SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  Form 10-KSB/A

                  ANNUAL REPORT PERSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES AND EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2000

                           Commission File No. 0-14696

                            RMED International, Inc.
             (Exact Name of Registrant and Specified in its Charter)

        Colorado                                       84-0898302
(State of Incorporation)                 (I.R.S. Employer Identification Number)

                             3925 North Hastings Way
                              Eau Claire, WI 54703
                          (Address of Principal Office)

                                 (715) 831-0280
                         (Registrant's Telephone Number)

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock $.01
                                                            Par value
                                                            (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 3 or 15 (d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the Registrant was
required to file such reports), and (2) had been subject to such filing
requirements for the past 90 days. |X| Yes |_| No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not 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/A or any amendment to
this Form 10-KSB/A. |_|

The Company's revenues from continuing operations for the fiscal year ended
December 31, 2000 totaled $11,865,687.

As of March 29, 2001, the aggregate market value of the voting stock held by
non-affiliates of the registrant, computed by reference to the last quoted price
at which such stock was sold on such date as reported by the OTC Bulletin Board,
was approximately

There were 9,868,642 shares of the Registrant stock $.01 par value common stock
outstanding as of March 29, 2001.

<PAGE>

                            RMED International, Inc.

                                Table of Contents

                                                                            PAGE

PART I

            Item 1.  Description of Business                                   3

            Item 2.  Description of Properties                                 4

            Item 3.  Legal Proceedings                                         5

            Item 4.  Submission of Matters to a Vote of Security Holders       5

PART II

            Item 5.  Market for the Registrant's Common Equity                 5
                     and Related Stockholder Matters

            Item 6.  Management's Discussion and Analysis                      6

            Item 7.  Financial Statements                                      8

            Item 8.  Changes in and Disagreements With Accountants             9
                     on Accounting and Financial Disclosure

PART III

            Item 9.  Directors and Executive Officers of the Registrant        9

            Item 10. Executive Compensation                                   11

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

            Item 12. Certain Relationships and Related Party Transactions     12

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

SIGNATURES                                                                    14


                                       2
<PAGE>

Part I

Item 1 DESCRIPTION OF BUSINESS

      General

      RMED International, Inc. (the "Company" or "RMED"), was incorporated under
      the laws of the State of  Colorado  on December  28,  1982,  and is in the
      business of manufacturing,  marketing, distributing and selling disposable
      baby diapers and related products under its own branded labels and private
      branded labels.

      In October of 2000, RMED entered into a sales and marketing agreement with
      Hospital Specialty Company, a Division of The Tranzonic Companies.  A copy
      of this exclusive agreement is attached as Exhibit A.

      Business Strategy

      On November 23, 1998, the Company  acquired  Jettar,  Ltd.  ("Jettar"),  a
      privately held diaper  manufacturing  and distributing  company located in
      Eau  Claire,  Wisconsin.  As  a  result  of  the  acquisition,   RMED  now
      manufactures  its own baby diaper  products  in addition to  manufacturing
      private label diapers.  Various RMED products are  manufactured by outside
      private label manufacturers pursuant to Company specifications.

      The  Eau  Claire   facility  is  leased  by  the   Company  and   contains
      approximately  100,000  square feet. It is used as a central  distribution
      point for all RMED products.  The Company has its own testing lab in which
      they can pursue their goal of improving absorbency with natural materials.
      A second state of the art diaper machine was put into service during 2000.
      This machine, complete with an inline laminator and automatic packager, is
      capable of producing national brand equivalent diapers.

      The Company is  marketing  its  products  internationally  through  health
      product stores, mainstream supermarkets,  mail order, catalogues,  Tushies
      Baby Care Representatives at 1-800-344-6379,  the Internet at tushies.com,
      ecomall.com, drugstore.com,  diapers4less.com, webvan.com, greenbabyco.com
      and in an ongoing  direct  marketing  partnership  with  Earth's Best Baby
      Food, a division of Hain Food Group. Earth's Best Baby Food is the largest
      certified organic baby food manufacturer in the United States.

      Product Description

      The Company currently distributes the following products:

      Tushies(R)-This  alternative  disposable  diaper features patented natural
      blend cotton  absorbency,  cloth-like  backsheet  and is available in four
      sizes.

      TushiesWipes-Under  the  TushiesWipes  brand,  the Company  offers natural
      formula  wipes in tubs,  refills and  travelpacks.  The wipes contain Aloe
      Vera, are hypo-allergenic and alcohol-free.


                                       3
<PAGE>

Item 1. DESCRIPTION OF BUSINESS cont'd.

      The Company currently manufactures and sells the following products:

      TenderCare(R) Disposable Diapers allows the Company to be price and design
      competitive with the leading  national brands.  TenderCare is made without
      artificial  chemical  absorbents  and is sold in  major  supermarkets  and
      health product stores.

      Bumpies(R) Disposable Diapers are mainstream diapers that are sold through
      major   supermarkets  in  the  Midwest  and  Mid-Atlantic   regions  at  a
      competitive price in regular, jumbo, and mega-size packaging.

      Rock-A-Bye(R)  Disposable Diapers are sold internationally to distributors
      and retailers under branded and private labels.

      Patents, Trademarks and Registrations

      The  Company  currently  holds  patents  in  cotton  blend  and  flushable
      disposable  diapers,  various trademarks and owns over 100 Internet domain
      names for its products and related baby businesses.

      Competitive Business Conditions

      The Company's  main  competition is other  mid-sized  private label diaper
      manufacturers.  With the recent alliance with Hospital  Specialty  Company
      and the addition of the second diaper machine the Company  believes it has
      positioned itself as a major contender in today's private label disposable
      baby diaper business.

      Sources and Suppliers

      The  Company  has  the  ability  to  use a  number  of  suppliers  in  its
      manufacturing  process,  but has chosen to build strong relationships with
      its vendors by using exclusive purchasing options. Some of the vendors the
      Company uses regularly include 3M, Georgia-Pacific and HB Fuller.

      Customers

      Between its branded  label and private label  products,  the Company has a
      large customer base,  however,  its marketing  relationship  with Hospital
      Specialty has dominated its 2000 private label sales.

      Employees

      As of December 31, 2000, the Company had 56 full and part-time employees.


                                       4
<PAGE>

Item 2. DESCRIPTION OF PROPERTIES

      The  principal  office of the  Company is leased and located at 3925 North
      Hastings Way, Eau Claire, Wisconsin, 54703.

      The 10,000 square foot Delta,  Colorado  facility is owned by the Company,
      and is on two and one-half  acres in an industrial  park. At this location
      the Company maintains its mail order and phone operations.

Item 3. LEGAL PROCEEDINGS

      In August  1994,  the  Company  commenced  an action in the United  States
      District  Court  of the  Southern  District  of New York  against  Sloan's
      Supermarkets,  Inc. and John A.  Catsimatidis  to recover damages based on
      the defendants' failure to disclose,  in its public filings and otherwise,
      the existence of an investigation by the Federal Trade Commission  ("FTC")
      regarding  the   concentration   of  supermarkets  by  entities  owned  or
      controlled by the defendants.  The Company purchased approximately 226,000
      shares of Sloan's  common  stock in  November  and  December  1993 in open
      market  transactions on the American Stock Exchange,  without knowledge of
      the FTC investigation,  and sold a portion of these shares at a loss after
      June 2, 1994, when the Company learned of the FTC investigation. The legal
      action has been  certified as a "class  action" with the Company the class
      action representative. Litigation is subject to many uncertainties and the
      Company is unable to predict the outcome of this matter.

