<PAGE>

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

                                   FORM 10-KSB

                     ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 29, 2001

                           Commission File No. 0-9478

                           SPECTRUM LABORATORIES, INC.
                 (Name of small business issuer in its charter)

             Delaware                                             95-4718363
             --------                                             ----------
  (State or other Jurisdiction of                             (I.R.S. Employer
   Incorporation or Organization)                            Identification No.)

      18617 Broadwick Street
    Rancho Dominguez, California                                   90220
    ----------------------------                                   -----
(Address of principal executive offices)                         (Zip Code)

         Issuer's telephone number, including area code: (310) 885-4600

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:

                                  Common Stock
                                (Title of Class)

Check whether the issuer (1) 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 is not contained in this form and no disclosure will be
contained, to the best of registrant'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: $12,916,000

The aggregate market value of voting stock held by nonaffiliates of the
registrant is $138,748 as of February 28, 2002, based on the $1.55 per share
closing price for the Common Stock in the over-the-counter market on such date,
representing 89,515 shares held by nonaffiliates.

Number of shares of Common Stock outstanding as of February 28, 2002:  5,312,468

<PAGE>

<TABLE>
                                     TABLE OF CONTENTS
                                 FORM 10-KSB ANNUAL REPORT
                           FOR THE YEAR ENDED DECEMBER 29, 2001
                                SPECTRUM LABORATORIES, INC.
<CAPTION>

Item No.                                                                               Page
--------                                                                               ----
<S>                                                                                     <C>
    PART I
    1.      Description of Business  ...............................................     3
    2.      Description of Property  ...............................................     7
    3.      Legal Proceedings  .....................................................     8
    4.      Submission of Matters to a Vote of Security Holders  ...................     8

    PART II
    5.      Market for Common Equity and Related Shareholder Matters  ..............     8
    6.      Management's Discussion and Analysis of Financial Condition
            and Results of Operations...............................................     8
    7.      Financial Statements  ..................................................     9
    8.      Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure................................................    10

    PART III
    9.      Directors, Executive Officers, Promoters and Control Persons;
            Compliance with Section 16(a) of the Exchange Act.......................    10
    10.     Executive Compensation..................................................    11
    11.     Security Ownership of Certain Beneficial Owners and Management..........    12
    12.     Certain Relationships and Related Transactions..........................    13
    13.     Exhibits and Reports on Form 8-K........................................    13


                                            2
</TABLE>
<PAGE>

THIS ANNUAL REPORT ON FORM 10-KSB CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS
THAT INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS THE REALIZATION OF WHICH MAY
BE IMPACTED BY CERTAIN FACTORS INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH IN
ITEM 6, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS".

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL
-------

Spectrum Laboratories, Inc. (the Company or Spectrum) was incorporated in
California on June 5, 1980 under the name Immutron, Inc. On November 23, 1982,
the Company changed its name to Spectrum Laboratories, Inc. In September 1998,
Spectrum Medical Industries, Inc. (SMI) was merged into the Company and the
Company was reincorporated in Delaware. Spectrum Chromatography, Inc. and
Spectrum Europe B.V., formerly subsidiaries of SMI, are now wholly-owned
subsidiaries of the Company.

BUSINESS
--------

The Company is a leader in the development and commercialization of proprietary
tubular membranes and membrane devices for existing and emerging life sciences
applications. These products are used by life science research laboratories for
emerging applications for molecular/biological separations, fluid purification
and cell expansion/bioreactors. The Company's platform technology allows it to
create membranes and devices to meet a wide range of performance criteria and to
integrate the devices into systems for life sciences applications. The Company's
fundamental strengths are based on the control of material, membrane
characteristics, surface modification, device properties, biological utility and
cell maintenance know-how.

The Company's proprietary products are used for research by OEM manufacturers
and for Process Separations of pharmaceutical compounds. Most laboratory
products are sold through laboratory distributors. OEM and private label
products are sold primarily to manufacturers. They include re-sale versions of
the Company's laboratory products as well as specially designed membrane
products. Process or scale-up separation products are sold to pharmaceutical and
diagnostic manufacturers for process development and manufacturing. The Process
Separation products also include the necessary systems for operating the
separation application. Both OEM and Process products are sold directly by the
Company. The Company's wholly owned subsidiary, Spectrum Europe B.V., sells
process products on behalf of the Company in Europe. The Company's products and
trademarks, Spectra/Por, Cellmax and KrosFlo are well-known and used throughout
the world for purification of proteins, cells expansion, encapsulation and
diagnostic particles separation. Company personnel work closely with existing
and potential customers to develop new Mass Transfer Membranes (MTM) products,
applications and devices for the research markets.

In addition, the Company has entered into strategic partnerships, licensing
agreements and collaborative arrangements with leading corporations and research
scientists. Some of these ventures include:

The Company is marketing Cellmax Implants for rapid drug screening. This
technology was developed at the National Cancer Institute and Rhode Island
Hospital. This fast-track drug screening and testing method greatly reduces the
use of animals in new drug discovery, drug efficacy screening and drug dosing.

The Company markets, sells and develops MTM perfusion systems for human cell
expansion. The perfusion systems are sold under the trade name CELLMAX(R) and
have been successfully used to expand and maintain mammalian cells including
human cell lines.

The Company has a business relationship with Stanford Research International and
Edison Power Research Institute (EPRI). This venture, Facilichem, Inc., was
established to commercialize new membrane systems for major industrial
separations while greatly reducing current costs. The systems will be marketed
for waste stream separators for environmental markets, chiral molecule

                                       3
<PAGE>

separations for pharmaceutical use and for food and beverage separation. This
technology provides the means to add or remove trace substances which contribute
to and/or improve flavor and taste.

Facilichem, Inc. was awarded a two million dollar grant in November 1998 by the
Advanced Technology Program (ATP) of the National Institute of Standards and
Technology to commercialize its proprietary separation systems. Spectrum is the
exclusive supplier of membranes to Facilichem, Inc.

In January, 2001, the Company acquired the patents and related technology for
Supported Polymeric Liquid Membrane (SPLM) from Pharmacia Corporation. This
replaced the exclusive license that had been acquired in 1999 from Monsanto Co.,
a subsidiary of Pharmacia. The Company is developing and plans to market
laboratory and industrial products using this technology for the preferential
extraction of organic compounds from dilute aqueous solutions and removal and
mitigation of environmental pollutants from potable water.

The Company's MTM devices, loaded with hepatocytes (liver cells) have been used
successfully as liver-assist devices for patients suffering from acute liver
failure. The device provides a life sustaining "bridge" to patients suffering
from fulminant liver failure who are candidates for a liver transplant or until
their own liver regenerates and recovers. By providing MTM's devices and systems
to clinical scientists, the Company believes that its products will be part of
applications and protocols for therapies undergoing the regulatory approval
process controlling such therapies. In December of 2001, Spectrum entered into
specific research, licensing, manufacturing and supply agreements (the
Agreements) with an unrelated company to develop this technology. The agreements
call for Spectrum to expend $550,000 over the next four years on specified
research and development. Per the terms of the Agreements, Spectrum would be the
exclusive manufacturer for any product developed as a result of this research.

PRODUCTS
--------

TUBULAR MEMBRANES FOR DIALYSIS, FILTRATION AND CELL CULTURE

The Company manufactures and markets many types of porous membranes used to
concentrate, separate and purify dissolved or suspended molecules. The Company
is a major manufacturer of hollow fiber membrane products whose applications
include: point-of-use water filtration; gas filtration for semiconductor
blow-off guns, plasma gas cauterizing devices, insufflator kits for endoscopic
surgery; drug filtration for surgical eyewash solutions and pain management
parenterals.

The Company is a market leader in supplying dialysis membranes for protein
concentration to the research laboratory market. The purification and separation
of components in fluid streams is a key element in biomedical research,
molecular biology and clinical diagnostics.

On October 1, 1996, a subsidiary of the Company, SLI Acquisition Corp.,
purchased certain assets of Cellco, Inc., providing artificial capillary systems
to academic, pharmaceutical, laboratory and clinical research markets involved
in the expansion and maintenance of human and animal cells. These are closed
systems that minimize the possible contamination encountered with other culture
devices.

OPERATING ROOM (OR) DISPOSABLES

Disposable OR products consist of sterile surgical drapes for orthopedic and
arthroscopic surgical procedures, sterile camera covers, rubber elastic bandages
(sterile and non-sterile), Esmarch Elastic Bandages, and a tamper-resistant
container system for use in harvesting bone and tissue for human transplantation
and other surgical specialty products.

