SECURITIES EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                            Annual Report Pursuant to
                       the Securities Exchange Act of 1934

                       Fiscal Year Ended December 31, 2000

                         Commission file number 000-28519

                          PATHOBIOTEK DIAGNOSTICS, INC.
                         ------------------------------
             (Exact name of registrant as specified in its charter)

          Texas                              76-0510754
        ----------                         -------------
  (State of incorporation)        (I.R.S. Employer Identification No.)

            7010 NW 100 Drive, Bldg. A, Suite 101, Houston, TX 77092
            --------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (713) 785-4722

           Securities registered pursuant to Section 12(g) of the Act:

                                  Common Stock
                                  ------------
                               Title of each class

Indicate by check mark whether the registrant (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 for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2)  has  been  subject  to the  filing
requirements for at least the past 90 days.     Yes     X   No
                                            ----      -----

Check if disclosure of delinquent  filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained,  to the best
of  Registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB.       X
                      -----

State issuer's revenues for its most recent fiscal year.  $0

There were 14,219,520 shares of the Registrant's  common stock outstanding as of
December 31, 2000 (not including 1,128,283) subscribed but unissued shares).

The aggregate  market value of the 8,430,520  shares of voting common stock held
by nonaffiliates of the Registrant is approximately $0 on December 31, 2000.


<PAGE>



                                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 Operation
         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
         --------

Pathobiotek was born out of research  started by its chief  scientific  officer,
Dr. Luther E. Lindner at Texas A&M Medical School in the mid 1980's.  All rights
were  purchased  for the work started there and all other work between that time
and 1993.  Pathobiotek  Diagnostics  Inc.,  (PDI) was a research and development
company engaged in the discovery,  identification, and characterization of novel
microbial  agents.  Now the mission has  changed to further  development  of its
technologies  and  license  them to  qualified  strategic  partners.  Assets and
technologies  were acquired from two other companies and eventually  Pathobiotek
was  formed on July 26,  1996 to  develop  diagnostics  for MS and other  immune
diseases.  PDI currently employs nine full-time and eighteen  part-time/contract
people  including  experts  in  medicine,   molecular   biology,   microbiology,
immunology, pathogenesis, genetics, and pathology.

Pathobiotek  has moved  forward to advance the  technology  surrounding  a novel
human  microorganism,  Luey,  which is associated with MS, CFS, and other immune
disorders.  Currently,  a unique  culturing  system and two  definitive  genetic
identification  assays,  fluorescent in situ hybridization  (FISH) and PCR, have
been developed. Quantitative methods for diagnostic purposes are currently under
development.  Among the potential  microbial  agents that scientists at PDI have
identified is an organism that is associated with symptoms in multiple sclerosis
(MS)  patients.  This organism has not been  associated  with any specific human
disease,  although  there  are a few  reports  of  opportunistic  infections  in
immunocompromised  individuals. PDI has conducted preliminary studies* that have
shown a 100% correlation between clinical improvement and reduction of levels of
organism in the patient. A similar  correlation with this organism has been seen
in the treatment of other disorders,  such as Chronic Fatigue Syndrome (CFS) and
certain autoimmune disorders.

The Company intends to obtain FDA approvals,  where necessary,  continue testing
and when allowed under applicable  rules,  license its technologies to marketing
partners.


Item 2.  PROPERTIES
         ----------

         Facilities
         ----------

     The Company  maintains a formal  offices 4800 Research  Forest  Drive,  The
Woodlands, TX 77381. The company owns no real property.

         Real Property
         -------------

         None

         Mineral Properties
         ------------------

         None


<PAGE>



Item 3.  LEGAL PROCEEDINGS
         -----------------

         As of December 31,  2000,  the Company was neither a party nor were any
of its properties subject to any legal proceedings.

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

     No matters  were  submitted  during the period  covered by this report to a
vote of security holders of the Company,  through the solicitation of proxies or
otherwise.


<PAGE>



                                     PART II

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

     As of the date of this  report,  there has been no trading or  quotation of
the Company's  common stock. The range of high and low trade quotations for each
fiscal  quarter  since the last report,  as reported by the  National  Quotation
Bureau Incorporated, was as follows:

                                 2000               High          Low
                           First quarter            $1.75         $.18
                           Second quarter            .54           .18
                           Third quarter             .37           .12
                           Fourth quarter            .20           .07


                                 1999               High          Low
                           First quarter            $1.18         $.25
                           Second quarter            .75           .18
                           Third quarter             .60           .25
                           Fourth quarter            .25           .18


         The  above  quotations  reflect  inter-dealer  prices,  without  retail
mark-up,  mark-down,  or commission  and may not  necessarily  represent  actual
transactions.

     As of December 31,  2000,  there were 144 record  holders of the  Company's
common Stock.

         The Company has not  declared or paid any cash  dividends on its common
stock and does not anticipate paying dividends for the foreseeable future.


