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

                                   FORM 10-QSB



[x]      QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000



[ ]      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: 40,051,176 shares of common stock
were outstanding as of June 30, 2000.

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


Note: The information contained in this Form 10-QSB 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 June 30, 2000.


<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 Sheet................................        1
                         Condensed Statements of Operation......................        2
                         Condensed Statements of Cash Flow......................        3
                         Summary of Significant Accounting Policies.............        4
                         Notes to Condensed Financial Statements................        7
      Item 2.       Management's Discussion and Analysis or Plan of
                    Operation...................................................        17

PART II.            OTHER INFORMATION

      Item 1.       Legal Proceedings...........................................        22
      Item 2.       Changes in Securities.......................................        22
      Item 3.       Defaults Upon Senior Securities.............................        22
      Item 4.       Submission of Matters to a Vote of Security Holders.........        22
      Item 5.       Other Information...........................................        23
      Item 6.       Exhibits and Reports on Form 8-K............................        23

                    Signatures..................................................        24

                    Certifications...............................................       25
</TABLE>

                                       ii
<PAGE>

                         PART I - FINANCIAL INFORMATION


ITEM 1.    FINANCIAL STATEMENTS.

                            ULTRASTRIP SYSTEMS, INC.
                        UNAUDITED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>


--------------------------------------------------------------------------------------------------------------------
June 30,                                                                                                   2000
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                                      <C>
CURRENT ASSETS
   Cash                                                                                                  $    21,190
   Prepaid expenses and other                                                                                 51,659
--------------------------------------------------------------------------------------------------------------------

TOTAL CURRENT ASSETS                                                                                          72,849

PROPERTY AND EQUIPMENT, NET (Note 2)                                                                       2,661,582

PATENT, NET                                                                                                   92,247
OTHER ASSETS                                                                                                 103,711
--------------------------------------------------------------------------------------------------------------------

                                                                                                         $ 2,930,389
====================================================================================================================

LIABILITIES, REDEEMABLE CONVERTIBLE CUMULATIVE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
   Accounts payable and accrued expenses                                                                 $   290,440
   Accrued preferred stock dividends (Note 6)                                                                204,459
   Notes payable - current portion (Note 4)                                                                    5,061
--------------------------------------------------------------------------------------------------------------------

TOTAL CURRENT LIABILITIES                                                                                    499,960

LONG-TERM DEBT:
   Notes payable to shareholders (Notes 3 and 4)                                                             893,921
   Notes payable, less current portion (Note 4)                                                               83,781
--------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES                                                                                          1,477,662

REDEEMABLE CONVERTIBLE CUMULATIVE PREFERRED STOCK SERIES A
   35 shares outstanding, $25,000 per share redemption amount (Note 6)                                       875,000

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; 40,051,176 shares issued and outstanding       400,512
ADDITIONAL PAID-IN CAPITAL                                                                                 9,510,248
ADDITIONAL PAID-IN CAPITAL UNISSUED SUBSCRIBED SHARES                                                         75,000
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE                                                          (9,408,033)
--------------------------------------------------------------------------------------------------------------------

TOTAL STOCKHOLDERS' EQUITY                                                                                   577,727
--------------------------------------------------------------------------------------------------------------------

                                                                                                         $ 2,930,389
====================================================================================================================
</TABLE>


                                       1

<PAGE>


                            ULTRASTRIP SYSTEMS, INC.
                  UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                                                                           From
                                                         For the three  For the three  For the six     For the six     Apr. 2, 1998
                                                         months ended   months ended   months ended    months ended     (inception)
                                                         June 30, 2000  June 30, 1999  June 30, 2000   June 30, 1999   June 30, 2000
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>            <C>            <C>             <C>             <C>
DEVELOPMENT STAGE EXPENSES:
     Selling, general and administrative, excluding non-cash
        compensation (benefit) expense                   $    611,667   $    252,661   $  1,192,145    $    438,563    $  2,720,033
     Non-cash compensation expense  (Notes 5 and 7)         2,877,188        569,026      3,270,436         569,026       6,470,964
-----------------------------------------------------------------------------------------------------------------------------------


