<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549
                                  ___________
                                  FORM 10-KSB

               Annual Report Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934

FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1999       Commission file number 0-18515


                             THERAPY LASERS, INC.
              (Exact name of Company as specified in its charter)


           NEVADA                                        93-0960302
-------------------------------             ------------------------------------
(State or other jurisdiction of             (IRS Employer Identification Number)
incorporation or organization)

                    10450 WESTOFFICE, HOUSTON, TEXAS  77042
--------------------------------------------------------------------------------
                   (Address of Principal Executive Offices)

       Company's telephone number, including area code:   (713) 339-2722

                                      N/A
--------------------------------------------------------------------------------
   (Former name and address of Company, if changed from last annual report.)

                                 _____________

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                     None

          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                        ($0.001) Par Value Common Stock


Indicate by check mark whether the Company: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the Company was required to
file such reports); and (2) has been subject to such filing requirements for the
past ninety (90) days.

                              Yes  [X]   No  [_]

   The issuer's revenues for the year ended February 28, 1999 were $28,751.

As of May 10, 1999, 10,762,627 shares of ($0.001) par value Common Stock (the
Company's only class of voting stock) were outstanding.  The aggregate market
value of the common shares of the Company on May 21, 1999 (based upon the mean
of the closing bid and asked price) held by nonaffiliates of the Company, was
approximately $52,457.

                     DOCUMENTS INCORPORATED BY REFERENCE:
                                     None
<PAGE>

                                  FORM 10-KSB

                             THERAPY LASERS, INC.


                               TABLE OF CONTENTS


PART I
  Item   1. Description of Business
  Item   2. Description of Property
  Item   3. Legal Proceedings
  Item   4. Submission of Matters to a Vote of Security Holders


PART II
  Item   5. Market for Common Equity and Related
             Stockholder Matters
  Item   6. Management's Discussion and Analysis or
             Plan of Operations
  Item   7. Financial Statements
  Item   8. Changes in and Disagreements with Accountants
             on Accounting and Financial Disclosure


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


SIGNATURES
<PAGE>

                                    PART I


ITEM 1.  BUSINESS

(a)  BUSINESS DEVELOPMENT

Therapy Lasers, Inc. (the "Company"), was organized with the name Medeci
Corporation under the laws of the State of Nevada on September 21, 1987 to
commercialize laser and related technologies.  Since that time and until
November 1996, the Company was engaged primarily in developing the laser
technology while developing a strategy to obtain approval from the Food and Drug
Administration ("FDA") to market the low level therapeutic lasers in the United
States.

On February 27, 1995, the former executive officers and major stockholders of
the Company resigned and disassociated themselves from the Company.  During
1994, the operations of the Company's Wellness, Inc. subsidiary had deteriorated
significantly due to the lack of working capital.  As a result, the Company
determined effective February 28, 1995 (the "measurement date") that it would
discontinue the Wellness business.  The sale of the net assets of Wellness to
American Medical Corporation, an unrelated company, was completed on June 21,
1995 in exchange for cash of $5,400, assumption of Wellness indebtedness by the
Company, forgiveness of Wellness debt owed to the Company and other
consideration totaling approximately $82,000.  Simultaneously, certain former
officers and affiliates returned 1,752,460 shares of Company stock for
cancellation in exchange for an agreement not to initiate litigation against the
former CEO for matters arising out of this transaction, and in exchange for a
release to the spouse of the former CEO from personal liability as a guarantor
on certain Company indebtedness.  In addition, stock options held by the
retiring parties were canceled.

On February 27, 1995, the Company changed its name from Medeci Corporation to
Therapy Lasers, Inc.

At the Annual Meeting of the Company's shareholders on July 1, 1998, the
shareholders elected the following directors of the Company:

     Lucien H. Cullen
     Leon D. Hogg
     Robert C. Meador, Jr.

At the Board of Directors Meeting on July 1, 1998, the following officers were
elected:

     Leon D. Hogg                            President
     Lucien H. Cullen                        Secretary-Treasurer
     Robert C. Meador, Jr.                   Vice President


On March 12, 1996, the Company acquired 100% of the stock of LaserCare, Inc. in
exchange for 5,750,776 shares of its common stock.

As a result of this transaction, one individual controls approximately 48.4% of
Therapy Lasers, Inc.'s outstanding common stock.  The transaction was accounted
for as a purchase, and was recorded at the net underlying assets of LaserCare.

LaserCare developed a small handheld laser that the Company sought to market in
Mexico, Canada, Central America and South America, and eventually in Europe and
the Orient.  During the current fiscal year, negotiations were undertaken with
one of Mexico's largest distributors of pharmaceuticals and medical devices to
market the devices in Mexico.  As of the date of this Annual Report, no
distribution agreements have been
<PAGE>

signed. Due to these reasons, and a lack of sufficient operating capital, the
Company has been unable to devote any substantial efforts to the laser business
since late 1996. In order to pursue this direction, the Company must raise
sufficient capital to fund the manufacture of the unit. The Company is moving in
other business directions in order to help raise the necessary funds. The
Company also investigated several sources of supply for the contract manufacture
of the items.

In November, 1996, the Company commenced activities in the wholesale electrical
components business, serving as a non-stocking sales representative for an
affiliated company. In that connection, the Company sells primarily to another
affiliated company. The Company's plan is to utilize the profits earned in the
wholesale electrical components business to exploit its laser business. However,
there is no assurance the Company will be successful in generating profits in
the wholesale electrical components business. Moreover, the Company suspended
its wholesale electrical components business subsequent to February 28, 1998.

At year end, the Company was investigating other opportunities in related
fields.

The Company is deemed to have been in the development stage since March 1, 1995.
Prior to that time, it was in the operating stage. In its current development
stage, management anticipates incurring substantial additional losses as it
pursues its wholesale electrical components business and laser business, and as
it investigates other business opportunities.

(b)  DESCRIPTION OF THE COMPANY'S BUSINESS

LASER BUSINESS.

Since 1987, the Company had been engaged in testing and developing laser
technology and seeking approval from the FDA to market its MLT-129 He-Ne Laser,
which had been placed in selected clinics and teaching hospitals for clinical
trial. The Company has not been able to secure FDA approval for unrestricted
commercial use of the laser even though the FDA itself classifies this low level
laser type ("LLLT") as a non significant risk device.

European markets are considered more favorable than the United States ("U.S.")
in laser use and technology, inasmuch as the various European governments have
not deterred the use of the LLLT. Reports from European doctors and hospitals at
the 1995 Annual Meeting of the American Society for Laser Medicine and Surgery
were critical of studies done in the U.S. for using the low-powered (5 to 10
milliwatt) lasers. The Europeans have reported achieving much improved results
by using higher powered Gallium Arsenide ("GaAs") and Gallium Aluminum Arsenide
("GaAlAs") Lasers.

Though the MLT-129 He-Ne Laser which the Company has marketed in the past is the
oldest and best documented of all the biostimulatory lasers, it is not practical
to build one with 100 milliwatt strength because it would be too big and
cumbersome to use efficiently. Also, inasmuch as the Helium-Neon gases are of
necessity encased in a long glass sealed tube, the units are easily broken and
expensive to replace.

After April of 1995, the Company's efforts were directed toward securing an up-
to-date state-of-the-art GaAs or GaAlAs Laser offering average power from 0 to
110 milliwatts and peak power up to 55 watts to achieve higher therapeutic
effects. Although a prototype of such a laser was developed by the Company, none
have been sold.