<PAGE>


Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        ------------------------------------------------------------------------
OF OPERATIONS
-------------

Results  of  Operations  For year  Ended  December  31,  2000 and  Period  Since
--------------------------------------------------------------------------------
Inception
---------

     The Company had no revenues in 2000,  and from  inception  in 1996  through
2000, the Company has only had total revenues of $1850. In fiscal year 2000, the
Company had $529,119 in administrative and general expenses.  In the period from
inception in 1996, the Company has incurred a total of $1,894,870 in general and
administrative  expenses.  In 2000,  the  Company  had  $25,648 in  depreciation
expenses compared to $93,496 in depreciation from inception through 2000.

     The loss from operations was ($554,767) in 2000, and the loss on operations
since  inception  through 2000 was  ($1,986,516).  Net loss  including  interest
expense was $557,741 in 2000.  Cumulative losses from inception through 2000 are
($2,007,768),  including  interest.  Loss per  share  was  ($.16)  in 2000,  and
cumulative loss per share from inception through 2000 was ($.21) per share.


Liquidity and Capital Resources
-------------------------------

     The Company had cash of $5115 at year end. The Company  needs to obtain new
capital  through  private  placements  or  loans  in  order  to  fund  continued
operations.  At year end, the current liabilities were $343,018.  The deficit of
current assets of $7273 to current liabilities is ($335,745) at year end. In the
event the  Company is unable to obtain  additional  capital  sources,  it may be
unable to continue its attempts to develop its diagnostic concepts.

Item 7.  Financial Statements and Supplementary Data
         -------------------------------------------

                  Please refer to pages F-1 through F-8.

Item 8.  Changes in and Disagreements on Accounting and Financial Disclosure
         -------------------------------------------------------------------

         In  connection  with  audits of two most  recent  fiscal  years and any
interim period preceding  resignation,  no  disagreements  exist with any former
accountant  on any  matter of  accounting  principles  or  practices,  financial
statement disclosure, or auditing scope of procedure, which disagreements if not
resolved to the  satisfaction of the former  accountant would have caused him to
make  reference  in  connection  with his  report to the  subject  matter of the
disagreement(s).

         The principal  accountants' reports on the financial statements for any
of the past two years  contained no adverse  opinion or a disclaimer  of opinion
nor was  qualified as to  uncertainty,  audit scope,  or  accounting  principles
except for the "going concern" qualification.


                                    PART III

Item 9.  Directors and Executive Officers of the Registrant and Compliance with
         ----------------------------------------------------------------------
Section 16(a)
-------------

The directors and executive officers of the Company as of December 31, 2000, are
as follows:

<PAGE>

          Name                 Age        Position                       Term
          ----                -----       --------                       ----

Robert C. Simpson, PhD        58           President & Director           Annual
Luther Lindener, MD, PhD      58           Secretary & Director           Annual
Greg McDonald, PhD            45           Director                       Annual
John Bonfiglio, PhD           46           Director                       Annual
Andy Blasband, PhD            44           Director                       Annual


     Robert C.  Simpson,  Ph.D. is a director as of March 6, 2000. He has served
as President and CEO of Pathobiotek  Diagnostics,  Inc. since 1996. From 1993 to
present  Dr.  Simpson has also served as  President  and CEO of Pacific  Biotech
International,   Inc.  His  educational   experience   includes  Michigan  State
University  where he studied  Education  Systems  Development.  At Eurotechnical
Research  University he studied Business  Administration and received a Ph.D. He
also studied at Central  Michigan  University and the University of Michigan for
Business Administration where he achieved a M.A. and B.B.A, respectively.

     Luther E.  Lindner,  M.D.,  Ph.D.  is a director  as of March 6, 2000.  Dr.
Lindner is a board certified  pathologist  with an unusual breadth of experience
and knowledge in different areas plus a strong academic background.  Dr. Lindner
is  currently  an  associate  professor  at Texas A&M  University  teaching  and
researching  infectious  disease since 1983. He has served as Vice President and
CSO  to  Pathobiotek  Diagnostics,   Inc.  (1996-present)  and  Pacific  Biotech
International,  Inc.  (1993 - present).  He has studied at Case Western  Reserve
University  for  Experimental  Pathology  where he obtained a Ph.D.,  University
Hospitals,   CWRU  for  Anatomic  Pathology  Residence,   Case  Western  Reserve
University  for Medicine where he received an M.D.  degree.  A B.S. was obtained
through the University of Toledo in the field of Pre-Medicine.

     Gregory A. McDonald,  Ph.D. has been a Director of  Pathobiotek,  Inc since
2000. He received his B.S. in Biology from Guilford  College in 1978 and a Ph.D.
in  Microbiology  from University of Virginia in 1984. From 1989 to 1995, he was
an  assistant  professor,  Department  of  Microbiology,   School  of  Medicine,
University of Missouri, Columbia, Missouri. From 1995 to present, he has been an
Associate Professor,  Deparment of Molecular Microbiology and Immuniology School
of Medicine, University of Missouri, Columbia, Missouri.

