YEAR ENDED DECEMBER 31, 2001 COMPARED TO
THE YEAR ENDED DECEMBER 31, 2000

REVENUES:

         As of December 31, 2001, we had not generated any significant revenues
from operations and, accordingly, we were still in the development stage.

         We do not expect to generate any significant revenues from our planned
operations prior to the second quarter of 2002.

RESEARCH AND DEVELOPMENT EXPENSES:

         During the year ended December 31, 2001 and 2000, the Company incurred
research and development expenses of $635,694 and $633,798, respectively. These
expenses were primarily compensation to our three founders under their
employment contracts. The employment agreements require an annual compensation
to our founders which aggregates $450,000 through December 31, 2002. As of
December 31, 2001, the founders elected to defer approximately $421,000 of this
amount. In addition, research and development expenses in each of these periods
includes $150,000 of amortization of unearned compensation relative to the
issuance of preferred stock to the founders.



<PAGE>


GENERAL AND ADMINISTRATION EXPENSES:

         During the year ended December 31, 2001 , the Company incurred general
and administrative expenses of $354,765 as compared to $211,797 in 2000. The
increase in 2001 was primarily attributable to an increase in payroll and other
overhead items. During 2001, the company added personnel to its payroll, as well
as incurring additional costs as it built up its infrastructure. The increases
were offset by a non-cash charge of $75,000 that was incurred during 2000 as a
result of issuing shares of common stock for professional services.

LIQUIDITY AND CAPITAL RESOURCES

         As of December 31, 2001, we had cash and cash equivalents and working
capital of approximately $152,000 and $109,000, respectively. To date, the
principal sources of capital resources have been proceeds from the issuance of
shares of common stock to our founders of $21,250 and the net proceeds from the
completed private placement of units of common stock and warrants during 2000 of
approximately $180,000. Then on October 15, 2000, we completed an initial public
offering whereby we sold 2,591,050 units at $.40 per unit and received net
proceeds of approximately $840,000. Each unit consisted of one share of common
stock and one warrant. The proceeds from this offering were used for working
capital and general corporate purposes. During 2001, we received approximately
$139,000 and $10,000, respectively, from the issuance of common stock upon the
exercise of warrants and the collection of a subscription receivable. In
addition, during 2002, we negotiated the sale of 400,000 shares of common stock
for $100,000.





Item 7. Financial Statements

         See Item 13, Exhibits, Financial Statement Schedules, and Reports on
Form 8K.

Item 8. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure

         None.

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons,
Compliance with Section 16(a) of the Exchange Act

Executive Officers and Directors

         Our executive officers and directors and their ages as of April 12,
2002 are as follows:

Name                       Age              Title
----                       ---              -----
David Ryon                 57       Director and Chairman of the Board of
                                    Directors, President, Chief Executive
                                    Officer and Principal Accounting Officer
Lewis M. Edwards           46       Director, Vice President of Research and
                                    Development, Chief Technical Officer


         All directors of Image Technology hold office until the next annual
meeting of shareholders or until their successors are elected and qualified. At
present, Image Technology's Bylaws provide for not less than one director nor
more than fifteen. Currently, there are two directors of Image Technology. The
Bylaws permit the Board of Directors to fill any vacancy and such director may


<PAGE>

serve until the next annual meting of shareholders or until his successor is
elected and qualified. Officers serve at the discretion of the Board of
Directors. There are no family relationships among any officers or directors of
Image Technology.

         DAVID RYON, MD, is a founder and principal stockholder of Image
Technology and a co-developer of ITL RIS/PACS. He was appointed to the Board of
Directors and appointed to serve as Image Technology's President and Chief
Executive Officer in December 1997. Dr. Ryon is the founder of the Kingston
Diagnostic Center in Kingston, New York. Dr. Ryon operated the Kingston
Diagnostic Center as a sole proprietor from its inception in 1992 until the sale
of the business to Mid Rockland in 1997. Dr. Ryon worked as a radiologist at the
Kingston Hospital for five years before founding the Center. Dr. Ryon graduated
as an M.D. cum laude from Albany Medical College in 1975 and served residencies
in surgery and radiology at Albany Center Hospital. Among other post-graduate
specialties, Dr. Ryon also trained as an Emergency Physician. Prior to becoming
a physician, Dr. Ryon earned a B.S. in physics with high honors and an M.S. in
engineering at the University of Rochester. He worked as an engineer at General
Electric in the medical systems division after graduation where he gained
experience in the patent process.


         LEWIS M. EDWARDS is a founder and principal stockholder of Image
Technology and a co-developer of ITL RIS/PACS. He was appointed to the Board of
Directors and elected by the Board to serve as Image Technology's Vice President
of Research and Development and Chief Technical Officer in December 1997. Mr.
Edwards has served as a senior technical staff member at IBM since 1993. He is
currently an architect and lead software designer for IBM's RS/6000 SP, a
massive parallel processor. From 1982 to 1993 he served as the head of
engineering for Graphic Systems Labs, a CAD/CAM Independent Business Unit
start-up company within IBM. He is a member of the IEEE and ACM professional
societies and a charter member of the Microsoft Developer Network. He has
provided computer-consulting services to Boeing, General Motors, Chrysler, Ford
and the Federal government's FAA and ATC teams. He holds a BSEE magna cum laude
from Princeton University and an MSCE from Syracuse University.

         In the first quarter of 2002, Dr. Carlton T. Phelps was terminated for
cause pursuant to the terms of his employment agreement as Vice President of
Finance and Administration, Chief Financial Officer, Secretary and Treasurer of
Image Technology and resigned from the Board of Directors. The terms and
circumstances of Carlton Phelps' departure are currently in dispute. Dr. David
Ryon has been appointed our acting principal accounting officer as of March 5,
2002.