Total development stage expenses                            3,488,855        821,687      4,462,581       1,007,117       9,190,997
-----------------------------------------------------------------------------------------------------------------------------------

Loss from operations                                       (3,488,855)      (821,687)    (4,462,581)     (1,007,117)     (9,190,997)

Other expense:
     Interest expense                                           3,750             --          6,329              --          12,577
-----------------------------------------------------------------------------------------------------------------------------------

Net loss                                                   (3,492,605)      (821,687)    (4,468,910)     (1,007,117)     (9,203,574)

Preferred stock dividends (Note 6)                            (33,760)       (27,539)       (72,826)        (27,539)       (204,459)
-----------------------------------------------------------------------------------------------------------------------------------

Net loss applicable to common stock                      $ (3,526,365)  $   (849,226)  $ (4,541,736)   $ (1,034,656)     (9,408,033)
===================================================================================================================================

Net loss per common share (basic and diluted)            $      (0.09)  $      (0.02)  $      (0.11)   $      (0.03)
===================================================================================================================================

Weighted average number of common shares outstanding       39,930,269     37,080,912     39,741,066      36,990,168
===================================================================================================================================
</TABLE>

                                       2

<PAGE>


                            ULTRASTRIP SYSTEMS, INC.
             UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS (NOTE 11)
<TABLE>
<CAPTION>
                                                                                                                    From
                                                                            For the six        For the six      Apr. 2, 1998
                                                                            months ended       months ended      (inception)
                                                                            June 30, 2000      June 30, 1999    to June 30, 2000
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>               <C>               <C>
OPERATING ACTIVITIES:
   Net loss                                                                   $(4,468,910)      $(1,007,117)      $(9,203,574)

   Adjustments to reconcile net loss to
     net cash used in operating activities:
       Accumulated depreciation and amortization                                  117,862             3,528           126,189
       Common stock issued for services                                           800,000           170,970         1,053,612
       Issuance of equity instruments for services                              2,077,188           184,040         2,929,866
       Non-cash compensation expense                                              393,248           214,016         2,487,486
   Change in assets and liabilities:
         Escrow receivable                                                             --            28,500                --
         Prepaid expenses and other                                               (38,756)          (16,000)          (51,659)
         Other assets                                                             (99,645)               --          (103,711)
         Accounts payable and accrued expenses                                    (23,969)          156,259           290,440
-----------------------------------------------------------------------------------------------------------------------------

Net cash used in operating activities                                          (1,242,982)         (265,804)       (2,471,351)
-----------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:
   Patent                                                                              --                --           (61,500)
   Purchase of property and equipment                                            (645,958)       (1,193,735)       (2,784,909)
-----------------------------------------------------------------------------------------------------------------------------

Net cash used in investing activities                                            (645,958)       (1,193,735)       (2,846,409)
-----------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
   Proceeds from issuance of long-term debt                                            --            96,120            96,120
   Repayment of long-term debt                                                     (5,440)               --            (7,277)
   Proceeds from issuance of long-term debt and warrants to shareholders          351,111           149,962           966,885
   Repayment of long-term debt and warrants to shareholders                       (72,964)               --           (72,964)
   Proceeds from issuance of preferred stock                                           --         1,225,000         1,550,000
   Proceeds from additional paid in capital unissued shares                            --                --            75,000
   Proceeds from issuance of common stock                                       1,577,453                --         2,731,186
-----------------------------------------------------------------------------------------------------------------------------

Net cash provided by financing activities                                       1,850,160         1,471,082         5,338,950
-----------------------------------------------------------------------------------------------------------------------------

Net increase (decrease) in cash and cash equivalents                              (38,780)           11,543            21,190

Cash and equivalents, beginning of year                                            59,970            24,384                 0
-----------------------------------------------------------------------------------------------------------------------------

Cash and equivalents, end of period                                           $    21,190       $    35,927       $    21,190
=============================================================================================================================
</TABLE>


                                       3

<PAGE>


                            ULTRASTRIP SYSTEMS, INC.
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


BASIS OF PRESENTATION      The accompanying unaudited condensed financial
                           statements have 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 generally accepted accounting principles
                           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 for the fiscal year ended December 31, 1999.