     John  Bonfiglio,  Ph.D. is a director as of March 6, 2000. Mr. Bingilio has
an MBA from Pepperdine  University (1992). In 1981, he was a Postdoctoral Fellow
in Organometallic Chemistry at University of California at Berkeley. He received
his Ph.D. in Synthetic  Organic  Chemistry  from the University of California at
San Diego in 1980 and received his MS in Synthetic  Organic  Chemistry  from the
University  of  California  at San Diego in 1978.  In 1976, he receive his BS in
Chemistry from State University of New York at Stony Brook in 1976.

     From  November 1999 to April 2001,  Mr.  Bonfiglio was President and CEO of
Peregrine  Pharmaceuticals,  Inc.  (NASDAQ:  PPHM).  From April 1999 to November
1999, he was Vice President,  Technology and Business  Development,  Techniclone
Corp. From July 1997 to April 1999, he was Vice President,  Business Development
for Techniclone Corp. From 1994 to 1997, he was Director of Business Development
of Baxter Healthcare Corp., Immunotherapy Division, and also served for a period
in the Cardiovascular Surgical Division.

     Andrew J.  Blasband  has been a Director  since March  2000.  He obtained a
Bachelor of Science in 1978 from Michigan State,  and in 1986, he received a PhD
in Microbiology from the University of Virginia.  From 1994 to December 1996, he
was Senior Scientist at Spectragen, a subsidiary of Lynx Therapeutics, Inc. From
January 1997 to July 1998, he was Senior Staff Scientist I, Science & Technology
at PE  Applied  Biosystems,  Inc.,  and in July  1998,  he became  Senior  Staff
Scientist II at PE Applied Biosystems, where he is still employed.

         No  appointee  for a director  position  has been  subject of any civil
regulatory proceeding or any criminal proceeding in the past five years.

         The term of office of each director and  executive  officer ends at, or
immediately  after,  the next annual  meeting of  shareholders  of the  Company.
Except as otherwise indicated,  no organization by which any director or officer
has been  previously  employed  is an  affiliate,  parent or  subsidiary  of the
Company.

         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 10% of a registered class of the Company's equity  securities,  to
file reports of ownership  and changes in ownership of equity  securities of the
Company  with the  Securities  and  Exchange  Commission  and NASDAQ.  Officers,

<PAGE>

directors and  greater-than  10% shareholders are required by the Securities and
Exchange Commission regulation to furnish the Company with copies of all Section
16(a) filings.

        1.  The following people did not file reports under Section 16(a) during
the most recent fiscal year:

         a.     Robert C. Simpson, PhD          President & Director
         b.     Luther Lindener, MD, PhD        Secretary & Director
         c.     Greg McDonald, PhD              Director
         d.     John Bonfiglo, PhD              Director
         e.     Andy Blasband, PhD              Director

Item 10. Executive Compensation
         ----------------------

     The Company  accrued a total of $$160,000 in  compensation to the executive
officers  as a group for  services  rendered  to the  Company in all  capacities
during the fiscal year ended December 31, 2000.


<PAGE>

<TABLE>
<CAPTION>


                    SUMMARY COMPENSATION TABLE OF EXECUTIVES
                    ----------------------------------------
                          Year Ended December 31, 2000

                                    Annual Compensation                         Awards

Name and Principal                                                                                         Securities
Position                           Salary     Bonus ($)     Other Annual            Restricted Stock       Underlying
                         Year      ($)                      Compensation ($)        Award(s)($)            Options/SARs(#)
------------------------ --------- ---------- ------------- ----------------------- ---------------------- ----------------------
<S>                      <C>       <C>        <C>           <C>                     <C>                    <C>

Robert C. Simpson, PhD,  2000      $125,000   0             0                       0                      0
President                --------- ---------- ------------- ----------------------- ---------------------- ----------------------

                         1999      $125,000   0             0                       0                      0
                         --------- ---------- ------------- ----------------------- ---------------------- ----------------------

                         1998      $125,000   0             0                       0                      0
                         --------- ---------- ------------- ----------------------- ---------------------- ----------------------


------------------------ --------- ---------- ------------- ----------------------- ---------------------- ----------------------

Luther Lindener, MD, PhD 2000      $35,000    0             0                       0                      0
Secretary                --------- ---------- ------------- ----------------------- ---------------------- ----------------------

                         1999      $35,000    0             0                       0                      0
                         --------- ---------- ------------- ----------------------- ---------------------- ----------------------

                         1998      $35,000    0             0                       0                      0
------------------------ --------- ---------- ------------- ----------------------- ---------------------- ----------------------

