U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB

                   [ X ] ANNUAL REPORT PURSUANT TO SECTION 13
                         OF THE SECURITIES EXCHANGE ACT
                   For the Fiscal Year Ended December 31, 1998


                            Commission File No. 09489

                        Associated Medical Devices, Inc.

                 (Name of Small Business Issuer in its Charter)
<TABLE>
<S>                                   <C>                                         <C>

Nevada                                 211 West Wall, Midland, Texas 79701            88-0164955
(State or Other Jurisdiction          (Address of Principal Executive Office,       (I.R.S. Employer
of incorporation or organization)               including Zip Code)               Identification No.)

</TABLE>

                                 (915) 682-1761
              (Registrant's telephone number, including area code)

         Securities Registered under Section 12(b) of the Exchange Act:

   Title of Each Class                 Name of Each Exchange on which Registered

    None

Securities  Registered  Under Section  12(g) of the Exchange Act:  Common Stock,
 .001 Par Value

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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     

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  management's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form 10- KSB or any
amendment to this Form 10-KSB. [ X ]

State issuer's revenues for its most recent fiscal year:  $-0-.

State the  aggregate  market  value of the voting  stock held by  non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked  prices of such stock,  as of a specified  date within the past 60
days: $-0- (stock is not quoted).

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 44,123,967

Transitional Small Business Disclosure Format:  Yes   No X  



<PAGE>



                                     PART I

Item 1.  Description of Business.
---------------------------------

General

Associated Medical Devices,  Inc. (the "Company") was incorporated in 1980 under
the laws of the State of Nevada  and filed a  registration  statement  under The
Securities Act of 1933, as amended,  thereafter with the Securities and Exchange
Commission with respect to a public offering of its common stock.  The Company's
public offering became  effective  September 12, 1980, the net proceeds of which
were $1,957,000.

The Company was  engaged in the  development  of several  medical  devices.  The
Company  was  unsuccessful  in its attempt to exploit  commercially  the medical
devices, and became illiquid during the first quarter of 1986.

The Company's  corporate  charter was revoked in 1986 by the State of Nevada for
failure to file required documents and pay associated fees. On February 1, 1995,
the corporate  charter was revived and the Directors of the Board  appointed the
current directors, then resigned.

It is the intention of the new management to bring its SEC periodic reporting to
date in order that the  Company  might be  potentially  attractive  to a private
business  that has  interest in becoming a  publicly-held  company,  without the
expense and time delay involved in distributing its securities to the public.

Proposed Business

The  Company  intends to locate and  combine  with an  existing,  privately-held
company which is profitable  or, in  management's  view,  has growth  potential,
irrespective of the industry in which it is engaged.  However,  the Company does
not  intend  to  combine  with a  private  company  which may be deemed to be an
investment  company subject to the Investment Company Act of 1940. A combination
may be structured as a merger,  consolidation,  exchange of the Company's common
stock for stock or assets or any other form which  will  result in the  combined
enterprise's becoming a publicly-held corporation.

Pending  negotiation and consummation of a combination,  the Company anticipates
that it will have, aside from carrying on its search for a combination  partner,
no business  activities,  and, thus, will have no source of revenue.  Should the
Company incur any significant  liabilities prior to a combination with a private
company, it may not be able to satisfy such liabilities as are incurred.

If the Company's management pursues one or more combination opportunities beyond
the  preliminary  negotiations  stage and those  negotiations  are  subsequently
terminated,  it is  foreseeable  that such efforts  will  exhaust the  Company's
ability to continue to seek such combination opportunities before any successful
combination can be consummated.  In that event,  the Company's common stock will
become  worthless  and  holders of the  Company's  common  stock will  receive a
nominal distribution, if any, upon the Company's liquidation and dissolution.






