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

                                  FORM 10-QSB/A

                                 AMENDMENT NO. 2



[x]      QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 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: 41,723,920 shares of common stock
were outstanding as of March 31, 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 March 31, 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 Changes in Stockholders'
                             Deficit............................................     3
                         Condensed Statements of Cash Flows.....................     4
                         Summary of Significant Accounting Policies.............     5
                         Notes to Condensed Financial Statements................     8
      Item 2.       Management's Discussion and Analysis or Plan of
                    Operation...................................................     19

PART II.            OTHER INFORMATION

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

                    Signatures..................................................     29

                    Certifications..............................................     30
</TABLE>



                                       ii

<PAGE>

                         PART I - FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS.

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


--------------------------------------------------------------------------------------------------------------------
                                                                                     March 31,       December 31,
                                                                                       2001               2000
--------------------------------------------------------------------------------------------------------------------
                                                                                    (unaudited)
<S>                                                                                  <C>                  <C>
CURRENT ASSETS
   Cash                                                                              1,017,357            300,304
   Accounts receivable                                                                 659,800                 --
   Prepaid expenses and other                                                   $       48,717       $         --
--------------------------------------------------------------------------------------------------------------------

TOTAL CURRENT ASSETS                                                                 1,725,874            300,304

PROPERTY AND EQUIPMENT, NET (Note 2)                                                 3,209,567          3,017,634

PATENTS, NET                                                                            87,904             89,345
OTHER ASSETS                                                                             6,839              4,066
--------------------------------------------------------------------------------------------------------------------

                                                                                $    5,030,184       $  3,411,349
====================================================================================================================

LIABILITIES, REDEEMABLE CONVERTIBLE CUMULATIVE PREFERRED STOCK AND
STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
   Accounts payable and accrued expenses                                        $    1,124,704       $    774,536
   Accrued preferred stock dividends (Note 6)                                          449,651            345,401
   Notes payable - current portion (Note 4)                                              9,438              9,438
--------------------------------------------------------------------------------------------------------------------

TOTAL CURRENT LIABILITIES                                                            1,583,793          1,129,375

LONG-TERM DEBT:
   Notes payable to shareholders (Notes 3 and 4)                                       972,253            517,893
   Notes payable, less current portion (Note 4)                                         99,821             78,879
--------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES                                                                    2,655,867          1,726,147

REDEEMABLE CONVERTIBLE CUMULATIVE PREFERRED STOCK SERIES A
   34 shares outstanding, $25,000 per share redemption amount (Note 6)                 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 (Note 6)

COMMITMENTS AND CONTINGENCIES (Notes 1 and 10)

STOCKHOLDERS' DEFICIT (Notes 5, 6 and 7)

COMMON STOCK, $0.01 par value; 100,000,000 shares authorized; 41,723,920 and
40,284,140 shares issued and outstanding, respectively                                 417,239            402,841
ADDITIONAL PAID-IN CAPITAL                                                          17,713,153         13,872,713
ADDITIONAL PAID-IN CAPITAL - UNISSUED SUBSCRIBED SHARES                                 75,000             75,000
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE                                   (19,321,075)       (16,210,352)
--------------------------------------------------------------------------------------------------------------------

TOTAL STOCKHOLDERS' DEFICIT                                                         (1,115,683)        (1,859,798)
--------------------------------------------------------------------------------------------------------------------

                                                                                $    5,030,184       $  3,411,349
====================================================================================================================
</TABLE>


                                       1
<PAGE>


                            ULTRASTRIP SYSTEMS, INC.