Due to the lack of adequate capital, the Company has been unable to devote any
substantial efforts toward the development of its laser business since late
1996.

WHOLESALE ELECTRICAL COMPONENTS BUSINESS

In November, 1996, the Company began activities in the wholesale electrical
components business, serving as a non-stocking sales representative for an
affiliated company. This business is conducted under the assumed name
<PAGE>

of Bob's Wholesale Lighting. Bob's Wholesale Lighting purchases electrical
components from Builder Source (formerly A C Global Corp.), and resells them to
Gulf Coast Fan & Light, Inc., both of which are controlled by the Company's
controlling shareholder. Gulf Coast Fan & Light, Inc., includes the electrical
components with other appliances and resells them to the ultimate customer,
primarily construction companies, for use and home and commercial construction
projects. As noted above, the Company suspended its wholesale electrical
components business subsequent to February 28, 1998.


(c)  DESCRIPTION OF TECHNOLOGY

LASER BUSINESS.

All biological reactions of laser light with live tissue depend upon the
interaction of that tissue, in some way, with the effects of the laser light.
There are many kinds of laser light (each with a different wave length) and each
has the potential to produce very different results. For example, the argon
laser (green light about 488 nanometers in length) causes clotting of small
blood vessels in the retina, and is therefore useful in treating certain eye
conditions. Carbon dioxide lasers cause immediate cutting and welding of tissue,
but are invisible to the human eye. Carbon dioxide lasers have largely replaced
scalpels for use in surgery. Both argon and carbon dioxide lasers work in the
following way: A pulsed light source flows through a medium (different for each
type of laser) and non-scattered single wave length of light is passed out of
the opposite end of the laser.

He-Ne Lasers use a laser medium of Helium-Neon gas; GaAs Lasers utilize a diode
of Gallium Arsenide and GaAlAs Lasers utilize a laser of Gallium-Aluminum
Arsenide. All three of the latter named lasers are useful in treating pain,
carpal tunnel syndrome, migraine headaches, trauma, and sports related injuries.
A comparison of the above lasers is as follows:

     Type          Wave Length         Mode      Output Power    Medical Use
     ----          -----------         ----      ------------    -----------
Gas Lasers
    He-Ne            632.8 mm       continuous      1-20 mW     Biostimulation
SEMI-CONDUCTOR LASERS
     GaAs             904 mm          pulsed        1-110 W     Biostimulation
    GaAlAs          660-860 mm      continuous      1-110 W     Biostimulation


All biomedical laser applications are based upon the interaction of the laser
light with biological substrate. In the simplest sense, low intensity laser
light is absorbed, reflected or re-radiated by the substance so that no change
occurs within it. On the other hand, ultraviolet invisible radiation can be
absorbed, and excite electronic states in many biological molecules, leading to
photo-biological transformation at a molecular level. Therefore, the use of
laser light enhances the speed at which molecules are excited, making is
possible to prove photochemical reactions at a pica second time scale, and
further excite higher electronic states in target molecules through multiphoton
processes. Biostimulation of metabolic tissue reactions by lasers at a lower
energy level has been demonstrated both in the laboratory utilizing LLLT in
neuronal tissue culture, fibroblast and wound healing processes in vivo,
stimulated healing in animal models in hairless mice, and treatment in human
patients in Russia for ulcers, open wounds and skin healing.

WHOLESALE ELECTRICAL COMPONENTS BUSINESS

The electrical components sold by Therapy, dba Bob's Wholesale Lighting, are
commonly available through various domestic and foreign manufacturers.
Substantially all of the electrical components marketed by Bob's are
manufactured overseas, due to lower labor costs, resulting in lower wholesale
purchase prices. There are no significant technological advantages held by one
supplier over another; sales are primarily driven by price, appearance, and
currently popular styles.
<PAGE>

(d)  FEDERAL REGULATION

LASER BUSINESS

All laser medical devices are regulated by the FDA under two laws: The Radiation
Control for Health and Safety Act of 1968, and an Amendment to the Public Health
Services Act in the Medical Device Amendments of 1976 to the Food, Drug and
Cosmetic Act. In general, the FDA regulates laser medical devices at three
different stages: (1) the manufacturing stage, (2) the distribution, repacking
and relabeling stage, and (3) the medical application stage. Only the second
stage is directly related to Therapy Laser's business because the Company is not
engaged in the manufacture of laser medical devices. The Company (in the past)
purchased the approved medical devices from an FDA approved manufacturer, then
re-labeled and repackaged the laser medical devices and sold the devices to
licensed physicians for use by them under FDA and state regulation in the
medical treatment of patients. FDA regulation controls what the Company can or
cannot do with its laser.

All lasers marketed in the U.S. must conform to the Safety Regulations 21 CFR
1040 as established by the Center for Devices and Radiological Health ("CDRH")
of the FDA. Each laser manufactured must meet the FDA Safety Standards set forth
by the CDRH. FDA acceptance must in turn be obtained by the licensed physician
or other healthcare providers in order to use the Company's laser in the medical
field. In order to be registered as a FDA regulated relabeler/repackager, the
Company must simply relabel/repackage only FDA manufacturer's approved laser
medical devices. Compliance with Federal Safety Regulations under FDA control
are a requirement. The Company found it easier to buy from am approved
manufacturer than to go through the approval sequence in order to manufacture
the medical laser device itself.

Therapy Lasers, Inc. has been registered with the FDA as a relabeler/repackager
and as a specification developer. A specification developer has the authority to
tell the FDA approved manufacturer which particular specifications as to power
output it desires in the laser medical device which is thus manufactured.
Registration by the FDA in this category is an unusual requirement. Registration
by the FDA in this category means that the Company can relabel and repackage
such laser device under its own name.

WHOLESALE ELECTRICAL COMPONENTS BUSINESS

Substantially of the electrical components marketed by the Company meet
Underwriters Laboratory ("UL") standards, as required by Federal regulations.
There are no other significant regulations that affect the business.

(e)  MARKETING

LASER BUSINESS

In the past, the Company purchased the original MLT-129 He-Ne Laser from its
supplier and then relabeled each laser with a corporation insignia and serial
number for medical use pursuant to FDA approval, and intends to follow the same
procedure with the new THERALASE Gallium Arsenide Laser when and if it becomes
available. Therapy Lasers, Inc. will, in turn, sell the laser to the medical
provider. More than 500 doctors, clinics and hospitals have contacted the
Company in the past indicating an interest in purchasing Therapy's lasers when
and if FDA approval can be secured. The manufacturer has assured the Company
that it will be able to supply an adequate number of lasers so that the Company
will experience no delays in filling purchase orders for the laser devices.

The Company has not sold any lasers in more than two years, and, as indicated
above, the Company has been unable to devote any substantial efforts in the
laser field since late 1996.

WHOLESALE ELECTRICAL COMPONENTS BUSINESS
<PAGE>

As previously indicated, all of the Company's sales of electrical components
have been made to an affiliated company, Gulf Coast Fan & Light, Inc.
Substantially all of the sales are initiated by Gulf Coast, and are not
generated by the Company or its employees. Therefore, there can be no assurance
that future sales will continue, or that they will be sufficient to enable the
Company to operate at a profit.