Page 2

<PAGE>



Combination Suitability Standards

In its pursuit for a combination  partner,  the Company's  management intends to
consider only  combination  candidates  which are profitable or, in management's
view, have growth potential.  The Company's management does not intend to pursue
any  combination  proposal  beyond the  preliminary  negotiation  stage with any
combination  candidate which does not furnish the Company with audited financial
statements  for at least its most  recent  fiscal year and  unaudited  financial
statements for interim periods  subsequent to the date of such audited financial
statements, or is in a position to provide such financial statements in a timely
manner.  The Company will, if necessary  funds are available,  engage  attorneys
and/or accountants in its efforts to investigate a combination  candidate and to
consummate a business  combination.  The Company may require  payment of fees by
such combination  candidate to fund the investigation of such candidate.  In the
event such a combination candidate is engaged in a high technology business, the
Company may also obtain  reports from  independent  organizations  of recognized
standing  covering the technology  being developed and/or used by the candidate.
The  Company's  limited  financial  resources may make the  acquisition  of such
reports  difficult  or even  impossible  to obtain  and,  thus,  there can be no
assurance  that the Company  will have  sufficient  funds to obtain such reports
when considering combination proposals or candidates.  To the extent the Company
is  unable to  obtain  the  advice or  reports  from  experts,  the risks of any
combined enterprise's being unsuccessful will be enhanced.  Furthermore,  to the
knowledge of the Company's officers and directors, neither the candidate nor any
of  its  directors,   executive  officers,  principal  shareholders  or  general
partners:

         (1)      will not have been convicted of securities  fraud, mail fraud,
                  tax  fraud,  embezzlement,  bribery,  or  a  similar  criminal
                  offense  involving  misappropriation  or theft of funds, or be
                  the subject of a pending investigation or indictment involving
                  any of those offenses;

         (2)      will  not  have  been  subject  to a  temporary  or  permanent
                  injunction   or   restraining   order  arising  from  unlawful
                  transactions  in securities,  whether as issuer,  underwriter,
                  broker,  dealer, or investment advisor,  may be the subject of
                  any pending  investigation or a defendant in a pending lawsuit
                  arising   from  or  based   upon   allegations   of   unlawful
                  transactions in securities; or

         (3)      will  not  have  been a  defendant  in a  civil  action  which
                  resulted  in a  final  judgement  against  it or him  awarding
                  damages or rescission  based upon unlawful  practices or sales
                  of securities.

The Company's  officers and directors will make these  determinations  by asking
pertinent  questions of the  management of prospective  combination  candidates.
Such persons will also ask pertinent  questions of others who may be involved in
the combination proceedings.  However, the officers and directors of the Company
will not generally take other steps to verify independently information obtained
in this manner which is favorable.  Unless  something  comes to their  attention
which  puts  them on  notice  of a  possible  disqualification  which  is  being
concealed  from them,  such persons will rely on  information  received from the
management of the prospective  combination  candidate and from others who may be
involved in the combination proceedings.

Item 2.  Description of Property.
---------------------------------

         The Company has no properties.



Page 3

<PAGE>



Item 3.  Legal Proceedings.
---------------------------

The  Company  is not a party  to any  material  pending  nor is it  aware of any
threatened legal proceeding.

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

No matters were  submitted to securities  holders during the year ended December
31, 1998.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.
------------------------------------------------------------------

Market Information

The stock  trades  over-the-counter  on the OTC Bulletin  Board.  There was only
isolated trades at $.01 per share.

As of January 1, 1998, there were 2494 holders on record of the Company's common
stock, holding a total of 44,123,967 shares.

Dividend Policy

The Company has never paid any  dividends  on its common stock and does not have
any current plan to pay any dividends in the foreseeable future.


Item 6.  Management's Discussion and Analysis of Financial
         Condition and Plan of Operation.
         --------------------------------------------------

Discussion of Financial Condition

The Company  currently has no revenues,  no operations  and owns no assets.  The
Company  will  remain  illiquid  until  such  time  as  a  business  combination
transaction  occurs, if ever. No prediction of the future financial condition of
the Company can be made.

The Company's independent auditor, S.W. Hatfield & Associates, expressed, in its
opinion on the Company's audited financial  statements,  substantial doubt about
the Company's  ability to continue as a going concern.  Reference is made to the
financial   statements  of  the  Company   included   elsewhere   herein,   and,
specifically,  to the Independent  Auditor's  Report and Note A in the financial
statements of the Company.

Plan of Business

General.   The  Company   intends  to  locate  and  combine  with  an  existing,
privately-held  company which is profitable or, in management's view, has growth
potential,  irrespective  of the industry in which it is engaged.  However,  the
Company does not intend to combine with a private company which may be deemed to
be an  investment  company  subject to the  Investment  Company  Act of 1940.  A
combination  may be  structured  as a  merger,  consolidation,  exchange  of the
Company's  common  stock for stock or assets or any other form which will result
in the combined enterprise's becoming a publicly-held corporation.

