<PAGE>

                              FINANCIAL STATEMENTS

                                     VISCORP
                        (A DEVELOPMENT STAGE ENTERPRISE)

                      Condensed Consolidated Balance Sheets

                                     ASSETS
<TABLE>
<CAPTION>
                     
                                                        Unaudited     Unauditd 
                                                           Six          Six 
                                                          Months       Months 
                                                          Ended        Ended 
                                                         June 30,     June 30, 
                                                           1997         1996 
                                                        ---------    ---------
<S>                                                    <C>          <C>
CURRENT ASSETS                                                                 
    Cash and cash Equivalents                             436,215       72,604 
    Receivables                                                   
       Stockholders                                        12,740 
       Other                                              199,870       57,445 
                                                                             - 
    Prepaid expenses                                       40,785      588,988 
                                                        ---------    ---------
                    Total Current Assets                  689,610      719,037 
                                                        ---------    ---------
 PROPERTY AND EQUIPMENT , AT COST                                 
    Equipment and Furnitue                                104,197       93,697 
    Equipment and Furniture under                                    
          capital lease                                    46,589            - 
    Test Equipment                                         35,130        4,883 
                                                        ---------    ---------
                                                          185,916       98,580 
                                                        ---------    ---------
    Less accumulated depreciation                         (45,733)     (31,244)
                                                        ---------    ---------
                    Total Property and Equipment, Net     140,183       67,336 
                                                        ---------    ---------

OTHER ASSETS                                                      
    Investment securities-Digital Sciences, Inc.                -      578,907 
    Investments                                           100,000            - 
    Intangible assets (Net of accumulated                         
     amortization)                                         75,766       93,243 
    Other                                                   5,753        5,670 
                                                        ---------    ---------
                    Total Other Assets                    181,519      677,820 
                                                        ---------    ---------
                                Totals                  1,011,312    1,464,193 
                                                        ---------    ---------
                                                        ---------    ---------
</TABLE>


                                    page 1
<PAGE>

                                    VISCORP    

                   LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)          
<TABLE>
<CAPTION>
                                                        Unaudited     Unauditd 
                                                           Six          Six 
                                                          Months       Months 
                                                          Ended        Ended 
                                                         June 30,     June 30, 
                                                           1997         1996 
                                                       -----------  -----------
<S>                                                    <C>          <C>
CURRENT LIABILITIES                                              
   Accounts payable                                       741,194      785,614 

   Accrued expenses                                       115,380       24,223 
   Notes payable to related parties                       644,385      285,397 
   Other notes payable                                    105,962            - 
   Due to former officer and consultant                   203,522            - 
                                                       -----------  -----------
         Total Current Liabilities                      1,810,443    1,095,234 
                                                       -----------  -----------
NOTES PAYABLE (NET OF PORTION INCLUDED                           
   in current liabilities)                                 29,895            - 
              
MINIMUM ROYALTY OBLIGATIONS                               450,000            - 
                                                       -----------  -----------
         Total Liabilities                              2,290,338    1,095,234 
                                                       -----------  -----------
STOCKHOLDERS' EQUITY (DEFICIT)                                   
   Common stock                                           221,280      221,280 
   Preferred stock                                         20,318            - 
   Additional paid-in capital (common)                 15,096,123    8,435,497 
   Additional paid-in capital (preferred)               2,680,928            - 
   Dividend cost (preferred)                             (113,985)           - 
   Deferred compensation for grant stock option        (3,713,542)           - 
   Deficit accumulated during the                                
     development stage                                (15,470,148)  (8,237,037)
   Net unrealized investment losses (gaines)                    -      (50,781)
                                                       -----------  -----------
         Total Stockholders' Equity (Deficit)          (1,279,026)     368,959 
                                                       -----------  -----------
                                Totals                  1,011,312    1,464,193 
                                                       -----------  -----------
                                                       -----------  -----------
</TABLE>

                                  page 2

<PAGE>

                                    VISCORP

                        (A Development Stage Enterprise)

                   Condensed Consolidated Statement of Income
<TABLE>
<CAPTION>
                                                      Unaudited      Unaudited      Period from  
                                                         Six            Six         May 1, 1990  
                                                        Months         Months       (Inception)  
                                                        Ended          Ended          through  
                                                       June 30,       June 30,        June 30,   
                                                         1997           1996            1997     
                                                     -----------    -----------   ------------
<S>                                                  <C>            <C>           <C>
LICENSE INCOME                                                -              -       (629,688) 