      The Company is subject to various legal  proceedings  in the normal course
      of business. Management believes the outcome of these proceedings will not
      have a material  adverse  effect on the  Company's  financial  position or
      results of operations.

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

      None.

Part II

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
        STOCKHOLDER'S MATTERS

      The Company's  common stock is traded on the  "Electronic  Bulletin  Board
      System" (OTC-BB) with the symbol TUSH.OB.

      The  following  table shows the high and low sales prices for each quarter
      within the last two fiscal years.

              Qtr 1             Qtr 2             Qtr 3             Qtr 4
          2000     1999     2000     1999     2000     1999     2000     1999
          ----     ----     ----     ----     ----     ----     ----     ----
High     $0.910   $2.000   $0.562   $1.312   $0.320   $1.563   $0.440   $1.000

Low      $0.375   $1.313   $0.230   $0.980   $0.230   $0.770   $0.170   $0.500


                                       5
<PAGE>

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
        STOCKHOLDER'S MATTERS cont'd.

      As of December 31, 2000, there were 974 holders of record of the Company's
      common stock.

      Between  January 28, 2000 and February  11, 2000,  the Company sold 17,700
      shares of Common  Stock,  which the Company had recently  acquired for the
      purpose of issuance to employees.  The Company had determined  that it did
      not intend to issue those shares to employees as had been anticipated. The
      sale was for cash, for an aggregate sales price of $11,768.56.  The shares
      were sold in the market by Westport Resources.  The Company paid brokerage
      commissions on those sales in the amount of $333.  There was no applicable
      exemption  from  the   registration   requirements   available  under  the
      Securities  Act of 1933 for that sale. The reserve for  contingencies  has
      been increased by $11,768.56 for possible rescission.

      On June 19, 2000, the Company issued an option  covering a total of 50,000
      shares  of  Common  Stock  of  the  Company  to  a  financing  company  in
      consideration of financial  accommodations  made by that financing company
      to the  Company.  The Company  capitalized  $15,500  which was the expense
      incurred by the Company in connection with the issuance of the option. The
      exemption from  registration  which the Company relied upon in issuing the
      option was the one provided by Section 4(2) of the Securities Act of 1933,
      in that the  issuance was a negotiated  transaction  with a  sophisticated
      party which had all relevant  information about the Company, and therefore
      did not involve a public offering.

      The  Company  has not paid and does not  anticipate  the  payment  of cash
      dividends in the foreseeable  future.  Any future earnings and declaration
      of dividends will remain within the  discretion of the Company's  Board of
      Directors.  The Board of Directors  will review its  dividend  policy from
      time to time, which will depend upon,  among other factors,  the Company's
      earnings  and  financial   requirements,   as  well  as  general  business
      conditions.

      The  Company's  current  line of credit  agreement  does not allow for the
      declaration or payment of dividends,  other than dividends  payable solely
      in stock of the  Company,  or for  payment  on  account  of the  purchase,
      redemption or other  retirement of any shares of such stock or to make any
      distribution in respect thereof either directly or indirectly.

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

      Material Changes in Financial Position

      Total  assets of the  Company  increased  $1,505,001  from  $7,347,371  at
      December 31, 1999 to  $8,852,372 at December 31, 2000, an increase of 20%,
      primarily due to the increase in machinery and equipment.

      During the year ended December 31, 2000, net working capital  decreased by
      $1,131,720 or 114% primarily due to decreases in cash, accounts receivable
      and deposits on  equipments  and  increases in accounts  payable,  accrued
      liabilities  and current  maturities  of long-term  obligations.  Accounts
      receivable  decreased  mainly due to the  bankruptcy in 2000 of one of the
      Company's  largest  customers.  Accounts  payable  increased  as the  note
      payable to bank decreased during 2000.

      Total  liabilities  at  December  31,  2000 were  $8,993,096  compared  to
      $7,387,105  at December  31,  1999,  an increase of 22%.  The increase was
      primarily  due to increases in accounts  payable and current and long-term
      obligations relating to the capital lease of the new diaper machine.

      Total  stockholders'  equity  decreased  $100,990  or 254% during the year
      ended  December 31, 2000.  The decrease was  primarily a result of the net
      loss and the repurchase of common stock.


                                       6
<PAGE>

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS cont'd.

      Material Changes in Results of Operations

      Net sales for the year ended December 31, 2000 were  $11,865,687  compared
      to  $15,620,052  for the year ended  December  31,  1999,  a  decrease  of
      $3,754,365 or 24%. The company's unit volume, however,  decreased only 17%
      as a result of the sales mix moving from branded label sales with a higher
      selling  price to private  label sales with a lower  selling  price due to
      fewer selling expenses such as rebates, billbacks,  slotting,  advertising
      and  commissions.  The volume decrease was due to a major customer failing
      to meet minimum order requirements as detailed in a sales agreement.  This
      noncompliance   resulted   in  income  of   approximately   $947,000   and
      approximates  the gross  margin  that  would  have been  realized  had the
      customer  complied with the contract  terms.  RMED's  agreement  with this
      customer  contained minimum order requirements or minimum monthly payments
      in lieu of  orders.  The  $947,000  of income  was  collected  as  monthly
      payments that were due in lieu of orders for the term of the contract.

      Gross  margin  decreased  $3,373,221  or 54%  from  $6,232,972  in 1999 to
      $2,859,751 in 2000. The decrease was primarily the result of the sales mix
      moving from high margin  branded label sales to private label sales with a
      smaller gross margin, but fewer selling expenses.

      Operating  expenses for the year ended  December 31, 2000 were  $3,438,351
      compared to $6,180,810 for the year ended December 31, 1999, a decrease of
      $2,742,459  or 44%.  The  decrease  was  primarily  due to a reduction  in
      promotional activities.  Net loss for the year ended December 31, 2000 was
      ($54,820)  as  compared  to a net loss of  ($145,567)  for the year  ended
      December 31, 1999, a gain over the previous  year of 62%  primarily due to
      the circumstances discussed above.

      Liquidity and Capital Resources

      At  December  31,  2000  the  Company  had  working  capital  ($2,120,162)
      consisting  of  $3,195,667  in current  assets and  $5,315,829  in current
      liabilities.

      As of December 31, 2000 the Company's  long-term  obligation is $4,691,896
      consisting  of  a  mortgage  payable  on  the  Delta,   Colorado  facility
      ($133,854),  capital  leases  ($3,795,012),  note  payable  for  equipment
      ($263,030)  and  notes  payable  to   shareholders/directors   ($500,000).
      Management  believes that cash,  earnings,  and borrowing  capacity of the
      Company  are  adequate to meet the needs of its  operations  and long term
      credit requirements, including capital expenditures and debt maturities.


                                       7
<PAGE>

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS cont'd.