NATURE OF OPERATIONS       UltraStrip Systems, Inc. (the "Company") was
                           incorporated on 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 has been operating
                           as a development stage enterprise since its inception
                           and is devoting substantially all its efforts to the
                           ongoing development of the Company.

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 OF              The carrying amounts of the Company's financial
FINANCIAL INSTRUMENTS      assets, including cash and cash equivalents and of
                           certain financial 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.

                                       4
<PAGE>
                            ULTRASTRIP SYSTEMS, INC.
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                           Based upon the conversion terms of the Company's
                           Series A 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
                           $1,680,000.

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 EQUIPMENT     Property and equipment is stated at cost, maintenance
                           and 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. 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).

ADVERTISING                The Company conducts advertising for the promotion of
                           its products. Advertising costs are charged to
                           operations when incurred; such amounts aggregated
                           $93,899 for the six months ended June 30, 2000 and
                           $59,300 for the six months ended June 30, 1999.

                                       5
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


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.


                                       6
<PAGE>


                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


1.      GOING CONCERN      The accompanying financial statements were prepared
                           assuming that the Company will continue as a going
                           concern. This basis of accounting contemplates the
                           realization of assets and the satisfaction of its
                           liabilities in the normal course of operations. Since
                           inception the Company has incurred losses of
                           approximately $9.4 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
                                  June 30,                                                Life           2000
                                  ---------------------------------------------------------------------------------

<S>                                                                                      <C>      <C>
                                  Machinery and equipment                                5 years  $   2,515,285
                                  Furniture and fixtures                                 7 years          6,383
                                  Automobile and trucks                                  5 years        168,731
                                  Leasehold improvements                                 5 years         30,421
                                  Office equipment                                       5 years         64,088
                                  ---------------------------------------------------------------------------------
                                                                                                      2,784,908
                                  Less accumulated depreciation and
                                           amortization                                                (123,326)
                                  ---------------------------------------------------------------------------------
                                                                                                  $   2,661,582
                                  =================================================================================
</TABLE>

                                       7
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


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

                                  June 30,                                                             2000
                                  ---------------------------------------------------------------------------------
<S>                                                                                             <C>
                                  Unsecured notes payable to
                                  employee/shareholder, noninterest
                                  bearing, due upon demand                                      $       893,921
                                  ---------------------------------------------------------------------------------
                                                                                                        893,921

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

                                                                                                $       893,921
                                  =================================================================================

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

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

                                  June 30,                                                                 2000
                                  ---------------------------------------------------------------------------------
<S>                                                                                                  <C>
                                  Installment notes payable to banks, payable $1,336 monthly
                                  including interest at 10.99%, through July 2009 collateralized
                                  by trucks                                                     $          88,842

                                  ---------------------------------------------------------------------------------
                                                                                                           88,842

                                  Less current portion                                                     (5,061)
                                  ---------------------------------------------------------------------------------

                                                                                                $          83,781
                                  =================================================================================

                                   Aggregate notes payable at June 30, 2000 consists of the following:


                                  --------------------------------------------------------------------------------
                                  Notes payable shareholders                                    $         893,921
                                  Notes payable                                                 $          88,842
                                  --------------------------------------------------------------------------------

                                                                                                $         982,763
                                  ================================================================================
</TABLE>


5.      COMMON STOCK       During the year ended December 31, 1999 the Company
                           issued to a shareholder and member of the Company's
                           Board of Directors 164,000 shares of restricted,
                           unregistered common stock in exchange for consulting
                           services. The issuances were valued at estimated fair
                           value of $1.04 per share. In connection therewith,
                           the Company recorded a charge to operations in the
                           amount of $170,970 during 1999.