                  UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                                   For the three months ended
                                                                                             March 31,
                                                                                     2001                2000
----------------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                  <C>
REVENUES:
     Hydro-blasting contracts                                            $        659,800     $            --

OPERATING EXPENSES:
     Cost of hydro-blasting contracts                                             563,525                  --
     Selling, general and administrative, excluding non-cash
compensation expense                                                            1,171,744             580,477
     Non-cash compensation expense  (Notes 5 and 7)                             1,929,008             393,248
----------------------------------------------------------------------------------------------------------------

Total operating expenses                                                        3,664,277             973,725
----------------------------------------------------------------------------------------------------------------

Loss from operations                                                           (3,004,477)           (973,725)

Other expense:
     Interest expense                                                               1,996               2,579
----------------------------------------------------------------------------------------------------------------

Net loss                                                                       (3,006,473)           (976,304)

Preferred stock dividends (Note 6)                                               (104,250)            (39,066)
----------------------------------------------------------------------------------------------------------------

Net loss applicable to common stock                                      $     (3,110,723)         (1,015,370)
================================================================================================================

Net loss per common share (basic and diluted)                            $          (0.08)    $         (0.03)
================================================================================================================

Weighted average number of common shares outstanding                           41,079,525          38,958,667
================================================================================================================
</TABLE>


                                       2
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.

            CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
                                                                                           Additional
                                                                                             Paid-In       Deficit
                                                                                             Capital      Accumulated
                                                             Common Stock       Additional   Unissued     During the        Total
                                                         --------------------    Paid-In    Subscribed    Development      Capital
                                                         Shares       Amount     Capital      Shares         Stage        (Deficit)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>         <C>        <C>           <C>         <C>            <C>
Balance at January 1, 2000                              38,539,876  $ 385,400  $  4,327,471  $   75,000  $  (4,866,298) $   (78,427)

Common stock issued for cash (01/2000 to 03/2000)          511,300      5,113     1,017,487                               1,022,600
Common stock issued for services (05/2000)                 400,000      4,000       796,000                                 800,000
Common stock issued for cash (05/2000)                     264,000      2,640       552,212                                 554,852
Common stock issued for cash (08/2000)                      83,333        833       249,167                                 250,000
Common stock issued for cash (12/2000)                      13,741        136        37,686                                  37,822
Conversion of series A preferred to common (Note 6)        360,000      3,600       371,400                                 375,000
Conversion of series B preferred to common (Note 6)        111,890      1,119       333,881                                 335,000
Issuance of equity instruments for services (05/2000)                             2,077,188                               2,077,188
Issuance of equity instruments for services (05/2000)                                78,235                                  78,235
Non-cash compensation (benefit) expense (Note 7)                                  4,031,986                               4,031,986
Preferred stock dividends (Note 6)                                                                            (213,768)    (213,768)
Net loss for the year                                           --         --            --                (11,130,286) (11,130,286)
------------------------------------------------------------------------------------------------------------------------------------

Balance at December 31, 2000                            40,284,140    402,841    13,872,713      75,000    (16,210,352)  (1,859,798)

Common stock issued for cash                               579,610      5,796     1,665,034                               1,670,830
Common stock issued for services                           775,000      7,750     2,224,250                               2,232,000
Conversion of series B preferred to common                  85,170        852       254,148                                 255,000
Issuance of equity instruments for services                                         163,770                                 163,770
Non-cash compensation (benefit) (Note 7)                                           (466,762)                               (466,762)
Preferred stock dividends (Note 6)                                                                            (104,250)    (104,250)
Net loss for the three months ended March 31, 2001                                                          (3,006,473)  (3,006,473)
------------------------------------------------------------------------------------------------------------------------------------
Balance at March 31, 2001 (unaudited)                   41,723,920  $ 417,239  $ 17,713,153  $   75,000  $ (19,321,075) $(1,115,683)
====================================================================================================================================
</TABLE>

                                       3
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.

             UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (NOTE 11)
<TABLE>
<CAPTION>

                                                                                 For the three months ended
                                                                                         March 31,
                                                                                  2001              2000
--------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                  <C>
OPERATING ACTIVITIES:
   Net loss                                                                $  (3,006,473)       $ (976,304)


   Adjustments to reconcile net loss to
     net cash used in operating activities:
       Accumulated depreciation and amortization                                 181,441            58,931
       Common stock issued for services                                        2,232,000                --
       Issuance of equity instruments for services                               163,770                --
       Non-cash compensation expense                                            (466,762)          393,248
   Change in assets and liabilities:
         Accounts receivable                                                    (659,800)               --
         Prepaid expenses and other                                              (48,717)               --
         Other assets                                                             (2,773)           (5,000)
         Accounts payable and accrued expenses                                   350,169           (19,821)
--------------------------------------------------------------------------------------------------------------