Page 4

<PAGE>


Pending  negotiation and consummation of a combination,  the Company anticipates
that it will have, aside from carrying on its search for a combination  partner,
no business  activities,  and, thus, will have no source of revenue.  Should the
Company incur any significant  liabilities prior to a combination with a private
company, it may not be able to satisfy such liabilities as are incurred.

If the Company's management pursues one or more combination opportunities beyond
the  preliminary  negotiations  stage and those  negotiations  are  subsequently
terminated,  it is  foreseeable  that such efforts  will  exhaust the  Company's
ability to continue to seek such combination opportunities before any successful
combination can be consummated.  In that event,  the Company's common stock will
become  worthless  and  holders of the  Company's  common  stock will  receive a
nominal distribution, if any, upon the Company's liquidation and dissolution.

Combination Suitability Standards. In its pursuit for a combination partner, the
Company's  management intends to consider only combination  candidates which are
profitable  or, in  management's  view,  have growth  potential.  The  Company's
management  does not  intend to  pursue  any  combination  proposal  beyond  the
preliminary  negotiation  stage with any  combination  candidate  which does not
furnish the Company  with  audited  financial  statements  for at least its most
recent  fiscal year and  unaudited  financial  statements  for  interim  periods
subsequent to the date of such audited financial statements, or is in a position
to provide such financial  statements in a timely  manner.  The Company will, if
necessary  funds are  available,  engage  attorneys  and/or  accountants  in its
efforts to  investigate  a  combination  candidate  and to consummate a business
combination.  The  Company  may  require  payment  of fees  by such  combination
candidate  to fund the  investigation  of such  candidate.  In the event  such a
combination candidate is engaged in a high technology business,  the Company may
also obtain  reports  from  independent  organizations  of  recognized  standing
covering  the  technology  being  developed  and/or used by the  candidate.  The
Company's limited  financial  resources may make the acquisition of such reports
difficult or even impossible to obtain and, thus, there can be no assurance that
the Company will have sufficient  funds to obtain such reports when  considering
combination  proposals  or  candidates.  To the extent the  Company is unable to
obtain  the  advice  or  reports  from  experts,   the  risks  of  any  combined
enterprise's being unsuccessful will be enhanced.  Furthermore, to the knowledge
of the Company's  officers and  directors,  neither the candidate nor any of its
directors, executive officers, principal shareholders or general partners:

         (1)      will not have been convicted of securities  fraud, mail fraud,
                  tax  fraud,  embezzlement,  bribery,  or  a  similar  criminal
                  offense  involving  misappropriation  or theft of funds, or be
                  the subject of a pending investigation or indictment involving
                  any of those offenses;

         (2)      will  not  have  been  subject  to a  temporary  or  permanent
                  injunction   or   restraining   order  arising  from  unlawful
                  transactions  in securities,  whether as issuer,  underwriter,
                  broker,  dealer, or investment advisor,  may be the subject of
                  any pending  investigation or a defendant in a pending lawsuit
                  arising   from  or  based   upon   allegations   of   unlawful
                  transactions in securities; or

         (3)      will  not  have  been a  defendant  in a  civil  action  which
                  resulted  in a  final  judgement  against  it or him  awarding
                  damages or rescission  based upon unlawful  practices or sales
                  of securities.

The Company's  officers and directors will make these  determinations  by asking
pertinent  questions of the  management of prospective  combination  candidates.
Such persons will also ask pertinent questions of others who may be involved  in

Page 5

<PAGE>


the combination proceedings.  However, the officers and directors of the Company
will not generally take other steps to verify independently information obtained
in this manner which is favorable.  Unless  something  comes to their  attention
which  puts  them on  notice  of a  possible  disqualification  which  is  being
concealed  from them,  such persons will rely on  information  received from the
management of the prospective  combination  candidate and from others who may be
involved in the combination proceedings.


Item 7.  Financial Statements.
------------------------------

The required financial statements are included in this document starting at page
F-1.



Item 8.  Changes in and Disagreements with Accountants on Accounting and 
         Financial Disclosures.
         ---------------------------------------------------------------
None

                                    PART III

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

The following table sets forth the officers and directors of the Company.


Name                         Position                           Age

Glenn A. Litle               President and Director             45

Matthew Blair                Secretary and Director             42

Set forth below is a description of the  backgrounds of each of the officers and
directors of the Company.