                                       8
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


                           During 1999, the Company issued 165,896 shares of
                           restricted, unregistered common stock for net
                           proceeds of $300,714. The Company also received
                           subscriptions for an additional 40,000 shares of
                           common stock for net proceeds of $75,000. These
                           shares will be issued to the subscriber after certain
                           issues are resolved by the investor.

                           In May 2000, the Company issued 400,000 shares of
                           restricted, unregistered common stock at estimated
                           fair value of $2.00 per share in exchange for
                           investment banking advisory services. In connection
                           therewith, the Company recorded a charge to
                           operations in the amount of $800,000 during 2000.

                           During the six months ended June 30, 2000, the
                           Company issued 775,300 shares of restricted,
                           unregistered common stock for net proceeds of
                           $1,577,453.

                           Purchase of patent
                           ------------------

                           The Company acquired from Amclean, Inc. (a related
                           corporation) the Patent for the robotic hydrostripper
                           for 1,000,000 shares of restricted common stock and
                           cash of $61,500. The Company's common stock was
                           selling at a price of $2 per share to private
                           investors at the date of the sale. According to SAB
                           48, since the owners of Amclean, Inc. retained a
                           substantial indirect interest in the patent though
                           their ownership of shares of Ultrastrip Systems,
                           Inc., the Company recorded the value of the patent as
                           $95,109, which is the historical cost basis of the
                           patent as recorded by Amclean, Inc. rather than the
                           fair market value of the assets given.

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

                           At June 30, 2000, 11,933,800 shares of Common Stock
                           were reserved for issuance under the Company's fixed
                           stock option plan, outstanding non-plan options,
                           warrants and upon conversion of the outstanding
                           Series A Redeemable Convertible Cumulative Preferred
                           Stock.


                                       9
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


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

                                  For the six months ended June 30,                     2000                             1999
                                  --------------------------------------------------------------------------------------------------

                                                                 Income       Shares      Per-        Income      Shares     Per-
                                                                 (Nume-       (Deno-      Share       (Nume-     (Deno-      Share
                                                                  rator)      minator)    Amount      rator)      minator)   Amount
                                  --------------------------------------------------------------------------------------------------
<S>                                                            <C>          <C>          <C>        <C>          <C>        <C>
                                  Loss per common share
                                      Net (loss) available to
                                        common shareholders    $(4,514,736) 39,741,066   $ (0.11)   $(1,034,656) 36,990,168 $(0.03)

                                  Effect of Dilutive
                                      Securities:
                                        Stock
                                        options/warrants                --         --         --             --          --     --
                                  --------------------------------------------------------------------------------------------------
                                  Net (loss) available to
                                      common shareholders
                                      plus assumed
                                      conversions              $(4,514,736) 39,741,066   $ (0.11)   $(1,034,656) 36,990,168 $(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 11,933,800 and 2,068,450 shares of common
                           stock at June 30, 2000 and 1999, respectively) are
                           not included in the computation of loss per share
                           because the effects of inclusion would be
                           anti-dilutive.


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

                           The Series A Redeemable Convertible Cumulative
                           Preferred Stock provides annual dividends, at the
                           rate of $3,750 per share, payable in cash, which are
                           cumulative and have priority over dividends on the
                           Series B preferred and common stock. Dividends in
                           arrears at June 30, 2000 were $204,459.

                           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

                                       10
<PAGE>


                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS



                           offering. During the six months ended June 30, 2000,
                           14 shares of Series A preferred stock were converted
                           into 336,000 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.


7.      STOCK OPTIONS      At June 30, 2000, the Company has one fixed stock
        AND WARRANTS       option plan 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 June
                           30, 2000, 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.

                           During the six months ended June 30, 2000 and the
                           periods ended December 31, 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 based upon the estimated fair
                           value of the stock at each intervening financial
                           statement date, $393,248 and $214,016 for the six
                           months ended June 30, 2000 and 1999, respectively.