                                       4
<PAGE>

MARKETS AND METHODS OF DISTRIBUTION
-----------------------------------

TUBULAR MEMBRANES FOR DIALYSIS, FILTRATION AND CELL CULTURE

The Company has customers worldwide for its hollow fiber membrane and dialysis
products. The customers include pharmaceutical and diagnostic manufacturers,
medical device manufacturers, laboratories, laboratory distributors and research
institutions. Spectrum's cell culture and process filtration products are also
sold to customers worldwide, which are comprised of academic, research,
pharmaceutical, laboratory, clinical research companies and institutes. Domestic
and foreign sales are made through direct sales and distributors.

OPERATING ROOM (OR) DISPOSABLES

The three major product groups are: Operating Room Equipment Drapes, Orthopedic
Soft Goods and Esmarch Bandages.

The products are distributed through a number of channels including National and
Regional Catalog Houses, OEM and Private Label Accounts, Regional OR Specialty
Distributors, Custom Procedure Tray Manufacturers and direct sales to
Institutions and International Distributors. Nearly all Operating Room Equipment
Drapes are sold in sterile ready-to-use format. OR Drapes are sold primarily
through OEM and Private label accounts, through Regional OR Specialty
Distributors and through Regional and National Catalog Houses. Over the past few
years, the importance of OR Specialty Distributor sales has declined while OEM,
Private Label and Catalog House sales have increased. OR Drapes constitute
nearly all the Company's international sales for this product group. Orthopedic
Soft Goods are primarily sold through Regional and National Catalog Houses and
Procedure Tray Manufacturers. Approximately one-third of Orthopedic Soft Goods
sales are in non-sterile, bulk format primarily to Tray Manufacturers.
Essentially no Soft Goods or Esmarch Bandages are sold internationally. Esmarch
Bandages are sold through Catalog Houses, Regional OR Specialty Distributors,
Procedure Tray Manufacturers and Private Label. The Company employs its own
sales force but also uses stocking distributors capable of supplying product
delivery on a local level.

COMPETITIVE FACTORS
-------------------

TUBULAR MEMBRANES FOR DIALYSIS, FILTRATION AND CELL CULTURE

The Company's ability to sell its products is subject to competitive factors
that include price, quality, timely delivery and competition from companies with
greater resources. The Company's membrane and membrane devices compete with AG
Technologies, Pall Corporation, Sartorius GMBH, and Millipore Corporation in the
laboratory products area. Laboratory products are price and performance
competitive with other products for media sterilization. OEM and private label
products offer high surface area in compact housings in comparison with
competing products. Process products are offered as disposables, single use in
competition with traditional tangential flow devices which are cleaned and
re-used. Tangential flow products are attractive to users who have critical
applications where single use will ensure optimum performance and/or simplify
the validation of the process for FDA approval.

OPERATING ROOM (OR) DISPOSABLES

There are distinctly different competitors among medical disposable product
lines. Significant consolidation has taken place recently in the OR Equipment
Drape business. The major competitors offering a full line of OR Equipment
Drapes include Microtek Medical, Medical Technique Instruments, MTI, Zeiss and
Advance Medical Designs. Each manufacturer has niches in either a specific type
of equipment drape or specific accounts with the exception of Microtek which,
with over 50% of the market share, is the market leader with a strong presence
in all niches. The Company has been most effective in competing with its Video
Camera Drape line particularly on the basis of quality and price. Orthopedic
Soft Goods are similarly consolidating but the market remains very fragmented.
Major competitors include Alba, Balfour, Kimberly Clark and DeRoyal Industries
among others. Esmarch Elastic Bandage is produced by a small number of
non-medical rubber producers who then sell bulk non-sterile product to medical
device firms for packaging and sterilization. As a result, there are numerous
competitors distributing Esmarch Bandages but the range of offerings is
relatively limited with competition being primarily driven by price.

                                       5
<PAGE>

Companies such as Allegiance Healthcare and Baxter Healthcare Corporation
dominate the market with products that include surgical extremity drapes as part
of an integrated "procedure pack," both custom and standard, for specific types
of procedures, (e.g., orthopedic surgery or arthroscopic or cardiovascular
surgical cases).

The Company manufactures a rubber elastic bandage that does not require the need
for metal clips. Currently, the market is dominated by such competitors as
Becton Dickinson, producers of ACE(R) bandages, Johnson & Johnson, producers of
Dyna-Flex(R) and Kendall, producers of Tensor(R), all of which have greater
resources than the Company.

RAW MATERIALS AND SUPPLIES
--------------------------

TUBULAR MEMBRANES FOR DIALYSIS, FILTRATION AND CELL CULTURE

The Company purchases common raw polymers and a variety of casting solvents from
several approved suppliers. The Company uses these materials to formulate and
manufacture several different kinds of proprietary membranes for specific
separation and purification processes in the Life Sciences field. Additionally,
the Company purchases commercially available membranes for certain applications
from several qualified suppliers. The Company has not experienced difficulty in
obtaining the necessary raw materials and supplies to conduct its business. Many
membranes are assembled into housings that are molded from commonly available
plastic resins by third party molders using molds owned by the Company.
Membranes are often affixed to the housings by means of proprietary potting
resins supplied by two independent suppliers that are covered by an industry
cooperative disaster recovery plan. The plan allows the suppliers to manufacture
the resins in the event of an interruption of supply. Membranes are also
pre-assembled into ready-to-use devices or marketed as pre-packaged finished
products to research laboratories.

Spectrum is dependent on a limited number of suppliers for hollow fiber membrane
products but has not experienced any difficulty in obtaining necessary supplies.

OPERATING ROOM (OR) DISPOSABLES

The principal raw materials used in producing sterile surgical drapes and
elastic bandages are yarn, synthetic latex and plastic film. There are several
suppliers in the United States for yarn. The Company is dependent on a limited
number of suppliers for plastic film but has not experienced any difficulty in
obtaining necessary supplies, and none are presently anticipated.

PATENTS AND TRADEMARKS
----------------------

The Company holds a number of trademark registrations for its products, some of
which are closely identified with the Company, such as the Spectra/Por
trademark. The Company also owns or licenses numerous issued patents and pending
patents that expire at various dates through the year 2019. Some of the
Company's patents or patent estates include: hollow fiber syringe tip filter,
rapid drug screening, membrane surface modification chemistries, liquid phase
separation membranes, apparatus for forming a rolled tubular fabric article,
surgical extremity drape and a video camera drape. The Company acquired the
rights to the Cellmax trademark and all related patents, including a patent for
serum-free production of packaged viral vector. Fundamental core technology is
kept as trade secrets. Employees and vendors are covered by non-disclosure
agreements.

A finding of invalidity or unenforceability of certain of the Company's patents
could have a materially adverse effect on the Company's business.

GOVERNMENT REGULATIONS
----------------------

The Food and Drug Administration (the "FDA") and the California Food and Drug
Bureau ("CFDB") regulate the manufacture and quality control procedures of
certain of the Company's products. Compliance with FDA and CFDB regulations is a
ignificant expense but the Company believes that such expenses are costs of

                                       6
<PAGE>

doing business in the industry and that the Company's expenses are similar to
those of other companies in the business.

In addition to regulations enforced by the FDA and the CFDB, the Company is also
subject to regulations under the Environmental Protection Act, the Occupational
Safety and Health Act, and other present and potential supranational, foreign,
Federal, state and local regulations. Compliance with any of these has not had a
material effect on the capital expenditures, operations or competitive position
of the Company to date. The Company adheres to the strict provisions of its ISO
9001 certification status.

The Company cannot predict whether future changes in government regulations
might increase its cost of conducting business or affect the time required to
develop and introduce new products.

DEPENDENCE UPON FEW CUSTOMERS
-----------------------------

The Company does not believe that its business would be adversely affected by
the loss of any individual customer or small group of customers. During the 2001
and 2000 fiscal years, two distributors accounted for 10% or more of the
Company's total sales which were approximately 14% in both 2001 and 2000, for
one dealer, and were approximately 13% in both 2001 2000 for another customer.
The Company's sales to dealers are proprietary branded products which would be
resourced from other dealers or directly from the Company if a specific dealer
or dealers fail to supply the Company's products.

RESEARCH AND PRODUCT DEVELOPMENT
--------------------------------

The Company incurred research and product development expenses of approximately
$671,000 in 2001 and $677,000 in 2000. Research and product development
functions are particularly important for the Company's future growth.

EMPLOYEES
---------

On December 29, 2001, the Company had 122 employees, of which 119 were full-time
employees.

ITEM 2.  DESCRIPTION OF PROPERTY

The Company's executive offices are located at 18617 Broadwick Street, Rancho
Dominguez, California. All facilities used by the Company are leased, in good
condition and are adequate for the Company's present operating requirements.
Production and administrative facilities are located in California and Texas.
The Company has a sales and distribution facility in The Netherlands.