(f)  RETURNS AND WARRANTIES

LASER BUSINESS AND WHOLESALE ELECTRICAL COMPONENTS BUSINESS

The Company offers whatever warranty is in existence from the manufacturer, both
with respect to lasers and electrical components. It also allows credit on items
from which it receives credit from the manufacturers. No losses have been
experienced to date.

(g)  EMPLOYEES

At fiscal year end, Therapy Lasers, Inc. had only two employees. Leon D. Hogg,
President, devotes such time as is necessary to the Company's affairs. Mr. Hogg
is compensated at the rate of $2,000 per month, and all of such compensation is
paid by the issuance of common stock. Subsequent to February 28, 1999, the
Company Robert C. Meador, Jr., Vice President, devotes part of his time to the
Company's affairs. Mr. Meador is compensated by an affiliated company controlled
by Therapy's principal shareholder, and the affiliate contributes Mr. Meador's
services to Therapy.

(h)  CUSTOMERS

LASER BUSINESS AND WHOLESALE ELECTRICAL COMPONENTS BUSINESS

As indicated above, the Company has curtailed substantially all activity with
respect to the laser business; therefore, there are currently no customers for
laser products. Also, as indicated above, all electrical components sales are
made to Gulf Coast Fan & Light, Inc., an affiliated company, for resale to the
ultimate consumers, primarily contractors.

(i)  COMPETITION

LASER BUSINESS

To the Company's knowledge there is at present one competitor seeking approval
from the FDA for a similar therapeutic laser.

WHOLESALE ELECTRICAL COMPONENTS BUSINESS

There is substantial competition in the wholesale electrical components
business, many of which competitors have more resources than the Company. The
industry is a highly competitive one, and success depends on developing a broad
customer base, having a broad line of goods at attractive prices, and providing
prompt delivery and service. There is no assurance the Company will be
successful in competing with its larger and better-financed competitors.

(j)  OTHER PRODUCTS/SERVICES

The Company is currently exploring other income-producing ideas not necessarily
in the medical field.

ITEM 2.  PROPERTIES
<PAGE>

The Company formerly occupied approximately 800 sq. ft. of office space at 10850
Richmond Avenue, Suite 216, Houston, Texas 77042, under a month-to-month lease.
During the current fiscal year, that space was vacated. Currently, the Company
shares office space with Builder Source, an affiliated company, and does not
incur rent.

ITEM 3.  LEGAL PROCEEDINGS

None.


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

None.


                                    PART II


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

The table below sets forth the high and low bid price of the common stock
through February 28, 1999, as reported by the National Quotation Bureau. Such
over-the-counter market quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commissions, and may not necessarily represent actual
transactions.

FISCAL YEAR ENDING FEBRUARY 28, 1998           HIGH             LOW
     1st Quarter                              $.0312           $.0625
     2nd Quarter                              $.0312           $.0312
     3rd Quarter                              $.0312           $.0312
     4th Quarter                              $.0312           $.0312

FISCAL YEAR ENDING FEBRUARY 28, 1999
     1st Quarter                              $.0625           $.0625
     2nd Quarter                              $.0625           $.0625
     3rd Quarter                              $.0350           $.0350
     4th Quarter                              $.0350           $.0350

As of May 10, 1999, the Company had 464 shareholders of record. The Company has
never paid any cash dividends and has no plans to pay any cash dividends in the
foreseeable future.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

LIQUIDITY

The Company had total liabilities of $71 ,000 and a working capital deficit of
$64,000 as of February 28, 1999 compared to $49,000 at February 29, 1998. This
decrease in working capital is attributable to the lack of operating revenues
coupled with continuing expenses. The Company expects that cash requirements for
development stage operations for the next fiscal year will be provided from the
wholesale electrical components
<PAGE>

business and private placements of common stock. However, there can be no
assurance that these activities will, in fact, provide the necessary working
capital for operations.

PLAN OF OPERATION

Year Ended February 28, 1998 compared with 1997
-----------------------------------------------

The Company had $28,751 in sales and $8,315 in gross profits for the year ended
February 28, 1999, compared with $62,170 in sales and $16,606 in gross profits
for February 29, 1998. Expenses (including interest) were $69,818 for 1999,
compared to $30,990 for 1998. The Company is considered to have re-entered the
development stage effective March 1, 1995 upon the sale of its last operating
unit In fiscal 2000, the Company plans to continue maintain expenses at the
lowest possible level until sales revenue is high enough to carry the operating
expenses. Some of the Company's larger shareholders have agreed to purchase
enough of the Company's stock in private placements to meet operating expense
obligations. However, such agreements are not evidenced by any written
agreements; therefore, there can be no assurance the shareholders will continue
to provide such funding when called upon.

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: The information contained in the preceding paragraph is forward looking
and involves risks and uncertainties that could significantly impact expected
results. While it is impossible to itemize the many factors and specific events
that could affect the outlook of any company, the Company's outlook for fiscal
1998 is predominately based on its interpretation of what it considers key
economic assumptions.

ITEM 7.  FINANCIAL STATEMENTS

The information required by this item is included in a separate section of this
Annual Report beginning on Page F-1.

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

None.

                                   PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

(a)  IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

The Company, pursuant to its by-laws, maintains a Board of Directors of three
members and as of February 28, 1999 had the following executive officers elected
by the Board of Directors on July 1, 1998:
<TABLE>
<CAPTION>
       NAME                            POSITION HELD                                    DATES OF SERVICE
---------------------------------------------------------------------------------------------------------------------
<S>                           <C>                                                   <C>
Leon D. Hogg                   Chairman, President, Chief Executive                  February 27, 1995 to date
                               Officer

Lucien Hugh Cullen             Secretary-Treasurer                                   February 27, 1995 to date

Robert C. Meador, Jr.          Vice President                                        February 28, 1996 to date
</TABLE>
<PAGE>

In addition, Charles Sheffield owns 5,208,972 shares of the Company's common
stock, either directly, or through his spouse, children, or entities controlled
by him, amounting to approximately 48.4% of total outstanding shares, and is
deemed to be a control person. Mr. Sheffield is not an officer of director of
the Company.

All Directors of the Company hold office until the next annual meeting of
shareholders and until their successors have been elected and qualified.
Vacancies in the Board of Directors are filled by the remaining members of the
Board until the next annual meeting of shareholders. The officers of the Company
are elected by the Board of Directors at its first meeting after each annual
meeting of the Company's shareholders and serve at the discretion of the Board
of Directors or until their earlier resignation or death.

(b)  BUSINESS EXPERIENCE

Leon D. Hogg, Age 78. Mr. Hogg has been a Director and Officer of the Company
since February 27, 1995. Mr. Hogg has been involved in the commercial banking
industry in Houston for the last twenty-eight (28) years. From 1962 through 1970
he was a senior commercial lending officer with two Houston banks. In 1970 he
formed Lee Hogg & Company, Inc., Mortgage Bankers and Financial Consultants, and
has been continuously involved with that company prior to joining Therapy
Lasers, Inc. Mr. Hogg obtained a Bachelor of Science degree from North Texas
State University in 1942 and has subsequently taken a number of advanced
banking, law and accounting courses from the American Institute of Banking.