Limitation on Liability of Directors

         As permitted by Delaware law, Image Technology's Certificate of
Incorporation includes a provision which provides that a director of Image
Technology shall not be personally liable to Image Technology or its
stockholders for monetary damages for a breach of fiduciary duty as a director,
except (i) for any breach of the director's duty of loyalty to Image Technology
or its stockholders, (ii) under Section 174 of the General Corporation Law of
the State of Delaware, which prohibits the unlawful payment of dividends or the
unlawful repurchase or redemption of stock, or (iii) for any transaction from
which the director derives an improper personal benefit. This provision is
intended to afford directors protection against and to limit their potential
liability for monetary damages resulting from suits alleging a breach of duty of
care by a director. As a consequence of this provision, stockholders of Image


<PAGE>


Technology will be unable to recover monetary damages against directors for
action taken by them which may constitute negligence or gross negligence in
performance of their duties unless such conduct falls within one of the
foregoing exceptions. The provision, however, does not alter the applicable
standards governing a director's fiduciary duty and does not eliminate or limit
the right of Image Technology or any stockholder to obtain an injunction or any
other type of non-monetary relief in the event of a breach of fiduciary duty.
Image Technology believes this provision will assist in securing and retaining
qualified persons to serve as directors.

Section 16(a) Beneficial Ownership Reporting Compliance. Based solely on a
review of Forms 3 and 4, and amendments thereto furnished to the Registrant
under Rule 16a-3(e) promulgated under the Securities Exchange Act of 1934 during
the most recent fiscal year, and Form 5 and amendments thereto furnished to the
Registrant with respect to its most recent fiscal year, all reports required
under Section 16(a) of the Securities Exchange Act of 1934 were timely filed.

Item 10. Executive Compensation


         The following table sets forth information for each of the Company's
Fiscal years ended December 31, 2001, 2000, and 1999 concerning compensation of
(i) all individuals serving as the Company's Chief Executive Officer during the
Fiscal year ended December 31, 2001 and (ii) each other executive officer of the
Company whose total annual salary and bonus equaled or exceeded $100,000 in the
Fiscal year ended December 31, 2001:





<TABLE>
<CAPTION>


                                Annual Compensation
                                --------------------

                                                                   Other      All Other
Name and Principal Position      Year    Salary ($) Bonus ($)(2) ($) Annual   Compensation ($)
---------------------------      ----    ---------  -----------  --------   ---------------


<S>                           <C>     <C>        <C>              <C>           <C>
David Ryon(1)                    2001    $150,000   $150,000         0              0
Chairman, President and Chief    2000     150,000    150,000         0             (3)
         Executive Officer       1999        0         0             0              0

Carlton Phelps(1)                2001     150,000    150,000         0              0
Vice President, Chief Financial  2000     150,000    150,000         0             (3)
  Officer, Secretary, Treasurer  1999        0         0             0              0
           and Director
Lewis Edwards(1)                 2001     150,000    150,000         0              0
Vice President, Chief Technical  2000     150,000    150,000         0             (3)
           Officer and Director  1999        0         0             0              0



<FN>

(1) Messrs. Ryon, Phelps and Edwards waived their salaries from Image Technology
for the years ended December 31, 1999 and 1998. These salaries were not deemed
material during this period.

(2) Messrs. Ryon, Phelps and Edwards were each issued 500,000 shares of
preferred stock in conjunction with the commencement of their employment
agreements. The preferred shares were valued at $.30 per share based on the
price of units that we were offering for sale through a private placement.

(3) See "Option Grants in Last Fiscal Year" below
</FN>
</TABLE>



<PAGE>

Employment Agreements
---------------------


         David Ryon is engaged as President, Chief Executive Officer and
Principal Accounting Officer of Image Technology and Lewis M. Edwards is engaged
as Vice President and Chief Technical Officer. Each has been signed to a three
year contract which provides them with the following:

o     a minimum annual base salary of $150,000 payable in regular equal
      installments in accordance with our general payroll practices.

o     an annual performance bonus at the end of each calendar year as determined
      in good faith by the Board based upon its annually established goals.

o     participation in all retirement plans, health and other group insurance
      programs, stock option plans and other fringe benefit plans which we may
      now or hereafter in the Board of Directors' discretion make available
      generally to its executives or employees.

o     term life insurance in the amount of $300,000, short-term and long-term
      disability insurance in the amount of not less than 60% of base salary,
      unless such insurance is not available at commercially reasonable rates.

o     an automobile for business use in accordance with Image Technology's
      standard policy for senior executive officers.


Stock Option Plan
-----------------


         In January 1998, Image Technology's stockholders ratified Image
Technology's Stock Option Plan (the "Plan") whereby options for the purchase of
up to 5,000,000 shares of Image Technology's common stock may be granted to key
personnel in the form of incentive stock options and nonstatutory stock options,
as defined under the Internal Revenue Code. Key personnel eligible for these
awards include our employees, consultants and nonemployee directors. Under the
Plan, the exercise price of all options must be at least 100% of the fair market
value of our common shares on the date of grant. The exercise price of an
incentive stock option granted to an optionee which holds more than ten percent
of the combined voting power of all classes of stock of Image Technology must be
at least 110% of the fair market value on the date of grant. The maximum term of
any stock option granted may not exceed ten years from the date of grant and
generally vest over three years.

         On January 1, 2000, we granted options under the plan to David Ryon,
Carlton T. Phelps and Lewis M. Edwards, our three founders, for the purchase of
a total of 3,000,000 shares of its common stock at $.33 per share, approximately
110% of the fair market value on the date of grant, which are exercisable
through December 31, 2009.

         No options were granted or exercised prior to January 1, 2000.