Information regarding the Company's major facilities is as follows:

<TABLE>
<CAPTION>
                                                                      Lease            Monthly
      Location               Principal Usage         Sq. Feet       Term. Date         Rental
------------------           ---------------        ----------      ----------       -----------
<S>                          <C>                     <C>                <C>            <C>
Rancho Dominguez, CA         Administration
                               and Manufacturing     55,000              7/05          $ 27,750
Dallas, TX                   Manufacturing           20,000             12/03             5,833
Houston, TX                  Manufacturing            9,975              8/03             4,339
Breda, The Netherlands       Sales                    1,400             12/03             1,683
</TABLE>


ITEM 3.  LEGAL PROCEEDINGS

None.

                                       7
<PAGE>

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

None.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The Company's Common Stock is currently traded on the over-the-counter market
with trading prices quoted in the Over the Counter (OTC) Bulletin Board.

The following table sets forth the high and low market prices for the last two
years. The quotations shown represent inter-dealer prices without adjustment for
retail markups, markdowns or commissions and do not necessarily reflect actual
transactions.

                2001                                   High              Low
                ----
                First Quarter                       $  2.38           $  1.50
                Second Quarter                         3.00              1.62
                Third Quarter                          3.00              1.75
                Fourth Quarter                         3.05              1.50

                2000
                ----
                First Quarter                       $  1.75           $  1.25
                Second Quarter                         2.13              1.25
                Third Quarter                          1.88              1.50
                Fourth Quarter                         1.75              1.50

No dividends have been declared or paid by the Company since inception.
Additionally, the Company's financing agreements with the bank prohibit the
payment of dividends without the bank's approval. The Company intends to employ
all available funds for development of its business and, accordingly, does not
intend to pay cash dividends in the foreseeable future.

As of December 29, 2001, the number of holders of record of the Company's Common
Stock was 752.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

The following discussion relates to the Company and its majority-owned
subsidiaries, SLI Acquisition Corp. (SLIAC), Spectrum Europe B.V. (Spectrum
B.V.) and Spectrum Chromatography, Inc. (Chromatography).

RESULTS OF OPERATIONS - FISCAL YEAR 2001 COMPARED TO FISCAL YEAR 2000

Consolidated sales of $12,916,000 were down from prior year by $524,000 (3.9%).
The falloff in sales is principally attributable to timing relating to the
Company's relocation in late 2000. Due to the Company's relocation and the
decrease in production capacity during the start up phase in the new facilities
customers were encouraged to order in greater quantities than their normal
purchasing pattern in late 2000. This resulted in sales increasing $368,000
(12%) in 2000 fourth quarter over 1999's fourth quarter. Correspondingly, the
Company's sales in the first six months of 2001 were down $335,000 (5%) versus
the same period in 2000.

Cost of sales increased by $272,000 (3.9%) resulting in gross margin of
$5,734,000 (44.4%). Actual production related costs at the Company's two primary
facilities increased $207,000 (4.9%) in 2001 versus year 2000. The principal
expenses associated with this increase related to utilities, with an increase of
$84,000 (35.9%) and health insurance/worker comp expenses that increased $76,000
(47.2%) in 2001. Gross margin was also adversely impacted by one product, sold
to a major customer, at a lower margin level, with a sales increase of $172,000
in 2001 versus 2000. The Company, desiring to maintain a strong working
relationship with this customer is currently in the process of developing
alternative production processes in order to reduce manufacturing costs.

                                       8
<PAGE>

Research and development expenses in 2001 were basically the same as prior year,
$671,000 versus $677,000. Due to a research agreement entered into in December
2001 with an unrelated company, the Company anticipates funds expended on
research and development will increase in the future as the agreement calls for
Spectrum to expend $550,000 over the next four years on specified research and
development.

Selling, general and administrative expenses (SG&A) increased $127,000 (3.1%).
European operations SG&A increased by $51,000 (16.6%) with the increase
principally attributable to personnel. SG&A for the U.S. operations increased
$77,000 (2%) in year 2001 to $3,854,000. U.S. operations incurred increased
patent amortization of $61,000 in the current year while 2000 expenses benefited
from a gain of $97,000 from disposal of assets related to relocation. These
negative impacts on the current year were partially offset by $50,000 less in
relocation expenditures in 2001 versus fiscal 2000. The Company does not
anticipate incurring any relocation expenses in 2002.

LIQUIDITY AND CAPITAL RESOURCES

During fiscal 2001, the Company generated approximately $1,629,000 of cash from
operating activities. Earnings from operations, before depreciation and
amortization, were the primary sources of these cash flows with a reduction of
$376,000 in inventory being an additional contributing factor. Cash expenditures
for equipment and leasehold improvements of $651,000, patents of $500,000 and
payments of long-term debt of $822,000 were the primary cash outflows. The
Company entered into its fourth credit agreement with a bank resulting in the
Company receiving debt proceeds of $2,250,000 in 2001. Principally related to
the above noted items resulted in cash increasing $1,906,000 for the year.

At December 29, 2001, the Company has approximately $692,000 in net operating
loss tax benefits which expire at various times through fiscal year 2027.
Management anticipates utilizing these entire benefits prior to their
expiration.

The fourth credit agreement does restrict the use of the cash proceeds to
certain purposes as defined in the agreement. The credit agreement prohibits the
payment of cash dividends without prior bank approval.

The Company's management believes that cash on hand plus cash anticipated to be
generated from operations will be sufficient to meet the Company's cash
requirements for 2002. The Company did expend the remaining $250,000 related to
the patent obligation, as of December 29, 2001, in February of 2002.

ITEM 7.  FINANCIAL STATEMENTS

The financial statements in response to this Item are submitted in a separate
section of this Report. The Index to the financial statements is as follows:

INDEPENDENTS AUDITORS' REPORT                                               F-1

FINANCIAL STATEMENTS
    Consolidated balance sheet                                              F-2
    Consolidated statements of income                                       F-3
    Consolidated statements of stockholders' equity                         F-4
    Consolidated statements of cash flows                                   F-5
    Notes to consolidated financial statements                              F-6

                                       9
<PAGE>

                           SPECTRUM LABORATORIES, INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 29, 2001

<PAGE>


                                 C O N T E N T S


                                                                         Page
------------------------------------------------------------------------------

INDEPENDENT AUDITOR'S REPORT                                              F-1
------------------------------------------------------------------------------

FINANCIAL STATEMENTS
  Consolidated balance sheet                                              F-2
  Consolidated statements of income                                       F-3
  Consolidated statements of stockholders' equity                         F-4
  Consolidated statements of cash flows                                   F-5
  Notes to consolidated financial statements                              F-6
------------------------------------------------------------------------------

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors
Spectrum Laboratories, Inc.
Rancho Dominguez Hills, California

We have audited the accompanying consolidated balance sheet of Spectrum
Laboratories, Inc. and subsidiaries as of December 29, 2001 and the related
consolidated statements of income, stockholders' equity and cash flows for the
years ended December 29, 2001 and December 30, 2000. 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 audit.

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 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Spectrum
Laboratories, Inc. and subsidiaries as of December 29, 2001 and the results of
their operations and their cash flows for the years ended December 29, 2001 and
December 30, 2000 are in conformity with accounting principles generally
accepted in the United States of America.






Anaheim, California
March 20, 2002

                                      F-1

<PAGE>

<TABLE>
SPECTRUM LABORATORIES, INC.

CONSOLIDATED BALANCE SHEET
------------------------------------------------------------------------------------------


<CAPTION>
                                                                             DECEMBER 29,
ASSETS                                                                           2001
                                                                             -------------
<S>                                                                          <C>
CURRENT ASSETS:
    Cash and cash equivalents                                                $  3,027,000
    Accounts receivable, less allowance for doubtful accounts of $135,000       1,689,000
    Inventories                                                                 1,647,000
    Prepaid expenses                                                              135,000
    Deferred taxes                                                                293,000

                                                                             -------------
        Total current assets                                                    6,791,000

EQUIPMENT AND LEASEHOLD IMPROVEMENTS                                            2,849,000

PATENTS, net of accumulated amortization of $61,000                               689,000

GOODWILL, net of accumulated amortization of $876,000                           1,122,000

DEFERRED TAXES                                                                  1,662,000

OTHER ASSETS                                                                       33,000
                                                                             -------------

        Total assets                                                         $ 13,146,000
                                                                             =============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Current maturities of long-term debt                                     $    771,000
    Accounts payable                                                              680,000
    Accrued expenses and other current liabilities:
      Compensation                                                                319,000
      Other                                                                       181,000
                                                                             -------------
        Total current liabilities                                               1,951,000
                                                                             -------------

LONG-TERM DEBT, net of current maturities                                       1,687,000
                                                                             -------------

MINORITY INTEREST                                                               1,755,000
                                                                             -------------

STOCKHOLDERS' EQUITY:
    Common stock, $.01 par value, 25,000,000 shares authorized;
      5,312,468 shares issued and outstanding                                      53,000
    Preferred stock, par value $.01; 10,000,000 shares authorized;
      none issued and outstanding                                                      --
    Additional paid-in capital                                                  8,458,000
    Accumulated deficit                                                          (758,000)
                                                                             -------------
        Total stockholders' equity                                              7,753,000
                                                                             -------------

        Total liabilities and stockholders' equity                           $ 13,146,000
                                                                             =============
</TABLE>

See Notes to Consolidated Financial Statements.