Greg McDonald, PhD       2000      0          0             0                       20,000 common shares  0
Director
                         --------- ---------- ------------- ----------------------- ---------------------- ----------------------
                         1999      0          0             0                       20,000 common shares   0

------------------------ --------- ---------- ------------- ----------------------- ---------------------- ----------------------

                         2000      0          0             0                       0                      0
                         --------- ---------- ------------- ----------------------- ---------------------- ----------------------
John Bonfiglo, PhD       1999      0          0             0                       5,000 common shares    0
Director
                         --------- ---------- ------------- ----------------------- ---------------------- ----------------------
                         1998      0          0             0                       0                      0

------------------------ --------- ---------- ------------- ----------------------- ---------------------- ----------------------

                         2000      0          0             0                       20,000 common shares   0
                         --------- ---------- ------------- ----------------------- ---------------------- ----------------------
Andy Blasband, PhD       1999      0          0             0                       0                      0
Director
                         --------- ---------- ------------- ----------------------- ---------------------- ----------------------
                         1998      0          0             0                       0                      0


</TABLE>


         The Company has no employee incentive stock option plan.

     No other  compensation  not described above was paid or distributed  during
the last fiscal year to the  executive  officers  of the  Company.  There are no
compensatory plans or arrangements,  with respect to any executive office of the
Company,  which result or will result from the  resignation,  retirement  or any
other  termination of such  individual's  employment  with the Company or from a
change  in   control   of  the   Company   or  a  change  in  the   individual's
responsibilities following a change in control.

         Option/SAR Grants Table (None)

     Aggregated  Option/SAR  Exercises in Last Fiscal Year and FY-End Option/SAR
value (None)

         Long Term Incentive Plans - Awards in Last Fiscal Year (None)


<PAGE>


<TABLE>
<CAPTION>

                   DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
                   ------------------------------------------

(Except for  compensation of Officers who are also Directors which  Compensation
is listed in Summary Compensation Table of Executives)

                               Cash Compensation                    Security Grants
Name                      Annual Retainer   Meeting Fees   Consulting            Number of     Number of Securities
                          Fees ($)          ($)            Fees/Other Fees ($)   Shares (#)    Underlying Options/SARs(#)
------------------------- ----------------- -------------- --------------------- ------------- --------------------------
<S>                       <C>               <C>            <C>                   <C>           <C>

A. Director               0                 0              0                     0             0
Robert C. Simpson, PhD

B. Director               0                 0              0                     0             0
Luther Lindner, MD PhD

C.  Director              0                 0              0                     0             0
Greg McDonald, PhD

D.  Director              0                 0              0                     0             0
John Bonfiglo, PhD

E.  Director              0                 0              0                     0             0
Andy Blasband, PhD

</TABLE>


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

         The following  table sets forth  information,  as of December 31, 2000,
with respect to the  beneficial  ownership of the  Company's no par value common
stock by each  person  known by the Company to be the  beneficial  owner of more
than five  percent  of the  outstanding  common  stock and by all  officers  and
directors.

                                               Number of         Percentage of
                  Name                       Shares Owned            Class*
------------------------------------- -------------------- --------------------
Robert C. Simpson, PhD                        4,670,800             30%
Luther Lindener, MD, PhD                        988,200              6.4%
Greg McDonald, PhD                               40,000               .26%
John Bonfiglo, PhD                                5,000               .03%
Andy Blasband, PhD                               40,000               .26%
                                             -----------           -------
Officers and Directors as a group             5,744,000             36.92%

*  Computed based upon 15,347,803 shares outstanding which includes 1,128,283
unissued, but subscribed shares at year end 2000.


                                     PART IV

Item 12. Certain Relationships and Related Transactions.
         ----------------------------------------------
     Pathobiotek  Diagnostics,  Inc.,  (the  "Company")  was formed on August 5,
1996,  under  the laws of the  State of Texas  for the  purpose  of  developing,
producing, distributing, selling and/or performing diagnostics for various virus
and bacterium.  The Company is a developmental  stage company under Statement of
Financial  Accounting  Standard  ("SFAS") No 7,  "Accounting  and  Reporting  by
Development State Enterprises".  Pathobiotek Diagnostics,  Inc. was a subsidiary
of Pacific  Biotech  International,  Inc. (the "Parent"),  a Texas  Corporation,

<PAGE>

until May 16,  2000.  Pacific  Biotech  International,  Inc.  no longer owns any
shares of the Company.  On March 6, 2000, the Company completed a Share Purchase
Agreement with  shareholders  of Investra  Enterprises,  Inc. (IEI) in which the
Company  acquired all 672,000 issued and outstanding  shares of IEI for $150,000
for purposes of  completing a merger of the Company and IEI. The Company was the
surviving entity.

     No officer,  director,  or affiliate of the Company has or proposes to have
any direct or indirect material interest in any asset proposed to be acquired by
the Company through security holdings, contracts, options, or otherwise.