      At December 31, 2000,  the Company  maintained a line of credit  agreement
      with a bank that expires in December 2001. Total funds available under the
      line of credit is the lesser of  $5,000,000  or a defined  borrowing  base
      consisting  of  eligible  receivables  and  inventory.  The  Company is in
      default of  certain  covenants  at  December  31,  2000 and the lender has
      called the line of credit in accordance with the credit agreement.  As the
      Company was unable to satisfy the bank's demand for payment, the borrowing
      base under the line will decrease on a monthly basis, and the Company will
      incur an  increasing  monthly  fee until  the note  matures.  The  default
      interest rates were retroactively applied to January 1, 2000 and are based
      on the banks  prime  rate plus 4.5% to 8.0%  (effective  rates of 14.0% to
      17.5%). The Company is in default of the line of credit's minimum book net
      worth  covenant.  This  covenant  required a book net worth of $460,267 at
      December 31, 2000.  The Company's  book net worth at December 31, 2000 was
      ($140,720), a shortfall of $600,987. The Company is also in default of the
      line of credit's minimum net earnings and capital expenditures  covenants.
      The minimum net earnings required under the agreement for the period ended
      December  31,  2000 were  $500,000.  The  Company  reported  a net loss of
      $54,820 for the period ended  December 31, 2000.  This loss  resulted in a
      deficiency of the covenant of $554,820.  The capital expenditure  covenant
      required that the Company did not expend or contract to expend for capital
      expenditures in excess of $3,300,000 during the fiscal year ended December
      31, 2000. The Company expended $3,556,755 for capital  expenditures during
      this period, an amount $256,755 in excess of the covenant.

      Cash at year end 2000  decreased by $407,067 over 1999.  Net cash provided
      by  operating  activities  increased  by  $2,573,500.  Net  cash  used  in
      investing  activities  decreased  by $675,795.  Cash flows from  financing
      activities resulted in a decrease of $2,626,662. Impact of Inflation

      The impact of  inflation on the  Company's  results of  operations  is not
      readily  determinable.  However,  the Company  does not believe the impact
      varies  materially  from that  experienced  by the  national  economy as a
      whole. As sales increase, it is possible the Company may be able to reduce
      costs and thereby minimize the impact of inflation.

      "When  used  in  this   report,   the  words  "may,"   "will,"   "expect,"
      "anticipate,"  "continue,"  "estimate,"  "project,"  "intend," and similar
      expressions are intended to identify forward-looking  statements regarding
      events,  conditions,  and  financial  trends that may affect the Company's
      future plans of operations,  business  strategy,  operating  results,  and
      financial  position.  Persons reviewing this report are cautioned that any
      forward-looking  statements are not guarantees of future  performance  and
      are subject to risks and  uncertainties and that actual results may differ
      materially from those included within the forward-looking  statements as a
      result of various factors."

Item 7. FINANCIAL STATEMENTS

      Financial  statements  are included on the  following  pages  numbered F-1
      through F-20.


                                       8
<PAGE>

                            FINANCIAL STATEMENTS AND
                         REPORT OF INDEPENDENT CERTIFIED
                               PUBLIC ACCOUNTANTS

                            RMED INTERNATIONAL, INC.

                           December 31, 2000 and 1999

<PAGE>

                                    CONTENTS

                                                                            Page
                                                                            ----

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS  -
  GRANT THORNTON LLP........................................................ F-2

FINANCIAL STATEMENTS

  BALANCE SHEETS............................................................ F-3

  STATEMENTS OF OPERATIONS.................................................. F-5

  STATEMENTS OF STOCKHOLDERS' DEFICIT....................................... F-6

  STATEMENTS OF CASH FLOWS.................................................. F-7

  NOTES TO FINANCIAL STATEMENTS............................................. F-9

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors
RMED International, Inc.

      We have audited the accompanying balance sheets of RMED International,
Inc. as of December 31, 2000 and 1999, and the related statements of operations,
stockholders' deficit, and cash flows for each of the two years in the period
ended December 31, 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 audits.

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

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of RMED International, Inc. as
of December 31, 2000 and 1999, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America.

      We have also audited Schedule II of RMED International, Inc. as of and for
each of the two years in the period ended December 31, 2000. In our opinion,
this schedule presents fairly, in all material respects, the information
required to be set forth therein.

      The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in note B to the
financial statements, the Company does not currently have the ability to fund
its operations through December 31, 2001. This factor raises substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in regard to this matter are described in note B. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

                                       /s/ GRANT THORNTON LLP

Minneapolis, Minnesota
February 16, 2001

<PAGE>

                            RMED International, Inc.

                                 BALANCE SHEETS

                                  December 31,

                ASSETS                                    2000           1999
                                                       ----------     ----------
CURRENT ASSETS
   Cash                                                $   35,327     $  442,394
   Marketable securities                                     --           32,715
   Accounts receivable, less allowances of
      $38,000 and $25,000 at December 31,
      2000 and 1999                                       718,923      1,574,715
   Inventory                                            2,061,474      1,814,339
   Deposits on equipment                                     --          550,000
   Prepaids and other                                     379,943        296,316
                                                       ----------     ----------

                Total current assets                    3,195,667      4,710,479

PROPERTY AND EQUIPMENT
   Land and building                                      253,969        245,000
   Furniture and office equipment                         146,739        126,535
   Machinery and equipment                              5,693,665      2,166,083
                                                       ----------     ----------
                                                        6,094,373      2,537,618
   Less accumulated depreciation                          856,507        352,161
                                                       ----------     ----------
                                                        5,237,866      2,185,457

OTHER ASSETS
   Patents, net of accumulated amortization
      of $36,577 and $1,297 at December 31,
      2000 and 1999                                       283,093        318,373
   Other                                                  135,746        133,062
                                                       ----------     ----------
                                                          418,839        451,435
                                                       ----------     ----------

                                                       $8,852,372     $7,347,371
                                                       ==========     ==========

The accompanying notes are an integral part of these statements.


                                      F-3
<PAGE>

                             LIABILITIES AND STOCK-
                                HOLDERS' DEFICIT

                                                        2000            1999
                                                     -----------    -----------
CURRENT LIABILITIES
   Note payable to bank                              $   909,896    $ 1,847,904
   Current maturities of capital lease and
      long-term obligations                            1,014,629        853,900
   Accounts payable                                    2,960,456      1,971,338
   Customer deposits                                        --          500,000
   Accrued liabilities                                   430,848        525,779
                                                     -----------    -----------

                Total current liabilities              5,315,829      5,698,921

CAPITAL LEASE OBLIGATIONS, less current maturities     3,013,777      1,542,149

LONG-TERM OBLIGATIONS, less current maturities           663,490        146,035

COMMITMENTS AND CONTINGENCIES                               --             --

STOCKHOLDERS' DEFICIT
   Preferred stock, $.10 par value; 2,500,000
      shares authorized, none issued                        --             --
   Common stock, $.01 par value; 50,000,000 shares
      authorized; 10,472,742 and 10,022,942 shares
      issued and 9,933,642 and 9,609,442 shares
      outstanding at December 31, 2000 and 1999           99,336         96,094
   Additional paid-in capital                          7,968,488      7,702,900
   Common stock to be issued, 450,000 shares                --          315,000
   Accumulated deficit                                (7,974,548)    (7,919,728)
                                                     -----------    -----------
                                                          93,276        194,266

   Less notes receivable from stockholders               234,000        234,000
                                                     -----------    -----------
                                                        (140,724)       (39,734)
                                                     -----------    -----------

                                                     $ 8,852,372    $ 7,347,371
                                                     ===========    ===========

The accompanying notes are an integral part of these statements.


                                      F-4
<PAGE>

                            RMED International, Inc.