                                      F-2

<PAGE>

<TABLE>
SPECTRUM LABORATORIES, INC.

CONSOLIDATED STATEMENTS OF INCOME
-----------------------------------------------------------------------------------------


<CAPTION>
                                                                  FISCAL YEARS ENDED
                                                             ----------------------------
                                                                 2001            2000
                                                             -------------  -------------

<S>                                                          <C>            <C>
NET SALES                                                    $ 12,916,000   $ 13,440,000

COSTS AND EXPENSES
    Cost of sales                                               7,182,000      6,910,000
    Selling, general and administrative                         4,206,000      4,079,000
    Research and development                                      671,000        677,000
    Compensation expense related to stock options                  30,000         81,000
    Other expense, primarily interest                              22,000         94,000
                                                             -------------  -------------

        Total costs and expenses                               12,111,000     11,841,000
                                                             -------------  -------------

        Income before provision for income taxes (credits)        805,000      1,599,000

Income taxes (credits)                                            207,000       (173,000)
                                                             -------------  -------------

        Net income                                           $    598,000   $  1,772,000
                                                             =============  =============

Earnings per share:
    Basic                                                    $       0.11   $       0.33
                                                             =============  =============

    Diluted                                                  $       0.11   $       0.33
                                                             =============  =============

Weighted average shares outstanding:
    Basic                                                       5,312,338      5,311,968
                                                             =============  =============

    Diluted                                                     5,438,514      5,422,842
                                                             =============  =============
</TABLE>

See Notes to Consolidated Financial Statements.

                                      F-3
<PAGE>

<TABLE>
SPECTRUM LABORATORIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------------------------


<CAPTION>
                                                Common stock           Additional
                                          --------------------------    paid-in     Accumulated
                                             Shares        Amount       capital       deficit
                                          ------------  ------------  ------------  ------------

<S>                                         <C>         <C>           <C>           <C>
Balance, January 1, 2000                    5,311,968   $    53,000   $ 8,347,000   $(3,128,000)

Net income                                         --            --            --     1,772,000

Compensation expense related
    to stock options                               --            --        81,000            --
                                          ------------  ------------  ------------  ------------

Balance, December 30, 2000                  5,311,968        53,000     8,428,000    (1,356,000)

Net income                                         --            --            --       598,000

Shares issued - exercised stock options           500            --         1,000            --

Compensation expense related
    to stock options                               --            --        29,000            --
                                          ------------  ------------  ------------  ------------

Balance, December 29, 2001                  5,312,468   $    53,000   $ 8,458,000   $  (758,000)
                                          ============  ============  ============  ============
</TABLE>


See Notes to Consolidated Financial Statements.

                                      F-4

<PAGE>

<TABLE>
SPECTRUM LABORATORIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------------------------------------------------


<CAPTION>
                                                                  FISCAL YEARS ENDED
                                                              ---------------------------
                                                                  2001           2000
                                                              ------------   ------------
<S>                                                           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                $   598,000    $ 1,772,000
    Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation and amortization                               719,000        627,000
      Noncash compensation                                         30,000         81,000
      Deferred taxes                                              189,000       (219,000)
      Change in working capital components:
        (Increase) in accounts receivable                         (90,000)       (91,000)
        Decrease in inventories                                   376,000        366,000
        Decrease in prepaid expenses                               23,000        129,000
        (Decrease) in accounts payable                           (102,000)      (279,000)
        (Decrease) in accrued expenses                           (114,000)      (123,000)
                                                              ------------   ------------

        NET CASH PROVIDED BY OPERATING ACTIVITIES               1,629,000      2,263,000
                                                              ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of equipment and leasehold improvements          (651,000)    (1,003,000)
    Acquisition of patents                                       (500,000)            --
    (Increase) decrease in other assets                                --         34,000
                                                              ------------   ------------

        NET CASH (USED IN) INVESTING ACTIVITIES                (1,151,000)      (969,000)
                                                              ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Principal payments of long-term debt                         (822,000)      (823,000)
    Loan Proceeds                                               2,250,000             --
    Decrease in restricted cash                                        --        100,000
                                                              ------------   ------------

        NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES     1,428,000       (723,000)
                                                              ------------   ------------

        NET INCREASE IN CASH AND CASH EQUIVALENTS               1,906,000        571,000

Cash and cash equivalents
    Beginning of year                                           1,121,000        550,000
                                                              ------------   ------------

    End of year                                               $ 3,027,000    $ 1,121,000
                                                              ============   ============
</TABLE>

See Notes to Consolidated Financial Statements.

                                      F-5
<PAGE>

SPECTRUM LABORATORIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

           NATURE OF OPERATIONS AND BASIS OF PRESENTATION - The consolidated
           financial statements include the accounts of Spectrum Laboratories,
           Inc. (Spectrum) and its subsidiaries (collectively, the Company), SLI
           Acquisition Corp. (SLIAC), Spectrum Europe B.V. (Spectrum B.V.) and
           Spectrum Chromatography (Chromatography). The Company develops and
           sells proprietary tubular membranes and membrane devices for existing
           and emerging life science applications used primarily by research
           laboratories. The Company is also engaged in the manufacture and sale
           of medical laboratory equipment and supplies and disposable products.
           Certain of the Company's products are regulated by the United States
           Food and Drug Administration and the California Food and Drug Bureau.
           All products are for sale primarily to the pharmaceutical,
           biotechnology and medical industries.

           FISCAL YEAR - The Company's fiscal year ends on the Saturday nearest
           December 31. The years ended December 29, 2001 (fiscal year 2001) and
           December 30, 2000 (fiscal year 2000) both consist of approximately 52
           weeks.

           PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial
           statements include the accounts of Spectrum and its wholly owned
           subsidiaries and majority-owned subsidiary, SLIAC. All intercompany
           balances and transactions have been eliminated in consolidation.

           USE OF ESTIMATES - The preparation of financial statements 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 revenue and expenses during the reporting period.
           Actual results could differ from those estimates.

           The Company's operations are affected by numerous factors including
           market acceptance, changes in technologies and new laws and
           government regulations and policies. The Company cannot predict what
           impact, if any, the occurrence of these or other events might have on
           the Company's operations. Significant estimates and assumptions made
           by management are used for, but not limited to, the allowance for
           doubtful accounts, the reserve for slow moving or obsolete
           inventories and the carrying value of long-lived and intangible
           assets.

           CREDIT RISK - The Company sells its products nationally and
           internationally, primarily through distributors, to medical equipment
           and medical supply companies. The Company performs ongoing credit
           evaluations of its customers and generally does not require
           collateral. The Company maintains reserves for potential credit
           losses.

           CASH AND CASH EQUIVALENTS - The Company classifies all highly liquid
           investments with original maturities of 90 days or less at the time
           of purchase as cash and cash equivalents. The Company, periodically
           throughout the year, has amounts on deposit that exceed insured
           limits.

           INVENTORIES - Inventories are stated at the lower of cost (using the
           first-in first-out method) or market value.

           EQUIPMENT AND LEASEHOLD IMPROVEMENTS - Equipment and leasehold
           improvements are recorded at cost, net of accumulated depreciation
           and amortization. Depreciation of equipment is provided using the
           straight-line method over the estimated useful lives (generally five
           years) of the respective assets. Leasehold improvements are amortized
           on a straight-line basis over the lesser of the lease term or the

                                      F-6
<PAGE>

SPECTRUM LABORATORIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

           estimated useful life of the asset. Amortization of leasehold
           improvements is included with depreciation expense. No depreciation
           is being provided for the artwork, which is carried at its historical
           cost.

           PATENTS - The Company has acquired patents utilized within the
           various manufacturing processes. These patents are amortized over
           their respective lives, typically 17 years. Management evaluates the
           usefulness of these patents annually in determining any potential
           impairment.

           GOODWILL - Goodwill represents the excess of the purchase price over
           the fair value of net assets acquired resulting from a prior
           acquisition and is amortized on a straight-line basis over 15 years.
           The Company evaluates the recoverability of goodwill annually by
           comparing undiscounted expected future cash flows from the related
           operations to the carrying value of goodwill.