OPERATING EXPENSES
    Research and development                             43,098        808,305      3,841,278
    Minimum royalty expense                                   -              -        900,000
    Travel and entertainment                             94,682        234,090      1,604,114
    Unallocated                                               -              -        300,000
    Legal fees
        Former employee litigation                       30,183        151,312        892,967
        Other                                           151,575        106,483      1,186,591
   Consulting                                           209,017        232,448        933,972
   Stock option compensation                                  -              -      2,927,083
   Fund raising fees for failed offerings                     -              -        118,237
   Rent expense -related parties                              -              -         39,400
   Other general and administrative                     532,919        474,048      2,959,187
                                                     -----------    -----------   ------------
              Total Operating Expenses                1,061,474      2,006,686     15,702,829
                                                     -----------    -----------   ------------
                                                                                  ------------
OPERATING LOSS                                        1,061,474      2,006,686     15,073,141
                                                     -----------    -----------   ------------
OTHER EXPENSE (INCOME)
    Interest expense - Stockholder debt                  30,976          6,002        268,904
    Interest expense - Other                              5,024              -         28,088
    Interest income                                     (14,074)        (5,480)       (34,615)
    Loss on disposal of equipment                             -              -          4,642 
    Loss on investment                                        -              -        129,688
                                                     -----------    -----------   ------------
              Total Other (Income) Expense, Net          21,926            522        397,007
                                                     -----------    -----------   ------------
NET LOSS                                              1,083,400      2,007,208     15,470,148 
                                                     -----------    -----------   ------------
                                                     -----------    -----------   ------------
AVERAGE SHARES OUTSTANDING (COMMON)                  22,128,000     21,628,000
AVERAGE SHARES OUTSTANDING (PREFERRED)                2,031,832              -

LOSS PER SHARE                                               04             09
                                                     -----------    -----------  
</TABLE>


<PAGE>

                                     VISCORP

                        (A DEVELOPMENT STAGE ENTERPRISE)

               Condensed and Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                      Unaudited      Unaudited     Period from  
                                                         Six            Six            Six  
                                                        Months         Months         Months  
                                                        Ended          Ended          Ended  
                                                       June 30,       June 30,       June 30,   
                                                         1997           1996          1997     
                                                    -------------------------------------------
<S>                                                  <C>            <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES                                                                    
    Net loss                                          (1,083,400)    (2,007,208)   (15,470,148)
    Adjustments to reconciled net loss to net                                                          
      cash used in operating activities                                       -                     
    Depreciation and amortization                         19,861         81,568        121,047 
    License income received in stock                           -              -       (629,688)
    Stock option compensation                                  -              -      2,927,083 
    Unallocated                                                -              -        300,000 
    Loss on investment                                         -              -        129,688 
    Services paid in stock                                     -              -        416,250 
    Interest on stockholder loans                         30,976              -        268,906 
    Interest on nonstockholder loans                       6,665              -         12,747 
    Provision for losses on advances                           -              -         36,509 
    Loss on disposal of equipment                              -              -          4,642 
    (Increase) in accounts receivable                   (191,091)             -       (191,091)
    (Increase) decrease in prepaid expenses              (10,307)      (488,988)       (40,785)
    Increase (decrease) in                                                                              
        Accounts payable                                (839,464)       480,725        599,819 
        Accrued expenses                                 (49,753)        11,289         82,975 
        Minimum royalty obligation                             -              -        450,000 
                                                    -------------------------------------------
              Total Adjustments                       (1,033,113)        84,594      4,488,102 
                                                    -------------------------------------------
              Net Cash Used in Operating Activities   (2,116,513)    (1,922,614)   (10,982,046)
                                                    -------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES                                                                    
    Proceeds from sale of equipment                            -              -            500 
    Capital expenditures                                 (58,394)       (38,269)      (159,068)
    Advances to employees (net)                                -        (57,445)       (36,509)
    Patents and other expenditures                             -              -       (142,234)
    Advances to stockholders                                   -              -       (116,478)
                                                    -------------------------------------------
              Net Cash used in Investing Activities      (58,394)       (95,714)      (453,789)