                            STATEMENTS OF OPERATIONS

                            Years ended December 31,

                                                       2000            1999
                                                   ------------    ------------

Sales                                              $ 11,865,687    $ 15,620,052

Cost of goods sold                                    9,005,936       9,387,080
                                                   ------------    ------------

                Gross profit                          2,859,751       6,232,972

Operating expenses
   Sales and marketing                                1,988,922       4,743,723
   General and administrative                         1,449,429       1,437,087
                                                   ------------    ------------
                                                      3,438,351       6,180,810
                                                   ------------    ------------

                Operating income (loss)                (578,600)         52,162
                                                   ------------    ------------

Other income (expense)

   Interest expense                                    (472,516)       (303,918)
   Interest income                                       32,343          24,522
   Noncompliance contract fees                          946,976            --
   Other                                                 16,977          81,667
                                                   ------------    ------------
                                                        523,780        (197,729)
                                                   ------------    ------------

                NET LOSS                           $    (54,820)   $   (145,567)
                                                   ============    ============

Net loss per share - basic and diluted             $      (0.01)   $      (0.02)
                                                   ============    ============

Weighted average common shares outstanding -
   basic and diluted                                  9,968,715       9,217,241
                                                   ============    ============

The accompanying notes are an integral part of these statements.


                                      F-5
<PAGE>

                            RMED International, Inc.

                       STATEMENTS OF STOCKHOLDERS' DEFICIT

                            Years ended December 31,

<TABLE>
<CAPTION>
                                                                     Common stock                            Notes
                            Common Stock        Additional           to be issued                          receivable
                            ------------         paid-in             ------------         Accumulated         from
                         Shares       Amount     capital         Shares       Amount        deficit       stockholders     Total
                        ---------    -------    ----------      ---------    --------     -----------     ----------    ----------
Balance at
<S>                     <C>          <C>        <C>              <C>         <C>          <C>              <C>          <C>
  January 1, 1999       9,195,958    $91,960    $7,534,712           --      $    --      ($7,774,161)     $    --      ($ 147,489)

Exercise of
  stock options           826,984      8,269       268,826           --           --             --         (234,000)       43,095

Purchase of stock        (157,500)    (1,575)     (135,913)          --           --             --             --        (137,488)

Sale of stock              44,000        440        32,275           --           --             --             --          32,715

Receipt of shares
  from merger
  settlement             (300,000)    (3,000)        3,000           --           --             --             --            --

Stock to be issued
  for patent                 --         --            --          450,000      315,000           --             --         315,000

Net loss                     --         --            --             --           --      (145,567.00)          --        (145,567)
                        ---------    -------    ----------      ---------    ---------    -----------     ----------    ----------

Balance at
  December 31, 1999     9,609,442     96,094     7,702,900        450,000      315,000     (7,919,728)      (234,000)      (39,734)

Stock issued for
  patent                  450,000      4,500       310,500       (450,000)    (315,000)          --             --            --

Purchase of stock        (143,500)    (1,435)      (72,004)          --           --             --             --         (73,439)

Sale of stock              17,700        177        11,592           --           --             --             --          11,769

Stock options
  issued in
  connection with
  financing                  --         --          15,500           --           --             --             --          15,500

Net loss                     --         --            --             --           --       (54,820.00)          --         (54,820)
                        ---------    -------    ----------      ---------    ---------    -----------     ----------    ----------

Balance at
  December 31, 2000     9,933,642    $99,336    $7,968,488           --      $    --      ($7,974,548)    ($ 234,000)   ($ 140,724)
                        =========    =======    ==========      =========    =========    ===========     ==========    ==========
</TABLE>


                                      F-6
<PAGE>

                            RMED International, Inc.

                            STATEMENTS OF CASH FLOWS

                            Years ended December 31,

                                                        2000           1999
                                                     -----------    -----------
Cash flows from operating activities:
   Net loss                                          $   (54,820)   $  (145,567)
   Adjustments to reconcile net loss to net
     cash flows provided by (used in) from
     operating activities:
       Depreciation and amortization                     559,517        370,085
       Gain on sale of assets                             (1,993)       (25,216)
       Changes in operating assets and
       liabilities:
         Accounts receivable                             855,792       (399,890)
         Inventory                                      (247,135)      (834,569)
         Prepaid and other                               468,025       (647,427)
         Accounts payable                                989,118        758,649
         Accrued liabilities                            (594,931)       324,008
                                                     -----------    -----------

                Net cash provided by (used in)
                   operating activities                1,973,573       (599,927)

Cash flows from investing activities:
   Purchases of equipment                               (823,859)      (110,803)
   Proceeds from sale of equipment                         2,800           --
   Net proceeds (purchase) of marketable
        securities                                        32,715        (32,715)
   Change in other assets                                 (1,636)        29,333
                                                     -----------    -----------

                Net cash used in investing
                  activities                            (789,980)      (114,185)

Cash flows from financing activities:
   Payments on note payable to bank, net                (938,008)    (1,204,096)
   Proceeds from notes payable issued
        to directors                                        --          500,000
   Payments on note payable to President                    --          (71,860)
   Proceeds from long-term obligations                      --        2,015,339
   Payments on long-term obligations                    (590,982)      (141,703)
   Proceeds from exercise of stock options                  --           43,095
   Purchase of stock                                     (73,439)      (137,488)
   Sale of stock                                          11,769         32,715
                                                     -----------    -----------

                Net cash provided by (used in)
                   financing activities               (1,590,660)     1,036,002
                                                     -----------    -----------

The accompanying notes are an integral part of these statements.


                                      F-7
<PAGE>

                            RMED International, Inc.

                      STATEMENTS OF CASH FLOWS - CONTINUED

                            Years ended December 31,

                                                        2000           1999
                                                     -----------    -----------
                NET INCREASE (DECREASE)
                   IN CASH                           $  (407,067)   $   321,890

Cash at beginning of year                                442,394        120,504
                                                     -----------    -----------

Cash at end of year                                  $    35,327    $   442,394
                                                     ===========    ===========

Supplemental disclosure of cash flow
information:
     Cash paid for interest (including
        capitalized interest of $153,200 at
        December 31, 2000)                           $   567,105    $   298,000

Supplemental disclosure of noncash investing
and financing activities:
     Stock options issued for financing                   15,500           --
     Purchase of equipment under note payable            320,000           --
     Acquisition of equipment under capital
        lease                                          2,420,794           --
     Common stock to be issued for patent                   --          315,000
     Notes received for common stock issued on
        exercise of options                                 --          234,000
     Payable to Chairman and Vice President
        of Operations due in stock to be
        issued as compensation for personal
        guarantee of debt                                   --           56,250
     Receipt of stock as settlement related
        to merger                                           --          300,000
                                                     ===========    ===========

The accompanying notes are an integral part of these statements.


                                      F-8
<PAGE>

                            RMED International, Inc.

                          NOTES TO FINANCIAL STATEMENTS

                           December 31, 2000 and 1999

NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
           ACCOUNTING POLICIES

      Nature of Business

      RMED International, Inc. (the "Company" or "RMED"), manufactures
      disposable baby diapers for private label distributors and its Bumpies(R),
      Rock-A-Bye (R) and TenderCare (R) brands as well as markets and
      distributes its Tushies(R) brand disposable diapers and related products.
      The Company's private brand diapers are marketed through independent
      commissioned brokers and sold to retail grocery chains in the Midwest and
      Mid-Atlantic regions of the United States, on the Internet, through health
      product stores and its 800 direct mail number. The Company also sells a
      small portion (less than 10%) of its diapers internationally.

      Summary of Significant Account Policies

      Revenue Recognition and Concentrations of Credit Risk

      Sales are recognized when products are shipped. Sales included in the
      statements of operations are presented net of allowances for sales
      returns, and promotional and trade discounts. Sales of wholesale product
      are generally unsecured and subject to credit limits and ongoing credit
      evaluations of customers. Home delivery sales require payment prior to
      shipment. The Company maintains allowances for potential credit losses
      which, when realized, have been within management's expectations.