Item 11. Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth, as of April 12, 2002, the number of
shares of the Company's common stock (the "Common Stock") beneficially owned by
all persons known to be holders of more than five percent (5%) of the Common
Stock and by all executive officers and directors of the Company individually
and as a group.

<PAGE>



Security Ownership of Management

Name, Title and Address         Title of Class       Shares Beneficially Owned
of beneficial owners
-----------------------         --------------       -------------------------

                                                     Number             Percent
-------------------------------------------------------------------------------
David Ryon, M.D.                Common Stock            2,829,584       24.24%
CEO, President
and Director                    Preferred Stock           500,000       33.33%
167 Schwenk Drive
Kingston, New York
12401
-------------------------------------------------------------------------------
Carlton T. Phelps, M.D.         Common Stock            2,429,583       20.81%
167 Schwenk Drive
Kingston, New York              Preferred Stock           500,000       33.33%
12401

-------------------------------------------------------------------------------
Lewis M. Edward                 Common Stock            2,429,583       20.81%
Chief Technical Officer
and Director                    Preferred Stock           500,000       33.33%
167 Schwenk Drive
Kingston, New York
12401
-------------------------------------------------------------------------------
All officers and directors      Common Stock            7,688,750          66%
as a group                      Preferred Stock         1,500,000         100%


Item 12. Certain Relationships and Related Transactions

         Kingston Diagnostic Radiology, P.C., or Kingston, which is wholly owned
by Dr. Ryon, leases the use of its equipment to Image Technology on a
non-exclusive basis in exchange for a limited license to use ITL RIS/PACS at the
Center and paid Image Technology a $21,375 service fee during the year ended
December 31, 2001. We are party to a facility usage and equipment lease now held
by Mid Rockland Imaging. Mid Rockland Imaging, the new owners of the Center have
agreed to allow the use of the Center as a demonstration site. Through Dr. Ryon,
Image Technology has access to Kingston's state-of-the art computer system in
return for a license to use the ITL RIS/PACS software in Kingston's practice.

Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

                  The following documents are being filed as a part of this
report:

Exhibits

<TABLE>
<CAPTION>

EXHIBIT NO.       DESCRIPTION
-----------       ---------------------------------------------------
       <C>      <S>
         3.1*     Certificate of Incorporation of Image Technology
         3.2 *    Certificate of Amendment to Certificate of Incorporation of Image Technology
                  dated December 23, 1999
         3.3 *    By-Laws of Image Technology
         4.1 *    Specimen certificate for common stock of Image Technology
         4.2 *    Specimen certificate for preferred stock of Image Technology
         4.3 *    Form of Private Placement Warrant
         4.4 *    Form of Investor Warrant
         4.5 *    Form of Oakes Warrant
         4.6 **   Form of Subscription Agreement

         10.1*    Image Technology 1998 Stock Option Plan
         10.2*    Stockholders Agreement dated January 16, 1998 among certain investors and Image Technology
         10.3*    Form of Registration Rights Agreement dated February 2000 among certain stockholders of Image
                  Technology and Image Technology
         10.4*    Assignment of Intellectual Property Agreement dated as of December 18, 1997 between Image Technology
                  and David Ryon, M. D., Carlton T. Phelps, M. D. and Lewis M. Edwards.
         10.5*    Form of Facility Usage and Equipment Lease Agreement by and between Mid Rockland Imaging
                  and Image Technology dated January 12, 1998
         10.6*    Form of Employment Agreement dated December 21, 1999 between Image Technology and David Ryon, M. D.
         10.7*    Form of Employment Agreement dated December 21, 1999 between Image Technology and Carlton T. Phelps, M. D.
         10.8*    Form of Employment Agreement dated December 21, 1999 between Image Technology and Lewis M. Edwards


<FN>
*  Filed with amendment no. 1 to registration statement (No.333-336787) on June 6, 2000.

** Filed with amendment no. 2 to registration statement (No. 333-336787) on July 27, 2000.
</FN>
</TABLE>


         No reports were filed on Form 8-K during the last quarter of the period
covered by this report.


<PAGE>



                              S I G N A T U R E S
                              -------------------

         Pursuant to the requirements of Section 13 or 15(d) 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.

                              Image Technology Laboratories, Inc.

                              By:_/s/ DAVID RYON
                                  ------------------
                                   David Ryon
                                   Chief Executive Officer and
                                   Principal Accounting Officer


Date: April 15, 2002

         Pursuant to the requirements of the securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.

Signature                           Title            Date
---------                           -----            ----

/S/ DAVID RYON                    Director         April 15, 2002
--------------
David Ryon




/S/ LEWIS M. EDWARDS              Director         April 15, 2002
--------------------
Lewis M. Edwards



<PAGE>












                       IMAGE TECHNOLOGY LABORATORIES, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                         REPORT ON FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000
                         AND PERIOD FROM JANUARY 1, 1998
                    (DATE OF INCEPTION) TO DECEMBER 31, 2001







<PAGE>


                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)



                          INDEX TO FINANCIAL STATEMENTS
                          -----------------------------

                                                                        PAGE
                                                                        ----

Report of Independent Public Accountants                                 F-2

Balance Sheet
    December 31, 2001                                                    F-3

Statements of Operations
    Years Ended December 31, 2001 and 2000 and Period From
    January 1, 1998 (Date of Inception) to December 31, 2001             F-4

Statements of Changes in Stockholders' Equity (Deficiency)
    Years Ended December 31, 2001 and 2000 and Period From
    January 1, 1998 (Date of Inception) to December 31, 2001             F-5

Statements of Cash Flows
    Years Ended December 31, 2001 and 2000 and Period From
    January 1, 1998 (Date of Inception) to December 31, 2001             F-6

Notes to Financial Statements                                          F-7/15



                                      * * *


<PAGE>





                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------


To the Board of Directors and Stockholders
Image Technology Laboratories, Inc.