Net cash used in operating activities                                         (1,257,145)         (548,946)
--------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:
   Purchase of property and equipment                                           (371,934)         (270,425)
--------------------------------------------------------------------------------------------------------------

Net cash used in investing activities                                           (371,934)         (270,425)
--------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES:
   Proceeds from issuance of long-term debt                                       24,857                --
   Repayment of long-term debt                                                    (3,915)           (1,431)
   Proceeds from issuance of long-term debt and warrants to                      454,360                --
     shareholders
   Repayment of long-term debt and warrants to shareholders                            -           (72,964)
   Proceeds from issuance of preferred stock                                     200,000                --
   Proceeds from issuance of common stock                                      1,670,830         1,022,600
--------------------------------------------------------------------------------------------------------------

Net cash provided by financing activities                                      2,346,132           948,205
--------------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                                        717,053           128,834

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

Cash and equivalents, end of period                                        $   1,017,357        $  188,804
==============================================================================================================
</TABLE>


                                       4
<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            UltraStrip Systems, Inc. (the "Company") was incorporated on
OF 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.

                                       5
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


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

FAIR VALUE        The carrying amounts of the Company's financial assets,
OF 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 $4,889,549.

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

PROPERTY AND      Property and equipment is stated at cost, maintenance 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 ASSETS The Company evaluates the recoverability of long-lived assets
                  by measuring the carrying amount of the assets against the
                  estimated undiscounted future cash flows associated with them.


                                       6
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                  At such time the evaluations indicate that the future
                  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 $12,778 for the three months
                  ended March 31, 2001 and $45,002 for the three months ended
                  March 31, 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 PER SHARE    Basic loss per share is computed on the basis of the weighted
                  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.

                                       7
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)


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 $18.4 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
                                  March 31,                                               Life           2001
                                  ---------------------------------------------------------------------------------
<S>                                                                                      <C>      <C>
                                  Machinery and equipment                                5 years  $   2,749,585
                                  Furniture and fixtures                                 7 years        271,943
                                  Automobile and trucks                                  5 years        198,554
                                  Leasehold improvements                                 5 years        170,053
                                  Office equipment                                       5 years         89,621
                                  Spare parts                                            5 years        615,519
                                  ---------------------------------------------------------------------------------
                                                                                                      4,095,275
                                  Less accumulated depreciation and
                                           amortization                                                (885,708)
                                  ---------------------------------------------------------------------------------

                                                                                                  $   3,209,567
                                  =================================================================================
</TABLE>

                                       8
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)


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

                                  March 31,                                                              2001
                                  ---------------------------------------------------------------------------------
<S>                                                                                               <C>
                                  Unsecured notes payable to
                                  employee/shareholder, noninterest
                                  bearing, due upon demand                                        $     972,253
                                  ---------------------------------------------------------------------------------
                                                                                                        972,253

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

                                                                                                  $     972,253
                                  ---------------------------------------------------------------------------------

                                   (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>
<TABLE>
<CAPTION>

4. NOTES PAYABLE   Notes payable consist of the following:

                                  March 31,                                                               2001
                                  ---------------------------------------------------------------------------------
<S>                                                                                               <C>
                                  Installment notes payable to banks, aggregating $1,842 monthly
                                  including interest at 7.9% to 10.99%, secured by
                                  vehicles, final payment due July, 2009                          $     109,259

                                  ---------------------------------------------------------------------------------
                                                                                                        109,259

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

                                                                                                  $      99,821
                                  ---------------------------------------------------------------------------------

                                   Aggregate notes payable at March 31, 2001
                                   consists of the following:


                                  --------------------------------------------------------------------------------
                                  Notes payable shareholders                                      $     972,253
                                  Notes payable                                                   $     109,259
                                  --------------------------------------------------------------------------------

                                                                                                  $   1,081,512
                                  --------------------------------------------------------------------------------

</TABLE>

5. COMMON STOCK   During the three months ended March 31, 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


                                       9
<PAGE>
                            ULTRASTRIP SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)


                  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.