      Marketable Securities

      The Company's investments of marketable securities classified as trading
      securities were sold in 2000 with no significant gain or loss incurred.

      Inventory

      Inventory is valued at the lower of cost (first-in, first-out) or market
      value. Inventories consist of the following at December 31:

                                                         2000          1999
                                                      ----------    ----------

        Raw materials                                 $  996,907    $1,087,933
        Finished goods                                 1,064,567       726,406
                                                      ----------    ----------
                                                      $2,061,474    $1,814,339
                                                      ==========    ==========


                                      F-9
<PAGE>

                            RMED International, Inc.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
           ACCOUNTING POLICIES - Continued

      Property and Equipment

      Property and equipment are recorded at cost. Depreciation is computed
      using the straight-line method over the estimated useful lives of the
      assets, ranging from 5 years for furniture and office equipment, 5 - 10
      years for machinery and equipment, and 39 years for buildings. Equipment
      under capital leases is depreciated using the straight-line method over
      the term of the lease.

      Maintenance and repair costs are charged to expense as incurred, and
      renewals and improvements that extend the useful life of the assets are
      capitalized.

      Patent

      The investment in patent consists primarily of the costs related to
      acquiring the patent and is amortized on a straight-line basis over the
      remaining life of the patent of 9 years. The carrying value of the patent
      is assessed periodically or when factors indicating impairment are
      present. Projected undiscounted cash flows are used in assessing this
      asset.

      Advertising and Slotting Costs

      Production costs of advertising (including the cost of coupons) are
      expensed when the initial advertising takes place. All other advertising
      and promotional costs are expensed when incurred. Advertising and coupon
      costs, which are included in sales and marketing expenses were $1,380,281
      and $3,467,361 for 2000 and 1999. Slotting fees paid to retailers for
      shelf space are expensed upon the initial shipment to the retailer.
      Slotting fees were $244,494 in 1999. The Company did not incur any
      slotting fees in 2000.

      Stock Based Compensation

      The Company utilizes the intrinsic value method for stock-based
      compensation. Under this method, compensation expense is recognized for
      the amount by which the market price of the common stock on the date of
      grant exceeds the exercise price of an option. Pro-forma information
      related to the fair value based method of accounting is contained in note
      G.


                                      F-10
<PAGE>

                            RMED International, Inc.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
           ACCOUNTING POLICIES - Continued

      Net Loss Per Common Share

      The Company's basic net loss per share amounts have been computed by
      dividing net loss by the weighted average number of outstanding common
      shares. The Company's diluted net loss per share is computed by dividing
      net loss by the weighted average number of outstanding common shares and
      common share equivalents relating to stock options, when dilutive. Basic
      and diluted per share amounts are the same for each of the years ended
      December 31, 2000 and 1999, as the Company incurred net losses. At
      December 31, 2000 and 1999, common stock options to purchase 450,000 and
      811,924 shares of stock with weighted average exercise prices of $0.27 and
      $0.99, were excluded from the computation of diluted loss per share
      because they were antidilutive.

      Use of Estimates

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

      Fair Value of Financial Investments

      Due to their short-term nature, the carrying value of our current
      financial assets and liabilities approximates their fair values. The fair
      value of our borrowings, if recalculated based on current interest rates,
      would not significantly differ from the recorded amounts.

      New Accounting Pronouncements

      The Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards ("SFAS") No. 133, Accounting for Derivative
      Instruments and Hedging Activities, which is effective for fiscal years
      beginning after June 15, 2000. SFAS 133 requires entities to recognize
      derivatives in their financial statements as either assets or liabilities
      measured at fair value. SFAS 133 also specifies new methods of accounting
      for derivatives used in risk management strategies (hedging activities),
      prescribes the items and transactions that may be hedged, and specifies
      detailed criteria required to qualify for hedge accounting. Management
      believes the adoption of SFAS 133 will not have a material effect on the
      financial statements.


                                      F-11
<PAGE>

                            RMED International, Inc.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
           ACCOUNTING POLICIES - Continued

      FASB Interpretation 44, Interpretation of APB Opinion 25 ("FIN 44"), was
      issued in March 2000. FIN 44 provides an interpretation of APB Opinion 25
      on accounting for employee stock compensation and describes its
      application to certain transactions. It applies on a prospective basis to
      events occurring after that date, except for certain transactions
      involving options granted to nonemployees, repriced fixed options, and
      modifications to add reload option features, which apply to awards granted
      after December 31, 1998. FIN 44 is effective on July 1, 2000 and did not
      have a material effect on the financial statements.

      SEC Staff Accounting Bulletin Number 101, Revenue Recognition in Financial
      Statements (SAB 101) summarizes certain of the staff's views on applying
      accounting principles generally accepted in the United States of America
      to revenue recognition in financial statements. The effective date of SAB
      101 was delayed by SAB 101A and 101B but became effective for the Company
      beginning with the fourth quarter of 2000. The adoption of SAB 101 did not
      have a material effect on the financial statements.

      Reclassifications

      Certain reclassifications have been made to the 1999 financial statements
      to conform with the 2000 financial statement presentation.

NOTE B - ABILITY TO CONTINUE AS A GOING CONCERN

      The accompanying financial statements have been prepared in conformity
      with accounting principles generally accepted in the United States of
      America, which contemplate continuation of the company as a going concern.
      However, the Company does not currently have the ability to fund its
      operations through December 31, 2001. This factor raises substantial doubt
      about the Company's ability to continue as a going concern. Therefore, the
      company will need to obtain additional financing.

      In view of the matter described in the preceding paragraph, recoverabilty
      of a major portion of the recorded asset amounts shown in the accompanying
      balance sheet is dependent upon continued operations of the company, which
      in turn is dependent upon the Company's ability to obtain additional
      financing to support current operations and debt requirements. The
      financial statements do not include any adjustments relating to the
      recoverability and classification of recorded asset amounts or amounts and
      classification of liabilities that might be necessary should the Company
      be unable to continue in existence.

      Management plans to obtain financing from a financial institution.
      Management believes that the proceeds from this financing will fund its
      operations and debt requirements through at least December 31, 2001.


                                      F-12
<PAGE>

                            RMED International, Inc.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE C  -  NOTE PAYABLE TO BANK

      At December 31, 2000 and 1999, the Company maintained a line of credit
      agreement with a bank that expires in December 2001. Total funds available
      under the line of credit is the lesser of $5,000,000 or a defined
      borrowing base consisting of eligible receivables and inventory. The
      Company is in default of certain covenants at December 31, 2000 and the
      lender has called the line of credit in accordance with the credit
      agreement. As the Company was unable to satisfy the bank's demand for
      payment, the borrowing base under the line will decrease by up to 1.5% per
      week beginning February 22, 2001, and the Company will incur an increasing
      monthly fee until the note matures. The default interest rates were
      retroactively applied to January 1, 2000 and are based on the bank's prime
      rate plus 4.5% to 8.0% (effective rates of 14.0% to 17.5% at December 31,
      2000). At December 31, 1999 interest was based on the bank's prime rate
      plus 1.5% to 3.0% (effective rates of 10.0% to 11.5%).