We have audited the accompanying balance sheet of Image Technology Laboratories,
Inc. (A Development Stage Company) as of December 31, 2001, and the related
statements of operations, changes in stockholders' equity (deficiency) and cash
flows for the years ended December 31, 2001 and 2000 and for the period from
January 1, 1998 (date of inception) to December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Image Technology Laboratories,
Inc. as of December 31, 2001, and its results of operations and cash flows for
the years ended December 31, 2001 and 2000 and for the period from January 1,
1998 (date of inception) to December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.


                                                J.H. COHN LLP


Roseland, New Jersey
February 6, 2002






                                      F-2

<PAGE>



<TABLE>
<CAPTION>

                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)

                                  Balance Sheet
                                December 31, 2001




                                     ASSETS
                                     ------

<S>                                                                 <C>
Current assets - cash and cash equivalents                          $   151,730

Equipment, net of accumulated depreciation of $4,598                     42,948
                                                                  -------------

       Totals                                                       $   194,678
                                                                    ===========


                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                    ----------------------------------------

Current liabilities:
    Accounts payable and accrued expenses                          $     37,911
    Notes payable to stockholders                                         5,200
                                                                  -------------
          Total current liabilities                                      43,111

Accrued compensation payable to stockholders                            420,541
                                                                   ------------
          Total liabilities                                             463,652
                                                                   ------------

Commitments

Stockholders' deficiency:
    Preferred stock, par value $.01 per share; 5,000,000 shares
       authorized; 1,500,000 shares issued and outstanding               15,000
    Common stock, par value $.01 per share; 50,000,000 shares
       authorized; 11,272,712 shares issued and outstanding             112,727
    Additional paid-in capital                                        1,587,118
    Unearned compensation                                              (150,000)
    Deficit accumulated in the development stage                     (1,833,819)
                                                                    -----------
          Total stockholders' deficiency                               (268,974)
                                                                   ------------

          Totals                                                    $   194,678
                                                                    ===========


</TABLE>




See Notes to Financial Statements.






                                      F-3
<PAGE>



<TABLE>
<CAPTION>

                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)

                            Statements of Operations
                     Years Ended December 31, 2001 and 2000
                         and Period From January 1, 1998
                    (Date of Inception) to December 31, 2001


                                                        2001              2000         CUMULATIVE
                                                    ----------      ------------     ------------

<S>                                                 <C>         <C>                 <C>
Revenues - related party                            $   21,375  $       -           $      21,375
                                                    ----------       -----------    -------------

Expenses:
    Research and development                           635,694           633,798        1,269,492
    General and administrative                         354,765           211,797          585,702
                                                    ----------       -----------    -------------
       Totals                                          990,459           845,595        1,855,194
                                                    ----------       -----------    -------------

Net loss                                             $(969,084)        $(845,595)   $  (1,833,819)
                                                     =========         =========    =============

Basic net loss per share                             $    (.08)      $      (.08)
                                                     =========       ===========

Basic weighted average shares outstanding           12,589,041        10,370,047
                                                    ==========        ==========



</TABLE>























See Notes to Financial Statements.




                                      F-4
<PAGE>




<TABLE>
<CAPTION>


                                                  Image Technology Laboratories, Inc.
                                                     (A Development Stage Company)

                                       Statement of Changes in Stockholders' Equity (Deficiency)
                                                Years Ended December 31, 2001 and 2000
                                                    and Period from January 1, 1998
                                               (Date of Inception) to December 31, 2001



                                                                                                                 DEFICIT
                                                                                                                 ACCUMU-
                                                                                                                 LATED      TOTAL
                                       PREFERRED STOCK        COMMON STOCK      ADDI-      COMMON                IN THE     STOCK-
                                       NUMBER             NUMBER                TIONAL     STOCK       UNEARNED  DEVELOP-  HOLDERS'
                                         OF                OF                  PAID-IN   SUBSCRIPTION  COMPEN-    MENT      EQUITY
                                       SHARES  AMOUNT     SHARES       AMOUNT   CAPITAL   RECEIVABLE   SATION    STAGE  (DEFICIENCY)
                                      -------- ------   ----------    ------- ---------  ------------ ---------  ------ -----------

<S>                                  <C>       <C>     <C>         <C>       <C>       <C>        <C>        <C>         <C>
Issuance of shares effective as of
   January 1, 1998 to founders                            7,288,750  $ 72,887$  (51,637)                                  $  21,250
Net loss                                                                                                        $ (18,407)  (18,407)
                                                        ------------ -------------------                       ----------- ---------
Balance, December 31, 1998                                7,288,750    72,887   (51,637)                          (18,407)    2,843
Net loss                                                                                                             (733)     (733)
                                                        ------------ -------- ----------                       ------------ --------

Balance, December 31, 1999                                7,288,750    72,887   (51,637)                          (19,140)    2,110

Issuance of preferred stock in
   exchange for services              1,500,000 $15,000                         435,000              $(450,000)
Issuance of common stock in exchange
   for services                                             250,000     2,500    72,500                                      75,000
Sales of units of common stock and
   warrants through private placement,
   net of expenses, in February 2000                        799,729     7,997   171,923                                     179,920
Subscription for units of common stock
   and warrants through private
   placement                                                 33,333       333     9,667  $(10,000)
Sales of units of common stock and
   warrants through public offering
     completed in October 2000, net of
     expenses                                             2,591,050    25,911   813,951                                     839,862
Amortization of unearned compensation                                                                150,000                150,000
Net loss                                                                                                         (845,595) (845,595)
                                       ---------  ------ ----------   ------- ---------   -------   --------     --------   -------

Balance, December 31, 2000             1,500,000  15,000 10,962,862   109,628 1,451,404   (10,000)  (300,000)    (864,735)  401,297
Issuance of common stock upon
   exercise of warrants                                     309,850     3,099   135,714                                     138,813
Amortization of unearned compensation                                                                150,000                150,000
Receipt of subscription receivable                                                         10,000                            10,000
Net loss                                                                                                         (969,084)(969,084)
                                       ---------  ------ ----------   ------- ---------   -------   --------     --------   -------

Balance, December 31, 2001             1,500,000 $15,000 11,272,712  $112,727$1,587,118 $ -        $(150,000) $(1,833,819)$(268,974)
                                       ========= ======= ==========   ======= ========= ========   =========   ========== =========


</TABLE>



See Notes to Financial Statements.