                  During the three months ended March 31, 2001, the Company
                  issued 579,610 shares of restricted, unregistered common stock
                  for net proceeds of $1,670,828.

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

                  At March 31, 2001, 24,441,560 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 and Series B Redeemable
                  Convertible Cumulative Preferred Stock.

                  The following reconciles the components of the loss per share
                  computation:
<TABLE>
<CAPTION>

                  For the three months ended March 31,            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     $(3,110,723)    41,079,52   $ (0.08)  $ (1,015,370)   38,958,667   $(0.03)


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

                  Net (loss) available
                      to common shareholders
                      plus assumed  conversions $(3,110,723)    41,079,52   $ (0.08)  $ (1,015,370)   38,958,667   $(0.03)
                  =========================================================================================================
</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 19,966,560 and 9,881,800
                  shares of common stock at March 31, 2001 and 2000,
                  respectively) are not included in the computation of loss per
                  share because the effects of inclusion would be anti-dilutive.

                                       10
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)


6. REDEEMABLE     Series A
   CONVERTIBLE    --------
   CUMULATIVE     During the year ended December 31, 1999, the Company issued 62
   PREFERRED      shares of Series A Redeemable Convertible Cumulative Preferred
   STOCK          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 March 31, 2001 were $300,400.

                  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 three months ended
                  March 31, 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 March
                  31, 2001 were $149,251.

                                       11
<PAGE>
                            ULTRASTRIP SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)


                  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
                  three months ended March 31, 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 March 31, 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 March 31, 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 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 March 31, 2001,
                  options to purchase 525,000 shares of common stock at a price
                  of $3.00 per share have been granted pursuant to the plan.

                                       12
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)


                  During the three months ended March 31, 2001, the Company
                  granted options to acquire 6,450,000 shares of common stock to
                  employees. The options are exercisable at a price of $3.00 per
                  share, vesting over periods from immediate to 2006. During the
                  three months ended March 31, 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, ($466,762) and $393,248 for the three months ended March
                  31, 2001 and 2000, respectively.

                  During the three months ended March 31, 2001 and 2000, the
                  Company granted options and warrants to acquire 150,000 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 $163,770 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 March 31, 2001
                  and changes during the period then ended is presented below:


                                       13
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
<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        $   1.88  1,000,000    $    1.13    10,143,800
                  year
                  Granted                                3.00    525,000         3.00     6,600,000
                  Exercised                                 -          -            -             -
                  Forfeited                                 -          -            -             -
                  -------------------------------------------------------------------------------------

                  Outstanding at March 31, 2001          2.26  1,525,000         1.87    16,743,800

                  Exercisable at March 31, 2001      $   1.88  1,000,000         1.52    12,793,800
                  =====================================================================================

                  Weighted average fair value
                  of                                 $   1.70               $    1.64
                     options granted during
                  the period
                  =====================================================================================
</TABLE>

                  A summary of the status of the Company's fixed stock option
                  plans and non-plan options and warrants as of March 31, 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        $   1.88  1,000,000    $    0.89     7,993,800
                  year
                  Granted                                   -          -            -             -
                  Exercised                                 -          -            -             -
                  Forfeited                                 -          -            -             -
                  -------------------------------------------------------------------------------------

                  Outstanding at March 31, 2000          1.88  1,000,000         0.89     7,993,800

                  Exercisable at March 31, 2000      $   1.88  1,000,000         0.89     7,993,800
                  -------------------------------------------------------------------------------------

                  Weighted average fair value
                  of                                 $      -               $       -
                     options granted during
                  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 disclose the amounts,


                                       14
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)


                  which approximate $4,193,645 and ($6,190) for the three months
                  ended March 31, 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>

                  Three months ended March 31,                              2001           2000
                  ----------------------------------------------------------------------------------
<S>                                                                    <C>            <C>
                  Net (loss) applicable to common stock as reported    $ (3,110,723)  $ (1,015,370)
                  Net (loss) applicable to common stock pro forma        (7,304,368)    (1,009,180)
                  Basic (loss) per share as reported                          (0.08)         (0.03)
                  Basic (loss) per share pro forma                            (0.18)         (0.03)
</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 $ 6,431,638
                  deferred federal tax asset at March 31, 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:

