UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-QSB/A

                                 AMENDMENT NO. 1



[x]      QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001



[ ]      TRANSITION REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO _____________



Commission file number  000-25663
                        ---------

                            ULTRASTRIP SYSTEMS, INC.
        (Exact name of small business issuer as specified in its charter)

            Florida                                              65-0841549
(State or other jurisdiction of                               (I.R.S. employer
 incorporation or organization)                              identification no.)

                            3515 S.E. Lionel Terrace
                              Stuart, Florida 34997
                    (Address of principal executive offices)

                                 (772) 287-4846
                (Issuer's telephone number, including area code)


                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 42,332,679 shares of common stock
were outstanding as of September 30, 2001.

Transitional Small Business Disclosure Format (check one):  Yes [ ]   No [x]

Note: The information contained in this Form 10-QSB/A relates only to the
covered period. The Company has not provided supplemental or revised information
after the period covered by this report, but instead has disclosed such
information in its quarterly reports on Form 10-QSB and annual reports on Form
10-KSB, as well as amended reports on Forms 10-QSB/A and Forms 10-KSB/A, as
appropriate for periods subsequent to September 30, 2001.

<PAGE>

                            ULTRASTRIP SYSTEMS, INC.


                                   FORM 10-QSB


                                TABLE OF CONTENTS
                                -----------------
<TABLE>
<CAPTION>

                                                                                    Page
                                                                                    ----
<S>                 <C>                                                              <C>
PART I.             FINANCIAL INFORMATION

      Item 1.       Financial Statements (unaudited)
                         Condensed Balance Sheets...............................     1
                         Condensed Statements of Operation......................     2
                         Condensed Statements of Cash Flows.....................     3
                         Summary of Significant Accounting Policies.............     4
                         Notes to Condensed Financial Statements................     7
      Item 2.       Management's Discussion and Analysis or Plan of
                    Operation...................................................     18

PART II.            OTHER INFORMATION

      Item 1.       Legal Proceedings...........................................     26
      Item 2.       Changes in Securities.......................................     27
      Item 3.       Defaults Upon Senior Securities.............................     27
      Item 4.       Submission of Matters to a Vote of Security Holders.........     27
      Item 5.       Other Information...........................................     28
      Item 6.       Exhibits and Reports on Form 8-K............................     29

                    Signatures..................................................     31

                    Certifications..............................................     32
</TABLE>


                                      ii

<PAGE>

                         PART I - FINANCIAL INFORMATION


ITEM 1.    FINANCIAL STATEMENTS.

                            ULTRASTRIP SYSTEMS, INC.
                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------------
                                                                                    September 30,        December 31,
                                                                                        2001                 2000
-------------------------------------------------------------------------------------------------------------------------
                                                                                      (unaudited)
<S>                                                                                 <C>                 <C>
CURRENT ASSETS
   Cash                                                                                   306,340             300,304
   Accounts receivable                                                                    908,624                  --
   Prepaid expenses and other                                                       $      59,952       $          --
-------------------------------------------------------------------------------------------------------------------------

TOTAL CURRENT ASSETS                                                                    1,274,917             300,304

PROPERTY AND EQUIPMENT, NET                                                             3,380,735           3,017,634

PATENTS, NET                                                                              102,623              89,345
OTHER ASSETS                                                                                8,864               4,066
-------------------------------------------------------------------------------------------------------------------------

                                                                                    $   4,767,138       $   3,411,349
=========================================================================================================================

LIABILITIES, REDEEMABLE CONVERTIBLE CUMULATIVE PREFERRED STOCK AND
STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
   Accounts payable and accrued expenses                                            $   1,865,627       $     774,536
   Customer deposits                                                                      150,000
   Accrued preferred stock dividends                                                      645,401             345,401
   Deferred revenue                                                                        78,365                   -
   Notes payable - current portion                                                          9,438               9,438
-------------------------------------------------------------------------------------------------------------------------

TOTAL CURRENT LIABILITIES                                                               2,748,831           1,129,375

LONG-TERM DEBT:
   Notes payable to shareholders                                                          869,352             517,893
   Notes payable, less current portion                                                    102,248              78,879
-------------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES                                                                       3,720,431           1,726,147

REDEEMABLE CONVERTIBLE CUMULATIVE PREFERRED STOCK SERIES A
   34 shares outstanding, $25,000 per share redemption amount                             850,000             850,000

REDEEMABLE CONVERTIBLE CUMULATIVE PREFERRED STOCK SERIES B
   1,056 and 1,158 shares outstanding, respectively, $2,500 per share                   2,640,000           2,950,000
   redemption amount

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT

COMMON STOCK, $0.01 par value; 100,000,000 shares authorized; 42,332,679 and
40,284,140 shares issued and outstanding, respectively                                    423,327             402,841
ADDITIONAL PAID-IN CAPITAL                                                             26,328,924          13,872,713
ADDITIONAL PAID-IN CAPITAL UNISSUED SUBSCRIBED SHARES                                      75,000              75,000
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE                                      (29,270,544)        (16,210,352)
-------------------------------------------------------------------------------------------------------------------------

TOTAL STOCKHOLDERS' DEFICIT                                                            (2,443,293)         (1,859,798)
-------------------------------------------------------------------------------------------------------------------------


                                                                                    $   4,767,138       $   3,411,349
=========================================================================================================================
</TABLE>


                                       1
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.

                  UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                          For the three months ended            For the nine months ended
                                                                  September 30,                        September 30,
                                                            2001                2000             2001                 2000
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>               <C>               <C>                  <C>
REVENUES:
     Hydro-blasting contracts                           $     77,724      $           --    $       737,524      $           --

OPERATING EXPENSES:
     Cost of hydro-blasting contracts                        131,603                  --            695,127                  --
     Selling, general and administrative,
       excluding non-cash compensation expense             1,298,724           1,042,465          4,356,885           2,234,610
     Loss from impairment of assets                          210,933             214,134            210,933             214,134
     Non-cash compensation expense
      (Notes 5 and 7)                                      4,187,657           3,716,973          8,214,538           6,987,409
---------------------------------------------------------------------------------------------------------------------------------

Total operating expenses                                   5,828,917           4,973,572         13,477,483           9,436,153
---------------------------------------------------------------------------------------------------------------------------------

Loss from operations                                      (5,751,193)        (4,973,572)        (12,739,959)         (9,436,153)

Other expense:
     Interest expense                                          5,161               5,545             20,233              11,874
---------------------------------------------------------------------------------------------------------------------------------

Net loss                                                  (5,756,354)         (4,979,117)       (12,760,192)         (9,448,027)

Preferred stock dividends (Note 6)                           (97,875)            (45,540)          (300,000)           (118,366)
---------------------------------------------------------------------------------------------------------------------------------

Net loss applicable to common stock                     $ (5,854,229)     $   (5,024,657)    $  (13,060,192)     $   (9,566,393)
=================================================================================================================================

Net loss per common share (basic and diluted)           $      (0.14)     $        (0.13)    $        (0.32)     $        (0.24)
=================================================================================================================================

Weighted average number of common shares
     outstanding                                          42,154,009          40,145,423         41,438,544          39,742,788
=================================================================================================================================
</TABLE>


                                       2
<PAGE>


                            ULTRASTRIP SYSTEMS, INC.
             UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (NOTE 11)
<TABLE>
<CAPTION>
                                                                             For the nine months ended
                                                                                     September 30,
                                                                                2001              2000
--------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                <C>
OPERATING ACTIVITIES:
   Net loss                                                                $ (12,760,192)     $  (9,448,027)

   Adjustments to reconcile net loss to
     net cash used in operating activities:
       Accumulated depreciation and amortization                                 552,649            389,293
       Common stock issued for services                                        2,320,000            800,000
       Issuance of equity instruments for services                               173,160          2,155,423
       Non-cash compensation expense                                           5,721,378          4,031,986
       Provision for impairment of equipment                                     210,933            214,134
   Change in assets and liabilities:
         Accounts receivable                                                    (908,624)                --
         Prepaid expenses and other                                              (59,952)           (74,282)
         Other assets                                                             (4,798)                --
         Deferred revenue                                                         78,365                 --
         Accounts payable and accrued expenses                                 1,241,093            (17,706)
--------------------------------------------------------------------------------------------------------------

Net cash used in operating activities                                         (3,435,988)        (1,949,179)
--------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:
   Patent                                                                        (17,601)                --
   Purchase of property and equipment                                         (1,122,361)        (1,694,887)
--------------------------------------------------------------------------------------------------------------