                                      F-13
<PAGE>

                            RMED International, Inc.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE D - LONG-TERM OBLIGATIONS

      Long-term debt and notes payable consist of the following:

                                                              December 31,
                                                       -------------------------
                                                          2000           1999
                                                       ----------     ----------
Mortgage note payable, due January 17, 2001,
  payable in monthly installments of $1,409
  including interest at the bank's base rate
  (effective rate of 9.5% and 8.5% at
  December 31, 2000 and 1999), secured by
  land and building, guaranteed by President           $  133,854     $  137,758

Notes payable to shareholders/directors,
  interest at 7.5%, unsecured,
  subordinate to line-of-credit                           500,000        500,000

Note payable, due April 2003, payable in
  monthly installments of $11,500
  including interest at 17.6%, secured
  by the equipment                                        263,030             --

Capital lease obligations (see note F)                  3,795,012      1,904,326
                                                       ----------     ----------
                                                        4,691,896      2,542,084
Less current maturities                                 1,014,600        853,900
                                                       ----------     ----------

                                                       $3,677,296     $1,688,184
                                                       ==========     ==========

      Future maturities of long-term obligations including capital leases are as
      follows:

                Year ended December 31:
                        2001                                      $1,014,600
                        2002                                       1,485,700
                        2003                                       1,011,800
                        2004                                         864,500
                        2005                                         315,296
                                                                  ----------

                                                                  $4,691,896
                                                                  ==========


                                      F-14
<PAGE>

                            RMED International, Inc.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE E - INCOME TAXES

      The Company has recorded a tax benefit related to losses incurred in 2000
      and 1999 which have been offset by a valuation allowance.

      The tax effects of temporary differences giving rise to deferred income
      taxes consisted of the following:

                                                            December 31,
                                                     --------------------------
                                                          2000           1999
                                                     -----------    -----------
      Deferred tax liabilities:
        Property and equipment                       $   (95,100)   $   (40,300)
      Deferred tax assets:
        Allowance for accounts receivable                 15,200         10,000
        Accrued vacation                                  24,400         16,000
        Intangible assets                                 49,000             --
        Inventory obsolescence reserve                     8,000             --
        Net operating loss carryforwards               1,314,400      1,399,100
                                                     -----------    -----------
                                                       1,315,900      1,384,800
      Valuation allowance                             (1,315,900)    (1,384,800)
                                                     -----------    -----------

                                                     $        --    $        --
                                                     ===========    ===========

      The Company's income taxes differed from the expected amount computed at
      the federal statutory tax rate of 34.0% to income before taxes as a result
      of the following:

                                                             December 31,
                                                       -----------------------
                                                         2000           1999
                                                       --------       --------

      Federal statutory rate                           $(18,600)      $(49,500)
      Adjustment of prior year's accrual                 98,700             --
      Change in valuation allowance                     (68,900)        55,200
      Permanent differences                               6,400             --
      Other                                             (17,600)        (5,700)
                                                       --------       --------

                                                       $     --       $     --
                                                       ========       ========


                                      F-15
<PAGE>

                            RMED International, Inc.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE E - INCOME TAXES - Continued

      A valuation allowance has been established to offset deferred tax assets
      due to the uncertainty of future taxable income, which is necessary to
      realize the benefits of the deferred tax assets. The Company has net
      operating loss (NOL) carryforwards of approximately $3,900,000 at December
      31, 2000, which expire in 2005 through 2020. These NOL's are subject to
      annual utilization limitations due to prior ownership charges.

NOTE F - RELATED PARTY TRANSACTIONS

      A 50% patent interest in the Company's Tushies disposable diaper owned by
      the President was converted into 450,000 shares of common stock of the
      Company on December 30, 1999. The stock was issued in 2000.

NOTE G - COMMITMENTS AND CONTINGENCIES

      Legal Proceedings

      The Company is subject to various legal proceedings in the normal course
      of business. Management believes the outcome of these proceedings will not
      have a material adverse effect on the Company's financial position or
      results of operations.

      Royalty Agreements

      The Company has an agreement with a national diaper manufacturer which
      requires payment of royalties to the manufacturer of three percent of net
      sales of certain disposable diapers effective August 13, 1998 for the term
      of the patent. Royalty expense related to this agreement was $35,574 and
      $207,499 for the years ended December 31, 2000 and 1999.

      Capital Leases

      During 2000, the Company obtained a second diaper machine under a capital
      lease. During 1999, the Company sold its original diaper machine to a
      financing company and entered into a sale-leaseback transaction which was
      accounted for as a capital lease. These leases are personally guaranteed
      by the Chairman and Vice President of Operations.


                                      F-16
<PAGE>

                            RMED International, Inc.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE G - COMMITMENTS AND CONTINGENCIES - Continued

      Property and equipment includes the following amounts under capital leases
      at December 31:

                                                         2000            1999
                                                      ----------      ----------

      Machinery and equipment                         $4,478,700      $2,057,900
                                                      ----------      ----------
      Less accumulated amortization                      652,900         227,100

                                                      $3,825,800      $1,830,800
                                                      ==========      ==========

      Future minimum lease payments for these leases are as follows:

                Year ending December 31,
                         2001                                         $1,177,000
                         2002                                          1,170,600
                         2003                                          1,167,400
                         2004                                            953,300
                         2005                                            326,746
                                                                      ----------

                Total payments                                         4,795,046
                Less amount representing interest                      1,000,034
                                                                      ----------

                Present value of future minimum lease payments        $3,795,012
                                                                      ==========

      Operating Leases

      The Company leases its manufacturing, warehouse, and office facility in
      Eau Claire, Wisconsin pursuant to a non-cancelable operating lease
      agreement. The agreement provides the Company options to renew the lease
      for two successive five-year terms. Rent expense for this lease was
      $187,920 for both 2000 and 1999. The remaining rental commitment is
      $187,920 for the year ending December 31, 2001.


                                      F-17
<PAGE>

                            RMED International, Inc.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE G - COMMITMENTS AND CONTINGENCIES - Continued

      Manufacturing Contract

      In October 1999, the Company entered into a contract to manufacture
      diapers for another company. As part of this agreement the Company was to
      manufacture and deliver a minimum of seven million diapers and a maximum
      of ten million diapers per month and shall maintain a minimum inventory of
      two million diapers. The customer to this contract has filed bankruptcy
      and the Company received approximately $947,000 in noncompliance contract
      fees from this customer for failure to meet these requirements. Although
      the Company is owed additional amounts, the Company has not recorded the
      total fee due them under the contract, as the customer is in bankruptcy
      and payment is not assured.

NOTE H - STOCKHOLDERS' EQUITY

      Pursuant to the terms of a settlement agreement related to the Company's
      merger with Jettar on November 23, 1998, the Company received 300,000
      shares of its stock which were returned in September 1999.

      Incentive Stock Options

      The Company has an incentive stock option plan (the "Plan") for key
      employees of the Company, reserving 250,000 shares of common stock. The
      options are to be granted to employees as determined by a committee
      administering the Plan. The exercise price of options granted under the
      Plan cannot be less than the fair market value of the common stock on the
      date of grant. As of December 31, 2000, no options have been granted.

      Stock Appreciation Rights

      The Plan also authorizes Stock Appreciation Rights to be granted, in
      connection with incentive stock options, which would permit an employee to
      receive an amount equal to the difference between the exercise price of
      the option and the fair market value of the Company's common stock upon
      the exercise date in paid-up stock of the Company or in cash, depending
      upon the Company's determination. It is not presently intended that Stock
      Appreciation Rights will be granted with options under the Plan. As of
      December 31, 2000, no rights have been granted.