Glenn A.  Little,  is a  graduate  of The  University  of  Florida,  Gainesville
(Bachelor  of Science in  Business  Administration)  and the  American  Graduate
School of International  Management  (Master  International  Management) and has
been the  principal  of Little and  Company  Investment  Securities  (LITCO),  a
Securities  Broker/Dealer with offices in Midland,  Texas since 1979. Mr. Little
currently serves as an officer of other inactive public  corporations having the
same business purpose as the Company.

Before founding LITCO Mr. Little was a stockbroker with Howard,  Weil, Labouisse
Friedrich in New Orleans and Midland and worked for the First  National  Bank of
Commerce in New Orleans, Louisiana.

Page 13

<PAGE>


Matthew Blair was formerly a solo  practitioner of law in Midland,  Texas and is
presently  a Title IV-D  Master in Midland  County,  Texas.  Before  opening his
practice  he served in the Legal  Department  of the Federal  Deposit  Insurance
Corporation  (FDIC),  Midland,  Texas  where he  gained  exposure  to  corporate
structures and debt workouts.  His employment  before the FDIC  appointment  was
with Texas American Energy and Exxon Corporation.  Mr. Blair received a Bachelor
of Arts in  Government  from The  University of Texas at Austin (1975) and Juris
Doctor from Texas Tech University  School of Law (1979). He is licensed in every
state court in Texas,  United  States  District  Court (Texas) and in The United
States Supreme Court.


Item 10.  Executive Compensation.
---------------------------------

The Company's  management is not currently  compensated for services provided to
the  Company,  and no  compensation  has been accrued and none is expected to be
accrued in the future.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.
-------------------------------------------------------------------------

The  following  table set forth the names and  addresses  of each of the persons
known by the Company to own  beneficially 10% or more of the common stock of the
Company,  as well as the common  stock  ownership  of each of the  officers  and
directors of the Company.


Name and Address              Number of Shares       Percentage of Ownership (1)

Glenn A. Little                     -0-                        -0-
211 West Wall
Midland, Texas 79701

Matthew Blair                       -0-                        -0-
P.O. Box 10133
Midland, Texas 79710

J. Lynn Rhodes                  6,171,000                      13.98%
1964 28th Avenue
Greely, Colorado 80631


Item 12.  Certain Relationships and Related Transactions.
---------------------------------------------------------

The  Company's  President,  Glenn A. Little,  has agreed to provide funds to the
Company  sufficient to covers the Company expenses  relating to its SEC periodic
reporting and other minor corporate expenses.







Page 14

<PAGE>


Item 13.  Exhibits and Reports on Form 8-K.
-------------------------------------------

Exhibits

                  None.

Reports on Form 8-K

No Current Report on Form 8-K was filed during the year ended December 31, 1998.


                                   SIGNATURES

In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated: February 10, 1999

Associated Medical Devices, Inc.


                 
By:  /s/ Glenn A. Little
     -------------------
         Glenn A. Little
         President

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
dates indicated.


                 
/s/ Glenn A. Little                                     February 10, 1999
    ---------------
    Glenn A. Little
    President, (Chief Executive Officer,
    Principal Financial Officer) and Director

                  
/s/ Matthew Blair                                       February 10, 1999
    -------------
    Matthew Blair
    Secretary and Director

Supplemental  Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Exchange Act by Non-reporting Issuers.

As of the date of this Annual  Report on Form 10-KSB,  no annual report or proxy
material  has been sent to security  holders of the Company.  It is  anticipated
that an annual report and proxy  material will be furnished to security  holders
subsequent to the filing of this Annual Report on Form 10-KSB.



Page 15

<PAGE>


                        ASSOCIATED MEDICAL DEVICES, INC.

                                    CONTENTS


                                                                     Page

Report of Independent Certified Public Accountants                    F-2

Financial Statements

   Balance Sheets as of December 31, 1998 and 1997                    F-3

   Statements of Operations
     for the years ended December 31, 1998 and 1997                   F-4

   Statement of Changes in Shareholders' Equity
     for the years ended December 31, 1998 and 1997                   F-5

   Statements of Cash Flows
     for the years ended December 31, 1998 and 1997                   F-6

   Notes to Financial Statements                                      F-7














                                                                             F-1

<PAGE>


S. W. HATFIELD, CPA
certified public accountant

Member:    American Institute of Certified Public Accountants
               SEC Practice Section
               Information Technology Section
           Texas Society of Certified Public Accountants



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


Board of Directors and Stockholders
Associated Medical Devices, Inc.