           DETERMINING IMPAIRMENT ON LONG-LIVED ASSETS - The Company recognizes
           impairment losses for long-lived assets used in operations when
           indicators of impairment are present and the undiscounted cash flows
           are not sufficient to recover the assets' carrying amount. Management
           believes there was no impairment of the value of such assets for the
           fiscal years 2001 or 2000.

           INCOME TAXES - Deferred taxes are provided on a liability method
           whereby deferred tax assets are recognized for deductible temporary
           differences and tax credit carryforwards and deferred tax liabilities
           are recognized for taxable temporary differences. Temporary
           differences are the differences between the reported amounts of
           assets and liabilities and their tax bases. Deferred tax assets are
           reduced by a valuation allowance when, in the opinion of management,
           it is more likely than not that some portion or all of the deferred
           tax assets will not be realized. Deferred tax assets and liabilities
           are adjusted for the effects of changes in tax laws and rates on the
           date of enactment.

           EARNINGS PER SHARE - Basic earnings per share is computed by dividing
           the net income attributable to the common stockholders by the
           weighted average number of common shares outstanding during the
           period. There is no adjustment in the net income attributable to
           common stockholders. Diluted earnings per share reflects the
           potential dilution that could occur from common shares issuable
           through stock options (126,176 and 110,874 shares in the fiscal years
           2001 and 2000, respectively). During 2001 and 2000, 81,100 and
           389,600 options, respectively, were excluded from diluted common
           shares as they were antidilutive.

           REVENUE RECOGNITION - The Company records revenue at the time the
           related products are shipped.

           PRODUCT RETURNS AND WARRANTIES - The Company records a provision for
           estimated product returns and warranties at the time the revenue is
           recognized.

           RESEARCH AND DEVELOPMENT - The Company expenses research and
           development costs as incurred.

           ADVERTISING COSTS - Costs associated with advertising and promoting
           products are expensed as incurred. Advertising and promotion expense
           was approximately $106,000 and $84,000 during fiscal years 2001 and
           2000.

                                      F-7
<PAGE>

SPECTRUM LABORATORIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

           REMEASUREMENT OF FOREIGN CURRENCIES - Monetary assets and liabilities
           of Spectrum B.V. are remeasured into U.S. dollars at year-end
           exchange rates and nonmonetary assets and stockholders' equity are
           remeasured using historical rates of exchange. Income and expenses
           are remeasured at average rates during the respective years. The
           functional currency of this subsidiary is the U.S. dollar; therefore,
           remeasurement gains or losses are included in income. Remeasurement
           gains or (losses) included in income for fiscal years 2001 and 2000
           were approximately $26,000 and ($71,000), respectively.

           FAIR VALUE OF FINANCIAL INSTRUMENTS - Management believes that the
           carrying amount of cash and cash equivalents, accounts receivable,
           accounts payable and accrued expenses approximates fair value because
           of the short maturity of these financial instruments. Long-term debt
           bears interest at a rate indexed to the prime rate and, therefore,
           management believes the carrying amount of the outstanding borrowings
           at December 29, 2001 and December 30, 2000 approximates fair market
           value.

           ACCOUNTING FOR STOCK-BASED COMPENSATION - The Company accounts for
           stock-based employee compensation under the requirements of
           Accounting Principles Board (APB) Opinion No. 25, which does not
           require compensation to be recorded if the consideration to be
           received is at least equal to fair value at the measurement date.
           Nonemployee stock-based transactions are accounted for under the
           requirements of the Financial Accounting Standards Board's (FASB)
           Statement of Financial Accounting Standards (SFAS) No. 123,
           ACCOUNTING FOR STOCK-BASED COMPENSATION, which requires compensation
           to be recorded based on the fair value of the securities issued or
           the services received, whichever is more reliably measurable.

           SEGMENT INFORMATION - In accordance with FASB Statement No. 131,
           DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION,
           the Company has determined the products are all classified into two
           product groups as further discussed in Note 13. The Company has
           further analyzed the type and class of its customers, and the product
           distribution methods, and has determined that the Company has one
           reportable segment.

           NEW ACCOUNTING STANDARDS - In June 2001, the FASB issued Statement of
           Financial Accounting Standards No. 141, BUSINESS COMBINATIONS (SFAS
           No. 141) and Statement of Financial Accounting Standards No. 142,
           GOODWILL AND OTHER INTANGIBLE ASSETS (SFAS No. 142). SFAS No. 141
           addresses financial accounting and reporting for business
           combinations and is effective for all business combinations after
           June 30, 2001. SFAS No. 142 addresses financial accounting and
           reporting for acquired goodwill and other intangible assets and is
           effective for fiscal years beginning after December 15, 2001. The
           Company will adopt SFAS 142 in the first quarter of fiscal year 2002.
           The Company is in the process of determining the expected impact on
           earnings and existing goodwill and other intangibles upon adoption,
           which will include the elimination of goodwill amortization and may
           include additional goodwill impairment. Goodwill amortization expense
           for the year ended December 29, 2001 was approximately $83,000. As of
           December 29, 2001, goodwill net of accumulated amortization totaled
           approximately $1,122,000 and was being amortized over 15 years.

           In August 2001 the FASB issued Statement of Financial Accounting
           Standards No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF
           LONG-LIVED ASSETS (SFAS No. 144). SFAS No. 144 addresses the
           financial accounting and reporting for the impairment or disposal of

                                      F-8
<PAGE>

SPECTRUM LABORATORIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

           long-lived assets. The Company is required to adopt this Statement
           in the first quarter of fiscal year 2002.

           Management does not expect the adoption of FASB 142 or FASB 144 to
           have a material impact on the financial statements.

NOTE 2.    INVENTORIES

           Inventories consist of the following at December 29, 2001:

           Raw materials                                            $   972,000
           Work in process                                               83,000
           Finished goods                                               592,000
                                                                    ------------
                                                                    $ 1,647,000
                                                                    ============

NOTE 3.    EQUIPMENT AND LEASEHOLD IMPROVEMENTS

           Equipment and leasehold improvements consist of the following at
           December 29, 2001:

           Machinery, equipment and tooling                         $ 5,828,000
           Office furniture and equipment                             1,752,000
           Artwork, at cost                                           1,006,000
           Leasehold improvements                                     1,057,000
                                                                    ------------
                                                                      9,643,000
           Less accumulated depreciation and amortization            (6,794,000)
                                                                    ------------

                                                                    $ 2,849,000
                                                                    ============

           Depreciation and amortization expense of equipment and leasehold
           improvements for fiscal years 2001 and 2000 was $577,000 and
           $445,000, respectively.

NOTE 4.    INCOME TAXES

           The Company's provision for income taxes (benefit) consists of the
           following:

                                                  2001                   2000
                                               ----------             ----------
           Current:
           Federal                             $ (21,000)             $      --
           State                                  22,000                 54,000
           Foreign                                17,000                 (8,000)
                                               ----------             ----------
                                                  18,000                 46,000
                                               ----------             ----------
           Deferred:
           Federal                               169,000               (229,000)
           State                                  20,000                 10,000
                                               ----------             ----------
                                                 189,000               (219,000)
                                               ----------             ----------
                                               $ 207,000              $(173,000)
                                               ==========             ==========

                                      F-9
<PAGE>

SPECTRUM LABORATORIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 4.    INCOME TAXES (Continued)

           The reported provision for income taxes differs from the amount
           computed by applying the statutory federal income tax rate of 35% to
           the consolidated income before provision for income taxes as follows:

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

           Statutory federal income tax provision      $ 284,000      $ 560,000
           Nondeductible amortization of intangibles          --         33,000
           State income taxes, net of federal benefit     40,000          5,000
           Change in valuation allowance                      --       (700,000)
           Nondeductible expenses                         32,000          8,000
           Tax credits used in current year              (57,000)            --
           Other                                         (92,000)       (79,000)
                                                       ----------     ----------

           Income tax provision                        $ 207,000      $(173,000)
                                                       ==========     ==========

           The components of the Company's net deferred income tax assets as of
           December 29, 2001 are as follows:

                                                                         2001
                                                                     -----------
           Operating loss carryforwards                              $2,012,000
           Intangibles                                                  499,000
           Stock based compensation not currently deductible            166,000
           Reserves not currently deductible                            373,000
           Equipment and leasehold improvements                         112,000
           Tax credits                                                   89,000
           Other                                                        204,000
                                                                     -----------
                                                                      3,455,000
           Valuation allowance                                        1,500,000
                                                                     -----------

           Net deferred tax assets                                   $1,955,000
                                                                     ===========

           The net deferred tax assets have been classified on the accompanying
           consolidated balance sheet as follows:

           Current assets                                            $  293,000
           Noncurrent assets                                          1,662,000
                                                                     -----------

           Net deferred tax assets                                   $1,955,000
                                                                     ===========

           In assessing the realizability of deferred tax assets, management has
           estimated that it is more likely than not that approximately
           $1,500,000 will not be realized. This valuation allowance represents
           a portion of net operating loss carryforwards attained through a
           prior business acquisition. As further discussed below, tax law
           limits the use of an acquired entity's net operating loss
           carryforwards to subsequent taxable income of the consolidated
           entity. During fiscal years 2001 and 2000, the Company utilized
           approximately $365,000 and $2,144,000, respectively, of net operating

                                      F-10
<PAGE>

SPECTRUM LABORATORIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 4.    INCOME TAXES (Continued)

           losses, to offset currently payable tax liability. Management will
           continue to evaluate the realizability of the deferred tax assets by
           assessing the need for and amount of a valuation allowance.