Net cash used in investing activities                                         (1,139,962)        (1,694,887)
--------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES:
   Proceeds from issuance of long-term debt                                       34,913                 --
   Repayment of long-term debt                                                   (11,544)            (3,904)
   Proceeds from issuance of long-term debt and warrants to shareholders         454,360            351,111
   Repayment of long-term debt and warrants to shareholders                     (102,901)          (181,438)
   Proceeds from issuance of preferred stock                                     200,000          1,975,000
   Proceeds from issuance of common stock                                      4,007,158          1,827,453
--------------------------------------------------------------------------------------------------------------

Net cash provided by financing activities                                      4,581,986          3,968,222
--------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                               6,036            324,156

Cash and equivalents, beginning of year                                          300,304             59,970
--------------------------------------------------------------------------------------------------------------

Cash and equivalents, end of period                                        $     306,340      $     384,126
==============================================================================================================
</TABLE>


                                       3
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


BASIS OF          The accompanying unaudited condensed financial statements have
PRESENTATION      been prepared in accordance with accounting principles
                  generally accepted in the United States for interim financial
                  information and with Item 310 of Regulation S-B. Accordingly,
                  they do not include all of the information and footnotes
                  required by accounting principles generally accepted in the
                  United States of America for complete financial statements.
                  All adjustments which, in the opinion of management, are
                  considered necessary for a fair presentation of the results of
                  operations for the periods shown are of a normal recurring
                  nature and have been reflected in the unaudited condensed
                  financial statements. The results of operations for the
                  periods presented are not necessarily indicative of the
                  results expected for the full fiscal year or for any future
                  period. The information included in these unaudited condensed
                  financial statements should be read in conjunction with
                  Management's Discussion and Analysis of Financial Condition
                  and Results of Operations contained in this report and the
                  financial statements and accompanying notes included in the
                  Ultrastrip Systems, Inc. (the "Company") Annual Report on Form
                  10-KSB/A for the fiscal year ended December 31, 2000.

                  The primary purpose of this amended report on Form 10-QSB is
                  to present interim financial statements that have been
                  corrected for certain accounting matters, including the
                  following: non-cash compensation charges due to variable
                  accounting expenses, preferred stock dividends, recalculation
                  of common stock outstanding, as well as reclassification of
                  certain liabilities as current liabilities and certain
                  expenses as cost of sales.

NATURE OF         UltraStrip Systems, Inc. (the "Company") was incorporated on
OPERATIONS        April 2, 1998 under the laws of the State of Florida. The
                  Company designs, develops and manufactures a robotic
                  hydro-blasting system that uses ultra-high water pressure to
                  remove coatings from steel surfaces. The Company operated as a
                  development stage enterprise from its inception through
                  February 26, 2001 by devoting substantially all its efforts to
                  the ongoing development of the Company. The Company commenced
                  significant operations in March 2001.

                  The Company operates solely in one reportable operating
                  segment. Management monitors and reviews the operating results
                  of equipment sales and contract activities and allocates
                  resources solely on an aggregate basis.

                                       4
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


CASH AND CASH     The Company considers all highly liquid investments with a
EQUIVALENTS       maturity of three months or less when purchased to be cash
                  equivalents.

FAIR VALUE OF     The carrying amounts of the Company's financial assets,
FINANCIAL         including cash and cash equivalents and of certain financial
INSTRUMENTS       liabilities (accounts payable and accrued expenses and due to
                  related parties), approximate fair value because of their
                  short maturities.

                  Based on the Company's estimate of its current incremental
                  borrowing rate for loans with similar terms and average
                  maturities, the carrying amounts of notes payable to
                  shareholders and notes payable approximate fair value.

                  Based upon the conversion terms of the Company's Series A and
                  Series B Redeemable Convertible Cumulative Preferred Stock
                  (Preferred Stock) and the estimated current fair value of the
                  Company's Common Stock into which the Preferred Stock is
                  convertible, the fair value of the Preferred Stock aggregates
                  approximately $7,470,144.

USE OF            The preparation of financial statements in conformity with
ESTIMATES         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 amounts of revenues and expenses during the reporting
                  period. Actual results could differ from those estimates.

PROPERTY          Property and equipment is stated at cost, maintenance and
AND EQUIPMENT     repairs are charged to operations. Property and equipment
                  consists principally of robotic hydro-blasting machinery and
                  equipment. Depreciation and amortization is computed using the
                  straight-line method based on the estimated useful lives of
                  the related assets of 5 to 7 years. Leasehold improvements are
                  amortized over the lesser of the lease term or the useful life
                  of the property.

LONG-LIVED        The Company evaluates the recoverability of long-lived assets
ASSETS            by measuring the carrying amount of the assets against the
                  estimated undiscounted future cash flows associated with them.
                  At such time the evaluations indicate that the future


                                       5
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


                  undiscounted cash flows of the long-lived assets would not be
                  sufficient to recover the carrying value of such assets, the
                  assets would be adjusted to their fair values.

PATENTS           The patents are stated at cost and are being amortized on a
                  straight-line basis over the estimated future periods to be
                  benefited (16.5 years).

REVENUE           Revenue from sales of equipment is generally recognized when
RECOGNITION       products are shipped, economic risk of loss has passed to the
                  customer, collection is probable, and any future obligations
                  of the Company are insignificant. Revenue from hydro-blasting
                  service contracts is recognized ratably over the service
                  period or as the services are rendered. Payments received in
                  advance of the performance of services are deferred until the
                  services are performed.

ADVERTISING       The Company conducts advertising for the promotion of its
                  products. Advertising costs are charged to operations when
                  incurred; such amounts aggregated $150,347 for the nine months
                  ended September 30, 2001 and $137,852 for the nine months
                  ended September 30, 2000.

INCOME TAXES      The Company accounts for income taxes pursuant to the
                  provisions of Statement of Financial Accounting Standards
                  (SFAS) No. 109, "Accounting for Income Taxes," which requires,
                  among other things, a liability approach to calculating
                  deferred income taxes. The asset and liability approach
                  requires the recognition of deferred tax liabilities and
                  assets for the expected future tax consequences of temporary
                  differences between the carrying amounts and the tax bases of
                  assets and liabilities.

LOSS              Basic loss per share is computed on the basis of the weighted
PER SHARE         average number of common shares outstanding during each period
                  presented. Diluted loss per share is computed on the basis of
                  the weighted average number of common shares and dilutive
                  securities outstanding. Dilutive securities having an
                  antidilutive effect on diluted loss per share are excluded
                  from the calculation.

                                       6
<PAGE>


                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


1. GOING CONCERN  The accompanying financial statements were prepared assuming
                  that the Company will continue as a going concern. This basis
                  of accounting contemplates the realization of assets and the
                  satisfaction of its liabilities in the normal course of
                  operations. Since inception the Company has incurred losses of
                  approximately $28.8 million, has outstanding redeemable
                  preferred stock that can become mandatorily redeemable after
                  June 2002 and has not reached a profitable level of
                  operations, all of which raise substantial doubt about the
                  Company's ability to continue as a going concern.

                  The Company's continued existence is dependent upon its
                  ability to resolve its liquidity problems, principally by
                  obtaining additional debt financing and equity capital. While
                  pursuing additional debt and equity funding, the Company must
                  continue to operate on limited cash flow generated internally.

                  The financial statements do not include any adjustments to
                  reflect the possible future effects on the recoverability and
                  classification of assets or the amounts and classification of
                  liabilities that may result from the possible inability of the
                  Company to continue as a going concern.

                  Accordingly, there are no assurances that the Company will be
                  successful in achieving the above plans, or that such plans,
                  if consummated, will enable the Company to obtain profitable
                  operations or continue as a going concern.