     The Company has adopted a policy under which any consulting or finder's fee
that may be paid to a third party or affiliate for consulting services to assist
management  in evaluating a prospective  business  opportunity  would be paid in
stock or in cash.  Any such  issuance of stock would be made on an ad hoc basis.
Accordingly,  the Company is unable to predict  whether or in what amount such a
stock issuance might be made.

     Although  there is no current plan in  existence,  it is possible  that the
Company  will adopt a plan to pay or accrue  compensation  to its  officers  and
directors for services related to seeking business  opportunities and completing
a merger or acquisition transaction.

     Although  management has no current plans to cause the Company to do so, it
is possible  that the Company may enter into an  agreement  with an  acquisition
candidate requiring the sale of all or a portion of the Common Stock held by the
Company's  current  stockholders  to the  acquisition  candidate  or  principals
thereof,  or to other individuals or business entities,  or requiring some other
form of payment to the Company's current  stockholders,  or requiring the future
employment  of specified  officers  and payment of salaries to them.  It is more
likely  than  not  that  any  sale  of  securities  by  the  Company's   current
stockholders  to an  acquisition  candidate  would  be at a price  substantially
higher than that  originally paid by such  stockholders.  Any payment to current
stockholders  in the context of an  acquisition  involving  the Company would be
determined  entirely by the largely  unforeseeable  terms of a future  agreement
with an unidentified business entity.

<PAGE>

Transactions with Management and Others
---------------------------------------

     There  were  no  transactions   or  series  of   transactions   during  the
Registrant's  last fiscal  year or the current  fiscal  year,  or any  currently
proposed  transactions  or series of transactions of the remainder of the fiscal
year, in which the amount involved exceeds $60,000 and in which to the knowledge
of the Registrant,  any director,  executive officer,  nominee, future director,
five percent shareholder, or any member of the immediate family of the foregoing
persons, have or will have a direct or indirect material interest.

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

          The following documents are filed as part of this report:

          1.       Reports on Form 8-K:  None

          2.       Exhibits:


<PAGE>


                                      INDEX
Regulation
S-K Number               Exhibit                              Page Number
----------               -------                              -----------

3.1               Articles of Incorporation          *Incorporated by reference
                                                     to Registration Statement
                                                     #000-28519

3.2               Bylaws                             *Incorporated by reference
                                                     to Registration Statement
                                                     #000-28519

10.1              Share Purchase Agreement           *Incorporated by reference

10.2              Articles of Merger                 *Incorporated by reference

10.3              Plan of Merger                     *Incorporated by reference



<PAGE>


                                   SIGNATURES

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

                                            PATHOBIOTEK DIAGNOSTICS, INC.
                                            (Registrant)

Date:  April 17, 2001
                                BY:     /s/ Robert C. Simpson
                                       -------------------------------
                                         Robert C. Simpson, PhD, President

                                BY:     /s/ Luther Lindener
                                       --------------------------------
                                         Luther Lindener, MD, PhD, Secretary

                                             Directors:

                                        /s/ Robert C. Simpson
                                       --------------------------------
                                         Robert C. Simpson, PhD, Director

                                        Luther Lindener
                                       --------------------------------
                                         Luther Lindener, MD, PhD, Director

                                        /s/ Greg McDonald
                                       --------------------------------
                                         Greg McDonald, PhD, Director

                                        /s/ John Bonfiglio
                                       --------------------------------
                                         John Bonfiglio, Director

                                        /s/ Andy Blasband
                                       --------------------------------
                                         Andy Blasband, PhD, Director

<PAGE>

<TABLE>
<CAPTION>


PATHOBIOTEK DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS

                                                  December 31, 2000             December 31, 1999
                                                  -----------------             -----------------
<S>                                                  <C>                           <C>
ASSETS
CURRENT ASSETS
    Cash and cash equivalents                        $      5,115                  $    24,135
    Employee
receivables                                                 2,158                        2,158
    Receivable from parent company                              -                       13,185
    Other receivables                                           -                          270
                                                     -------------                  -----------
Total current assets                                        7,273                       39,748

PROPERTY AND EQUIPMENT, at cost                           142,533                      131,361
    Less: Accumulated depreciation                        (93,496)                     (67,848)
                                                     -------------                  -----------
                                                           49,037                       63,513

OTHER ASSETS
    Deposits                                               10,000                            -
    Patent costs                                           59,459                       44,699
    Less: Accumulated amortization                         (8,799)                      (6,039)
    Other assets                                              300                          300
                                                     -------------                  -----------
                                                           60,960                       38,960
                                                     -------------                  -----------
                                                    $     117,270                   $  142,221
                                                     =============                  ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
    Trade accounts payable
         and accrued expenses (Note 8)              $    314,868                    $  246,021
    Due to shareholder                                    28,150                        87,290
                                                     -------------                  -----------
Total current liabilities                                343,018                       333,311