                                      F-18
<PAGE>

                            RMED International, Inc.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE H - STOCKHOLDERS' EQUITY - Continued

      Non-Qualified Options

      A summary of the Company's stock option activity, and related information
      is as follows:

                                                                Weighted average
                                                     Shares      exercise price
                                                    ---------   ----------------
      Outstanding as of January 1, 1999             1,638,908         $0.66
         Exercised                                   (826,984)         0.34
                                                    ---------         -----

      Outstanding as of December 31, 1999             811,924          0.99
         Canceled                                    (811,924)         0.99
         Granted                                      450,000          0.27
                                                    ---------         -----

      Outstanding as of December 31, 2000             450,000         $0.27
                                                    =========         =====

      Options exercisable at December 31:

        2000                                          450,000         $0.27
        1999                                          811,924          0.99

      The following table summarizes information concerning options outstanding
      and exercisable as of December 31, 2000:

                                              Weighted average
                                                 remaining      Weighted average
        Range of                   Number     contractual life      exercise
    exercise prices              outstanding       years             price
    ---------------              -----------  ----------------  ----------------

         $0.01                      50,000          1.08             $0.01
         $0.30                     400,000          4.50              0.30
                                   -------

                                   450,000          1.46             $0.27
                                   =======


                                      F-19
<PAGE>

                            RMED International, Inc.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE H - STOCKHOLDERS' EQUITY - Continued

      Pro forma information regarding the fair value of stock options is
      determined at the date of grant using the Black-Scholes option pricing
      model with the following weighted-average assumptions for the year ended
      December 31, 2000: risk free interest rates of 5.97%; no dividend yield,
      volatility factor of the expected market price of the Company's common
      stock of 48.2%; and a weighted-average expected life of the options of 24
      months.

      Had the fair value method been used for valuing options granted, the
      Company's pro forma net loss and net loss per common share would have
      changed to the pro forma amounts indicated below:

                                                             2000        1999
                                                           ---------   --------

      Net income (loss)                                    $(90,820)   $145,567
      Net income (loss) per common share basic
        and diluted                                           (.01)       (.02)

      The pro forma amounts may not be representative of future disclosures
      since the estimated fair value of stock options is amortized to expense
      over the vesting period and additional options may be granted in future
      years.

NOTE I - NOTES RECEVABLE FROM STOCKHOLDERS

      In November 1999, the Company's Chairman and President exercised their
      options to purchase 300,000 and 400,000 shares of common stock in exchange
      for notes receivable of $114,000 and $120,000. Both notes bear interest at
      7% and are due in November 2002.

NOTE J - EMPLOYEE BENEFIT PLAN

      The Company maintains a 401(k) savings plan for employees who are not
      covered by any collective bargaining agreement, have attained age 21 and
      have completed one year of service. Employee and Company matching
      contributions are discretionary. The Company did not make matching
      contributions in 2000 or 1999.


                                      F-20
<PAGE>

                            RMED International, Inc.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE K - CONCENTRATIONS

      Customers

      The following customers each accounted for more than 10% of net sales for
      the years ending December 31:
                                                         2000            1999
                                                      ----------      ----------

      Customer A                                      $1,724,099      $2,795,173
      Customer B                                            --         1,685,710
      Customer C                                       2,620,471            --

      Accounts receivable from these customers were $133,728 and $468,820 at
      December 31, 2000 or 1999.

      Suppliers

      Three suppliers accounted for approximately $3,625,800 of purchases for
      the year ended December 31 1999. Related accounts payable to these
      suppliers were $712,265 at December 31, 1999. During the year ended
      December 31, 2000 no such concentration existed.


                                      F-21
<PAGE>

Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURE

      We dismissed our independent auditors, Oatley Bystrom & Hansen effective
      as of June 10, 1999, and retained the accounting firm of Grant Thornton
      LLP to audit our financial statements for the year ended December 31,
      1999. This change in accountants was approved by the board of directors.
      There were no disagreements with the former accountants on accounting or
      financial disclosure issues, and the former accountants'audit option for
      the past two years did not contain an adverse opinion or disclaimer of
      opinion and were not modified as to uncertainty, audit scope or accounting
      principles.

Part III

Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      The names and ages of the directors and officers of the Registrant and
      their positions and offices presently held are as follows:

      Name                Age    Position and Period of Service
      ----                ---    ------------------------------

      Edward Reiss        62     Director, Chairman of the Board and Co-CEO

      Brenda Schenk       57     Director, President and Co-CEO

      Todd L. Nelson      42     Vice President Operations

      Thomas A. Biebel    60     Director

      John O. Harry       54     Director

      George Reinbacher   72     Director

      No family relationships exist between any Executive Officer or Director.

      The directors shall be elected at each annual meeting of the shareholders.
      Each director shall hold office until the next annual meeting of the
      shareholders and thereafter until his successor shall have been elected
      and qualified, or until his earlier death, resignation or removal.


                                       9
<PAGE>

Item 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT cont'd.

      Background of Listed Directors and Executive Officers

      EDWARD REISS has been a Director, Chairman of the Board and Officer of the
      Company since April 1988 and Vice President and Secretary since 1990. Mr.
      Reiss directs the Company's marketing activities and has served as Co-CEO
      since January 1999. Mr. Reiss is the owner and President of an injection
      molding plastics company, Crystal Tex Co., Inc. Mr. Reiss is not active in
      the daily operations of Crystal Tex. His time is 100% devoted to RMED
      International, Inc.

      BRENDA SCHENK has been a Director of the Company since October 1990 and
      served as President and CEO since September 1990 and Co-CEO since January
      1999. Ms. Schenk is the President and owner of Brandy Enterprises, Ltd.,
      an equipment leasing company. Ms. Schenk is co-owner and Vice President of
      Mr. Reiss's injection molding plastics company. Ms. Schenk is not active
      in the daily operations of Brandy Enterprises, Ltd. or Crystal Tex. Her
      time is 100% devoted to RMED International, Inc.

      TODD L. NELSON, Vice President Operations of the Company since January
      1999, General Manager of the Company from November 1998 until January
      1999, Manufacturing Supervisor at Pope & Talbot from 1977-1992, General
      Manager at Universal Converter from 1992-1995 and Vice President & General
      Manager of Jettar, Ltd. from 1996-1998.

      THOMAS A. BIEBEL, a Director of the Company since January 1999, has been
      the majority owner, President and CEO of Belson Company, a distributor of
      paper packaging and industrial products, since 1987. Mr. Biebel was
      Chairman and President of the Wisconsin Film and Bag Company from 1988 to
      1993 and served as Chairman of the Board of Jettar, Ltd. from 1997 until
      1998.

      JOHN O. HARRY, a Director of the Company since January 1999, has been
      majority owner, Chairman of the Board, President and CEO of Corrosion
      Technologies, Inc., a company that develops, sells and applies
      anti-corrosion technologies to commercial products since 1988.

      GEORGE REINBACHER, a Director of the Company since January 1999, was Vice
      President and General Manager of the Absorbent Products Division of Pope &
      Talbot, until his retirement in 1991. Mr. Reinbacher serves on the board
      of Spectrum Industries, manufacturers of office furniture.


                                       10
<PAGE>

Item 10. EXECUTIVE COMPENSATION

      The following table sets forth information concerning the cash
      compensation during the last three years of the Company to each of the
      Company's executive officers.