2. PROPERTY AND   Property and equipment consist of the following:
   EQUIPMENT
<TABLE>
<CAPTION>

                                                                        Estimated
                                                                         Useful
                  September 30,                                            Life          2001
                  ---------------------------------------------------------------------------------
<S>                                                                      <C>      <C>
                  Machinery and equipment                                5 years  $   2,607,691
                  Furniture and fixtures                                 7 years        270,743
                  Automobile and trucks                                  5 years        198,554
                  Leasehold improvements                                 5 years        180,261
                  Spare parts                                            5 years        621,769
                  Office equipment                                       5 years        187,397
                  ---------------------------------------------------------------------------------

                                                                                      4,066,416
                  Less accumulated depreciation and
                           amortization                                                (685,681)
                  ---------------------------------------------------------------------------------

                                                                                  $   3,380,735
                  =================================================================================
</TABLE>

                                       7
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS

3. NOTES PAYABLE  Notes payable to shareholders consist of the following:
   TO
   SHAREHOLDERS
<TABLE>
<CAPTION>

                  September 30,                                                            2001
                  ---------------------------------------------------------------------------------
<S>                                                                                <C>
                  Unsecured notes payable to
                  employee/shareholder, noninterest
                  bearing, due upon demand                                         $    869,352
                  ---------------------------------------------------------------------------------
                                                                                        869,352

                  Less current portion (a)                                                   --
                  ---------------------------------------------------------------------------------

                                                                                   $    869,352
                  =================================================================================

                   (a)    Though these notes are due on demand, the Company and the
                          employee/shareholder(s) renegotiated these notes over a
                          longer term in 2001.
</TABLE>

4. NOTES PAYABLE  Notes payable consist of the following:
<TABLE>
<CAPTION>

                  September 30,                                                        2001
                  ---------------------------------------------------------------------------------
<S>                                                                                <C>
                  Installment notes payable to banks, payable $1,336 monthly
                  including interest at 10.99%, through July 2009 collateralized
                  by trucks                                                        $    111,686

                  ---------------------------------------------------------------------------------
                                                                                        111,686

                  Less current portion                                                   (9,438)
                  ---------------------------------------------------------------------------------

                                                                                   $    102,248
                  =================================================================================

                  Aggregate notes payable at September 30, 2001 consists of the following:


                  --------------------------------------------------------------------------------
                  Notes payable shareholders                                       $    869,352
                  Notes payable                                                    $    111,686
                  --------------------------------------------------------------------------------

                                                                                   $    981,038
                  =================================================================================
</TABLE>


5. COMMON STOCK   During the nine months ended September 30, 2001, the Company
                  issued 775,000 shares of restricted, unregistered common stock
                  as part of the new compensation package for key employees.
                  According to the original terms there were no vesting
                  requirements, however, on March 31, 2002 the executives agreed
                  to a vesting schedule. These issuances were valued at
                  estimated fair value of $2.88 per share. Accordingly, the
                  Company recorded a charge to operations in the amount of
                  $2,232,000 during 2001.

                                       8
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


                  During the nine months ended September 30, 2001, the Company
                  issued 1,168,369 shares of restricted, unregistered common
                  stock for net proceeds of $4,007,158.

                  During the nine months ended September 30, 2000, the Company
                  issued 858,633 shares of restricted, unregistered common stock
                  for net proceeds of $1,827,453.

                  Shares reserved for issuance
                  ----------------------------

                  At September 30, 2001, 22,787,760 shares of Common Stock were
                  reserved for issuance under the Company's fixed stock option
                  plan, outstanding non-plan options, warrants and upon
                  conversion of the outstanding Series A Redeemable Convertible
                  Cumulative Preferred Stock.

                  The following reconciles the components of the loss per share
                  computation:

                  <TABLE>
<CAPTION>

                  For the nine months ended September 30,             2001                             2000
                  --------------------------------------------------------------------------------------------------------
                                                   Income       Shares       Per-       Income        Shares     Per-
                                                   (Nume-       (Deno-       Share      (Nume-       (Deno-      Share
                                                    rator)      minator)     Amount      rator        minato     Amount
                  ---------------------------------------------------------------------------------------------------------
<S>                                             <C>             <C>         <C>       <C>             <C>          <C>
                  Loss per common share
                      Net (loss) available to
                        common shareholders     $(13,060,192)  41,438,544  $ (0.32)  $ (9,566,393)   39,742,788   $(0.24)


                  Effect of Dilutive
                      Securities:
                           Stock
                           options/warrants              --            --        --            --             --       --
                  ---------------------------------------------------------------------------------------------------------

                  Net (loss) available
                      to common shareholders
                      plus assumed conversions  $(13,060,192)  41,438,544  $ (0.32)  $ (9,566,393)   39,742,788   $(0.24)
                  =========================================================================================================
</TABLE>

                  The Company's outstanding options and warrants to acquire
                  common stock and shares of common stock issuable upon
                  conversion of outstanding redeemable convertible cumulative
                  preferred stock (all aggregating 18,337,760 and 12,579,370
                  shares of common stock at September 30, 2001 and 2000,
                  respectively) are not included in the computation of loss per
                  share because the effects of inclusion would be anti-dilutive.

                                       9
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS

6. REDEEMABLE     Series A
   CONVERTIBLE    --------
   CUMULATIVE
   PREFERRED      During the year ended December 31, 1999, the Company issued 62
   STOCK          shares of Series A Redeemable Convertible Cumulative Preferred
                  Stock at $25,000 per share for net proceeds of $1,550,000. The
                  shares are redeemable at the option of the Company at $27,500
                  per share plus accrued dividends and are redeemable at the
                  option of the holder any time after June 2002 at $25,000 per
                  share plus accrued dividends.

                  The Series A Redeemable Convertible Cumulative Preferred Stock
                  provides annual dividends, at the rate of $3,750 per share,
                  payable in cash, which are cumulative and have priority over
                  dividends on the Series B preferred and common stock.
                  Dividends in arrears at September 30, 2001 were $364,150.

                  Each share of Series A Redeemable Convertible Cumulative
                  Preferred Stock is convertible into 24,000 shares of common
                  stock at the holder's option. The Series A preferred shall
                  automatically be converted into common stock in the event of
                  an underwritten public offering. During the nine months ended
                  September 30, 2001, 0 shares of Series A preferred stock were
                  converted into shares of common stock. In the event of
                  dissolution, the holders of Series A preferred shall be
                  entitled to receive $25,000 per share, plus accrued dividends,
                  prior to any distribution to holders of common stock.

                  Series B
                  --------

                  During the year ended December 31, 2000, the Company issued
                  1,292 shares of Series B Redeemable Convertible Cumulative
                  Preferred Stock at $2,500 per share for net proceeds of
                  $3,230,000, of which $200,000 was not received until 2001. The
                  shares are redeemable at the option of the Company at $3,000
                  per share plus accrued dividends and are redeemable at the
                  option of the holder anytime after June 2002 at $2,500 per
                  share plus accrued dividends.

                  The Series B Redeemable Convertible Cumulative preferred stock
                  provides annual dividends, at the rate of $250 per share,
                  payable in cash, which are cumulative and have priority over
                  dividends on the common stock. Dividends in arrears at
                  September 30, 2001 were $281,251.

                                       10
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


                  Each share of Series B preferred is convertible into 835
                  shares of common stock at the holder's option. The Series B
                  preferred shall automatically be converted into common stock
                  in the event of an underwritten public offering. During the
                  nine months ended September 30, 2001, 102 shares of Series B
                  preferred stock were converted into 85,170 shares of common
                  stock, respectively. In the event of dissolution, the holders
                  of Series B preferred shall be entitled to receive $3,000 per
                  share, plus accrued dividends, prior to any distribution to
                  holders of common stock.

7. STOCK OPTIONS  At September 30, 2001, the Company has two fixed stock option
   AND WARRANTS   plans and non-plan options, which are described below. The
                  Company applies APB Opinion No. 25, "Accounting for Stock
                  Issued to Employees," and related interpretations in
                  accounting for employee stock options. Under APB Opinion No.
                  25, in situations where the number of shares of common stock
                  that may be acquired and the price to be paid are determinable
                  at the date of grant, and the exercise price of the Company's
                  employee stock options equals or exceeds the market price of
                  the underlying stock on the date of grant, no compensation
                  cost is recognized. For those grants where either the number
                  of shares of common stock that may be acquired or the price to
                  be paid are not determinable, the Company records estimates of
                  compensation costs based upon the market value of the stock at
                  each intervening financial statement date.

                  On August 15, 1999, the Company adopted an Outside Directors
                  Stock Option Plan, which provides for the granting of
                  2,000,000 stock options to members of the Board who are not
                  full or part time employees of the Company. Under the plan,
                  each eligible director will be granted an option to purchase
                  up to 200,000 shares on the date the person is elected to the
                  Board and will be granted an option to purchase 50,000 shares
                  upon reelection to the Board at each annual shareholders
                  meeting. The stock options are not exercisable until six
                  months after the grant date and are exercisable over a
                  five-year period. As of September 30, 2001, options to
                  purchase 1,000,000 shares of common stock at a price of $1.88
                  per share have been granted pursuant to the plan.

                  On August 18, 2000, the Company adopted a Long Term Incentive
                  Program, which provides for the granting of 4,000,000 stock
                  options and stock appreciation rights (SARs) to key employees.
                  Options granted may be either "incentive stock options,"
                  within the meaning


                                       11
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


                  of Section 422 of the Internal Revenue Code, non-qualified
                  options, or restricted stock awards. The stock options are
                  exercisable for a period no longer than ten years after the
                  date they are granted. As of September 30, 2001, options to
                  purchase 550,000 shares of common stock at prices ranging from
                  $3.00 to $5.00 per share have been granted pursuant to the
                  plan.