Lucien Hugh Cullen, Age 77. Mr. Cullen has over forty (40) years of general
experience in the management of business involved in oil operations, chemicals,
mining and the management of investments. For the twelve (12) years prior to his
joining the Company in February, 1995, Mr. Cullen was the Chief Executive
Officer of Twentieth Century Pipe and Equipment Company, a specialized line pipe
company that he formed in 1982. Mr. Cullen began his education at Rice
University, then transferred to the University of Texas. After a three (3) year
interruption for military service in 1942-45, Mr. Cullen completed his education
at Glendale College, California and the University of Houston. He has both a
Bachelor of Arts and Master's degree in Business Administration.

Robert C. Meador, Jr., 37. For the past ten years employed by Gulf Coast Fan &
Light Inc., the last 2 1/2 years as Vice President. In 1992, he became President
of Ceiling Fans Direct, Inc., and in 1996 he became General Manager of A C
Global Corp. Mr. Meador is also President of the Company's subsidiary,
LaserCare, Inc.

Charles Sheffield, 46. Mr. Sheffield is President and majority shareholder of
U.S. Ceiling Fan Corp., the parent company of Gulf Coast Fan & Light, Inc. and A
C Global Corp. He is also a director and majority shareholder of U.S. Design and
Construction, Inc. Mr. Sheffield is a graduate of the University of Houston,
where he obtained a Bachelors degree in finance.

ITEM 10. EXECUTIVE COMPENSATION

(a)  SUMMARY COMPENSATION TABLE

No executive of the Company was paid more than $60,000 during the fiscal years
ended February 28, 1999 or 1998. All compensation paid during the past two
fiscal years to Company executives was paid in stock.

(b)  OPTION AND LONG-TERM COMPENSATION TABLES

There has been no restricted stock awards, stock options, SAR's, LTIP payouts or
other forms of long-term compensation paid to any officer or director of the
Company during the last three years, except for certain stock options granted to
former officers which either expired without being exercised or were canceled by
the Board of
<PAGE>

Directors on March 24, 1995. Subsequent to February 28, 1995, the Board of
Directors granted stock options as follows:

    Granted to            Number of    Vesting Schedule         Option Price
                            Shares
----------------------------------------------------------------------------

Lucien Hugh Cullen          80,000     20,000 s/s Quarterly     $.05 / Share

Leon D. Hogg                80,000     20,000 s/s Quarterly     $.05 / Share

At February 28, 1998, none of the options had been exercised. All of the above
options expired at the end of three years (March 24, 1998).

(c)  PENSION PLANS AND OTHER BENEFIT OR ACTUARIAL PLANS

The Company has no annuity, pension or retirement plans, nor other plans whose
benefits are based on actuarial computations.

(d)  EMPLOYMENT CONTRACTS AND TERMINATION AGREEMENTS

The Company has no employment contracts or termination agreements with any
officer, director or key employee.

(e)  DIRECTOR COMPENSATION

The Company has no standard arrangement by which its directors are compensated.

(f)  COMPENSATION COMMITTEE REPORT

The Company's Compensation Committee consists of Lucien Hugh Cullen, Leon D.
Hogg and Robert C. Meador, Jr., who administer the Company's Stock Option Plan
which was adopted March 12, 1996.

(g)  STOCK PERFORMANCE CHART

A graph comparing the Company's commutative total return to stockholders in
terms of stock price appreciation plus dividends during the previous five years
to a broad market index, such as the S&P 500, has not been presented due to the
Company's operating losses in recent years and the resulting lack of any
significant stock price appreciation or dividends.

(h)  INTERLOCKING RELATIONSHIPS OF DIRECTORS

Robert C. Meador, Jr. is also a director of the wholly owned Laser Care, Inc.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         AND MANAGEMENT

The following table set forth, as of May 10, 1999, the stock ownership of each
person known by the Company to be the beneficial owner of five percent or more
of the Company's common stock. Unless otherwise indicated, each person has
beneficial voting and investment power with respect to the shares owned.
<PAGE>

    NAME/ADDRESS OF BENEFICIAL OWNER      NUMBER OF SHARES   PERCENTAGE OF TOTAL
    --------------------------------      ----------------   -------------------

Charles Sheffield
  10450 Westoffice
  Houston, Texas  77042                     5,208,972 (A)            48.4%
Mark Chapman
  4102 University Boulevard
  Houston, Texas 77005                        930,300                 8.6%

(A)  Includes shares owned directly and shares owned indirectly by spouse,
family members, and related entities, as follows:

    NAME/ADDRESS OF BENEFICIAL OWNER      NUMBER OF SHARES   PERCENTAGE OF TOTAL
    --------------------------------      ----------------   -------------------

Charles Sheffield                           3,702,317                34.4%
Family of Charles Sheffield:
  Adult children                              575,078                 5.3%
  Minor child                                 287,539                 2.7%
Entities controlled by Charles Sheffield:
  Gulf Coast Fan & Light, Inc.                500,269                 4.6%
  U.S. Design & Construction, Inc.            143,769                 1.4%
                                          --------------------------------
    Total                                   5,208,972                48.4%
                                          ================================

The following table sets forth, as of May 10, 1999, the common stock ownership
of all officers and directors of the Company:

    NAME/ADDRESS OF BENEFICIAL OWNER      NUMBER OF SHARES   PERCENTAGE OF TOTAL
    --------------------------------      ----------------   -------------------

Lucien Hugh Cullen
     4529 Tonawanda
     Houston, Texas  77035                    460,000                 4.3%
Leon D. Hogg
     6701 Sands Point, Suite 15
     Houston, Texas  77074                    464,000                 4.3%
Robert C. Meador, Jr.
     10850 Richmond, Suite 216
     Houston, Texas  77042                    287,539                 2.7%
All Officers and Directors as a Group
     (3 persons)                            1,211,539                11.3%


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On March 12, 1996, Therapy Lasers, Inc. acquired 100% ownership of LaserCare,
Inc., a Delaware corporation, which has designed a hand-held 10 mW laser that is
planned to be manufactured in Mexico and distributed in Mexico, Central and
South America, and eventually in Europe and the Orient. The acquisition was in
exchange solely for the shares of the corporation in a tax free reorganization
under Section 368(a)(1)(b) of the Internal Revenue Code of 1986, as amended.
<PAGE>

(a)  COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than ten-percent
shareholders are required by the Securities and Exchange Commission regulations
to furnish the Company with copies of all Section 16(a) forms they file.

The Company's current management has insufficient information to determine
whether during the period from March 1, 1998 to February 28, 1999 all Section
16(a) filing requirements applicable to its former officers, former directors
and greater than ten-percent beneficial owners were complied with.


                                    PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS:
     (1) LISTING OF SUBSIDIARIES OF REGISTRANT:

     NAME                                            PERCENTAGE OWNED
     LaserCare, Inc.                                      100.00%
     Houston, Texas
     (acquired March 12, 1996)

     (2) FINANCIAL DATA SCHEDULE - See Financial data schedule attached.

(b)  REPORTS FILED ON FORM 8-K:

None.
<PAGE>

                                  SIGNATURES


In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                             THERAPY LASERS, INC.