SHAREHOLDERS' EQUITY
    Common stock, $.001 par value,
      authorized 20,000,000 shares,
      issued and outstanding 14,219,520 and
      10,543,368 shares at 2000 and 1999, respectively,
       stock subscribed but not issued 1,128,283
       shares  (Note 6)                                   15,348                        10,543
    Additional paid in capital                         1,766,672                     1,248,394
    Deficit accumulated
      during the development stage                    (2,007,768)                   (1,450,027)
                                                     -------------                  -----------
Total shareholders' equity                              (225,748)                     (191,090)
                                                     -------------                  -----------
                                                    $    117,270                   $   142,221
                                                     =============                  ===========

</TABLE>

                       See notes to financial statements.

                                       F-1

<PAGE>

<TABLE>
<CAPTION>

PATHOBIOTEK DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

<S>                                              <C>                             <C>
                                                                              August 5, 1996
                                                     Year ended                    through
                                                December 31, 2000            December 31, 2000
                                               -------------------          -------------------

Revenues                                         $             0                 $      1,850
Direct costs                                                   0                            0
                                                 ----------------                -------------
Gross profit                                                   0                        1,850

Administrative and general expenses                      529,119                    1,894,870
Depreciation expense                                      25,648                       93,496
                                                 ----------------                -------------
                                                         554,767                    1,988,366
                                                 ----------------                -------------
Loss from operations                                    (554,767)                  (1,986,516)

Other income                                                                            4,800
Interest expense                                          (2,974)                     (26,052)
                                                 ----------------                -------------
                                                          (2,974)                     (21,252)
                                                 ----------------                -------------
Loss before income taxes                                (557,741)                  (2,007,768)
Federal income taxes - current
     expense (benefit)                                         0                            0
                                                 ----------------                -------------
Net loss                                                (557,741)                  (2,007,768)

Accumulated deficit at beginning of period            (1,450,027)                           0
                                                 ----------------                -------------
Deficit accumulated during
     the development stage                       $    (2,007,768)                $ (2,007,768)
                                                 ================                =============
Basic and fully diluted loss per share                     $(.16)                       $(.21)

Weighted average number of shares                     12,945,586                    9,673,902


</TABLE>

See notes to financial statements.

                                       F-2


<PAGE>
<TABLE>
<CAPTION>


PATHOBIOTEK DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS - UNAUDITED


                                                                                                           August 5, 1996
                                                                              Year ended                    through
                                                                           December 31, 2000            December 31, 2000
                                                                       -------------------------    -----------------------
<S>                                                                  <C>                              <C>

OPERATING ACTIVITIES
Net loss                                                             $       (557,741)                $    (2,007,768)
Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
      Depreciation and amortization                                            25,648                          93,496
      Changes in operating assets and liabilities:
         Receivable from parent                                                13,185                               -
         Other receivables                                                        270                          (2,158)
         Deposits                                                             (10,000)                        (10,000)
         Patent costs                                                         (12,000)                        (50,660)
         Other assets                                                               -                            (300)
        Trade accounts payable and accrued expenses                            68,847                         314,868
                                                                       -----------------               -----------------
Net cash (used in) operating activities                                      (471,791)                     (1,662,522)

INVESTING ACTIVITIES
Capital expenditures                                                          (11,172)                       (142,533)
                                                                       -----------------               -----------------
Net cash (used in) investing activities                                       (11,172)                       (142,533)

FINANCING ACTIVITIES
Principal payments on long-term debt                                                -                               -
Related parties                                                               (59,140)                         28,150
Proceeds from issuance of stock                                               523,083                       1,782,020
                                                                       -----------------               -----------------
Net cash provided by financing activities                                     463,943                       1,810,170
                                                                       -----------------               -----------------
(DECREASE) INCREASE IN CASH                                                   (19,020)                          5,115
Cash and cash equivalents at beginning of period                               24,135                               -
                                                                       -----------------               -----------------
Cash and cash equivalents at end of period                           $          5,115                  $        5,115
                                                                       =================               =================

</TABLE>

                       See notes to financial statements.