                  During the nine months ended September 30, 2001, the Company
                  granted options to acquire 6,475,000 shares of common stock to
                  employees. The options are exercisable at prices ranging from
                  $3.00 to $5.00 per share, vesting over periods from immediate
                  to 2006. During the nine months ended September 30, 2001 and
                  the years ended December 31, 2000, 1999, and 1998, the Company
                  granted options to employees and directors to acquire an
                  aggregate 4,460,000 shares of common stock which are
                  exercisable, at the holders' option, in a cashless manner by
                  surrendering options held on appreciated shares of common
                  stock. For these options, the number of shares of common stock
                  that may be acquired by the option holder cannot be determined
                  prior to exercise of the option. Accordingly, the Company
                  records estimates of compensation expense (benefit) based upon
                  the estimated fair value of the stock at each intervening
                  financial statement date, $5,721,379 and $4,031,986 for the
                  nine months ended September 30, 2001 and 2000, respectively.

                  During the nine months ended September 30, 2001 and 2000, the
                  Company granted options and warrants to acquire 200,000 and 0,
                  respectively, shares of common stock to third parties as
                  compensation for services rendered to the Company. The options
                  and warrants are exercisable at a price of $3.00 per share,
                  substantially were fully vested at the date of grant and
                  expire through 2004. The options and warrants are exercisable
                  by payment of cash to the Company. In connection with these
                  grants, the fair value (Black Scholes value) of the options
                  and warrants granted approximated the value of the services
                  rendered, and the Company recorded expenses for the services
                  rendered of $173,160 in 2001 and $0 in 2000.

                  A summary of the status of the Company's fixed stock option
                  plans and non-plan options and warrants as of September 30,
                  2001 and changes during the period then ended is presented
                  below:

                                       12
<PAGE>
                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                      Plan Options and        Non-Plan Options and
                                                          Warrants                   Warrants
                                                  -----------------------  ----------------------------
                                                     Weighted                Weighted
                                                     Average                 Average
                                                     Exercise                Exercise
                                                      Price      Shares       Price         Shares
                  -------------------------------------------------------------------------------------
<S>                                                  <C>       <C>          <C>          <C>
                  Outstanding at beginning of year   $   1.88  1,000,000    $    1.13    10,143,800
                  Granted                                3.09    550,000         3.02    6,650,000
                  Exercised                                 -          -            -            -
                  Forfeited                                 -          -         0.63    1,653,800 (1)
                  -------------------------------------------------------------------------------------

                  Outstanding at September 30, 2001      2.31  1,550,000         2.01    15,140,000

                  Exercisable at September 30, 2001  $   1.88  1,000,000         1.66    11,190,000
                  =====================================================================================

                  Weighted average fair value
                  of options granted during          $   1.82               $    0.82
                  the period

                  (1)      Warrants to purchase 1,653,800 shares of common stock which are the subject
                           of subsequent litigation
</TABLE>

                  A summary of the status of the Company's fixed stock option
                  plans and non-plan options and warrants as of September 30,
                  2000 and changes during the period then ended is presented
                  below:
<TABLE>
<CAPTION>
                                                      Plan Options and        Non-Plan Options and
                                                          Warrants                   Warrants
                                                  -----------------------  ----------------------------
                                                     Weighted                Weighted
                                                     Average                 Average
                                                     Exercise                Exercise
                                                      Price      Shares       Price         Shares
                  -------------------------------------------------------------------------------------
<S>                                                  <C>       <C>          <C>          <C>
                  Outstanding at beginning of year   $   1.88  1,000,000    $    0.89     7,993,800
                  Granted                                   -          -         2.02     2,150,000
                  Exercised                                 -          -            -             -
                  Forfeited                                 -          -            -             -
                  -------------------------------------------------------------------------------------

                  Outstanding at September 30, 2000  $   1.88  1,000,000         1.13    10,143,800

                  Exercisable at September 30, 2000  $   1.88  1,000,000         1.13    10,143,800
                  =====================================================================================

                  Weighted average fair value
                  of options granted during          $      -               $    1.25
                  the period
                  =====================================================================================
</TABLE>

                  SFAS No. 123, "Accounting for Stock-Based Compensation,"
                  establishes a fair value based method of accounting for
                  stock-based compensation plans under which employees receive
                  shares of stock or other equity instruments of the Company or
                  the Company incurs liabilities to employees in amounts based
                  on the price of its stock.

                  The amounts of such Stock-Based Compensation may be expensed
                  in a Company's financial statements or alternatively,
                  companies may elect to disclose the amounts as pro forma
                  information. The Company has elected to


                                       13
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


                  disclose the amounts, which approximate $4,088,484 and
                  $476,906 for the nine months ended September 30, 2001 and
                  2000, respectively. Had the Company elected to recognize the
                  amounts under the accounting provisions of SFAS 123, the
                  Company's net loss and loss per share would have been
                  decreased to the pro forma amounts indicated below:
<TABLE>
<CAPTION>

                  Nine months ended September 30,                           2001           2000
                  ----------------------------------------------------------------------------------
<S>                                                                   <C>             <C>
                  Net (loss) applicable to common stock
                      as reported                                     $ (13,060,192)  $ (9,566,393)
                  Net (loss) applicable to common stock pro forma       (17,148,676)   (10,043,299)
                  Basic (loss) per share as reported                          (0.32)         (0.24)
                  Basic (loss) per share pro forma                            (0.41)         (0.25)
</TABLE>

                  The Company estimates the fair value of each stock option at
                  the grant date by using the Black-Scholes option pricing model
                  based on the following assumptions:
<TABLE>
<CAPTION>
                                                                            2001           2000
                  ----------------------------------------------------------------------------------
<S>                                                                            <C>           <C>
                  Risk free interest rate                                      5.16%         5.96%
                  Expected life                                          3-10 years     3-5 years
                  Expected volatility                                            51%           74%
                  Dividend yield                                                0.0           0.0
</TABLE>

8. INCOME TAXES   Deferred income taxes reflect the net tax effects of temporary
                  differences between the carrying amounts of assets and
                  liabilities for financial reporting purposes and the amounts
                  used for income tax purposes. At December 31, 2000, the
                  Company had federal net operating losses (NOL) of
                  approximately $5,988,714. The NOL expires during the years
                  2018 to 2020. In the event that a change in ownership of the
                  Company of greater than 50 percent occurs/occurred as a result
                  of the Company's issuance of common and preferred stock, the
                  utilization of the NOL carryforward will be subject to
                  limitation under certain provisions of the Internal Revenue
                  Code.

                  Realization of any portion of the approximate $9,913,716
                  deferred federal tax asset at September 30, 2001 is not
                  considered more likely than not by management; accordingly, a
                  valuation of allowance has been established for the full
                  amount of such asset.

                  The reconciliation of income tax benefit computed at the
                  United States federal tax rate of 34% to income tax benefit is
                  as follows:

                                       14
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                  Nine months ended September 30,                     2001              2000
                  --------------------------------------------------------------------------------
<S>                                                             <C>                <C>
                  Tax benefit at the United States
                     statutory rate                             $   4,093,663      $   3,252,574
                  State income tax benefit, net                       204,683            162,629
                  Valuation allowance adjustment                   (4,298,346)        (3,415,202)
                  --------------------------------------------------------------------------------

                  Income tax benefit                            $           -      $           -
                  ================================================================================
</TABLE>

                  Significant components of the Company's deferred tax assets
                  and liabilities are as follows:
<TABLE>
<CAPTION>
                  September 30,                                       2001               2000
                  ----------------------------------------------------------------------------------
<S>                                                             <C>                <C>
                  Deferred tax assets:
                      Organizational costs                      $      87,943      $     123,121
                      Net operating loss
                      carryforwards                                 4,460,749          1,742,039
                      Compensation related to equity
                      instruments issued for
                      services                                      5,365,024          3,191,899
                  ----------------------------------------------------------------------------------
                  Valuation allowance for deferred
                      tax assets                                   (9,913,716)        (5,057,059)
                  ----------------------------------------------------------------------------------

                  Net deferred tax asset                        $           -      $           -
                  ----------------------------------------------------------------------------------
</TABLE>


9. RELATED PARTY  Development Agreement
   TRANSACTIONS   ---------------------

                  On September 3, 1999 the Company entered into a Development
                  Agreement with Carnegie Mellon University, through the
                  National Robotics Engineering Consortium ("NREC"), to develop
                  technologies based on the Company's base technology for ultra
                  high-pressure coatings removal. The project director of NREC
                  is a director of the Company. In accordance with the
                  agreement, any technology developed by the Company prior to
                  entering into the Development Agreement or developed without
                  NREC's assistance will belong exclusively to the Company.

                  New technology or technology that may be used outside the
                  field of ultra high-pressure cleaning will belong to NREC,
                  however, the Company will have the right to license the
                  technology if it is based on funds provided by the Company.
                  During the nine months ended September 30, 2001, the Company
                  incurred consulting expenses totaling $55,546 to NREC for
                  services rendered on hydroblasting contracts.