By: /s/ LEON D. HOGG                                    Date: June 16, 1999
    ----------------------------------------------
    Leon D. Hogg, Chairman of the Board, President,
    Chief Executive Officer


In accordance with the Exchange Act, this report has been signed below by the
following persons, on behalf of the Registrant and in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
           NAME                                    TITLE                                 DATE
           ----                                    -----                                 ----
<S>                                          <C>                           <C>
 /s/ LEON D. HOGG
_________________________________            Chairman of the Board,                  June 16, 1999
Leon D. Hogg                                 President, Chief Executive
                                             Officer, Director


_________________________________            Secretary-Treasurer                     _______, 1999
Lucien Hugh Cullen                           Director


/s/ ROBERT C. MEADOR, JR.
_________________________________            Vice President,                         June 16, 1999
Robert C. Meador, Jr.                        Director
</TABLE>

    SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
  SECTION 15(D) OF THE ACT BY REGISTRANT WHICH HAVE NOT REGISTERED SECURITIES
                      PURSUANT TO SECTION 12 OF THE ACT:

                                NOT APPLICABLE.
<PAGE>

                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
                        REQUIRED BY ITEMS 8 AND ITEM 13


                                     INDEX

A.   FINANCIAL STATEMENTS
     --------------------

     Reports of independent certified public accountants

     Balance sheet - February 29, 1999

     Statements of income (loss) for the periods ended
        February 28, 1999 and 1998

     Statements of stockholders' equity for the years
        ended February 28, 1999 and, 1998

     Statements of cash flows for the periods ended
        February 28, 1999 and, 1998

     Notes to consolidated financial statements


B.   FINANCIAL STATEMENT SCHEDULES
     -----------------------------

Schedules are omitted because of the absence of the conditions under which they
are required, or because the information required by such omitted schedule is
contained in the financial statements or the notes thereto.
<PAGE>

             [LOGO]
     BATEMAN & CO., INC., P.C.
  Certified Public Accountants

                                                    5 Briardale Court
                                                Houston, Texas 77027-2904
                                                       (713) 552-9800
                                                    AX (713) 552-9700
                                                  www.batemanhouston.com


              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To The Board of Directors and Stockholders
Therapy Lasers, Inc.
Houston, Texas

We have audited the accompanying balance sheet of Therapy Lasers, Inc. and
Subsidiary, (a development stage enterprise) as of February 28, 1999 and the
related statements of income (loss), stockholders' equity, and cash flows for
the periods ended February 28, 1999 and 1998.  These financial statements are
the responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Therapy Lasers, Inc. and
Subsidiary (a development stage enterprise) as of February 28, 1999 and the
results of its operations and cash flows for the periods ended February 28, 1999
and 1998, in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and development stage activities and has a working capital deficiency that raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2.  The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.



                                         BATEMAN & CO., INC.,  P.C..

Houston, Texas
June 14, 1999

                                    Member
              INTERNATIONAL ASSOCIATION OF PRACTICING ACCOUNTANTS
                 Offices in Principal Cities Around The World
<PAGE>
                                             THERAPY LASERS, INC. AND SUBSIDIARY
                                                (A development stage enterprise)
                                                                   Balance Sheet
                                                               February 28, 1999
================================================================================



ASSETS
  Current assets:
    Cash                                                        $     6,708
                                                                -----------
      Total current assets                                            6,708
                                                                -----------
  Property and equipment, net of accumulated
    depreciation of $1,000                                                -
                                                                -----------
      Total assets                                              $     6,708
                                                                ===========
LIABILITIES
  Current liabilities:
    Accounts payable and accrued expenses                       $    66,964
    Due to related parties                                            4,000
                                                                -----------
      Total current liabilities                                      70,964
                                                                -----------
      Total liabilities                                              70,964
                                                                -----------
  Commitments and contingencies                                           -

STOCKHOLDERS' EQUITY
  Common stock, $.001 par value, 100,000,000 shares authorized,
     10,762,627 shares issued and outstanding                        10,763
Capital in excess of par value                                    4,598,085
  Accumulated deficit:
    Prior operating accumulated deficit                          (4,452,105)
    Accumulated during the development stage                       (220,999)
                                                                -----------
      Total stockholders' equity                                    (64,256)
                                                                -----------
      Total liabilities and stockholders' equity                $     6,708
                                                                ===========


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
                                                   THERAPY LASERS, INC. AND SUBSIDIARY
                                                      (A development stage enterprise)
                                    Statements of Income (Loss) For The Periods Ended
                                                            February 28, 1999 and 1998
======================================================================================

                                           CUMULATIVE
                                            MARCH 1,
                                              1995
                                             THROUGH       YEARS ENDED FEBRUARY 28,
                                           FEBRUARY 28, -----------------------------
                                               1999       1999               1998
                                            ----------  -----------       -----------
<S>                                      <C>           <C>               <C>
Sales                                       $ 101,473   $   28,751        $    62,170
Cost of sales                                  73,995       20,436             45,564
                                            ---------   ----------        -----------
  Gross profit                                 27,478        8,315             16,606
                                            ---------   ----------        -----------
Operating expenses:
  Personnel and consulting costs              170,196       48,000              6,600
  Rent and occupancy                           29,055        6,903              9,177
  Legal and professional fees                  53,279        9,825              9,947
  Depreciation and amortization                 1,000          191                333
  Other general and administrative             30,393        4,899              4,933
                                            ---------   ----------        -----------
    Total operating expenses                  283,923       69,818             30,990
                                            ---------   ----------        -----------
    Loss from operations                     (256,445)     (61,503)           (14,384)

Other expense
  Interest                                     17,191            -              4,000
                                            ---------   ----------        -----------
    Loss before taxes on income              (273,636)     (61,503)           (18,384)

  Provision for income taxes                        -            -                  -
                                            ---------   ----------        -----------
    Loss from continuing operations          (273,636)     (61,503)           (18,384)
                                            ---------   ----------        -----------
  Discontinued operations, applicable to
     period prior to entering development
     stage:
       Income from discontinued
         operations                            39,571            -                  -
                                            ---------   ----------        -----------
         Total income (loss) from
           discontinued operations             39,571            -                  -
                                            ---------   ----------        -----------
    Loss before extraordinary item           (234,065)     (61,503)           (18,384)

Extraordinary item:
  Income from forgiveness of debt              52,637       25,051             27,586
                                            ---------   ----------        -----------
    Net income (loss)                      $ (181,428) $   (36,452)       $     9,202
                                           ==========  ===========        ===========

Basic earnings (loss) per common share:
  Continuing operations                                $   (0.0058)       $   (0.0018)
  Discontinued operations                                        -                  -
  Extraordinary item                                        0.0024             0.0027
                                                       -----------        -----------
                                                       $   (0.0034)       $    0.0009
                                                       ===========        ===========
Weighted average number of shares outstanding           10,603,723         10,352,819
                                                       ===========        ===========

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                                                 THERAPY LASERS, INC. AND SUBSIDIARY
                                                                                                    (A development stage enterprise)
                                                                              Statements of Stockholders' Equity For The Years Ended
                                                                                                          February 28, 1999 and 1998
====================================================================================================================================

                                                                                                       DEFICIT
                                                                                       PRIOR          ACCUMULATED
                                                                   ADDITIONAL        OPERATING       DURING THE
                                         COMMON STOCK                PAID IN        ACCUMULATED       DEVELOPMENT
                                     SHARES          AMOUNT          CAPITAL          DEFICIT           STAGE          TOTAL
                                 ---------------   -----------   ---------------  ---------------   -------------  -------------
<S>                                <C>              <C>            <C>              <C>               <C>           <C>
 Balances, February 29, 1997         10,142,627      $ 10,143       $ 4,554,638      $(4,452,105)      $(193,749)     $ (81,073)