           At December 29, 2001, the Company had approximately $5.8 million in
           net operating loss carryforwards for federal income tax purposes
           available to offset future taxable income. Certain of these loss
           carryforwards are limited to approximately $298,000 annually. Any
           unused net operating loss is carried forward. As a result of the
           limitation discussed above, it is probable that $4,500,000 of the
           Company's net operating loss will expire without utilization. Loss
           carryforwards for tax purposes expire in amounts and by fiscal year
           as follows: 2004 $1,600,000; 2005 $1,319,000; 2011 $20,000; 2012
           $347,000; 2013 $776,000; 2022 to 2026 $299,000 per year; 2027
           $275,000.

NOTE 5.    LONG-TERM DEBT

           At December 29, 2001, the Company had a credit agreement with a bank,
           which provided for two term loans and an equipment acquisition loan.
           The first of these loans has an outstanding balance at December 29,
           2001 of $180,000, bears interest subject to the bank's yield
           maintenance agreement (9.14% at December 29, 2001) and requires
           monthly principal installments of $60,000 plus interest through March
           1, 2002, when all principal and interest is due. The second loan has
           an outstanding balance at December 29, 2001 of $28,000, bears
           interest at prime plus .25% (5% at December 29, 2001) and requires
           monthly principal installments of $8,530 plus interest through April
           1, 2002, when all principal and interest are due.

           The equipment acquisition loan has an outstanding balance of
           $2,250,000 at December 29, 2001 and bears interest at prime plus .25%
           (5% at December 29, 2001) and provides the Company additional
           liquidity, although the proceeds are restricted to certain purposes,
           as defined in the credit agreement. Repayments are to be made in
           thirty-six (36) equal and successive monthly installments of $62,500
           plus interest beginning April 1, 2002 and ending on March 1, 2005.

           The agreement is secured by substantially all of the assets and is
           personally guaranteed by the majority stockholder. The agreement also
           requires the maintenance of certain financial and non-financial loan
           covenants and restricts payment of dividends. Future maturities of
           long-term debt owed on December 29, 2001 by fiscal year are
           approximately as follows: 2002 $771,000; 2003 $812,000; 2004
           $750,000; 2005 $125,000.


NOTE 6.    STOCK OPTION PLAN

           During the year ended December 30, 2000, the Company adopted a new
           2000 stock option plan reserving 300,000 shares of common stock for
           option grants to its key employees, directors and consultants.
           Exercise prices for the stock options will not be less than 100% of
           the fair market value of the stock on the date of grant. During
           fiscal year 2000, the Company granted 298,200 options under this
           plan. The Company also has a 1995 stock option plan that provides for
           issuance of options to purchase up to 200,000 shares of its common
           stock. Options under both plans expire not more than ten years from
           date of grant. Options under the 2000 plan become exercisable over a
           five-year period (20% per year) and options under the 1995 plan
           become exercisable over a four-year period (25% per year), of which
           500 options were exercised during 2001. In addition, during 1998 the
           Company granted nonqualified stock options to purchase 5% of the
           outstanding stock to an officer of the Company at $1.20 per share.
           The terms of this grant result in variable plan accounting.
           Accordingly, future compensation expense will be measured and

                                      F-11
<PAGE>

SPECTRUM LABORATORIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 6.    STOCK OPTION PLAN (Continued)

           recorded based on stock price fluctuations. At the date of grant, 60%
           of these options vested immediately and the remaining 40% vest over
           two to four years. Total compensation expense recorded during fiscal
           years 2001 and 2000 was approximately $30,000 and $81,000,
           respectively.

           A summary of the status of the plans and the nonqualified options and
           changes during fiscal years ended 2001 and 2000 is as follows:
<TABLE>
<CAPTION>
                                                                                      Weighted
                                                                                      average
                                                                           Number     exercise
                                                                          of shares     price
                                                                          ---------   ---------
           <S>                                                             <C>        <C>
           OUTSTANDING, January 1, 2000                                    379,749    $   1.59

           Granted at fair value (weighted average fair value of $1.29)    298,200        2.13

           Forfeited                                                        (6,250)       2.25
                                                                          ---------   ---------

           OUTSTANDING, December 30, 2000                                  671,699        1.82

           Granted at fair value (weighted average fair value of $1.29)         25        1.20

           Exercised                                                          (500)       3.20

           Forfeited                                                       (36,500)       2.08
                                                                          ---------   ---------

           OUTSTANDING, December 29, 2001                                  634,724    $   1.81
                                                                          =========   =========
</TABLE>

                                      F-12
<PAGE>

SPECTRUM LABORATORIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 6.    STOCK OPTION PLAN (Continued)

           At December 29, 2001, 180,400 shares were available for future grants
           under the plans.

           A further summary of options outstanding at December 29, 2001 is as
           follows:

                       Options Outstanding                Options Exercisable
           ---------------------------------------------  --------------------
                                             Weighted
                                 Weighted    average                 Weighted
                                  average   remaining                 average
           Exercise    Number    exercise  contractual      Number   exercise
            Prices   of options   price    life in years  of options   price
           --------- ----------  --------  -------------  ---------- ---------

           $ 2.13      262,100   $  2.13      8.36           54,200  $   2.13
             1.20      265,624      1.20      7.67          257,512      1.20
             2.44       50,000      2.44      1.20           50,000      2.44
             3.20       23,300      3.20      3.95           23,300      3.20
             4.37        5,000      4.37      4.10            5,000      4.37
             7.50          500      7.50      4.79              500      7.50
             1.88          400      1.88      5.83              375      1.88
             2.18       10,000      2.18      4.47           10,000      2.18
             2.20        3,800      2.20      5.01            3,800      2.20
             1.25       14,000      1.25      6.68           10,500      1.25
                     ----------                           ----------

                       634,724                              415,187
                     ==========                           ==========


           SFAS No. 123 requires the disclosure of pro forma net income and
           earnings per share had the Company adopted the fair value method as
           of the beginning of fiscal year 1995. Under SFAS No. 123, the fair
           value of stock-based awards to employees is calculated through the
           use of option-pricing models, even though such models were developed
           to estimate the fair value of freely tradable, fully transferable
           options with vesting restrictions which significantly differ from the
           Company's stock option awards. These models also require subjective
           assumptions, including future stock price volatility and expected
           time to exercise, which greatly affect the calculated value. The
           Company's calculations for the options granted in 2001 and 2000 were
           made using the Black-Scholes option-pricing model with the following
           weighted average assumptions in both 2001 and 2000: expected life of
           ten years; stock volatility of 35%; risk-free interest rate 6.51%;
           and no dividends during the expected term.

           The calculations are based on a single-option valuation approach and
           forfeitures are recognized as they occur. If the computed fair value
           of awards had been amortized to expense over the vesting period of
           the awards, pro forma net income of the Company would have been
           approximately $545,000 ($.10 per basic and per diluted share) and
           $1,738,000 ($0.33 per basic and $.32 diluted share) in fiscal years
           2001 and 2000, respectively.

                                      F-13
<PAGE>

SPECTRUM LABORATORIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 7.    RELATED-PARTY TRANSACTIONS

           ROYALTY AGREEMENT - The Company is committed under a royalty
           agreement to pay the majority stockholder royalties of 7% of the net
           sales of certain products, as defined, through the life of the
           defined products. During 2001 and 2000, the Company incurred royalty
           expenses of $321,000 and $331,000, respectively, under this
           agreement.

           CONSULTING SERVICES - During 2001 and 2000, the Company incurred
           expenses of $4,000 and $15,000, respectively, for consulting services
           to a firm which employed a member of the Board of Directors.


NOTE 8.    COMMITMENTS, RENT EXPENSE AND OTHER AGREEMENTS

           LEASE COMMITMENTS AND RENT EXPENSE - The Company is obligated under
           the terms of various operating lease agreements for manufacturing,
           warehouse and office facilities. Certain of these leases provide for
           rent escalation adjustments. Rent expense was $498,000 and $625,000
           in fiscal years 2001 and 2000, respectively. Minimum future rental
           payments under these operating lease agreements for the years ending
           December 31 are as follows: 2002 $476,000; 2003 $460,000; 2004
           $341,000; and 2005 $186,000 (total $1,463,000).