                                      F-5

<PAGE>




<TABLE>
<CAPTION>
                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)

                            Statements of Cash Flows
                     Years Ended December 31, 2001 and 2000
                         and Period from January 1, 1998
                    (Date of Inception) to December 31, 2001




                                                                               2001             2000         CUMULATIVE
                                                                           -----------      ------------   ---------------

Operating activities:
<S>                                                                      <C>             <C>              <C>
    Net loss                                                                 $(969,084)      $  (845,595)     $(1,833,819)
    Adjustments to reconcile net loss to
       net cash used in operating activities:
       Amortization of unearned compensation                                   150,000           150,000          300,000
       Amortization of capitalized software                                                        2,186            2,186
       Depreciation                                                              4,598                              4,598
       Common stock issued for services                                                           75,000           75,000
       Changes in operating assets and liabilities:
          Accounts payable and accrued expenses                                 17,248            20,663           37,911
          Accrued compensation payable to stockholders                         122,596           297,945          420,541
                                                                            ----------      ------------    -------------
              Net cash used in operating activities                           (674,642)         (299,801)        (993,583)
                                                                            ----------      ------------    -------------

Investing activities:
    Software costs capitalized                                                                                     (2,186)
    Purchase of equipment                                                      (47,546)                           (47,546)
                                                                           -----------                     --------------
              Net cash used in investing activities                            (47,546)                           (49,732)
                                                                           -----------                     --------------

Financing activities:
    Proceeds from issuance of notes payable to
       stockholders                                                                                  100            5,200
    Proceeds from issuance of common stock                                     138,813                            170,063
    Receipt of subscription receivable                                          10,000
    Net proceeds from private placement and public
       offering of units of common stock and warrants                                          1,024,782        1,024,782
    Payments of deferred private placement costs                                                                   (5,000)
                                                                            ----------       -----------     ------------
              Net cash provided by financing activities                        148,813         1,024,882        1,195,045
                                                                            ----------       -----------     ------------

Net increase (decrease) in cash and cash equivalents                          (573,375)          725,081          151,730

Cash and cash equivalents, beginning of period                                 725,105                24             -
                                                                            ----------  ----------------  ---------------

Cash and cash equivalents, end of period                                     $ 151,730       $   725,105     $    151,730
                                                                             =========       ===========     ============

</TABLE>







See Notes to Financial Statements.


                                      F-6

<PAGE>


                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)

                          Notes to Financial Statements


Note 1 - Business:

               Image Technology Laboratories, Inc. is a development stage
               company that has entered the medical image management segment of
               the healthcare information systems market. We were incorporated
               in Delaware on December 5, 1997. Image Technology has developed a
               fully integrated "radiology information system/picture archiving
               and communications", known as RIS/PACS for use in the management
               of medical diagnostic images and patient information by
               hospitals. The PACS portion of the system inputs and stores
               diagnostic images in digital format from original imaging sources
               such as:

               Computerized tomography, or CT scans
               Magnetic resonance imaging, or MRIs
               Ultrasound, nuclear imaging
               Digital flouroscopy

               The RIS portion of the system inputs and stores patient
               demographics, along with the appropriate insurance, billing and
               scheduling information required to complete the patient visit.
               All of the data is retained in standard formats, including the
               DICOM and HL-7 standards.

               As of December 31, 2001, the Company's operations have been
               limited to organizational activities and have not generated any
               significant revenues from operations through that date.
               Accordingly, the Company is considered a "development stage
               company" for financial reporting purposes.

               As of December 31, 2001, the Company has cash and cash
               equivalents of approximately $152,000 and working capital of
               approximately $109,000. However, since inception, the Company has
               incurred losses resulting in an accumulated deficit of
               approximately $1,834,000 at December 31, 2001. The Company
               currently has no significant sources of revenues and expects to
               incur additional losses for the foreseeable future. In addition,
               the Company has only recently introduced its product to market
               and does not expect to generate any significant revenues prior to
               the second quarter of the year ending December 31, 2002. Further,
               as of December 31, 2001, the stockholders have deferred until
               2003 approximately $421,000 of compensation due them under their
               employment agreements.

               On April 4, 2002, the Company entered into a letter of intent
               with a company for the purchase of one of the Company's systems
               at fair market value and a service agreement. The Company is
               anticipating to generate approximately $700,000 in annual fees
               under this agreement. The agreement is anticipated to close no
               later than May 1, 2002, unless mutually extended. In addition,
               the Company is currently negotiating similar agreements with
               other companies.

               If the aforementioned contract does not close, as anticipated,
               the Company estimates that it will need additional financing of
               $200,000, either by debt or equity financing to fund its planned
               operations beyond its current level over the next 12 months over
               and above the $100,000 it received in January 2002 from the sale
               of 400,000 shares of common stock in a private placement. At the
               present time, except for the commitment of the Company's
               principal stockholder to fund the $200,000, the Company has no
               commitments for additional financing and there can be no
               assurance that such financing will be available on satisfactory
               terms, if at all. Management believes that even if the principal
               stockholder funds the additional working capital of $200,000 it
               will enable the Company to meet its obligations and fund its
               operations through at least December 31, 2002.