                                       15
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


                  License Agreement
                  -----------------

                  On July 17, 2000 the Company entered into a License Agreement
                  with Ocean Futures Society ("OFS") and Jean-Michel Cousteau, a
                  director of the Company, whereby the Company agreed to pay OFS
                  2% of its revenues from sales of products, equipment leases
                  and services in exchange for the exclusive right to utilize
                  their names in connection with marketing, advertising, sales
                  and distribution of the M2000 and hydro blasting services in
                  the ship cleaning industry. For the nine months ended
                  September 30, 2001 and 2000, royalty expenses were $14,750 and
                  $0.

                  Management Agreement
                  --------------------

                  On September 1, 2000 the Company entered into an agreement
                  with Wallem Shipmanagement Limited ("Wallem") whereby Wallem
                  will provide all of the Company's management and marketing for
                  its contract services in the heavy marine industry. The
                  managing director of Wallem is a director of the Company.

10.COMMITMENT AND The Company currently maintains office facilities in Stuart,
   CONTINGENCIES  Florida. The Company does not currently own or operate any
                  manufacturing, operating or shipbuilding or repair facilities.
                  Substantially all of the Company's operations are devoted to
                  the removal of paint, the disposal of which is regulated by
                  various federal, state and international laws. Compliance with
                  these provisions has not had, nor does the Company expect to
                  have, any material affect upon the capital expenditures,
                  results of operations, financial condition or competitive
                  position of the Company. The Company believes that it is in
                  substantial compliance with all environmental laws and
                  regulations applicable to its business as currently conducted.

                  The Company has employment agreements with certain officers
                  calling for aggregate annual base compensation of
                  approximately $2,200,000, expiring through 2004. As of
                  September 30, 2001, accounts payable and accrued expenses
                  include $241,643 of accrued wages.

                  The Company rents office space and warehouse storage space
                  under operating leases expiring in September 2005 and August
                  2006, with a guaranteed option to renew for an additional
                  five-year term at the Company's option for annual increases of
                  3.25%.

                                       16
<PAGE>
                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


11. SUPPLEMENTAL  Supplemental disclosure is as follows:
    CASH FLOW
    INFORMATION
<TABLE>
<CAPTION>

                  September 30,                                            2001              2000
                  ----------------------------------------------------------------------------------
<S>                                                                 <C>              <C>
                  Cash paid for interest                            $    15,232      $     11,874
                  Cash paid for taxes                                         -                 -

                  Non-cash investing and financing activities:

                  Conversion of preferred stock to
                      common stock                                  $   255,000      $    495,000

                  Accrued preferred stock dividends                 $   300,000      $    118,366
</TABLE>

12. RESEARCH AND  Research and development cost relates to both future and
    DEVELOPMENT   present products and are charged to operations as incurred.
                  The Company recognized research and development costs of
                  $264,317 and $199,982 for the nine months ended September 30,
                  2001 and 2000, respectively.


                                       17
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Certain statements in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are forward-looking statements that involve
risks and uncertainties. Words such as may, will, should, would, anticipates,
expects, intends, plans, believes, seeks, estimates and similar expressions
identify such forward-looking statements. Readers are cautioned not to place
undue reliance on these forward-looking statements, which reflect management's
analysis only as of the date hereof. The Company assumes no obligation to update
these forward-looking statements to reflect actual results or changes in factors
or assumptions affecting forward-looking statements.

The primary purpose of this amended report on Form 10-QSB is to present interim
financial statements that have been corrected for certain accounting matters,
including the following: non-cash compensation charges due to variable
accounting expenses, preferred stock dividends, recalculation of common stock
outstanding, as well as reclassification of certain liabilities as current
liabilities and certain expenses as cost of sales.

BACKGROUND AND FINANCIAL HISTORY

Since UltraStrip Systems, Inc. (the "Company") was incorporated on April 2,
1998, the Company has operated as a development stage enterprise and is devoting
substantially all its efforts to the ongoing development of the Company. The
Company is developing an automated hydro-blasting system that uses ultra-high
water pressure to remove coatings from steel surfaces. Two U.S. patents issued
to the Company's founder, Dennis McGuire, in 1997 and 1998 apply to the
Company's product. The Company purchased the first patent, U.S. Patent No.
5,628,271, in December 1999 from AmClean Inc. The second patent, U.S. Patent No.
5,849,099, was assigned to the Company in May 2000.

The business of designing, developing, marketing, and selling the Company's
automated hydro-blasting systems is capital intensive. The Company intends to
continue its developing and marketing efforts and will require additional
capital in order to continue operating at the current level, to expand its
business, and to fund production and development costs. Additional capital
financing may not be available. Without such financing, the Company will not be
able to continue at its present operational level or fully implement its
business plan.

The Company has been unable to generate sufficient cash flow from operations
throughout its history to fund operations, including its research and
development and marketing plans. Since its inception on April 2, 1998 through
February 26, 2001, the Company operated as a development stage enterprise. The
Company commenced significant operations in March 2001. From its inception
through December 31, 2000, the Company incurred net losses applicable to common
stock of $16,210,352. Over that timeframe, the Company generated $8,280,217 from
financing activities during this period to help fund its shortfall in working
capital.


                                       18
<PAGE>


RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2000

REVENUE

Revenues were $77,724 for the three months ended September 30, 2001, as compared
to $0 for the three months ended September 30, 2000, an increase of $77,724.
Revenues for the quarter were generated from services performed for Northrop
Grumman's Ingalls Shipbuilding division.

In August 2001, the Company removed approximately 16,000 square feet of coatings
from the hull and sides of the USS Cole pursuant to the contract with Ingalls
Shipbuilding. The USS Cole, the US Navy destroyer attacked in Yemen in October
2000, was under repair at the Ingalls Shipbuilding facility in Pascagoula,
Mississippi. Ingalls Shipbuilding is a division of Litton Ship Systems, which is
a unit of Northrop Grumman Corporation. The work was completed to the
satisfaction of Ingalls in early September 2001. The Company believes that
Litton Ship Systems may purchase additional equipment or contract services in
the future.

In September 2001, the Company signed an exclusive distributor agreement with
Robotic Environmental Services, LLC ("RES") of Baton Rouge, Louisiana for the
sale of the Company's patented robotic hydroblasting systems in Louisiana and
Texas. RES will concentrate on the above-ground storage tank coatings removal
market, as well as the oil production facility and barge markets for coatings
removal. The exclusive distributor agreement is for a term of five years and
establishes minimum purchasing requirements necessary to maintain RES'
exclusivity in the two states. The minimum number of robotic systems required to
be purchased during the term of the agreement to maintain exclusivity is
expected to generate approximately $20 million dollars in sales. RES also
received an option from the Company to acquire the exclusive distribution rights
in Venezuela. To exercise this option RES must purchase four additional robotic
systems by June 30, 2002.

Pursuant to the terms of the exclusive distributor agreement and after a
successful demonstration of the Company's robotic system on an above-ground
storage tank in Louisiana, RES purchased its first robotic system. This system,
which was delivered in September 2001, contained previously used equipment
thereby allowing the Company to recognize a gain on the sale of used equipment
in connection with this agreement. Since financing for the purchase is still
being finalized by the Purchaser, the Company is deferring the gain on the sale
of the system until the fourth quarter of 2001.

In October 2001, the Company undertook performance of a two-month systems and
manpower rental contract with Tecor - Tecnologia Anti-Corrosao, S.A. ("Tecor")
of Setubal, Portugal, the surface preparation contractor for the Lisnave
shipyards. Lisnave shipyard serves commercial ship owners in Europe and is the
second largest shipyard in the world. The Company has transported to Portugal
two robotic hydroblasting systems with supporting crew to demonstrate the
operation and effectiveness of its technology during the period from October to


                                       19
<PAGE>

December, 2001. The Company has invited additional shipyard managers and owners
to the Portugal shipyard to witness first-hand the operation and capabilities of
the Company's robotic systems. The Company believes that a successful Portugal
demonstration will represent a significant advance in the implementation of the
Company's business plan.

To continue to attract industry attention, the Company has also increased the
scope of its marketing efforts. The Company has sponsored booths at the
NorShipping Exhibition in Oslo, Norway in June 2001, and the SNAME IMExpo 2001 -
sponsored by the Society of Naval Architects and Marine Engineers in Orlando,
Florida in October 2001, and intends to sponsor a booth at the London Ship
Repair & Conversion Show in November 2001, a major maritime trade show. The
Company continually improves its website at http://www.ultrastrip.com, to
provide the most current information concerning the Company and its products.
The Company continues to regularly advertise in a number of maritime industry
publications, such as SEATRADE, MARITIME REPORTER AND ENGINEERING NEWS,
SHIPCARE, and INTERNATIONAL SHIPREPAIR NEWS. The Company's M2000 robotic system
has been featured on the covers of numerous trade publications in 2001,
including the third quarter 2001 issue of SHIPREPAIR AND CONVERSION TECHNOLOGY.