                                       15
<PAGE>
                            ULTRASTRIP SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

<TABLE>
<CAPTION>

                  Three months ended Mar. 31,                          2001                2000
                  --------------------------------------------------------------------------------
<S>                                                            <C>             <C>
                  Tax benefit at the United States
                    statutory rate                             $    777,399    $        365,626
                  State income tax benefit, net                      38,870              18,281
                  Valuation allowance adjustment                   (816,269)           (383,907)
                  --------------------------------------------------------------------------------

                  Income tax benefit                           $          -    $              -
                  ================================================================================

                  Significant components of the Company's deferred tax assets
                  and liabilities are as follows:

                  March 31,                                            2001              2000
                  ----------------------------------------------------------------------------------

                  Deferred tax assets:
                      Organizational costs                     $    105,532    $        140,709
                      Net operating loss
                      carryforwards                               2,965,225             749,399
                      Compensation related to equity
                      instruments issued for
                      services                                    3,360,881           1,135,656
                  ----------------------------------------------------------------------------------
                  Valuation allowance for deferred
                      tax assets                                 (6,431,638)         (2,025,764)
                  ----------------------------------------------------------------------------------

                  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 three months ended March 31, 2001, the Company
                  incurred consulting expenses totaling $23,638 to NREC for
                  services rendered on hydroblasting contracts.

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


                  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 three months ended March
                  31, 2001 and 2000, royalty expenses were $13,196 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 March
                  31, 2001, accounts payable and accrued expenses include
                  $239,143 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%.


                                       17
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)


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

                  March 31,                                                2001              2000
                  ----------------------------------------------------------------------------------
<S>                                                                  <C>              <C>
                  Cash paid for interest                             $    1,996       $    2,579
                  Cash paid for taxes                                         -                -

                  Non-cash investing and financing activities:

                  Conversion of preferred stock to
                      common stock                                   $  255,000       $  300,000

                  Accrued preferred stock dividends                  $  104,250       $  39,066
</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
                  $108,330 and $21,537 for the three months ended March 31, 2001
                  and 2000, respectively.


                                       18
<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 has developed 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.


                                       19
<PAGE>


RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

REVENUE

The results of operations for the first quarter of 2001 show substantial
revenues for the first time in the Company's history. Revenues were $659,800 for
the first quarter of 2001, as compared to $0 for the first quarter of 2000, an
increase of $659,800. From February 26 to March 16, 2001, the Company was
engaged as a sub-contractor to Corrosion Engineering Services, Inc. to remove
the non-skid coating from the deck of the USS Eisenhower, a U.S. Navy
Nimitz-class aircraft carrier, dry-docked in Norfolk, Virginia. Management
believes that this engagement represents a significant step towards
implementation of the Company's business plan.

In order to increase revenues, the Company has also increased the scope of its
marketing efforts. The Company plans to sponsor booths at two major maritime
industry trade shows, including the NorShipping Exhibition in Oslo, Norway in
June, as well as at the Ship Repair & Conversion show in London in November. The
Company has also relaunched its website at http://www.ultrastrip.com, which now
includes more detail about its products. The Company is also advertising on a
regular basis in a number of maritime industry publications, such as Seatrade,
Maritime Reporter and Engineering News, and ShipCare. Finally, the Company plans
to hold demonstrations of its robotic systems in Pittsburgh, Pennsylvania and in
an international shipyard during the third and fourth quarters of this year to
facilitate the signing of lease and purchase contracts and letters of intent.

With these marketing efforts coupled with the successful demonstration of its
product in connection with its work for Corrosion Engineering Services, the
Company believes that it will be positioned to negotiate equipment purchase
contracts with interested shipyards worldwide and contracts to perform coatings
removal services on a per-ship, per-square foot basis for shipyards and ship
managers and owners, including the U.S. government and foreign governments. No
such agreements or commitments are currently in place. 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 hydro blasting
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 $973,725 for the three months ended March 31,
2000 to $3,664,277 for the three months ended March 31, 2001. The primary
components of operating expenses were cost of hydro-blasting contracts, selling,
general and administrative expenses and non-cash compensation expenses.