                                       11
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


                           During the six months ended June 30, 2000 and 1999,
                           the Company granted options and warrants to acquire
                           1,600,000 and 400,000, respectively, shares of common
                           stock to third parties as compensation for services
                           rendered to the Company. The options and warrants are
                           exercisable at prices ranging from $1.88 to $2.00 per
                           share, substantially were fully vested at the date of
                           grant and expire through 2005. The options and
                           warrants are exercisable by payment of cash to the
                           Company or, for substantially all of the options and
                           warrants, at the holder's option, in a cashless
                           manner by surrendering options and warrants held on
                           appreciated shares of common stock. 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 $2,077,188 in 2000 and $184,040 in 1999.

                           A summary of the status of the Company's fixed stock
                           option plans and non-plan options and warrants as of
                           June 30, 2000 and changes during the period then
                           ended is presented below:
<TABLE>
<CAPTION>
                                                                     Plan Options and       Non-Plan Options and
                                                                         Warrants                 Warrants
                                                                  -----------------------  ------------------------
                                                                       Weighted                Weighted
                                                                        Average                Average
                                                                       Exercise                Exercise
                                                                        Price      Shares       Price      Shares
                                  -------------------------------------------------------------------------------------
<S>                                                                   <C>         <C>          <C>        <C>
                                  Outstanding at beginning of year    $ 1.88      1,000,000    $ 0.89     7,993,800
                                  Granted                                 --             --      2.00     2,100,000
                                  Exercised                               --             --        --            --
                                  Forfeited                               --             --        --            --
                                  -------------------------------------------------------------------------------------

                                  Outstanding at June 30, 2000        $ 1.88      1,000,000      1.13    10,093,800

                                  Exercisable at June 30, 2000        $ 1.88      1,000,000      1.13    10,093,800
                                  =====================================================================================

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


                           A summary of the status of the Company's fixed stock
                           option plans and non-plan options and warrants as of
                           June 30, 1999 and changes during the period then
                           ended is presented below:

                                       12
<PAGE>


                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                     Plan Options and         Non-Plan Options and
                                                                         Warrants                   Warrants
                                                                  ------------------------   ------------------------
                                                                      Weighted                   Weighted
                                                                       Average                    Average
                                                                      Exercise      Shares       Exercise    Shares
                                                                        Price                      Price
                                  -------------------------------------------------------------------------------------
<S>                                                                   <C>                       <C>         <C>
                                  Outstanding at beginning of year    $    --          --       $   0.63    4,013,800
                                  Granted                                  --          --           1.04    3,180,000
                                  Exercised                                --          --              -           --
                                  Forfeited                                --          --              -           --
                                  -------------------------------------------------------------------------------------
                                  Outstanding at June 30, 1999             --          --           0.81    7,193,800

                                  Exercisable at June 30, 1999        $    --          --           0.81    7,193,800
                                  =====================================================================================
                                  Weighted average fair value
                                  of options granted during
                                  the period                          $    --                   $   0.46
                                  =====================================================================================
</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, which approximate
                           $472,735 and $41,346 for the six months ended June
                           30, 2000 and 1999, 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>

                                 Six  months ended June 30,                                 2000          1999
                                 ----------------------------------------------------------------------------------
<S>                                                                                   <C>              <C>
                                 Net (loss) applicable to common stock as reported    $  (4,541,736)   $ (1,034,656)
                                 Net (loss) applicable to common stock pro forma         (5,014,471)     (1,076,002)
                                 Basic (loss) per share as reported                           (0.11)          (0.03)
                                 Basic (loss) per share pro forma                             (0.13)          (0.03)
</TABLE>


                                       13
<PAGE>


                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS



                           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>
                                                                                              2000         1999
                                 ----------------------------------------------------------------------------------
<S>                                                                                           <C>           <C>
                                 Risk free interest rate                                      5.96 %        5.80 %
                                 Expected life                                           3-5 years       3 years
                                 Expected volatility                                            74 %          59 %
                                 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, 1999, the Company had
                           federal net operating losses (NOL) of approximately
                           $1,080,722. The NOL expires in the years 2018 through
                           2019. 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 $
                           3,237,259 deferred federal tax asset at June 30, 2000
                           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:
<TABLE>
<CAPTION>