These marketing efforts, coupled with the successful completion of its current
contract with Tecor, should enable the Company to negotiate equipment purchase
contracts with interested shipyards worldwide and to perform coatings removal
services on a per-ship, per-square foot basis for shipyard operators, ship
managers and ship owners, including the U.S. government and foreign governments.
The Company also anticipates that RES will satisfy its minimum purchase
requirements established in the exclusive distributor agreement, which will
position the Company to sell additional systems and advance its market
penetration into the above-ground petroleum and water storage tank coatings
removal markets. Under the Company's business plan, future revenues are also
expected from the sale of technical support and maintenance packages, as well as
spare parts and accessories, to those shipyards that have purchased and
installed robotic hydroblasting systems. However, no such maintenance or supply
arrangements or commitments have been entered into by the Company to date.

OPERATING EXPENSES

Operating expenses increased from $4,973,572 in the third quarter of 2000 to
$5,828,917 in the third quarter of 2001. The primary components of operating
expenses were cost of hydro-blasting contracts, selling, general and
administrative expenses, loss from impairment of assets and non-cash
compensation expenses.

COST OF HYDRO-BLASTING CONTRACTS

Cost of hydro-blasting contracts increased from $0 for the three months ended
September 30, 2000 to $131,603 for the three months ended September 30, 2001.
These costs were related to the Company's performance on its contract with
Ingalls Shipbuilding. This contract required more consumable parts and labor
than necessary, and other precautions to ensure a successful outcome. The
Company decided to over-supply labor on this contract to ensure customer
satisfaction. In the future, the Company expects to provide adequate levels of
equipment, consumable parts, and labor to generate positive gross profit margins
from contract services.

                                       20
<PAGE>

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses, excluding non-cash compensation,
increased from $1,042,465 for the three months ended September 30, 2000 to
$1,298,724 for the three months ended September 30, 2001. This increase is due
to an expansion of the Company's operating activities. Some major components of
selling, general and administrative expenses include salaries and wages,
including leased labor, which increased from $231,193 in the third quarter of
2000 to $546,825 for the third quarter of 2001, reflecting the addition of
several managerial employees and insurance expenses, which increased from
$20,480 in the third quarter of 2000 to $95,130 in the third quarter of 2001.

LOSS FROM IMPAIRMENT OF ASSETS

Loss from impairment of assets decreased from $214,134 for the three months
ended September 30, 2000 to $210,933 for the three months ended September 30,
2001.

NON-CASH COMPENSATION EXPENSE

Non-cash compensation expenses increased from $3,716,973 for the three months
ended September 30, 2000 to $4,187,657 for the three months ended September 30,
2001. This increase is attributable to a variable accounting charge of
$4,090,267 from stock options to employees and directors with cashless
conversion provisions. For these options, the number of shares of common stock
that may be acquired by the option holder cannot be determined prior to the
exercise of the option. The Company records estimates of compensation expense
for these options based upon the estimated fair value of the stock at each
intervening financial statement date. These expenses were incurred when the
estimated fair value of the Company's common stock increased to $4.40 per share.

LOSS FROM OPERATIONS

The Company continues to recognize losses from its operations. Loss from
operations in the third quarter of 2001 was $5,751,193 as compared to $4,973,572
for the prior year period. This increase in loss from operations is primarily
due to the increase in operating expenses described above.

INTEREST EXPENSE

Interest expense totaled $5,161 for the third quarter of 2001, compared to
$5,545 for the third quarter of 2000.


                                       21
<PAGE>


NET LOSS

Net loss was $5,756,354 for the third quarter of 2001, compared to $4,979,117
for the third quarter of 2000.

PREFERRED STOCK DIVIDENDS

Preferred stock dividends were $97,875 and $45,540 for the three months ended
September 30, 2001 and 2000, respectively. These dividends reflect Company
obligations to preferred shareholders but have not been paid.

NET LOSS APPLICABLE TO COMMON STOCK

Net loss applicable to common stock was $5,854,229 for the three months ended
September 30, 2001, compared to $5,024,657 for the three months ended September
30, 2000. Loss per common share was $0.14 and $0.13 in the third quarter of 2001
and 2000, respectively.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2000

Revenues were $737,524 for the nine months ended September 30, 2001 and $0 for
the nine months ended September 30, 2000.

Operating expenses increased from $9,436,153 for the nine months ended September
30, 2000 to $13,477,483 for the nine months ended September 30, 2001. The
primary components of operating expenses were cost of hydro-blasting contracts,
selling, general and administrative expenses, loss from impairment of assets,
and non-cash compensation expenses. Cost of hydro-blasting contracts increased
from $0 for the nine months ended September 30, 2000 to $695,127 for the nine
months ended September 30, 2001. Selling, general and administrative expenses,
excluding non-cash compensation, increased from $2,234,610 for the nine months
ended September 30, 2000 to $4,356,885 for the nine months ended September 30,
2001. Loss from impairment of assets decreased from $214,134 to $210,933 for the
nine months ended September 30, 2000 and 2001, respectively. Non-cash
compensation expenses increased from $6,987,409 for the nine months ended
September 30, 2000 to $8,214,538 for the nine months ended September 30, 2001.

Loss from operations for the nine months ended September 30, 2001 was
$12,739,959 as compared to $9,436,153 for nine months ended September 30, 2000.
Preferred Stock dividends were $300,000 for the nine months ended September 30,
2001 and $118,366 for the nine months ended September 30, 2000. Net loss
applicable to Common Stock was $13,060,192 for the nine months ended September
30, 2001, compared to $9,566,393 for the nine months ended September 30, 2000.
Loss per common share was $0.32 for the nine months ended September 30, 2001 and
$0.24 for the nine months ended September 30, 2000.


                                       22
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company continues to experience losses from operations and is dependent on
outside sources of funding to continue its operations.

As of September 30, 2001, the Company's cash and cash equivalents on hand were
$306,340, compared to $300,304 as of December 31, 2000. The Company's accounts
receivable were $908,624 as of September 30, 2001, compared to $0 as of December
31, 2000, reflecting the receivable due for the Company's services for Ingalls
Shipbuilding concerning the removal of coatings from the hull and sides of the
USS COLE during the third quarter of 2001, which was collected in October.
However, despite this increase in cash and accounts receivable, Management
recognizes that the Company has a continuing need to raise capital to fund its
daily operations and research and development activities.

Since inception, the Company has relied principally upon the proceeds of private
equity financings and loans to fund its working capital requirements and capital
expenditures. Net cash provided by financing activities increased from
$3,968,222 for the nine months ended September 30, 2000 to $4,581,986 for the
nine months ended September 30, 2001. The Company borrowed $454,360 from a
majority shareholder from January 1, 2001 to September 30, 2001 to finance the
acquisition of additional equipment and to fund the continuation of operations.
The Company also repaid $102,901 of long-term debt to share holders during the
same time period. This loan and certain other loans payable by the Company to
certain of its shareholders in the aggregate principal amount of $869,352 are
unsecured, non-interest bearing, and due upon demand.

In October 2001, the Company borrowed $862,069 at an annual percentage rate of
16% from a shareholder by executing a $1,000,000 promissory note due on October
19, 2002. These funds will be used to manufacture new systems, as well as to
fund general operating expenses.

Also during the first nine months of 2001, the Company sold 625,943 restricted,
unregistered shares of Common Stock in a number of private sales for aggregate
proceeds of $1,809,828 between January and April 2001 in transactions exempt
under Section 4(2) of the Securities Act of 1933. Between April and September
2001, the Company conducted a private placement of Common Stock pursuant to Rule
506 of Regulation D as promulgated under the 1933 Act in which it issued 542,426
restricted, unregistered common shares for $2,197,330.

In October 2001, the Company issued a warrant for 100,000 shares of common stock
with a per share exercise price of $0.07 for a purchase price of $137,931. This
warrant expires on October 19, 2021.

Net cash used by operating activities was $3,435,988 for the nine months ended
September 30, 2001, compared to $1,949,179 for the nine months ended September
30, 2000. Net cash used in operating activities during the first nine months of
2001 does not include non-cash charges of $552,649 for depreciation and
amortization, $2,320,000 for common stock issued for services, $173,160 for


                                       23
<PAGE>

issuance of stock options to service providers, $5,721,378 for non-cash
compensation expense for variable accounting treatment of options and warrants
issued to employees and directors with cashless conversion provisions, and
$210,933 for provision for impairment of equipment.