We have audited the accompanying  balance sheets of Associated  Medical Devices,
Inc. (a Nevada  corporation)  as of  December  31, 1998 and 1997 and the related
statements of  operations,  changes in  shareholders'  equity and cash flows for
each of the years then ended. 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  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits 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 Associated  Medical Devices,
Inc. as of December 31, 1998 and 1997 and the related  statements of operations,
changes  in  shareholders'  equity and cash flows for the each of the years then
ended, in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note A to the
financial statements, the Company has no viable operations or significant assets
and is dependent upon  significant  shareholders to provide  sufficient  working
capital to maintain the integrity of the corporate entity.  These  circumstances
create  substantial  doubt  about the  Company's  ability to continue as a going
concern and are discussed in Note A. The financial statements do not contain any
adjustments that might result from the outcome of these uncertainties.





                                                S. W. HATFIELD, CPA
Dallas, Texas
January 27, 1999


                      Use our past to assist your future sm

P. O. Box 820395                               9002 Green Oaks Circle, 2nd Floor
Dallas, Texas  75382-0395                               Dallas, Texas 75243-7212
214-342-9635 (voice)                                          (fax) 214-342-9601
800-244-0639                                                      SWHCPA@aol.com

<PAGE>


<TABLE>

<CAPTION>
                        ASSOCIATED MEDICAL DEVICES, INC.
                                 BALANCE SHEETS
                           December 31, 1998 and 1997


                                                                 1998          1997      
                                                             -----------    -----------
<S>                                                          <C>            <C>

                                     ASSETS
Current assets                                               $      --      $      --
                                                             -----------    -----------

     Total Assets                                            $      --      $      --
                                                             ===========    ===========



                      LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
   Current liabilities
     Accounts payable - trade                                $     4,999    $     4,248
     Due to controlling shareholder                                1,000           --
                                                             -----------    -----------

     Total Liabilities                                             5,999          4,248
                                                             -----------    -----------


Commitments and contingencies


Shareholders' equity
   Common stock - $0.001 par value 
     50,000,000 shares authorized 
     44,093,967 shares issued and
     outstanding,  respectively                                   44,094         44,094
   Additional paid-in capital                                  2,708,394      2,708,394
   Accumulated deficit                                        (2,758,487)    (2,756,736)
                                                             -----------    -----------

     Total Shareholders' Equity                                   (5,999)        (4,248)
                                                             -----------    -----------

     Total Liabilities and Shareholders' Equity              $      --      $      --
                                                             ===========    ===========
</TABLE>



The accompanying notes are an integral part of these financial statements.
                                                                             F-3

<PAGE>



                        ASSOCIATED MEDICAL DEVICES, INC.
                            STATEMENTS OF OPERATIONS
                     Years ended December 31, 1998 and 1997


                                             1998             1997      
                                         ------------    ------------

Revenues                                 $       --      $       --
                                         ------------    ------------


Expenses
   General and administrative expenses          1,751           1,416
                                         ------------    ------------

     Total operating expenses                   1,751           1,416
                                         ------------    ------------

Loss from Operations                           (1,751)         (1,416)

Provision for income taxes                       --              --
                                         ------------    ------------

Net Loss                                 $     (1,751)   $     (1,416)
                                         ============    ============

Net loss per weighted-average
   share of common stock outstanding              nil             nil
                                         ============    ============
Weighted-average number of shares
   of common stock outstanding             44,093,967      44,123,885
                                         ============    ============



The accompanying notes are an integral part of these financial statements.
                                                                             F-4

<PAGE>

<TABLE>

<CAPTION>

                        ASSOCIATED MEDICAL DEVICES, INC.
                  STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                     Years ended December 31, 1998 and 1997


                                                              Additional                    Treasury
                                       Common Stock            paid-in       Accumulated     stock
                                   Shares       Amount         capital        deficit        at cost         Total
                               -----------    -----------    -----------    ------------   -----------    ------------   
<S>                             <C>           <C>            <C>            <C>            <C>            <C>

Balances at
   January 1, 1997              44,123,967    $    44,124    $ 2,708,510    $(2,755,320)   $      (146)   $    (2,832)

Retirement of Treasury Stock       (30,000)           (30)          (116)          --              146           --