</TABLE>

<PAGE>

                                     VISCORP
                         (A DEVELOPMENT STAGE ENTERPRISE)

                  Condensed Consolidated Statement of Cash Flows


<TABLE>
<CAPTION>

                                                      Unaudited    Unaudited    Period from
                                                         Six          Six       May 1, 1997
                                                        Months       Months     (Inception)
                                                        Ended        Ended        through
                                                       June 30,     June 30,      June 30,
                                                         1997         1996          1997
                                                    ----------------------------------------
<S>                                                 <C>          <C>            <C>
CASH FLOW FROM FINANCING ACTIVITIES
  (Repayments of checks issued in excess
   of funds on deposit)                                    --            --            --
  Net borrowings from nonstockholders                      --        51,002       100,000 
  Net borrowings from stockholders                     20,000     1,300,000     4,103,384 
  Principal payments under notes payable               (4,793)           --       (10,763)
  Repayments to affiliated company                          --           --            --
  Proceeds from issuance of common stock                    --           --     5,586,000 
  Payment of stock issuance costs                    (346,502)           --      (740,335)
  Repayment of stockholder borrowings                                    --      (100,000)
  Proceeds from issuance of preferred stock         3,047,748            --     3,047,748 
  Dividends paid                                     (113,985)           --      (113,985)
                                                    ----------------------------------------

      Net Cash Provided by Financial Activities     2,602,468     1,351,002    11,872,049 
                                                    ----------------------------------------

NET INCREASE IN CASH & CASH EQUIVALENTS               427,561      (667,326)      436,215 

CASH & CASH EQUIVALENTS, BEG OF YEAR                    8,654       739,930            --
                                                    ----------------------------------------

CASH & CASH EQUIVALENTS, END OF PERIOD                436,215        72,604       436,215
                                                    ----------------------------------------
                                                    ----------------------------------------

</TABLE>

<PAGE>



VisCorp
4764 Park Granada 
Suite 110
Calabasas, CA  91302

RESULTS OF OPERATIONS


Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996.

     The company had no license income during the period nor did it have
any during the same period of the previous year.

     Research and Development Expenses decreased to $43,098 for the second 
quarter of 1997 from $808,305 for the second quarter of fiscal 1996, a 
decrease of  $765,207. This is due to abandoning the development of the ED 
and UITI devices.
  
     Travel and entertainment expenses decreased to $94,682 for the second 
quarter of fiscal 1997 from $234,090 for the second quarter of fiscal 1996, a 
decrease of $139,408. This is  due to the overall reduction in the number of 
employees, the discontinuation of the development of the ED and UITI devices 
as well as a tightened travel policy began by management.

     Consulting expenses decreased to $209,017 for the second quarter of 1997 
from $232,448 for the second quarter of fiscal 1996, a decrease of $23,431. 
This decrease is due to the reduced use of consultants during the period.

     Legal fees for litigation decreased to $30,183 for the second quarter of 
fiscal 1997 from $151,312  for the second quarter of fiscal 1996, a decrease 
of $121,129. Legal  fees for other activities  increased $151,575  for the 
second quarter of fiscal 1997 from $106,483 for the second quarter of fiscal 
year 1996 an increase of $45,092. The decrease in litigation expenses is 
largely due to the negotiation of an out of court settlement in the 
Serlin/Lerch lawsuit. The rise in other legal expenses is due to the 
relocation of the offices to California and a brief period when new counsel 
was retained before the dismissal of Chicago counsel.


     Other General and Administrative expenses increased to  $532,919 for the 
second quarter of 1997 from $474,048 for the second quarter of fiscal 1996, 
an increase of $58,871. This increase is due primarily to the relocation of 
the office from Chicago to California and associated costs as well as 
increased compensation for key executives.


<PAGE>

VisCorp
4764 Park Granada
Calabasas, California 901302


                                 SIGNATURES

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

                                    VisCorp



Date: June 30, 1997                 LAWRENCE D. SIEGEL
     ---------------                --------------------------------------------
                                    Lawrence D. Siegel
                                    (President, Chief Executive Officer
                                     and Director (Principal Executive Officer))



Date: June 30, 1997                 HUGH A. JENCKS
     ---------------                --------------------------------------------
                                    Hugh A. Jencks
                                    Vice President, Secretary and Chief
                                    Operating Officer (Principal Financial and
                                     Accounting Officer))