                                       20
<PAGE>


COST OF HYDRO-BLASTING CONTRACTS

Cost of hydro-blasting contracts increased from $0 for the three months ended
March 31, 2000 to $563,525 for the three months ended March 31, 2001. These
costs were related to the Company's performance on its contract with Corrosion
Engineering Services. 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.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses, excluding non-cash compensation,
increased from $580,477 for the three months ended March 31, 2000 to $1,171,744
for the three months ended March 31, 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 and leased labor, which
increased from $68,431 in the first quarter of 2000 to $255,414 due to hiring of
nine new Company officers and employees; consulting expenses, which increased
from $87,871 in the first quarter of 2000 to $323,812, due primarily to an
increase in engineering services and the Company's contract with Projects
International to help identify an industrial partner in Asia; and research and
development, which increased from $0 in the first quarter of 2000 to $108,330 in
the first quarter of 2001.

NON-CASH COMPENSATION EXPENSE (BENEFIT)

Non-cash compensation expenses increased from $393,248 for the three months
ended March 31, 2000 to $1,929,008 for the three months ended March 31, 2001.
This increase is attributable to a $2,232,000 charge taken to reflect the
issuance of 775,000 restricted, unregistered shares of common stock to attract
members of the Company's new senior management team as part of compensation
packages. The increase is also attributable to a charge of $163,770 for options
issued to members of the Company's Board of Advisors and service providers for
the three months ended March 31, 2001. Non-cash compensation expense also
includes an offset from variable accounting benefit of ($466,762) 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 benefits were incurred when the estimated fair value of the
Company's common stock decreased to $2.88 per share.

LOSS FROM OPERATIONS

Although the Company saw improvement in its revenues in the first quarter of
this year, the Company continues to recognize losses from its operations. Loss


                                       21
<PAGE>

from operations in the first quarter of 2001 was $3,004,477 as compared to
$973,725 for the prior year period. This increase in loss from operations is
primarily due to the increase in operating expenses described above, as well as
an increase in depreciation and amortization expenses, from $58,931 in the first
quarter of 2000 to $181,441 in the first quarter of 2001.

INTEREST EXPENSE

Interest expense totaled $1,996 for the first quarter of 2001, compared to
$2,579 for the first quarter in 2000.

NET LOSS

Net loss was $3,006,473 for the first quarter of 2001, compared to $976,304 for
the first quarter 2000.

PREFERRED STOCK DIVIDENDS

Preferred stock dividends were $104,250 and $39,066 for the three months ended
March 31, 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 $3,110,723 for the three months ended
March 31, 2001, compared to $1,015,370 for the three months ended March 31,
2000. Loss per common share was $0.08 and $0.03 in the first quarter of 2001 and
2000, respectively.

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 March 31, 2001, the Company's cash and cash equivalents on hand were
$1,017,358, compared to $300,304 as of December 31, 2000. This increase was
primarily due to the receipt of a loan from the Company's majority shareholder,
described below, and the Company's recent private sale of restricted,
unregistered common shares, also described below. The Company's accounts
receivable were $659,800 as of March 31, 2001, compared to $0 as of December 31,
2000. This increase was a result of the completion of its services for Corrosion
Engineering Services concerning the removal of non-skid coating from the deck of
the USS Eisenhower. 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. During the first quarter of 2001, the Company borrowed $454,360


                                       22
<PAGE>

from a majority shareholder to finance the acquisition of additional equipment
and to fund the continuation of operations. This loan and certain other loans
payable by the Company to certain of its shareholders in the aggregate principal
amount of $972,253 are unsecured, non-interest bearing, and due upon demand.