 Stock issued for services
   performed in prior year              120,000           120             5,880                                           6,000
 Stock issued for cash                  100,000           100             9,900                                          10,000
 Services contributed by affiliated
    company for which no shares
    were issued                                                           6,600                                           6,600
 Development stage net income                                                                              9,202          9,202
                                 ---------------   -----------   ---------------  ---------------   -------------  -------------
 Balances, February 28, 1998         10,362,627        10,363         4,577,018       (4,452,105)       (184,547)       (49,271)

 Stock issued for cash                  400,000           400            19,600                                          20,000
 Services contributed by affiliated
   company for which no shares
   were issued                                                            1,467                                           1,467
 Development stage net (loss)                                                                            (36,452)       (36,452)
                                 ---------------   -----------   ---------------  ---------------   -------------  -------------
 Balances, February 28, 1999         10,762,627      $ 10,763       $ 4,598,085      $(4,452,105)      $(220,999)     $ (64,256)
                                 ===============   ===========   ===============  ===============   =============  =============


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                             THERAPY LASERS, INC. AND SUBSIDIARY
                                                (A development stage enterprise)
                                  Statements of Cash Flows For The Periods Ended
                                                      February 28, 1999 and 1998
================================================================================


                                           CUMULATIVE
                                            MARCH 1,
                                              1995
                                             THROUGH    YEARS ENDED FEBRUARY 28,
                                           FEBRUARY 28, ------------------------
                                               1999       1999           1998
                                            ----------  ---------       --------
<S>                                        <C>          <C>         <C>
Cash flows from operating activities:
Net income (loss)                           $ (181,428)  $ (36,452)  $  9,202

Adjustments to reconcile  net income to
  cash provided  (used) by  developmental
  stage activities:
    Income from forgiveness of debt            (52,637)    (25,051)   (27,586)
    Discontinued operations                    (39,571)          -          -
    Depreciation and amortization                1,000         191        333
    Stock issued for services                   75,237           -      6,000
    Services contributed                        38,067       1,467      6,600
    Decrease (increase) in accounts
      receivable                                     -       8,479     (1,752)
    Increase (decrease) in accounts
      payable and accrued expenses              48,640      45,302     (3,132)
    Increase (decrease) in due to
      related parties                           (2,000)     (6,512)     1,439
    Other increases, net                         6,000           -          -
                                            ----------   ---------   --------
      Net cash provided (used) by
        operating activities                  (106,692)    (12,576)    (8,896)
                                            ----------   ---------   --------
Cash flows from investing activities:                -           -          -
                                            ----------   ---------   --------
Cash flows from financing activities:
  Proceeds from sale of common stock            83,675      20,000     10,000
  Stock issued to acquire subsidiary            18,517           -          -
  Capital contributed by affiliated
    company                                     10,291           -          -
  Decrease in long term debt                    (2,008)     (2,000)         -
                                            ----------   ---------   --------
    Net cash provided (used) by
      financing activities                     110,475      18,000     10,000
                                            ----------   ---------   --------
    Net increase (decrease) in cash
      and equivalents                            3,783       5,424      1,104

Cash and equivalents, beginning of period        2,925       1,284        180
                                            ----------   ---------   --------
Cash and equivalents, end of period         $    6,708   $   6,708   $  1,284
                                            ==========   =========   ========

Supplemental cash flow disclosures:
  Cash paid for interest                    $   10,699   $       -   $  4,000
  Non-cash financing and
    investing activities:
      Income from forgiveness of debt           52,637      25,051     27,586
      Stock issued for services                 75,237           -      6,000
      Services contributed                      38,067       1,467      6,600

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
</TABLE>
<PAGE>

                                             THERAPY LASERS, INC. AND SUBSIDIARY
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                         FEBRUARY 28, 1999 AND FEBRUARY 28, 1998
================================================================================

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Following is a summary of the Company's organization and significant accounting
policies:

     ORGANIZATION AND NATURE OF BUSINESS - Therapy Lasers, Inc. (the Company) is
     a Nevada corporation engaged principally in searching for capital, in
     organizing and developing a wholesale electrical components business, and
     in investigating other business opportunities.  From March 1, 1995 until
     late 1996, the Company was attempting to establish markets in foreign
     countries (primarily Mexico and Canada) for medical laser products it had
     developed, and was seeking financing to obtain approval of the Food and
     Drug Administration to market the medical laser products in the United
     States.  In late 1996, the Company substantially discontinued its efforts
     in the laser field, as its efforts had been unsuccessful.  Also in late
     1996, the Company commenced activities in the wholesale electrical
     components business, serving as a non-stocking sales representative based
     in Houston, Texas for an affiliated company.  In that connection, the
     Company sells primarily to another affiliated company.  At year end, the
     Company was investigating other opportunities in related fields.

     The Company is deemed to have been in the development stage since March 1,
     1995.  Prior to that time, it was in the operating stage and was engaged in
     the sale and rental of medical supplies and equipment; these operations
     have been sold and/or discontinued.

     In its current development stage, management anticipates incurring
     substantial additional losses as it pursues its wholesale lighting business
     and as it investigates other business opportunities.

     On February 27, 1995, the Company changed its name from Medeci Corporation
     to Therapy Lasers, Inc.

     BASIS OF PRESENTATION - The accounting and reporting policies of the
     Company conform to generally accepted accounting principles, and, effective
     March 1, 1995, the accounting and reporting policies conform to generally
     accepted accounting principles of development stage enterprises.

     PRINCIPLES OF CONSOLIDATION - The accompanying financial statements include
     the accounts of its wholly owned subsidiary, LaserCare, Inc., also a
     development stage enterprise.  All significant intercompany transactions
     have been eliminated.

     USES OF ESTIMATES - The preparation of financial statements in conformity
     with generally accepted accounting principles requires management to make
     estimates and assumptions that affect the reported amounts of assets and
     liabilities and disclosure of contingent assets and liabilities at the date
     of the financial statements and the reported amount of
<PAGE>

                                             THERAPY LASERS, INC. AND SUBSIDIARY
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                         FEBRUARY 28, 1999 AND FEBRUARY 28, 1998
================================================================================

     revenues and expenses during the reporting period. Actual results could
     differ from those estimates. The Company's periodic filings with the
     Securities and Exchange Commission include, where applicable, disclosures
     of estimates, assumptions, uncertainties and concentrations in products and
     markets which could affect the financial statements and future operations
     of the Company.

     CASH AND CASH EQUIVALENTS - For purposes of the statement of cash flows,
     the Company considers all cash in banks, money market funds, and
     certificates of deposit with a maturity of less than one year to be cash
     equivalents.

     FAIR VALUE OF FINANCIAL INSTRUMENTS AND DERIVATIVE FINANCIAL INSTRUMENTS  -
     The carrying amounts of cash, accounts receivable, accounts payable, notes
     payable, and accrued expenses approximate fair value because of the short
     maturity of these items.   These fair value estimates are subjective in
     nature and involve uncertainties and matters of significant judgment, and,
     therefore, cannot be determined with precision.  Changes in assumptions
     could significantly affect these estimates.  At February 28, 1999, the
     Company had no derivative financial instruments.

     EQUIPMENT AND FURNISHINGS - Equipment and furnishings is stated at cost
     less accumulated depreciation, computed principally on the straight-line
     method over the estimated useful lives of the assets.  Estimated useful
     lives approximate five years.  Depreciation is taken on the straight-line
     method for tax purposes also, using lives prescribed by the Internal
     Revenue Code, which are similar to book basis lives.