           Name and                           Annual            Management
           --------                           ------            ----------
      Principal Position                  Year    Salary    Bonuses  Commissions
      ------------------                  ----    ------    -------  -----------

      Edward Reiss                        2000   $ 93,500      --         --
      Director, Chairman of the Board     1999   $ 85,981   $25,000    $12,000
      & Co-CEO                            1998   $ 68,000      --      $31,700

      Brenda Schenk                       2000   $102,300      --         --
      Director, President                 1999   $ 94,073   $25,000       --
      & Co-CEO                            1998   $ 87,500      --         --

      Todd L. Nelson                      2000   $ 96,949      --         --
      Vice President Operations           1999   $ 89,163   $25,000       --
                                          1998   $ 92,140      --         --

      Directors receive $500 plus travel expenses for attending a Board meeting.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT

      Principal Shareholders

      The following table sets forth information with respect to those persons
      who owned beneficially, more than 5% of the $.01 par value common stock of
      the Company as of December 31, 2000, as reflected in the stock transfer
      records of the Company, copies of filings on schedule 13-D or 13-G, and
      otherwise to the Company's knowledge.

      All forms and reports required by Section 16(a) of the Exchange Act have
      been filed on a timely basis.

      Name and Address (1) of       Amount of                   Percent of
      Beneficial Owner              Beneficial Ownership (2)    Common (5)
      ----------------              ------------------------    ----------

      Edward Reiss                  1,037,109(3)                     8%

      Brenda Schenk                 2,750,221(4)                    28%

      Thomas A. Biebel                800,291                        8%

      John O. Harry                   510,210                        5%

      All Executive Officers        5,462,831                       55%
      And Directors As a Group


                                       11
<PAGE>

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT cont'd.

      (1)   The addresses of all individuals are    c/o RMED International, Inc.
                                                    3925 N. Hastings Way
                                                    Eau Claire, WI  54703

      (2)   Includes the following number of shares which could be purchased
            under stock options exercisable within 60 days of the date hereof:
            Mr. Reiss, 200,000 shares; and all executive officers and directors
            as a group, 400,000 shares. The Board of Directors of RMED
            International, Inc. granted Edward Reiss and Todd Nelson common
            stock options in the amount of 200,000 each that are exercisable at
            $.30 per share and will expire June 29, 2002. These options were
            granted in connection with personal guarantees made by Mr. Reiss and
            Mr. Nelson for loans of $5,000,000 to purchase RMED diaper
            machinery. The market value of RMED's common stock approximated the
            options exercise price on the date of the grant.

      (3)   Includes 3,792 shares held in trust for Mr. Reiss's daughter, Ilana.

      (4)   Includes 337,500 shares owned by Brandy Enterprises, Ltd., a
            corporation wholly owned by Ms. Schenk.

      (5)   Percentage is computed as if all shares listed in column (2) for the
            beneficial owners were outstanding.

            Todd L. Nelson, Vice President-Operations owns 162,803 shares.

Item 12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

      In November 1999, the Company's Chairman and President exercised their
      options to purchase 300,000 and 400,000 shares of common stock in exchange
      for notes receivable of $114,000 and $120,000.

      $500,000 was borrowed from two directors in fiscal year 1999 for working
      capital.

      A 50% patent interest owned by the President in the Company's Tushies
      disposable diaper was sold to the Company for 450,000 shares of common
      stock of the Company on December 30, 1999.

      During 1999, $71,860 was paid to President Brenda Schenk to reimburse her
      for personal payments she made to creditors on RMED's behalf.

      A Flushable Diaper Patent owned by Brenda Schenk was sold to the company
      in 1999 in exchange for 450,000 shares of RMED common stock. The shares
      were valued at $.70. The market value of RMED's common stock approximated
      the price on the date of the sale. The stock was trading between $.50 and
      $1.00. The company had no interest in selling the patent to an outside
      interest since it was deemed in the best interest of the company to
      develop the Flushable Diaper itself.


                                       12
<PAGE>

Item 13. EXHIBITS AND REPORTS ON FORM 8-K

      (a) Documents filed as part of this report.

            (1)   Financial Statements. The following financial statements are
                  included in Part II, Item 7 of this Annual Report on Form
                  10-K:

                  Report of Grant Thornton LLP on Consolidated Financial
                  Statements and Financial Statement Schedule as of December 31,
                  2000 and 1999 and for each of the two years in the period
                  ended December 31, 2000 and 1999

                  Consolidated Balance Sheets as of December 31, 2000 and 1999

                  Consolidated Statements of Operations for the years ended
                  December 31, 2000, and 1999

                  Consolidated Statements of Shareholders' Equity for the years
                  ended December 31, 2000 and 1999

                  Consolidated Statements of Cash Flows for the years ended
                  December 31, 2000 and 1999

                  Notes to Consolidated Financial Statements

            (2)   Financial Statement Schedules: The following consolidated
                  financial statement schedule is included in Item 14(d):

                  Schedule II-Valuation and Qualifying Accounts and Reserves

                  All other financial statement schedules have been omitted,
                  because they are not applicable, are not required, or the
                  information is included in the Financial Statements or Notes
                  thereto

            (3)   Exhibits. The following exhibits are included in this report:
                  See "Exhibit Index to Form 10-K" immediately following the
                  signature page of this Form 10-K

      (b) Reports on Form 8-K

                  The Company did not file any reports on from 8-K during the
                  three months ended December 31, 2000.


                                       13
<PAGE>

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                       RMED International, Inc.

Date: July 16, 2001

                                       By /s/ Brenda Schenk
                                       --------------------------------
                                       President and Co-CEO
                                       (Principal Financial  and Accounting
                                       Officer)

In accordance with the Securities Exchange Act of 1934, this report has been
signed below on July 16, 2001 by the following persons on behalf of the
Registrant and in the capacity indicated.

/s/ Edward Reiss                                               07/16/01
-------------------------------------                          Date
Edward Reiss, Chairman
of the Board and Co-CEO
(Principal Executive Officer)

/s/ Brenda Schenk                                              07/16/01
-------------------------------------                          Date
Brenda Schenk
President and Co-CEO (Principal
Financial and Accounting Officer)

/s/George Reinbacher                                           07/16/01
-------------------------------------                          Date
George Reinbacher
Director


                                       14
<PAGE>

                                  EXHIBIT INDEX
                            RMED INTERNATIONAL, INC.
                                   FORM 10-KSB

Exhibit No.       Description
-----------       -----------

2.0               Plan of acquisition, reorganization, arrangement, liquidation
                  or succession-incorporated by reference to the Company's
                  Current Report on Form 8-K filed December 1, 1998

3.1               Articles of Incorporation of the Company, Amended and Restated
                  Articles of Incorporation of the Company

3.2               By-Laws of the Company

4.2               Credit and Security Agreement between RMED International, Inc.
                  and Wells Fargo Business Credit, Inc. dated December 3, 1999

10.1              Sales & Marketing Agreement between the Company and Hospital
                  Specialty Company dated October 5, 2000

10.2              Standard Premises Lease between Jettar, Ltd. and National
                  Presto Industries, Inc. dated June 12, 1996 and reassigned at
                  the merger between the Company and Jettar, Ltd. on November
                  23, 1998

10.3              Equipment Lease Agreement between the Company and
                  International Financial Services Corporation dated July 26,
                  1999

10.4              Master Equipment Lease Agreement between the Company and DNJ
                  Diaper, LLC dated June 19, 2000

16.0              Letter on change in certifying accountant-incorporated by
                  reference to the Company's Current Reports on Form 8-K filed
                  June 10, 1999, July 6, 1999 and July 8, 1999