The Company's capital expenditures decreased from $1,694,887 in the first nine
months of 2000 to $1,139,962 in the first nine months of 2001, primarily as a
result of a decrease in new equipment purchases in connection with the Company's
work for Corrosion Engineering Services, and the manufacture of systems for the
Ingalls Shipbuilding and Tecor projects. Management expects that the Company
will be able to use this equipment in connection with future operations.

The Company lacks assured available financial resources to meet its September
30, 2001 working capital deficit of $1,473,914 and future operating costs.

Due to insufficient cash generated from operations, the Company presently does
not have cash available to pay its accounts payable and other liabilities.
Obligations are being met on a month-to-month basis as cash becomes available.
There can be no assurances that the Company's present flow of cash will be
sufficient to meet current and future obligations. The Company has incurred
losses since its inception, and continues to require additional capital to fund
operations and development. As such, the Company's ability to pay its already
incurred obligations is mostly dependent on the Company raising additional
capital in the form of equity or debt.

Subject to its ability to raise outside capital and generate additional
revenues, the Company may also incur additional capital expenses in the future.
The Company currently leases its headquarters facility and is planning to lease
an additional facility adjacent to its current location for manufacturing and
warehouse operations, and may consider purchasing one or both of these
facilities if favorable terms are presented. In addition, the Company may invest
in certain machine tools and equipment to enable it to manufacture critical
components of its robotics systems. In total, the Company estimates that
aggregate capital expenditures over the next twelve months may be as much as
$1,000,000.

The Company's short-term and long-term liquidity requirements are expected to
result from working capital needs to purchase inventory, retire existing trade
liabilities and redeemable preferred stock and to pay other operating expenses.
Although the Company cannot accurately predict the precise timing of its future
capital expenditures, the Company estimates that it will need to expend over $5
million, primarily for research and development and operating expenses, within
the next twelve months.

On September 3, 1999, the Company entered into a Development Agreement with
Carnegie Mellon University, through the National Robotics Engineering Consortium
("NREC"), to develop technologies based on the Company's base technology for
ultra high-pressure coatings removal. The project director of NREC is a director
of the Company. In accordance with the agreement, any technology developed by
the Company prior to entering into the Development Agreement or developed
without NREC's assistance will belong exclusively to the Company. The Company
may also incur additional future expense in connection with its research and
development activities, including $264,317 in research and development


                                       24
<PAGE>

expenditures in the first nine months of 2001. The Company currently has four
research and development projects in process, which management expects will be
completed on or around July 2001 and estimates total research and development
expenses over the next twelve months will be approximately $750,000. The Company
intends to advance the design and operations of its systems through continuing
research and development.

New technology or technology that may be used outside the field of ultra
high-pressure cleaning will belong to NREC, however, the Company will have the
right to license the technology if it is based on funds provided by the Company.

PLAN OF OPERATIONS

As of November 15, 2001, the Company's plan of operation for the next twelve
months is to focus on completion of its development efforts for a
commercially-viable robot, to launch the robot once completed, and to begin
sales and marketing efforts to place its robotic systems into use in the heavy
marine and above ground storage tank markets. The Company believes the most
effective marketing effort for its product will be to conduct live
demonstrations at the development site in Pittsburgh, Pennsylvania and in
shipyards throughout the world, to introduce the marine industry to robotic
hydro-blasting and demonstrate its superiority to existing surface preparation
methods and competitive technologies.

The Company plans to offer two primary sales options: outright equipment
purchase and long-term rental contracts. No such agreements or commitments are
currently in place. Under the Company's business plan, future revenues are also
expected from the sale of spare parts and accessories to those customers that
have purchased or rented robotic hydro-blasting systems. No such spare parts
purchase agreement or commitment has been made to date.

Should the number of purchase orders or rental contracts be less than currently
forecasted, or should the sales or rental prices be less than currently
forecasted, there can be no assurance that the Company will be able to generate
sufficient cash flow to sustain operations and meet all payable obligations for
the next twelve months.

The Company does not currently anticipate any significant changes in its total
number of employees over the next twelve months. However, should the demand for
the Company's products or contract services increase significantly, the Company
anticipates the need to hire additional employees in the areas of equipment
operation for the performance of contract services, equipment maintenance, field
support and component and spare parts manufacturing.

The Company will seek additional equity capital from private offerings. There is
no assurance, that the Company will be able to raise such additional capital
during the next twelve months. If the Company is unable to obtain the necessary
additional capital, it may be required to change the proposed business plan and
decrease the planned operations, which could have a material adverse effect upon
the business, financial condition, or results of operations.

                                       25
<PAGE>

Between September 30, 2001 and October 31, 2001, the Company has expended
approximately $986,091 of the cash on hand, and as of October 31, 2001, the
Company's cash and cash equivalents on hand were $397,974. Management is
actively seeking additional debt financing through multiple sources of funding.

In the event that the Company is unable to obtain the requisite funds to
continue its operations as planned, it will be necessary for the Company to
curtail its expenditures and refocus its business plan with a view toward
containing costs and obtaining additional revenues. Specific actions to this end
might include a reduction in staff, research and development and marketing
expenditures. There can be no assurance, however, that such cost reductions will
be achieved.

GOING CONCERN QUALIFICATION

The Company's auditors stated in their reports that the financial statements of
the Company for the years ended December 31, 2000 and December 31, 1999 were
prepared on the going-concern basis. For the years ended December 31, 2000 and
1999, the Company incurred net annual losses applicable to common stock of
$11,344,054 and $4,128,153, respectively, had a working capital deficit of
$829,071 and $377,414, respectively, and had outstanding redeemable preferred
stock that would become mandatorily redeemable during 2002. These factors raise
substantial doubt about the ability of the Company to continue as a going
concern. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.

Management has established plans intended to increase the sales of the Company's
products. Management intends to seek new capital from new equity securities and
loans to provide funds needed to increase liquidity, fund growth and implement
its business plan; however, no assurance can be given that the Company will be
able to raise any additional capital. If the Company is unable to obtain needed
sources of funds or effect sufficient cost reductions, the Company's liquidity
would be materially adversely affected and it is unlikely that the Company would
continue as a going concern (See Note 1 to the financial statements).

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

At November 15, 2001, the Company was not a party to any pending litigation.

                                       26
<PAGE>

ITEM 2.  CHANGES IN SECURITIES.

There has been no change in the rights, preferences or privileges of any
security of the Company during the third quarter of 2001. During the three
months ended September 30, 2001, the Company conducted a private placement of
Common Stock pursuant to Rule 506 of Regulation D as promulgated under the 1933
Act in which it issued 342,925 restricted, unregistered common shares for
aggregate proceeds of $1,498,327.

Also during the quarter ended September 30, 2001, 20,000 shares of the Company's
common stock, with an estimated value of $88,000, were issued to certain
individuals in exchange for consulting services.

For information concerning the issuance of options and warrants, please see Note
7 to the unaudited financial statements.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

There has been no default on any senior security during the three months ended
September 30, 2001.

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

The Company held its annual meeting of stockholders on August 18, 2001, and the
holders of a majority of the Company's common shares present in person or by
proxy at the annual meeting re-elected the following individuals to the
Company's Board of Directors for an additional one-year term expiring on August
17, 2002: William A. Owens, Robert O. Baratta, John P. Odwazny, John E. Bares,
R. Gerald Buchanan, Jean-Michel Cousteau, Frank R. Esposito, John M. Gumersell,
T. Joseph Lopez, Dennis E. McGuire, and Gordon G. Kuljian. At such annual
meeting, the holders of the Company's common stock voted as follows:

Nominee                        Total Votes For         Total Votes Withheld
-------                        ---------------         --------------------

Robert O. Baratta                 25,710,767                      20,500
John E. Bares                     25,710,767                      20,500
R. Gerald Buchanan                25,710,767                      20,500
Jean-Michel Cousteau              25,710,767                      20,500
Frank R. Esposito                 25,710,767                      20,500
John M. Gumersell                 25,710,767                      20,500
Gordon G. Kuljian                 25,710,767                      20,500
T. Joseph Lopez                   25,710,767                      20,500
Dennis E. McGuire                 25,710,767                      20,500
John P. Odwazny                   25,710,767                      20,500
William A. Owens                  25,710,767                      20,500

                                       27
<PAGE>


ITEM 5.  OTHER INFORMATION.

In August 2001, the Company removed approximately 16,000 square feet of coatings
from the hull and sides of the USS Cole pursuant to the contract with Ingalls
Shipbuilding. The USS Cole, the US Navy destroyer attacked in Yemen in October
2000, was under repair at the Ingalls Shipbuilding facility in Pascagoula,
Mississippi. Ingalls Shipbuilding is a division of Litton Ship Systems, which is
a unit of Northrop Grumman Corporation. The work was completed to the
satisfaction of Ingalls in early September 2001.