                                       F-3


<PAGE>
<TABLE>
<CAPTION>


PATHOBIOTEK DIAGNOSTICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF SHAREHOLDERS' EQUITY - UNAUDITED
For the Period August 5, 1996 (Inception) through December 31, 2000



                                                                                                Deficit
                                                                                              Accumulated
                                                                             Additional        During the
                                                         Common              Paid in          Development
                                                          Stock              Capital)            Stage              Total

                                                   --------------------------------------------------------------------------
<S>                                               <C>          <C>          <C>               <C>             <C>

Issuance of 4,000,000 shares - August 7, 1996       4,000,000     $ 4,000      $                $               $    4,000
Issuance of 77,320 shares - January 23, 1997           77,320          77          9,923                            10,000
Issuance of 300,000 shares - January 23, 1997         300,000         300                                              300
Issuance of 86,800 shares - Various dates in 1997      86,800          87         35,118                            35,205
Issuance of 480,000 shares - Various dates in 1997    480,000         480        254,520                           255,000
Net loss for the period August 5, 1996 (Inception)
  through July 31, 1997                                                                           (325,680)       (325,680)

                                                   --------------------------------------------------------------------------
Balance at July 31, 1997                            4,944,120       4,944        299,561          (325,680)        (21,175)
Issuance of  970,193 shares-Various dates in 1998     970,193         970        417,927                           418,897
Repurchase of  225,000 shares-Various dates in 1998  (225,000)       (225)       (99,775)                         (100,000)
Issuance of 129,500 shares - Various dates in 1998    129,500         130         18,390                            18,520
Reduction of paid in capital for management fees       (8,377)                    (8,377)
Net loss for the year ended July 31, 1998                                                         (778,556)       (778,556)

                                                   --------------------------------------------------------------------------
Balance at July 31, 1998                            5,818,813       5,819        627,726        (1,104,236)       (470,691)
Issuance of 178,000 shares-Various dates in 1998      178,000         178         72,372                            72,550
Repurchase of 73,000 shares-Various dates in 1998     (73,000)        (73)        (5,227)                           (5,300)
Issuance of 43,000 shares-Various dates in 1998        43,000          43         87,442                            87,485
Reduction of paid in capital for management fees                                 (16,215)                          (16,215)
Net loss for 5 months ended December 31, 1998                                                     (403,184)       (403,184)

                                                   --------------------------------------------------------------------------
Balance at December 31, 1998                        5,966,813       5,967        766,098        (1,507,420)       (735,355)
Issuance of 7,357,055 shares-Various dates-1999     7,357,055       7,357        479,515                           486,872
Net income for the year ended December 31, 1999                                                     57,393          57,393

                                                   --------------------------------------------------------------------------
Balance at December 31, 1999                       10,543,368    $ 10,543     $1,248,394       $(1,450,027)    $  (191,090)
Issuance of shares subscribed but not yet
  issued - Various dates in 2000                    4,420,783       4,421        493,512                           497,933
Issuance of shares for services rendered              583,652         584         24,766                            25,350
Cancellation of shares issued previously             (200,000)       (200)                                            (200)
Net loss for the year ended December 31, 2000                                                     (557,741)       (557,741)
                                                   --------------------------------------------------------------------------

Balance at December 31, 2000                       15,347,803   $  15,348    $ 1,766,672       $(2,007,768)    $  (225,748)

</TABLE>


(1) See Note 5 to the financial statements.
(2)  Stock  issued  in  exchange  for legal  expenses,  administrative  fees and
commissions relating to the stock offering.  (3) Stock issue costs deducted from
additional paid in capital related to the offering/sale totaled $53,697.

                                       F-4


<PAGE>



PATHOBIOTEK DIAGNOSTICS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2000

Note 1 - Organization and Business Activity

Pathobiotek  Diagnostics,  Inc.,  (the  "Company") was formed on August 5, 1996,
under the laws of the State of Texas for the purpose of  developing,  producing,
distributing,  selling  and/or  performing  diagnostics  for  various  virus and
bacterium.  The Company is a  developmental  stage  company  under  Statement of
Financial  Accounting  Standard  ("SFAS") No 7,  "Accounting  and  Reporting  by
Development State Enterprises".  Pathobiotek Diagnostics,  Inc. was a subsidiary
of Pacific  Biotech  International,  Inc. (the "Parent"),  a Texas  Corporation,
until May 16,  2000.  Pacific  Biotech  International,  Inc.  no longer owns any
shares of the Company.  On March 6, 2000, the Company completed a Share Purchase
Agreement with  shareholders  of Investra  Enterprises,  Inc. (IEI) in which the
Company  acquired all 672,000 issued and outstanding  shares of IEI for $150,000
for purposes of  completing a merger of the Company and IEI. The Company was the
surviving entity.

Note 2 - Summary of Significant Accounting Policies

Cash and Cash Equivalents:
--------------------------
The Company  considers all highly liquid  investments  with  maturities of three
months or less when purchased to be cash equivalents.

Supplemental schedule of non-cash investing and financing activities:  Equipment
totaling $91,887 was acquired through a note payable financing agreement.

Property and Equipment:
-----------------------
Property and equipment,  consisting primarily of lab and computer equipment,  is
stated at cost.  Depreciation  is computed using the  straight-line  method over
estimated lives ranging from 5 to 7 years.

Maintenance   and  repairs  are  expensed  as  incurred;   major   renewals  and
improvements are capitalized.