                                      F-7

<PAGE>


                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)

                          Notes to Financial Statements


Note           2 - Summary of significant accounting policies:

               Use of estimates:
                  The preparation of financial statements in conformity with
                  accounting principles generally accepted in the United States
                  of America requires management to make estimates and
                  assumptions that affect certain reported amounts and
                  disclosures. Accordingly, actual results could differ from
                  those estimates.

               Cash equivalents:
                  Cash equivalents include all highly-liquid investments with an
                  original maturity of three months or less when acquired.

               Revenue recognition:
                  Sales are recognized when revenue is realized or becomes
                  realizable and has been earned. In general, revenue is
                  recognized when the earnings process is complete and
                  collectibility is assured, which is usually when the Company
                  delivers the diagnostic images in digital format to the
                  customer. During the year ended December 31, 2001 and the
                  period from January 1, 1998 (date of inception) to December
                  31, 2001, the Company earned revenue of $21,375 from Kingston
                  Diagnostic Radiology, P.C., a company wholly-owned by one of
                  the principal stockholders.

               Concentrations of credit risk:
                  Financial instruments which potentially subject the Company to
                  concentrations of credit risk consist primarily of cash and
                  cash equivalents. The Company places its cash and cash
                  equivalents with high-quality financial institutions. At
                  times, the Company's cash and cash equivalent balances exceed
                  the insured amount under the Federal Deposit Insurance
                  Corporation of $100,000. At December 31, 2001, the Company was
                  not exposed to such risk.

               Software development costs:
                  Pursuant to Statement of Financial Accounting Standards No.
                  86, "Accounting for the Costs of Computer Software to be Sold,
                  Leased or Otherwise Marketed," the Company is required to
                  charge the costs of creating a computer software product to
                  research and development expense as incurred until the
                  technological feasibility of the product has been established;
                  thereafter, all related software development and production
                  costs are required to be capitalized.

                  Commencing upon the initial release of a product, capitalized
                  software development costs and any costs of related purchased
                  software are generally required to be amortized over the
                  estimated economic life of the product or based on current and
                  estimated future revenues. Thereafter, capitalized software
                  development costs and costs of purchased software are reported
                  at the lower of unamortized cost or estimated net realizable
                  value. Due to the inherent technological changes in the
                  software development industry, estimated net realizable values
                  or economic lives may decline and, accordingly, the
                  amortization period may have to be accelerated.








                                      F-8
<PAGE>


                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)

                          Notes to Financial Statements


Note 2 - Summary of significant accounting policies (continued):

               Equipment:
                  Equipment is stated at cost, net of accumulated depreciation.
                  Depreciation is provided using accelerated methods over the
                  estimated useful lives of the assets, which range from five to
                  seven years.

               Impairment of long-lived assets:
                  The Company has adopted the provisions of Statement of
                  Financial Accounting Standards No. 121, "Accounting for the
                  Impairment of Long-Lived Assets and for Long-Lived Assets to
                  be Disposed of" ("SFAS 121"). Under SFAS 121, impairment
                  losses on long-lived assets, such as goodwill and capitalized
                  software costs, are recognized when events or changes in
                  circumstances indicate that the undiscounted cash flows
                  estimated to be generated by such assets are less than their
                  carrying value and, accordingly, all or a portion of such
                  carrying value may not be recoverable. Impairment losses are
                  then measured by comparing the fair value of assets to their
                  carrying amounts.

               Income taxes:
                  The Company accounts for income taxes pursuant to the asset
                  and liability method which requires deferred income tax assets
                  and liabilities to be computed for temporary differences
                  between the financial statement and tax bases of assets and
                  liabilities that will result in taxable or deductible amounts
                  in the future based on enacted tax laws and rates applicable
                  to the periods in which the differences are expected to affect
                  taxable income. Valuation allowances are established when
                  necessary to reduce deferred tax assets to the amount expected
                  to be realized. The income tax provision or credit is the tax
                  payable or refundable for the period plus or minus the change
                  during the period in deferred tax assets and liabilities.

               Net earnings (loss) per common share:
                  The Company presents "basic" earnings (loss) per common share
                  and, if applicable, "diluted" earnings per common share
                  pursuant to the provisions of Statement of Financial
                  Accounting Standards No. 128, "Earnings per Share" ("SFAS
                  128"). Basic earnings (loss) per common share is calculated by
                  dividing net income or loss applicable to common stock by the
                  weighted average number of common shares outstanding during
                  each period. The calculation of diluted earnings per common
                  share is similar to that of basic earnings per common share,
                  except that the denominator is increased to include the number
                  of additional common shares that would have been outstanding
                  if all potentially dilutive common shares, such as those
                  issuable upon the exercise of stock options and warrants, were
                  issued during the period. The rights of the Company's
                  preferred and common stockholders are substantially
                  equivalent. The Company has included the 1,500,000 preferred
                  shares from the date of their issuance in the weighted average
                  number of shares outstanding in the computation of basic loss
                  per share for the years ended December 31, 2001 and 2000 in
                  accordance with the "two class" method of computing earnings
                  (loss) per share set forth in SFAS 128.








                                      F-9
<PAGE>


                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)

                          Notes to Financial Statements



Note           2 - Summary of significant accounting policies (concluded):

                  Net earnings (loss) per common share (concluded):
                  Since the Company had net losses in 2001 and 2000, the assumed
                  effects of the exercise of 3,000,000 options outstanding at
                  December 31, 2001 and 2000 and 3,364,262 and 3,674,112
                  warrants outstanding at December 31, 2001 and 2000 would have
                  been anti-dilutive.