In September 2001, the Company signed an exclusive distributor agreement with
Robotic Environmental Services, LLC ("RES") of Baton Rouge, Louisiana for the
sale of the Company's patented robotic hydroblasting systems in Louisiana and
Texas. RES will concentrate on the above-ground storage tank coatings removal
market, as well as the oil production facility and barge markets for coatings
removal. The exclusive distributor agreement is for a term of five years and
establishes minimum purchasing requirements necessary to maintain RES'
exclusivity in the two states. The minimum number of robotic systems required to
be purchased during the term of the agreement to maintain exclusivity is
expected to generate approximately $20 million dollars in sales. RES also
received an option from the Company to acquire the exclusive distribution rights
in Venezuela. To exercise this option RES must purchase four additional robotic
systems by June 30, 2002. Pursuant to the terms of the exclusive distributor
agreement and after a successful demonstration of the Company's robotic system
on an above-ground storage tank in Louisiana, RES purchased its first robotic
system in September 2001.

In October 2001, the Company undertook performance of a two-month systems and
manpower rental contract with Tecor - Tecnologia Anti-Corrosao, S.A. ("Tecor")
of Setubal, Portugal, the surface preparation contractor for the Lisnave
shipyards. Lisnave shipyard serves commercial ship owners in Europe and is the
second largest shipyard in the world. The Company has transported to Portugal
two robotic hydroblasting systems with supporting crew to demonstrate the
operation and effectiveness of its technology during the period from October to
December, 2001. The Company has invited additional shipyard managers and owners
to the Portugal shipyard to witness first-hand the operation and capabilities of
the Company's robotic systems. The Company believes that a successful Portugal
demonstration will represent a significant advance in the implementation of the
Company's business plan.


                                       28
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a) EXHIBITS.
<TABLE>
<CAPTION>

EXHIBIT                                                                                     PRIOR FILING OR
NUMBER                                   DESCRIPTION                                      SEQUENTIAL PAGE NO.
------                                   -----------                                      -------------------
<S>                  <C>                                                     <C>
3.1                  Articles of Incorporation, as amended                  Incorporated by reference to Exhibit 2.1 to the
                                                                            Company's Registration Statement on Form 10-SB
                                                                            (the "Form 10-SB").

3.2                  Bylaws                                                 Incorporated by reference to Exhibit 2.2 to the
                                                                            Form 10-SB.

4.1                  Certificate of Designation for the Series A            Incorporated by reference to Exhibit 3.1 to the
                     Preferred Stock                                        Form 10-SB.

4.2                  Certificate of Designation for the Series B            Incorporated by reference to Exhibit 3.2 to the
                     Preferred Stock                                        Form 10-SB.

10.1                 Employment Agreement - Scott Baratta                   Incorporated by reference to Exhibit 6.1 to the
                                                                            Form 10-SB.

10.2                 Employment Agreement - Jacqueline K. McGuire           Incorporated by reference to Exhibit 6.2 to the
                                                                            Form 10-SB.

10.3                 Employment Agreement - John P. Odwazny                 Incorporated by reference to Exhibit 6.3 to the
                                                                            Form 10-SB.

10.4                 Employment Agreement - Michael R. Donn                 Incorporated by reference to Exhibit 6.4 to the
                                                                            Form 10-SB.

10.5                 Employment Agreement - Kevin P. Grady                  Incorporated by reference to Exhibit 6.5 to the
                                                                            Form 10-SB.

10.6                 Employment Agreement - Michael Cristoforo              Incorporated by reference to Exhibit 6.6 to the
                                                                            Form 10-SB.

10.7                 Employment Agreement - Robert O. Baratta               Incorporated by reference to Exhibit 6.7 to the
                                                                            Form 10-SB.

10.8                 Development Agreement with Carnegie Mellon             Incorporated by reference to Exhibit 10.8 to
                     University Robotics Institute                          the Form 10-SB.

10.9                 Agreement for Robotic Coatings Removal with Wallem     Incorporated by reference to Exhibit 6.9 to the
                     Shipmanagement Ltd.                                    Form 10-SB.

10.10                Consulting Agreement with T.A.S.T. Corporation         Incorporated by reference to Exhibit 6.10 to
                                                                            the Form 10-SB.

10.11                Consulting Agreement with D.M. Ransom Associates,      Incorporated by reference to Exhibit 6.11 to
                     Inc.                                                   the Form 10-SB.

10.12                1999 Outside Directors Stock Option Plan               Incorporated by reference to Exhibit 10.12 to
                                                                            the Form 10-SB.
</TABLE>

                                       29
<PAGE>
<TABLE>
<CAPTION>
<S>                  <C>                                                     <C>

10.13                2000 Long Term Incentive Program                       Incorporated by reference to Exhibit 6.13 to
                                                                            the Form 10-SB.

10.14                License Agreement dated July 17, 2000 by and           Incorporated by reference to Exhibit 10.14 to
                     between UltraStrip Systems, Inc. and Ocean Futures     the Form 10-SB.
                     Society

10.15                Promissory Note executed by UltraStrip Systems,        Incorporated by reference to Exhibit 10.15 to
                     Inc. in favor of Kevin P. Grady dated March 16, 2001   the Form 10-SB.

10.16                Full-time Employment Agreement - Robert O. Baratta     Incorporated by reference to Exhibit 10.16 to
                                                                            the Company's Form 10-QSB for the quarter ended
                                                                            March 31, 2001.

10.17                Employment Agreement - Dennis McGuire                  Incorporated by reference to Exhibit 10.17 to
                                                                            the Company's Form 10-QSB for the quarter ended
                                                                            March 31, 2001.

10.19                Consulting Agreements (4)                              Incorporated by reference to Exhibit 2.3 to the
                                                                            Form 10-SB.

10.20                Option to Purchase Assets and License Agreement        Incorporated by reference to Exhibit 2.6 to the
                                                                            Form 10-SB

10.21                Subcontract Agreement dated February 9, 2001 by and    Incorporated by reference to Exhibit 10.21 to
                     between Corrosion Engineering Services, Inc. and       the Company's Form 10-QSB for the quarter ended
                     UltraStrip Systems, Inc.                               March 31, 2001.

10.22                Lease and Option to Purchase Agreement dated August    Incorporated herewith.
                     9, 2001 between UltraStrip Systems, Inc. and Tecor
                     - Tecnologia Anticorrosao S.A.

10.23                Exclusive Distribution Agreement dated September       Incorporated herewith.
                     11, 2001 by and between UltraStrip Systems, Inc.
                     and Robotic Environmental Services, L.L.C.
</TABLE>


         (b) REPORTS ON FORM 8-K.

         A report on Form 8-K was filed on October 12, 2001 announcing the
         execution of an exclusive distributor agreement between the Company and
         Robotic Environmental Services.


                                       30
<PAGE>

                                   SIGNATURES

         In accordance with the requirements of the Securities and Exchange Act
of 1934, as amended, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.


                                        ULTRASTRIP SYSTEMS, INC.

        March 24, 2003                  /s/ Robert O. Baratta
                                        ----------------------------------------
                                        Robert O. Baratta
                                        President, Chief Executive Officer
                                        and Vice Chairman of the Board


        March 24, 2003                  /s/ Scott R. Baratta
                                        ----------------------------------------
                                        Scott R. Baratta
                                        Senior Vice President - Finance
                                        (Chief Financial and Accounting Officer)


                                       31
<PAGE>


                                  CERTIFICATION

In connection with the Quarterly Report of UltraStrip Systems, Inc. (the
"Company") on Form 10-QSB/A for the period ending September 30, 2001, as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
the undersigned certify pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, to his knowledge that:

(1)      The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2)      The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.



/s/ Robert O. Baratta
--------------------------------------------
President and Chief Executive Officer


/s/ Scott R. Baratta
--------------------------------------------
Senior Vice President - Finance (Chief Financial Officer)


                                       32
<PAGE>

                                 CERTIFICATIONS

I, Robert O. Baratta, certify that:

1.       I have reviewed this quarterly report on Form 10-QSB/A of UltraStrip
Systems, Inc;

2.       Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report.


Date:  March 24, 2003                       /s/ Robert O. Baratta
                                            ---------------------------------
                                            Robert O. Baratta
                                            President, Chief Executive Officer
                                            and Vice Chairman of the Board


                                       33
<PAGE>


                                 CERTIFICATIONS

I, Scott R. Baratta, certify that:

1.       I have reviewed this quarterly report on Form 10-QSB/A of UltraStrip
Systems, Inc;

2.       Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report.


Date:  March 24, 2003                       /s/ Scott R. Baratta
                                            ---------------------------------
                                            Scott R. Baratta
                                            Senior Vice President - Finance
                                            (Chief Financial Officer)


                                       34