Use of Estimates:
-----------------

Management  uses estimates and  assumptions in preparing  financial  statements.
Those  estimates  and  assumptions  affect the reported  revenues and  expenses.
Actual results could differ from the estimates.

                                       F-5



<PAGE>



PATHOBIOTEK DIAGNOSTICS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2000

Asset Valuation:
----------------
The carrying  amounts of  long-lived  assets are reviewed  periodically.  If the
asset carrying amount is not recoverable, the asset is considered to be impaired
and the value is adjusted.

Amortization of Patent Related Costs:
-------------------------------------
In  connection  with the issuance of shares of stock to the parent (Note 5), the
Company was assigned and licensed  all  technological  applications  of one U.S.
Patent  Application.  Legal  costs  related to the  application  incurred by the
Company   are   capitalized   in   accordance   with   management's   estimation
andexpectation of securing a patent.

Capitalized patent related costs are amortized on a straight-line basis over the
expected life of the patent starting from the application date.

The patent  process may take from several  months to several  years.  Should the
patent be denied or its value impaired, the balance of unamortized costs will be
expensed at that date.

Income Taxes:
-------------
The  Company  utilizes  Statement  of  Financial  Accounting  Standard  No. 109,
"Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109, the liability method
is used in accounting for income taxes.  Under this method,  deferred tax assets
and liabilities are determined based on differences  between financial reporting
and tax bases of assets  and  liabilities  and are  measured  using the  enacted
statutory  tax  rates  and laws  that  will be in  effect  when the  differences
reverse.

Fair Value of Financial Instruments:
------------------------------------
The carrying amounts of cash,  receivables,  and payables approximate their fair
values due to the short-term maturities of these instruments.


                                       F-6


<PAGE>



PATHOBIOTEK DIAGNOSTICS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS  - continued
December 31, 2000


Net  (Loss) Per Share
----------------------------

Basic  and  diluted  net loss per  share  information  is  presented  under  the
requirements  of SFAS No. 128,  Earnings Per Share.  Basic net loss per share is
computed by dividing net loss by the weighted average number of shares of common
stock outstanding for the period, less shares subject to repurchase. Diluted net
loss per share  reflects the  potential  dilution of  securities by adding other
common stock equivalents, including stock options, shares subject to repurchase,
warrants and  convertible  preferred  stock, in the  weighted-average  number of
common shares  outstanding for a period, if dilutive.  All potentially  dilutive
securities  have  been  excluded  from  the  computation,  as  their  effect  is
anti-dilutive.


Note 3 - Note Payable - Related Party

In  connection  with the purchase of lab  equipment and supplies from the Parent
totaling $91,887,  the Company entered into a promissory note payable agreement.
The balance and any unpaid  interest  was due on or before  maturity of July 31,
2000.  The note is secured by the lab  equipment.  Effective  May 16, 2000,  the
Parent  transferred  the note  receivable to the  President of the Company.  The
balance due at December 31, 2000, is $28,150.

Note 4 - Income Taxes

The Company has incurred net operating losses of $2,007,768 since inception.  No
tax benefit has been recorded  relating to these losses  because  realization of
the carryforward benefit is uncertain.  For tax purposes, the net operating loss
carryforwards will expire beginning in the year 2012.

Note 5 - Related Party Transactions

On August 7, 1996, the Company issued  4,000,000  shares of stock to the Parent,
Pacific Biotech  International,  Inc., in exchange for certain intangible assets
consisting  primarily  of licenses  rights and  technological  applications.  In
accordance with APB 16 and 29, the exchange was recorded at the Parent company's
historical  capitalized  basis,  which was not considered  material at August 7,
1996.

In March 1999, the Company issued an additional 2,000,000 shares of stock to the
Parent in  exchange  for  certain  intangible  assets as  described  above.  The
exchange  was recorded at the Parent  company's  historical  capitalized  basis,
which was not considered material at March 1999. An additional  2,000,000 shares
was due to the Parent as of March 31, 2000.  The right to receive the  2,000,000
shares was transferred to two executives of the Company  effective May 16, 2000.
This  exchange  will not  have a  material  affect  on the  Company's  financial
position.

                                       F-7



<PAGE>


PATHOBIOTEK DIAGNOSTICS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2000

Note 6 - Subscribed Stock

In  addition  to the  2,000,000  shares  due to two  executives  related  to the
transfer of stock from the former  Parent (Note 5), at December 31, 2000,  there
were 1,128,283 shares subscribed but not yet issued.

Note 7- Leases

The Company leases office space and certain  equipment under  operating  leases.
Future minimum lease payments are as follows:

                                     Year
                                     Ended
                                     December 31,
                                     ------------
                                       2000        $       9,266
                                       2001                  725
                                                        -------------
                                                           9,991
                                                        =============

Rent expense for 2000 was $30,000.
Rent expense from August 5, 1996 through December 31, 2000, was $128,000.




                                       F-8