                                  Six months ended June 30,                        2000                1999
                                  --------------------------------------------------------------------------------
<S>                                                                           <C>                  <C>
                                  Tax benefit at the United States
                                     statutory rate                           $   1,519,429        $  342,420
                                  State income tax benefit, net                      75,971            17,121
                                  Valuation allowance adjustment
                                                                                 (1,595,401)         (359,541)
                                  --------------------------------------------------------------------------------
                                  Income tax benefit                          $          --        $       --
                                  ================================================================================
</TABLE>

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


                                       14
<PAGE>

                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                  June 30,                                                 2000              1999
                                  ----------------------------------------------------------------------------------
<S>                                                                                <C>               <C>
                                  Deferred tax assets:
                                      Organizational costs                         $    131,915      $    162,695
                                      Net operating loss
                                      carryforwards                                   1,177,216           279,616
                                      Compensation related to equity
                                      instruments issued for
                                      services                                        1,928,128           180,750
                                  ----------------------------------------------------------------------------------
                                  Valuation allowance for deferred
                                      tax assets                                     (3,237,259)         (623,061)
                                  ----------------------------------------------------------------------------------

                                  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.

10.     COMMITMENT AND     The Company currently maintains office facilities in
        CONTINGENCIES      Stuart, 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.

                                       15
<PAGE>


                            ULTRASTRIP SYSTEMS, INC.
                          NOTES TO FINANCIAL STATEMENTS


                           The Company has consulting agreements with certain
                           officers calling for aggregate annual base
                           compensation of approximately $338,000, expiring
                           through 2000. As of June 30, 2000, accounts payable
                           and accrued expenses include $195,761 of accrued
                           compensation.

                           The Company rents office space under an operating
                           lease expiring in July 2000.


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

                                  June 30,                                                 2000              1999
                                  ----------------------------------------------------------------------------------
<S>                                                                                 <C>                 <C>
                                  Cash paid for interest                            $     6,329         $      --
                                  Cash paid for taxes                                         -                --

                                  Non-cash investing and financing activities:

                                  Conversion of preferred stock to
                                      common stock                                  $   350,000         $ 100,000

                                  Accrued preferred stock dividends                 $    72,826         $  27,539
</TABLE>

12.     RESEARCH AND       Research and development cost relates to both future
        DEVELOPMENT        and present products and are charged to operations as
                           incurred. The Company recognized research and
                           development costs of $60,275 and $0 for the six
                           months ended June 30, 2000 and 1999, respectively.

                                       16
<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.

BACKGROUND AND FINANCIAL HISTORY

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

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

The Company has been unable to generate sufficient cash flow from operations
throughout its history to fund operations, including its research and
development and marketing plans. Since its inception on April 2, 1998, the
Company has generated no revenues. During this same period, the Company recorded
net losses applicable to common stock of $9,408,033. The Company generated
$5,338,950 from financing activities during this period to help fund the
shortfall in working capital.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999

During the three months ended June 30, 2000, the Company believes that it made
substantial progress toward development of a commercially-viable automated
hydro-blasting system. The Company remains primarily in a development stage and
anticipates commencing revenue-generating operations within the next two years.
As such, the Company's primary operational activities in the first six months of
2000 related to research and development.

                                       17
<PAGE>

The Company did not generate any revenues during the three months ended June 30,
2000. Revenues were $0 for both the three months ended June 30, 2000 and the
three months ended June 30, 1999.

Development stage expenses increased from $821,687 for the three months ended
June 30, 1999 to $3,488,855 for the three months ended June 30, 2000. The
primary components of development stage expenses were selling, general and
administrative expenses and non-cash compensation expenses.

Selling, general and administrative expenses, excluding non-cash compensation,
increased from $252,661 for the three months ended June 30, 1999 to $611,667 for
the three months ended June 30, 2000. This increase is due to an expansion of
the Company's operating activities through the hiring of new employees,
consulting projects, legal expenses, research and development, as well as
advertising, depreciation and travel expenses.