           In December of 2001, Spectrum entered into specific research,
           licensing, manufacturing and supply agreements (the Agreements) with
           an unrelated company. The agreements call for Spectrum to expend
           $550,000 over the next four years on specified research and
           development. Per the terms of the Agreements, Spectrum would be the
           exclusive manufacturer for any product developed as a result of this
           research.


NOTE 9.    GEOGRAPHIC INFORMATION

           Net sales by country for fiscal years ended 2001 and 2000 are as
           follows:

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

           United States                              $ 9,977,000   $10,360,000
           Japan                                          795,000       917,000
           Other countries, each of which represent
             less than 5% of total net sales            2,144,000     2,163,000
                                                      ------------  ------------

                                                      $12,916,000   $13,440,000
                                                      ============  ============


           There were no significant assets held outside the United States at
           December 29, 2001 or December 30, 2000.

                                      F-14
<PAGE>

SPECTRUM LABORATORIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 10.   MAJOR CUSTOMERS

           Net sales for fiscal years 2001 and 2000 includes sales to the
           following major customers (each of which accounted for 10% or more of
           the total sales of the Company) together with the receivables due
           from those customers as of December 29, 2001 and December 30, 2000:

                                        2001                     2000
                              ------------------------  ------------------------
                                             TRADE                     Trade
                                            ACCOUNTS                  Accounts
                               NET SALES   RECEIVABLE    Net Sales   Receivable
                              -----------  -----------  -----------  -----------

           Customer A         $1,849,000   $  242,000   $1,889,000   $  316,000
                              ===========  ===========  ===========  ===========

           Customer B         $1,677,000   $  209,000   $1,361,000   $  164,000
                              ===========  ===========  ===========  ===========


NOTE 11.   MINORITY INTEREST

           On October 1, 1996, SLI Acquisition Corp., (SLIAC), a subsidiary of
           the Company, entered into an Asset Purchase Agreement with Cellco,
           Inc., a Delaware corporation, and acquired the operating assets and
           liabilities of Cellco, Inc. in exchange for 10,000 shares of the
           subsidiary's preferred stock valued at $2,000,000 for redemption
           purposes. One of the subsidiary's preferred stockholders sold its
           stock with a carrying value of $245,000 to the Company in 1999. At
           December 29, 2001, there is $1,755,000 in preferred stock of the
           subsidiary outstanding. The preferred stockholders of the subsidiary
           had the right to put their stock to SLIAC at any time through
           September 30, 2001 for an aggregate price of $1,755,000. In the event
           the subsidiary is combined with the Company and the combined company
           completes an underwritten offering, the preferred stockholders have
           the right to exchange such stock for 7% of the newly combined
           company. The preferred shares of SLIAC are nonvoting and have
           preference over common stockholders as to dividends and liquidation.
           Management anticipates that this subsidiary would be liquidated, if
           the put is exercised and the subsidiary does not perform under the
           put. The put obligation is that of the subsidiary and not the
           Company.

                                      F-15
<PAGE>

SPECTRUM LABORATORIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

NOTE 12.   SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

                                                          2001          2000
                                                      ------------  ------------
           Cash paid for:
               Income taxes                           $    20,000   $   179,000
                                                      ============  ============

               Interest                               $    67,000   $   135,000
                                                      ============  ============

               Debt incurred for purchase of patents  $   250,000   $        --
                                                      ============  ============

NOTE 13.   PRODUCT GROUP INFORMATION

           The Company's product groups are based on specific product
           characteristics and are grouped into laboratory products and
           operating room disposable products. Laboratory products consist
           primarily of (1) membranes used to concentrate, separate and purify
           dissolved or suspended molecules that are sold primarily to
           laboratories and (2) hollow fiber membrane devices that allow
           components retained by a membrane to be concentrated, including
           filters utilized for micro and ultrafiltration separations that are
           sold to biotech and pharmaceutical companies. Operating room
           disposable products consist of sterile plastic surgical drapes and
           cloth bandages that are used primarily by hospitals.

           Revenue by product group is as follows:

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

           Laboratory products                        $11,200,000   $11,638,000
           Operating room disposable products           1,716,000     1,802,000
                                                      ------------  ------------

                                                      $12,916,000   $13,440,000
                                                      ============  ============

NOTE 14.   VALUATION AND QUALIFYING ACCOUNT INFORMATION

           Following is information regarding the Company's allowance for
           doubtful accounts:

                            Balance at  Provision
                            beginning   charged to  Net recoveries   Balance at
                             of year     expense    (charge-offs)   end of year
                            ----------  ----------  --------------  ------------

           Fiscal year:
           2001             $ 186,000   $  38,000   $     (89,000)  $   135,000
                            ==========  ==========  ==============  ============

           2000             $ 143,000   $  52,000   $      (9,000)  $   186,000
                            ==========  ==========  ==============  ============

                                      F-16
<PAGE>

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

Directors
---------

Named below are directors serving until an Annual Meeting of Shareholders and
until their respective successors are elected and qualified.

<TABLE>
<CAPTION>
Name                                Age     Director Since      Position
----                                ---     --------------      --------
<S>                                 <C>     <C>                 <C>
Roy T. Eddleman                     62      July 30, 1982       Chairman, CEO, Director & Acting CFO (1)

Walter J. Lack, J.D.                54      January 2, 1999     Secretary & Director

Thomas V. Girardi, J.D.             62      January 2, 1999     Director

Jay Henis, Ph.D.                    63      January 2, 1999     Director

Jack Whitescarver, Ph.D.            64      April 1, 1985       Director


Executive Officers of The Company
---------------------------------

Roy T. Eddleman                     62      July 30, 1982       Chairman & CEO

F. Jesus Martinez                   62          ----            President & COO

Malcolm Morrison, Ph.D.             59          ----            Vice President Operations

Robert J. Sudol                     54          ----            Vice President Sales
</TABLE>

(1) The Company intends to appoint a permanent Chief Financial Officer in the
second quarter of 2002.

Business Experience of Directors and Executive Officers
-------------------------------------------------------

Roy T. Eddleman was elected Chairman of the Board and Chief Executive Officer of
the Company on July 30, 1982. Mr. Eddleman has been engaged primarily as a
private investor and entrepreneur for more than twenty years.

Walter Lack has been employed as an attorney in private practice for over twenty
years. He is also a Director of HCCH Holdings, Inc., Microvision, Inc. and
Supergen, Inc.

Thomas Girardi has been employed as an attorney in private practice for over
twenty years.

Jay Henis is a practicing scientist and for ten years has been President and CEO
of Henis Technologies, Inc. He is also President and CEO of Orex
Pharmaceuticals.

                                       10
<PAGE>

Jack Whitescarver is the Acting Director for the Office of AIDS Research at the
National Institutes of Health in Bethesda, Maryland and has been there more than
twelve years.

F. Jesus Martinez has been Chief Operating Officer and President of the Company
since September, 1995. Mr. Martinez held the position of Vice President of R&D
and Operations from August 1989 to September 1995. He has held senior management
positions at Baxter Healthcare Corporation, National Medical Care, Minntech
Corporation and is inventor or co-inventor of over twenty patents in medical
devices.

Malcolm Morrison has been employed by the Company since January 1985. Prior to
becoming Vice President Operations in October, 1998, he was Director of Quality
Assurance and Regulatory Affairs. From 1985 to September 1998, he was Manager of
Quality Assurance and Regulatory Affairs.

Robert Sudol joined the Company in June 1998 as Vice President/General Manager
for OR Products. He became Vice President Sales in October 1999. Previously he
was President of Cyberdent, Inc. for one and one half years and Vice President
of American CareSource for two and one-half years.

There are no family relationships between any of the Company's directors and
officers. There are no arrangements or understandings between any director and
any other person pursuant to which any person was elected or nominated as a
director.

The Company sponsors no pension, retirement, annuity, savings or similar benefit
plans, that it was required to fund in 2001. The Company does sponsor an
employee only contributory 401K Plan. Directors are not compensated for their
services on the Company's Board of Directors.