     Maintenance and repairs of equipment and furnishings are charged to
     development stage expenses and new purchases and major improvements are
     capitalized.  Upon retirement, sale or other disposition, the cost and
     accumulated depreciation are eliminated from the accounts, and any gain or
     loss is included in operating income.

     FEDERAL INCOME TAXES - Deferred income taxes are reported for timing
     differences between items of income or expense reported in the financial
     statements and those reported for income tax purposes in accordance with
     Statement of Financial Accounting Standards number 109 Accounting for
     Income Taxes, which requires the use of the asset/liability method of
     accounting for income taxes.  Deferred income taxes and tax benefits are
     recognized for the future tax consequences attributable to differences
     between the financial statement carrying amounts of existing assets and
     liabilities and their respective tax bases, and for tax loss and credit
     carryforwards.  Deferred tax assets and liabilities are measured using
     enacted tax rates expected to apply to taxable income in the years in which
     those temporary differences are expected to be recovered or settled.  The
     Company provides deferred taxes for the estimated future tax effects
     attributable to temporary differences and carryforwards when realization is
     more likely than not.
<PAGE>

                                             THERAPY LASERS, INC. AND SUBSIDIARY
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                         FEBRUARY 28, 1999 AND FEBRUARY 28, 1998
================================================================================

     Differences between book and tax income arise primarily from the valuation
     of stock issued for services.

     NET INCOME PER SHARE OF COMMON STOCK - Net income per share of common stock
     is computed by dividing net income by the weighed average number of shares
     of common stock outstanding during the period, after giving retroactive
     effect to stock splits, if any.

NOTE 2 - GOING CONCERN ASSUMPTION:
The Company has incurred net operating losses and negative cash flow from
operations in recent years, and has disposed of its last operating subsidiary.
As of February 28, 1999, the Company had negative net worth in excess of $64,000
and operating revenues that were insufficient to generate a profit.  Although
the Company settled a Federal tax lien during the current year for approximately
$4,000, resulting in an extraordinary gain of $25,051, and although the Company
realized $20,000 in cash from sales of common stock during the current year, and
although management is currently seeking additional cash flow through potential
acquisitions and/or mergers with operating companies, and although management is
seeking to expand its wholesale components business, there is no assurance that
these  activities will be successful.

These factors create substantial doubt about the Company's ability to continue
as a going concern.  The ability of the Company to continue as a going concern
is dependent upon (a) obtaining sufficient additional debt or equity financing
to finance operations, capital improvements, and other necessary activities, (b)
achieving a profitable level of operations, (c) acquiring a profitable business,
or (d) a combination of these actions.  The financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as
a going concern.

NOTE 3 - RELATED PARTY TRANSACTIONS:
During the year ended February 28, 1997, the Company commenced limited
operations as a non-stocking sales representative in the wholesale electrical
components business.  All of its sales, totaling $28,751 (1999) and $62,170
(1998), were to Gulf Coast Fan & Light, Inc., and all of its purchases, totaling
$20,436 (1999) and $45,564 (1998), were from BuilderSource, Inc., (formerly A C
Global Corp.), both of which entities are controlled by the Company's principal
shareholder.  The Company was owed $ -0- (February 28, 1999) and $8,479
(February 28, 1998) in accounts receivable from Gulf Coast Fan & Light, Inc.,
from lighting fixture sales.
<PAGE>

                                             THERAPY LASERS, INC. AND SUBSIDIARY
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                         FEBRUARY 28, 1999 AND FEBRUARY 28, 1998
================================================================================


At February 28, 1999, the Company was indebted to related parties as follows:

    DESCRIPTION                                                   BALANCE
    Account payable to BuilderSource, Inc. for purchases of
      electrical components                                        $    -
    Loan from Gulf Coast Fan & Light, Inc., non-interest
      bearing, unsecured, due February 28, 2000                     4,000
                                                                   ------
          Total                                                    $4,000
                                                                   ======

All of the above companies are controlled by the Company's principal
shareholder.

During the years ended February 28, 1999 and 1998, the salary of the Company's
Vice President was paid by BuilderSource, and a portion of his salary was
allocable to services for the Company.  Also, beginning in October, 1998, the
Company occupied space in the leased facilities of BuilderSource.  The affiliate
did not seek reimbursement for such expenses.  The estimated value of the
contributed services was $1,467 (1999) and $6,600 (1998), has been reflected in
the accompanying financial statements as a contribution to capital in excess of
par value, and is included in operating expenses.

NOTE 4 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Details of accounts payable and accrued expenses are as follows:

DESCRIPTION                                                       BALANCE
Accounts payable, trade                                           $15,000
Accrued expenses:
  Accrued salary to the Company's President                        48,000
  Federal payroll tax lien, at compromised amount                   3,964
                                                                  -------
     Total                                                        $66,964
                                                                  =======

Accounts payable, trade, include approximately $15,000 in estimated payables
that were incurred prior to March 1, 1995, as a provision related to the
Company's discontinued operations.  During the year ended February 28, 1999, no
demands were made on the Company for payment of these amounts.

Subsequent to February 28, 1999, the Company settled its obligation to the
Company's President for accrued salary by the issuance of 480,000 shares of
common stock valued at $.10 per share.

During the current year, the Internal Revenue Service accepted the Company's
offer in compromise to settle the Federal tax lien recorded at $29,115 for
$4,064 and a reduction of $96,800 in the Company's net operating loss
carryforward.  The balance of $3,964 after payment
<PAGE>

                                             THERAPY LASERS, INC. AND SUBSIDIARY
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                         FEBRUARY 28, 1999 AND FEBRUARY 28, 1998
================================================================================

of $100 during the current year, was paid in March, 1999. As a result of this
settlement, an extraordinary gain of $25,051 from forgiveness of debt was
recognized.


NOTE 5 - NOTE PAYABLE TO BANK:
At February 28, 1997, the Company was obligated on a promissory note to a bank,
resulting from the discontinued operation of its Wellness business, having a
principal balance of $29,586, payable in monthly installments of interest only
at 10% per annum through July 5, 2001, at which time it was due in full.  The
note was collateralized by a lien on all of the Company's assets. During the
year ended February 28, 1998, the Company made an offer to the bank to settle
this note for $2,000, which was accepted by the bank.  Payment in full
settlement was made on  May 19,1998.  Accordingly, the balance at February 28,
1998 was reduced to $2,000, and income from forgiveness of debt in the amount of
$27,586 was recognized, and is classified as an extraordinary item.