Non-cash compensation expenses increased from $569,026 for the three months
ended June 30, 1999 to $2,877,188 for the three months ended June 30, 2000. This
increase is attributable to charges of $800,000 for the issuance of Common Stock
for investment banking advisory services and of $2,077,188 for the issuance of
stock options and warrants to service providers.

Loss from operations for the three months ended June 30, 2000 was $3,488,855 as
compared to $821,687 for the three months ended June 30, 1999. Preferred Stock
dividends were $33,760 for the three months ended June 30, 2000 and $27,539 for
the three months ended June 30, 1999. Net loss applicable to Common Stock was
$3,526,365 for the three months ended June 30, 2000, compared to $849,226 for
the three months ended June 30, 1999. Loss per common share was $0.09 for the
three months ended June 30, 2000 and $0.02 for the three months ended June 30,
1999.

SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999

The Company did not generate any revenues during the six months ended June 30,
2000. Revenues were $0 for both the six months ended June 30, 2000 and the six
months ended June 30, 1999.

Development stage expenses increased from $1,007,117 for the six months ended
June 30, 1999 to $4,462,581 for the six months ended June 30, 2000. The primary
components of development stage expenses were selling, general and
administrative expenses and non-cash compensation expenses. Selling, general and
administrative expenses, excluding non-cash compensation, increased from
$438,091 for the six months ended June 30, 1999 to $1,192,145 for the six months
ended June 30, 2000. Non-cash compensation expenses increased from $569,026 for
the six months ended June 30, 1999 to $3,270,436 for the six months ended June
30, 2000.

Loss from operations for the six months ended June 30, 2000 was $4,462,581 as
compared to $1,007,117 for six months ended June 30, 1999. Preferred Stock
dividends were $72,826 for the six months ended June 30, 2000 and $27,539 for


                                       18
<PAGE>

the six months ended June 30, 1999. Net loss applicable to Common Stock was
$4,541,736 for the six months ended June 30, 2000, compared to $1,034,656 for
the six months ended June 30, 1999. Loss per common share was $0.11 for the six
months ended June 30, 2000 and $0.03 for the six months ended June 30, 1999.

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 June 30, 2000, the Company's cash and cash equivalents on hand were
$21,190, compared to $59,970 as of December 31, 1999. This decrease was
primarily due to continued net losses, offset by the sale of restricted,
unregistered shares of Common Stock, described below. However, despite this
decrease, 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. The Company has generated no revenues from operations to date. Net
cash used by operating activities was $1,242,982 for the six months ended June
30, 2000, compared to $265,804 for the six months ended June 30, 1999. This
increase resulted from increases in the Company's net loss. Net cash used in
operating activities during the first six months of 2000 does not include
non-cash charges of $117,862 for depreciation and amortization and $3,270,436
for non-cash compensation to employees and directors.

The Company's net cash used in investing activities decreased from $1,193,735 in
the six months ended June 30, 1999 to $645,958 in the six months ended June 30,
2000, primarily as a result of a decrease in new machinery and equipment
purchases.

During the six months ended June 30, 2000, the Company repaid long-term debt
from significant shareholders in the amount of $72,964. The Company also
incurred new long-term debt from significant shareholders in the amount of
$351,111. These loans payable by the Company to certain of its shareholders are
unsecured, non-interest bearing, and due upon demand. During the period through
March 31, 2000, the Company issued 511,300 shares of Common Stock for net
proceeds of $1,022,600 through a private placement pursuant to Rule 506 of
Regulation D as promulgated under the 1933 Act. During the three months ended
June 30, 2000, the Company also issued 264,000 shares of Common Stock for net
proceeds of $554,853 in transactions exempt under Section 4(2) of the Securities
Act of 1933. The Company's net cash provided by financing activities rose to
$1,850,160 for the six months ended June 30, 2000 from $1,471,082 for the six
months ended June 30, 1999.