                  The weighted average common shares outstanding shown in the
                  accompanying statements of operations have been retroactively
                  adjusted for a 388.733 for 1 stock split that was effected on
                  January 7, 2000 (see Note 5).

               Stock options:
                  In accordance with the provisions of Accounting Principles
                  Board Opinion No. 25, "Accounting for Stock Issued to
                  Employees" ("APB 25"), the Company will recognize compensation
                  costs as a result of the issuance of stock options to
                  employees based on the excess, if any, of the fair value of
                  the underlying stock at the date of grant or award (or at an
                  appropriate subsequent measurement date) over the amount the
                  employee must pay to acquire the stock. Therefore, the Company
                  will not be required to recognize compensation expense as a
                  result of any grants of stock options at an exercise price
                  that is equivalent to or greater than fair value. The Company
                  will also make pro forma disclosures, as required by Statement
                  of Financial Accounting Standards No. 123, "Accounting for
                  Stock-Based Compensation" ("SFAS 123"), of net income or loss
                  as if a fair value based method of accounting for stock
                  options had been applied.


Note 3 - Equipment:

               Equipment consists of the following:

                  Equipment                                     $42,046
                  Furniture                                       5,500
                                                               --------
                      Total                                      47,546
                  Less accumulated depreciation                   4,598
                                                               --------

                      Total                                     $42,948
                                                                =======

               Depreciation expense amounted to $4,598 during the year ended
               December 31, 2001 and the period from January 1, 1998 (date of
               inception) to December 31, 2001.








                                      F-10
<PAGE>


                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)

                          Notes to Financial Statements



Note 4 - Notes payable to stockholders:

                  Notes payable to stockholders with a principal balance of
                  $5,200 at December 31, 2001 were noninterest bearing and
                  due on demand.


Note 5 - Stockholders' equity (deficiency):

               Preferred stock:
                  As of December 31, 2001, the Company was authorized to issue
                  up to 5,000,000 shares of preferred stock with a par value of
                  $.01 per share. No shares of preferred stock had been issued
                  as of December 31, 1999. Under the Company's Articles of
                  Incorporation, the Board of Directors, within certain
                  limitations and restrictions, can fix or alter preferred stock
                  dividend rights, dividend rates, conversion rights, voting
                  rights and terms of redemption including price and liquidation
                  preferences.

               Issuance of preferred stock to founders:
                  On January 7, 2000, the Board of Directors authorized the
                  issuance of a total of 1,500,000 shares of preferred stock to
                  the three founders of the Company in conjunction with the
                  commencement of their employment agreements on January 1, 2000
                  (see Note 9). The preferred shares will have rights to
                  dividends, rights with respect to liquidation and other rights
                  equivalent to those of holders of the Company's common stock
                  including one vote for each share held on all matters to be
                  voted on by the Company's stockholders.

                  Since the rights of the Company's preferred and common
                  stockholders are substantially equivalent, the preferred
                  shares were valued at $.30 per share based on the price of
                  units of common stock and warrants that the Company sold
                  through the private placement that was completed on February
                  4, 2000. The aggregate fair value of the preferred shares of
                  $450,000 has been recorded as unearned compensation and
                  reflected as a reduction of stockholders' equity, net of
                  accumulated amortization, in the accompanying balance sheet as
                  of December 31, 2001. The unearned compensation is being
                  charged to the Company's operations over the terms of the
                  respective employment agreements.

               Common stock:
                  As of December 31, 1999, the Company was also authorized to
                  issue up to 50,000,000 shares of common stock with a par value
                  of $.01 per share. As of that date, it had issued 18,750
                  shares of common stock to its founding stockholders for total
                  cash consideration of $21,250 in January 1998.







                                      F-11

<PAGE>


                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)

                          Notes to Financial Statements



Note           5 - Stockholders' equity (deficiency) (concluded):

               Private placement of units:
                  On February 4, 2000, the Company completed a private placement
                  of 799,729 units, at $.30 per unit, that was exempt from
                  registration under the Securities Act of 1933 and received
                  proceeds of $239,920 before related expenses of $60,000. Each
                  unit was comprised of one share of common stock and one
                  warrant. In addition, the Company issued 250,000 warrants to
                  the broker who arranged the private placement of units. Each
                  warrant gives the holder the right to purchase one share of
                  common stock at the initial exercise price of $.40 per share
                  and expires on April 15, 2002.

               Stock subscription receivable:
                  An investor subscribed to purchase 33,333 units, at $.30 per
                  unit, for a total subscription price of $10,000. Each unit was
                  comprised of one share of common stock and one warrant. Each
                  warrant gives the holder the right to purchase one share of
                  common stock at the initial exercise price of $.40 per share
                  and expires on April 15, 2002. During 2001, the Company
                  received the proceeds of the subscription receivable.

               Shares for services:
                  During March 2000, the Company issued 250,000 shares of common
                  stock for the payment of legal services. The common shares and
                  legal services were valued at a total of $75,000, or $.30 per
                  share based on the price of units sold through the private
                  placement that was completed on February 4, 2000.

               Initial public offering:
                  During 2000, the Company filed a registration statement with
                  the Securities and Exchange Commission related to an initial
                  public offering of a minimum of 1,500,000 units, on a
                  best-efforts, all-or-none basis and an additional 1,500,000
                  units on a best-efforts basis. Each unit offered consists of
                  one share of common stock and one warrant. Each warrant will
                  give the holder the right to purchase one share of common
                  stock at the initial exercise price of $.50 per share, expire
                  on April 15, 2002 and be redeemable by the Company at $.05 per
                  warrant if the closing bid price of the common stock exceeds
                  $2.00 for ten consecutive trading days. Management intends to
                  use the proceeds for working capital and general corporate
                  purposes.