ITEM 10.  EXECUTIVE COMPENSATION

The following table sets forth the annual compensation paid and accrued by the
Company during its last three fiscal years to executive officers who were paid
in excess of $100,000 including cash and issuance of securities:

<TABLE>
<CAPTION>
                                  ANNUAL COMPENSATION                  LONG TERM COMPENSATION
                                  -------------------                  ----------------------
                                                                RESTRICTED         STOCK
NAME AND POSITION            YEAR       SALARY     BONUS       STOCK AWARDS      OPTIONS #     LTIP      ALL OTHER(1)
-----------------            ------------------------------    ---------------------------------------  ------------
<S>                          <C>      <C>         <C>          <C>                <C>          <C>        <C>
Roy T. Eddleman              2001     $160,000    $100,000                                                $321,490
Chief Executive Officer      2000      160,000     100,000                                                 331,319
                             1999      160,000     125,000                                                 335,337

F. Jesus Martinez            2001      145,000      36,000                        25(2)
President                    2000      145,000
                             1999      145,000
</TABLE>

(1)      Royalties based are at  7% on sales of certain products.
(2)      Represents all stock option grants during fiscal 2001. The exercise
         price of these options is $1.20/share and they expire in May 2011.


The following table sets forth information relating to stock options held by the
Company's executive officers as of December 29, 2001:

                     Number of Securities Underlying      Value of Unexercised
                          Unexercised Options             In-the-Money Options

Name                     Exercisable/Unexercisable     Exercisable/Unexercisable
------------------   -------------------------------   -------------------------

F. Jesus Martinez           257,512/8,112                   $319,000/$10,000
President


                                       11
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock at December 29, 2001 by (i) all persons
known by management to be beneficial owners of more than 5% of its Common Stock,
(ii) all directors and nominees and (iii) all directors and nominees and
officers of the Company as a group:
                                         Amount and Nature            Percent
Name and Address                    of Beneficial Ownership (1)       of Class
-------------------------------    ------------------------------     ---------

Roy T. Eddleman                             4,320,128                   81.3
18617 Broadwick Street
Rancho Dominguez, CA 90220

Thomas V. Girardi, J.D.                       800,002                   15.1
1126 Wilshire Blvd.
Los Angeles, CA  90017

Jay Henis, Ph.D.                                8,000 (A)                 .2
501 Marford Drive
St. Louis, MO  63141

Walter J. Lack, J.D.                          102,323                    1.9
10100 Santa Monica Blvd.
Los Angeles, CA  90067

Jack Whitescarver, Ph.D.                        8,000 (A)                 .2
4301 Massachusetts Ave. NW #6002
Washington, D.C.  20016

F. Jesus Martinez                             259,725 (A)                4.7
18617 Broadwick Street
Rancho Dominguez, CA  90220

All directors and officers as a             5,505,817 (B)               98.4
   group (9 in number)

(1)      All amounts are amounts of ownership of common stock of the Company
         unless otherwise indicated
(A)      Entire amount is amount of exercisable stock options
(B)      Includes 275,724 exercisable stock options

                                       12
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The Company had transactions with related parties as follows:

<TABLE>
<CAPTION>
                                                                        2001           2000
<S>                                                                  <C>            <C>
        Expenses (income) related to transactions with the
          Company's majority shareholder:
                Royalties (1)                                        $321,490       $331,319
        Expenses for consulting services to a firm which
          employs a member of the Board of Directors                    4,000         15,000
</TABLE>

         The majority shareholder has personally guaranteed the Company's bank
loan up to $2,000,000.

(1)      7% fee on sales of certain products by the Company


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits
------------

Exhibit No.                         Description

3.1               Articles of Incorporation of Registrant (incorporated by
                  reference to Exhibit 4.1 filed with Registrant's Registration
                  Statement on Form S-2, Registration No. 2-68999)

3.2               Amendment to Article I of the Articles of Incorporation of
                  Registrant (incorporated by reference to Exhibit 3.2 filed
                  with Registrant's Report on Form 10-K for the fiscal year
                  ended December 31, 1982, Commission File No. 0-9478)

3.3               Bylaws of Registrant (incorporated by reference to Exhibit 4.2
                  filed with Registrant's Registration Statement on Form S-2,
                  Registration No. 2-68999)

3.4               Amendment to Article III, section 2 of Registrant's Bylaws
                  (incorporated by reference to Exhibit 3.3 filed with
                  Registrant's Report on Form 10-K for the fiscal year ended May
                  31, 1982, Commission File No. 0-9478)

3.5               Amendment to Article IV, Section 6 and Section 7 of the
                  Registrant's Bylaws (incorporated by reference to Exhibit 3.4
                  filed with Registrant's Report on Form 10-K for the fiscal
                  year ended May 31, 1982, Commission File No. 0-9478)

3.6               Articles of Amendment to Registrant's Articles of
                  Incorporation increasing authorized stock to 25,000,000 shares
                  (incorporated by reference to Registrant's Schedule 14C-2
                  Information Statement, Exhibit A, filed with the Commission on
                  October 19, 1996, Commission File No. 0-9478)

3.7               Certificate of Ownership of Microgon into Spectrum
                  Laboratories (incorporated by reference to Exhibit 2B to the
                  Registrant's Form 8-K/A on October 15, 1996, Commission File
                  No. 0-9478)

3.8               Reorganization Agreement, dated September 30, 1998, between
                  Spectrum Laboratories, Inc., and Spectrum Medical Industries,
                  Inc. (incorporated by reference to Exhibit 2 to the
                  Registrant's Form 8-K/A filed November 18, 1998, Commission
                  File No. 0-9478)

                                       13
<PAGE>

10.1              Amendment to Investment and Loan Agreement dated August 1,
                  1995 among the Company, Microgon and certain preferred
                  shareholders of Microgon (incorporated by reference to Exhibit
                  2A to the Registrant's Form 8K/A filed on October 15, 1995,
                  Commission File No. 0-9478)

10.2              Stock Option Plan adopted October 11, 1996 (incorporated by
                  reference to Exhibit B to Registrant's filing of Schedule
                  14-2, filed with the Commission on October 9, 1996)

10.3              Registrant's purchase agreement of Cellco, Inc. (incorporated
                  by reference to Exhibit 10.14 with Registrant's Form 8-K dated
                  November 1, 1996, Commission File No. 0-9478)

10.4              Credit agreement, dated as of December 22, 1998, between
                  Registrant and City National Bank (incorporated by reference
                  to Exhibit 10.18 filed with Registrant's report on Form 10-KSB
                  for fiscal year ended January 2, 1999, Commission File No.
                  0-9478)

10.5              Incentive Agreement dated August 10, 1998, between Spectrum
                  Medical Industries, Inc., the Registrant and F. Jesus Martinez
                  and Roy T. Eddleman (incorporated by reference to Exhibit
                  10.19 filed with Registrant's report on Form 10-KSB for fiscal
                  year ended January 2, 1999, Commission File No. 0-9478)

10.6              Sublease agreement dated January 19, 1999 between Millipore
                  Corporation and Spectrum Laboratories, Inc. (incorporated by
                  reference to Exhibit 10.20 filed with Registrant's report on
                  Form 10-KSB for fiscal year ended January 1, 2000, Commission
                  File No. 0-9478)

10.7              First amendment, dated July 14, 1999, to the credit agreement,
                  dated December 22, 1998, between the Company and City National
                  Bank (incorporated by reference to Exhibit 10.21 filed with
                  Registrant's report on Form 10-KSB for fiscal year ended
                  January 1, 2000, Commission File No. 0-9478)

10.8              Second amendment, dated July 1, 2000, to the credit agreement,
                  dated December 22, 1998, between the Company and City National
                  Bank

10.9              The Registrant's Year 2000 Stock Option Plan

10.10             Third amendment, dated January 8, 2001, to the credit
                  agreement, dated December 22, 1998, between the Company and
                  City National Bank

10.11             Royalty Agreement, dated June 1, 1976, between Roy T. Eddleman
                  and Spectrum Medical Industries

10.12             Fourth amendment, dated December 14, 2001, to the credit
                  agreement, dated December 22, 1998, between the Company and
                  City National Bank

16                Letter on change in certifying accountant (incorporated by
                  reference to Exhibit 16 filed with Registrant's report on Form
                  10-KSB for fiscal year ended January 2, 1999, Commission File
                  No. 0-9478)

21                Subsidiaries of the Registrant (incorporated by reference to
                  Exhibit 21 filed with Registrant's report on Form 10-KSB for
                  fiscal year ended January 2, 1999, Commission File No. 0-9478)

                                       14
<PAGE>

(b) Reports on 8-K
------------------

No reports on Form 8-K were filed during the quarter ended December 29, 2001 by
the Registrant.

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, on March 29, 2002.

SPECTRUM LABORATORIES, INC.


By:  /s/  Roy T. Eddleman
     ------------------------

Roy T. Eddleman
Chairman, Chief Executive Officer, Acting Chief Financial Officer and Director


By:  /s/  Tom Girardi, Esq.
     ------------------------

Tom Girardi
Director


By:  /s/  Jack Whitescarver
     ------------------------

Jack Whitescarver
Director


By:  /s/  F. Jesus Martinez
     ------------------------

F. Jesus Martinez
President and Chief Operating Officer

                                       15