The Company lacks assured available financial resources to meet its June 30,
2000 working capital deficit of $427,111 and future operating costs.

                                       19
<PAGE>

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.

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
approximately $5.5 million, within the next twelve months. The Company estimates
that of that amount (i) $0.65 million will be for research and development, (ii)
$0.35 million for sales and marketing forces, (iii) $0.8 million for
professional fees, (iv) $3.0 million for other operating expenses, such as
payroll, rent and office expense, and (v) $0.75 million for investment in
property and equipment.

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. Through June
30, 2000, the Company has incurred research and development costs of $60,275
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 August 15, 2000, 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


                                       20
<PAGE>

expected from the sale of spare parts and accessories to those customers that
have purchased or rented robotic hydro-blasting systems. No such spare parts
purchase agreement or commitment has been made to date.

Should the Company receive the number of purchase orders and rental contracts it
is forecasting over the next twelve months and the sales and rental prices it is
currently forecasting over the next twelve months, the Company should be able to
generate sufficient cash flow to sustain operations and meet all payable
obligations for the next twelve months. However, 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. The Company currently relies on
consultants to provide many important operational and administrative services.
The Company may consider hiring some of these consultants as full-time employees
if the Company believes that is in its interest. Additionally, 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 12 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.

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, 1999 and December 31, 1998 were
prepared on the going-concern basis. For the years ended December 31, 1999 and
1998, the Company incurred net annual losses of $4,128,153 and $738,145,
respectively, had a working capital deficit of $377,414 and surplus of $129,088
respectively, and has outstanding redeemable preferred stock that can 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.

                                       21
<PAGE>

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

                           PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS.

As of June 30, 2000, 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 three months ended June 30, 2000. During the
three months ended June 30, 2000, the Company issued 264,000 restricted,
unregistered shares of Common Stock for net proceeds of $554,853 in transactions
exempt under Section 4(2) of the Securities Act of 1933. In May 2000, the
Company issued 400,000 restricted, unregistered shares of Common Stock in
exchange for investment banking advisory services.

Also, during the three months ended June 30, 2000, two holders of an aggregate
of 2 shares of Series A Redeemable Convertible Cumulative Preferred Stock
exercised their conversion rights and were issued 48,000 shares of Common Stock.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

There has been no default on any senior security during the three months ended
June 30, 2000.

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

There were no matters submitted to a vote of security holders during the three
months ending June 30, 2000.

                                       22
<PAGE>


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.

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

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


10.19                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
</TABLE>

         (b) REPORTS ON FORM 8-K.

                  No reports were filed on Form 8-K during the three months
                  ended June 30, 2000.


                                       23
<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.

         November 27, 2002            /s/ Robert O. Baratta
                                      ----------------------------------------
                                      Robert O. Baratta
                                      President, Chief Executive Officer
                                      and Vice Chairman of the Board


         November 27, 2002            /s/ Scott R. Baratta
                                      ----------------------------------------
                                      Scott R. Baratta
                                      Senior Vice President - Finance
                                      (Chief Financial and Accounting Officer)


                                       24
<PAGE>


                                  CERTIFICATION

In connection with the Quarterly Report of UltraStrip Systems, Inc. (the
"Company") on Form 10-QSB for the period ending June 30, 2000, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned certify pursuant to ss. 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)


                                       25
<PAGE>


                                 CERTIFICATIONS

I, Robert O. Baratta, certify that:

1.       I have reviewed this quarterly report on Form 10-QSB 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:  November 27, 2002             /s/ Robert O. Baratta
                                     ----------------------------------
                                     Robert O. Baratta
                                     President, Chief Executive Officer
                                     and Vice Chairman of the Board


                                       26
<PAGE>


                                 CERTIFICATIONS

I, Scott R. Baratta, certify that:

1.       I have reviewed this quarterly report on Form 10-QSB 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:  November 27, 2002                  /s/ Scott R. Baratta
                                          ----------------------------------
                                          Scott R. Baratta
                                          Senior Vice President - Finance
                                         (Chief Financial Officer)