                  As of October 15, 2000, the date the offering closed, the
                  Company sold 2,591,050 units at $.40 per unit from which it
                  received proceeds of $839,862, net of related expenses of
                  $196,558.








                                      F-12


<PAGE>


                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)

                          Notes to Financial Statements

Note 6 - Income taxes:

               As of December 31, 2001, the Company had net operating loss
               carryforwards of approximately $1,413,000 available to reduce
               future Federal and state taxable income which will expire at
               various dates through 2021. The Company's only other material
               temporary difference as of that date was approximately $421,000
               of accrued officers' compensation. Due to the uncertainties
               related to, among other things, the future changes in the
               ownership of the Company, which could subject those loss
               carryforwards to substantial annual limitations, and the extent
               and timing of its future taxable income, the Company offset the
               deferred tax assets attributable to the potential benefits of
               approximately $734,000 related to the net operating loss
               carryforwards ($566,000) and future deductibility of the
               officers' compensation ($168,000) by an equivalent valuation
               allowance as of December 31, 2001.

               The Company had also offset the potential benefits from net
               operating loss carryforwards of approximately $227,000, $7,600
               and $7,200 by an equivalent valuation allowance as of December
               31, 2000, 1999 and 1998, respectively and accrued officers'
               compensation of approximately $119,000 as of December 31, 2000.
               Although the Company had pre-tax losses in each period, income
               tax benefit is included in the accompanying statements of
               operations as a result of the increases in the valuation
               allowance of $388,000, $338,400, $400 and $7,200 in 2001, 2000,
               1999 and 1998, respectively.


Note 7 - Fair value of financial statements:

               The Company's financial instruments at December 31, 2001 for
               which disclosure of estimated fair value is required by certain
               accounting standards consisted of cash and cash equivalents,
               accounts payable and accrued expenses, notes payable to
               stockholders and accrued compensation payable to stockholders. In
               the opinion of management, cash and cash equivalents and accounts
               payable and accrued expenses were carried at fair value because
               of its liquidity and short-term maturity. Because of the
               relationship of the Company and its stockholders, there is no
               practical method that can be used to determine the fair value of
               the notes payable to stockholders and accrued compensation
               payable to stockholders.


Note 8 - Stock option plan:

               In January 1998, the Company's stockholders ratified the
               Company's Stock Option Plan (the "Plan") whereby options for the
               purchase of up to 5,000,000 shares of the Company's common stock
               may be granted to key personnel in the form of incentive stock
               options and nonqualified stock options, as defined under the
               Internal Revenue Code. Key personnel eligible for these awards
               include employees of the Company, consultants to the Company and
               nonemployee directors of the Company. Under the Plan, the
               exercise price of all options must be at least 100% of the fair
               market value of the Company's common shares on the date of grant
               (the exercise price of an incentive stock option granted to an
               optionee that holds more than ten percent of the combined voting
               power of all classes of stock of the Company must be at least
               110% of the fair market value on the date of grant). The maximum
               term of any stock option granted may not exceed ten years from
               the date of grant and options generally vest over three years.







                                      F-13
<PAGE>


                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)

                          Notes to Financial Statements


Note 8 - Stock option plan (concluded):

               Since the Company has elected to use the provisions of APB 25 in
               accounting for stock options, no earned or unearned compensation
               cost will be recognized in the financial statements for stock
               options granted to employees at exercise prices that are equal to
               or greater than the fair market value of the Company's common
               stock on the date of grant. Instead, the Company makes the pro
               forma disclosures required by SFAS 123 of net loss as if a fair
               value based method of accounting for stock options had been
               applied.

               On January 1, 2000, the Company granted options to its founders
               for the purchase of a total of 3,000,000 shares of its common
               stock at $.33 per share (approximately 110% of the fair market
               value on the date of grant) that are exercisable through December
               31, 2009.

               The pro forma amounts computed as if the Company had elected to
               recognize compensation cost for all stock options granted to
               employees based on the fair value of the options at the date of
               grant as prescribed by SFAS 123 and the related historical
               amounts reported in the accompanying statements of operations are
               set forth below:

<TABLE>
<CAPTION>

                                                            2001            2000
                                                       --------------  -------------

<S>                                                 <C>              <C>
                  Net loss - as reported              $    (969,084)   $   (845,595)
                  Net loss - pro forma                   (1,129,084)     (1,005,595)
                  Basic loss per share - as reported          $(.08)          $(.08)
                  Basic loss per share - pro forma            $(.09)          $(.10)
</TABLE>

               The fair value of each option granted was estimated as of the
               date of grant using the Black-Scholes Option-Pricing-Model with
               the following weighted average assumptions:

                  Expected volatility                                29%
                  Risk-free interest rate                             6%
                  Expected years of option term                      10
                  Expected dividends                                  0%


Note 9 - Employment agreements:

               During December 1999, the Company entered into employment
               agreements with its three founders that became effective on
               January 1, 2000 and obligate the Company to make an aggregate
               payment of $150,000 in the year ending December 31, 2002.

               On May 1, 2001, the Company entered into an employment agreement
               with an employee that obligates the Company to make annual
               payments in years subsequent to 2001 as follows: $115,000 in 2002
               and $38,333 in 2003.






                                      F-14

<PAGE>


                       Image Technology Laboratories, Inc.
                          (A Development Stage Company)

                          Notes to Financial Statements



Note 10- Subsequent event:

               During January 2002, the Company entered into an agreement with
               an investor relations firm. In exchange for marketing services,
               the Company granted 450,000 shares of common stock and 100,000
               two-year warrants with a $3.00 exercise price.

               The services will be valued at approximately $112,500 based on
               the fair value of the shares of common stock on the date the
               agreement was entered into.

               During January 2002, the Company negotiated the sale of 400,000
               shares of its common stock for $100,000.



                                      * * *









                                      F-15