Net loss for the year                 --             --             --           (1,416)          --           (1,416)
                               -----------    -----------    -----------    -----------    -----------    -----------
Balances at
   December 31, 1997            44,093,967         44,094      2,708,394     (2,756,736)          --           (4,248)

Net loss for the year                 --             --             --           (1,751)          --           (1,751)
                               -----------    -----------    -----------    -----------    -----------    -----------

Balances at
   December 31, 1998            44,093,967    $    44,094    $ 2,708,394    $(2,758,487)   $      --      $    (5,999)
                               ===========    ===========    ===========    ===========    ===========    ===========

</TABLE>










The accompanying notes are an integral part of these financial statements.
                                                                             F-5

<PAGE>



                        ASSOCIATED MEDICAL DEVICES, INC.
                            STATEMENTS OF CASH FLOWS
                     Years ended December 31, 1998 and 1997


                                               1998       1997      
                                              -------    -------

Cash Flows from Operating Activities
   Net loss for the period                    $(1,751)   $(1,416)
   Adjustments to reconcile net loss
     to net cash provided by operating
     activities
       Increase in accounts payable - trade       751      1,416
                                              -------    -------

Net cash used in operating activities          (1,000)      --
                                              -------    -------


Cash Flows from Investing Activities             --         --
                                              -------    -------


Cash Flows from Financing Activities
   Advances from controlling shareholder        1,000       --
                                              -------    -------

Net cash provided by financing activities       1,000       --
                                              -------    -------


Increase (Decrease) in Cash                      --         --

Cash at beginning of period                      --         --
                                              -------    -------

Cash at end of period                         $  --      $  --
                                              =======    =======


SUPPLEMENTAL DISCLOSURE OF
   INTEREST AND INCOME TAXES PAID

     Interest paid for the year               $  --      $  --
                                              =======    =======
     Income taxes paid for the year           $  --      $  --
                                              =======    =======










The accompanying notes are an integral part of these financial statements.
                                                                             F-6

<PAGE>


                        ASSOCIATED MEDICAL DEVICES, INC.

                          NOTES TO FINANCIAL STATEMENTS


Note A - Organization and Description of Business

Associated  Medical Devices,  Inc.  (Company) was incorporated under the laws of
the State of Nevada on March 11,  1980 for the  development,  and  marketing  of
various medical  devices.  Due to the non-payment of required fees and filing of
required  reports,  the Company  forfeited its corporate charter during 1986 and
was revived in February 1995. The Company had an initial year-end of May 31 and,
effective  December  31, 1997,  the  Company's  Board of  Directors  changed its
year-end to  December  31. The  accompanying  financial  statements  reflect the
change in year-end to December 31.

In  September  1980,  the  Company  successfully  completed  a public  offering,
pursuant to a Registration  Statement under The Securities Act of 1933,  raising
net proceeds to the Company of approximately $1,957,000.

The Company was  unsuccessful in its attempt to bring several medical devices to
the marketplace and the Company became  insolvent by the second quarter of 1987.
All assets,  liabilities  and operations  were  subsequently  liquidated and the
Company became dormant.

The  Company  has  had  no  operations,   assets  or  liabilities   since  1987.
Accordingly,  the  Company  is  dependent  upon  management  and/or  significant
shareholders to provide  sufficient working capital to preserve the integrity of
the  corporate  entity  at  this  time.  It is  the  intent  of  management  and
significant  shareholders to provide  sufficient  working  capital  necessary to
support and preserve the integrity of the corporate entity.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.


Note B - Summary of Significant Accounting Policies

1.   Cash and cash equivalents

     For  Statement of Cash Flows  purposes,  the Company  considers all cash on
     hand  and  in  banks,  including  accounts  in  book  overdraft  positions,
     certificates of deposit and other highly-liquid investments with maturities
     of three months or less, when purchased, to be cash and cash equivalents.

2.   Loss per share

     Loss per  share of common  stock is  computed  using  the  weighted-average
     number of shares outstanding during each respective period presented. As of
     December 31, 1998 and 1997,  respectively,  the Company has no  outstanding
     stock warrants, options or convertible securities which could be considered
     as dilutive for purposes of the loss per share calculation.


Note C - Common Stock Transactions

Effective  December  31, 1997,  the  Company's  Board of Directors  approved the
retirement and cancellation of 30,000 shares of outstanding common stock held by
the Company as treasury stock.


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