NOTE 6 - FEDERAL INCOME TAX:
The currently payable (refundable) provision (credit) for Federal income tax
consists of the following

                                                             1999        1998
                                                           --------     -------
Currently payable (refundable) provision (credit),
attributable to:
    Current operations                                     $(11,900)    $ 5,400
    Less:
      Benefit from net operating loss carryover                   -      (5,400)
      Limitation due to absence of prior taxable income      11,900           -
                                                           --------     -------
    Net amount payable (refundable)                        $      -     $     -
                                                           ========     =======

The Company follows Statement of Financial Accounting Standards number 109 (SFAS
109), Accounting for Income Taxes. Deferred income taxes reflect the net effect
of (a) temporary difference between carrying amounts of assets and liabilities
for financial purposes and the amounts used for income tax reporting purposes,
and (b) net operating loss carryforwards. The cumulative tax effect at the
expected rate of 35% of significant items comprising the Company's net deferred
tax amounts as of February 28, 1999 and 1998 are as follows:

                                                             1999       1998
                                                           --------    -------
  Deferred tax assets attributable to:
    Net operating loss carryforward                       $ 571,800   $ 593,400
                                                          ---------   ---------
      Subtotal                                              571,800     593,400
    Less, Valuation allowance                              (571,800)   (593,400)
                                                          ---------   ---------
    Net deferred tax assets                               $       -   $       -
                                                          =========   =========
<PAGE>

                                             THERAPY LASERS, INC. AND SUBSIDIARY
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                         FEBRUARY 28, 1999 AND FEBRUARY 28, 1998
================================================================================

At February 28, 1999 the Company had net operating loss carryovers which expire
as follows:

EXPIRES:                                                 AMOUNT
  December 31, 2003                                    $    4,000
  December 31, 2004                                       126,000
  February 28, 2007                                       459,000
  February 28, 2008                                       542,000
  February 28, 2010                                       389,000
  February 28, 2012                                        78,000
  February 28, 2014                                        35,000
                                                       ----------
    Total                                              $1,633,000
                                                       ==========

NOTE 7 - COMMITMENTS:
Through October, 1998, the Company occupied approximately 500 square feet of
office space under a month-to-month lease that requires monthly rentals of $764.
Thereafter, the Company occupied space leased by an affiliated company, for
which no rent was charged.  Rent expense charged to operations were $6,903
(1999) and $9,177 (1998).

NOTE 8 - REVERSION TO DEVELOPMENT STAGE ENTERPRISE - As indicated in Note 1, the
Company has been a development stage enterprise since March 1, 1995.
Previously, it had been an operating company, and is deemed to have reverted to
a development stage enterprise effective March 1, 1995.   Certain items of
income or expense incurred during the year ended February 29, 1996 related to
discontinued operations during the period when the company was an operating
entity.  Accordingly, such items are not included in development stage loss.

The deficit accumulated while the Company was an operating company has been
segregated into a separate account from the development stage deficit since
accumulated.

NOTE 9 - NEW ACCOUNTING PRONOUNCEMENTS:
The Financial Accounting Standards Board has issued several new accounting
pronouncements which may affect the Company in future years.  FASB Statement
Number 128, Earnings per Share, became effective for periods ending after
December 15, 1997, simplifies the standards for computing earnings per share,
and makes them comparable to international EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS. It also requires
dual presentation of basic and diluted EPS on the face of the income statement
for all entities with complex capital structures and requires a reconciliation
of the numerator and denominator of the basic EPS computation to the numerator
and denominator of the diluted EPS computation.
<PAGE>

                                             THERAPY LASERS, INC. AND SUBSIDIARY
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                         FEBRUARY 28, 1999 AND FEBRUARY 28, 1998
================================================================================


FASB Statement Number 129, Disclosure of Information about Capital Structure, is
effective for periods ending after December 15, 1997, and establishes standards
for disclosing information about an entity's capital structure.  This
pronouncement did not have a significant effect on the Company's financial
statement disclosures.

FASB Statement Number 130, Reporting Comprehensive Income, became effective for
fiscal years beginning after December 15, 1997, and establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains, and losses) in a full set of general-purpose financial
statements.  This Statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements.  The Company had no comprehensive income other than
net income during the last two fiscal years.

FASB Statement Number 131, Disclosures about Segments of an Enterprise and
Related Information, became effective for fiscal years beginning after December
15, 1997, and establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. As the Company has only one business
segment, the pronouncement had no material effect during the current year.

FASB Statement Number 132, Employers' Disclosures about Pensions and Other
Postretirement Benefits, became effective for fiscal years beginning after
December 15, 1997, and revises employers' disclosures about pension and other
postretirement benefit plans.  It does not change the measurement or recognition
of those plans.  It standardizes the disclosure requirements for pensions and
other postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis, and eliminates certain disclosures.
Since the Company has no pension or postretirement benefit plans, the
pronouncement had no effect in the current year.

FASB Statement Number 133, Accounting for Derivative Instruments and Hedging
Activities, becomes effective for fiscal years beginning after June 15, 1999,
and establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging activities.  The
Company does not believe this pronouncement will have a material effect on its
financial statements in the near future.

FASB Statement Number 134, Accounting for Mortgage-Backed Securities Retained
after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise, becomes
<PAGE>

                                             THERAPY LASERS, INC. AND SUBSIDIARY
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                         FEBRUARY 28, 1999 AND FEBRUARY 28, 1998
================================================================================

effective for fiscal years beginning after December 15, 1998. It is not expected
to apply to the Company.

NOTE 10 - YEAR 2000 COMPLIANCE:
The Company utilizes "off-the-shelf" computer software in its operations
obtained from major vendors such as Peachtree and Microsoft.  Currently,
management believes that most critical systems are year 2000 compliant, or will
be made compliant prior to December 31, 1999.  The estimated cost of becoming
compliant is minimal, and is not expected to have a material effect on the
financial statements or the Company's ability to serve its customers.

NOTE 11 - COMMON STOCK:
Since returning to the development stage, the Company has issued shares of its
common stock as follows:

                                                        PRICE PER
DESCRIPTION AND DATES              SHARES                 SHARE        AMOUNT
------------------------------------------------------------------------------
Shares issued for cash:
  March, 1995                       40,000               $ 0.050       $ 2,000
  June, 1995                       230,000                 0.050        11,500
  July, 1995                       107,500                 0.050         5,375
  August, 1995                     112,000                 0.050         5,600
  November, 1995                   160,000                 0.050         8,000
  June, 1996                        40,000                 0.125         5,000
  July, 1996                        16,000                 0.125         2,000
  August, 1996                      80,000                 0.090         7,200
  October, 1996                     70,000                 0.100         7,000
  March, 1997                      100,000                 0.100        10,000
  May, 1998                        300,000                 0.050        15,000
  February, 1999                   100,000                 0.050         5,000

SHARES ISSUED TO ACQUIRE
  LASERCARE, INC. (1):
  March, 1996                    5,750,776               $0.0032       $18,517

SHARES ISSUED FOR SERVICES (2):
  August, 1995                     209,000               $ 0.100       $20,900
  November, 1995                   120,000                 0.100        12,000
  February, 1996                   128,000                 0.125        16,000
  May, 1996                        160,000                 0.050         8,000
  August, 1996                      96,000                 0.076         7,296
  December, 1996                    96,000                 0.050         4,800
  March, 1997                      120,000                 0.050         6,000
<PAGE>

                                             THERAPY LASERS, INC. AND SUBSIDIARY
                                                (A DEVELOPMENT STAGE ENTERPRISE)
                                                   NOTES TO FINANCIAL STATEMENTS
                                         FEBRUARY 28, 1999 AND FEBRUARY 28, 1998
================================================================================

     (1)  Transaction recorded at net book value of LaserCare, Inc.
     (2)  Value based on management's estimate of fair value at date of
          issuance.

On March 24, 1995, the Company granted nonqualified options to certain officers,
directors, and key employees to purchase 200,000 shares of common stock at $.05
per share at any time prior to March 24, 1998.  None of the options had been
exercised at February 29, 1998, and the options lapsed in March, 1998.  No
compensation expense was recognized upon granting of the options.