Also during the first quarter of 2001, the Company issued 579,610 restricted,
unregistered shares of Common Stock for aggregate proceeds of $1,670,830 in
transactions exempt under Section 4(2) of the Securities Act of 1933. The
Company's net cash provided by financing activities rose to $2,346,132 for the
three months ended March 31, 2001 from $948,205 for the three months ended March
31, 2000.

The Company's net cash used in investing activities increased to $371,934 in the
three months ended March 31, 2001 from $270,425 in the three months ended March
31, 2000, primarily as a result of new machinery and equipment purchases in
connection with the Company's work for Corrosion Engineering Services.
Management expects that the Company will also be able to use this equipment in
connection with future operations.

Net cash used by operating activities was $1,257,145 for the three months ended
March 31, 2001, compared to $548,946 for the three months ended March 31, 2000.
This increase resulted from increases in the Company's net loss. Net cash used
in operating activities during the first three months of 2001 does not include
non-cash charges of $181,441 for depreciation and amortization, $2,232,000 for
common stock issued for services, $163,770 for issuance of stock options to
service providers, and ($466,762) for non-cash compensation benefit for variable
accounting treatment of options and warrants issued to employees and directors
with cashless conversion provisions.

The Company lacks assured available financial resources to meet all of its March
31, 2001 obligations and future operating costs, notwithstanding its working
capital surplus of $142,081.

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.

                                       23
<PAGE>

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 $108,330 in research and development
expenditures in the first quarter 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. Through March 31, 2001, the Company has incurred
research and development costs of $621,621 with the NREC.

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 May 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.

                                       24
<PAGE>

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.

Since March 31, 2001, the Company has expended approximately $1,019,169 of the
cash on hand at March 31, and as of June 15, 2001, the Company's cash and cash
equivalents on hand were $109,189. Management is actively seeking additional
equity financing or other sources of funding and, through June 15, 2001, the
Company has raised approximately $111,000 through an on-going private offering
of restricted, unregistered shares of its common stock.

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


                                       25
<PAGE>

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

ITEM 2.    CHANGES IN SECURITIES.

There has been no change in the rights, preferences or privileges of any
security of the Company during the first quarter of 2001. During the first
quarter of 2001, the Company issued 579,610 unregistered, restricted shares of
its common stock for aggregate proceeds of $1,670,830 in a number of private
sales for which the Company relied upon the exemption from the registration
requirements provided by Section 4(2) of the Securities and Exchange Act of 1933
and Regulation D under the Act. Also during the three months ended March 31,
2001, the Company issued 725,000 restricted, unregistered shares of Common Stock
valued at $2,088,000 as part of a new compensation package for key employees and
50,000 restricted, unregistered shares of Common Stock valued at $144,000 to a
service provider for sales and marketing services rendered.

Also during the three months ended March 31, 2001, four holders of an aggregate
of 102 shares of Series B Redeemable Convertible Cumulative Preferred Stock
exercised their conversion rights and were issued 85,170 restricted,
unregistered shares of Common Stock.

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
March 31, 2001.


                                       26
<PAGE>


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

In January 2001, a majority of Company shareholders acting by written consent
elected Gerald Buchanan to the Board of Directors to serve until the next annual
meeting of shareholders or until his successor is duly elected and qualified to
serve.


ITEM 5.    OTHER INFORMATION.

None.


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.
</TABLE>

                                       27
<PAGE>
<TABLE>
<CAPTION>
<S>                  <C>                                                    <C>
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.

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     Previously filed.

10.17                Employment Agreement - Dennis McGuire                  Previously filed.

10.18                Consulting Agreement with George Sterner               Incorporated by reference to Exhibit 10.18 to
                                                                            the Form 10-KSB for the year ended December 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 herewith.
                     between Corrosion Engineering Services, Inc. and
                     UltraStrip Systems, Inc.
</TABLE>


(B) REPORTS ON FORM 8-K. No reports were filed on Form 8-K during the three
months ended March 31, 2001.


                                       28
<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)


                                       29
<PAGE>



                                  CERTIFICATION

In connection with the Quarterly Report of UltraStrip Systems, Inc. (the
"Company") on Form 10-QSB/A for the period ending March 31, 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)


                                       30
<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


                                       31
<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)


                                       32