<PAGE>


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

                                   FORM 10-QSB

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2003

[  ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

             For the transition period from __________ to __________

                         Commission file number 0-31459


                              Valesc Holdings Inc.
        -----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

          Delaware                                       23-3048857
-------------------------------                ---------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

                  16200 Addison Road, Suite 190, Addison, TX  75001
        -----------------------------------------------------------------
                    (Address of principal executive offices)

                                 (972) 931-1989
        -----------------------------------------------------------------
                           (Issuer's telephone number)

            Valesc Inc., 2300 Coit Road, Suite 300B, Plano, TX 75075
            --------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [  ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

    State the number of shares outstanding of each of the issuer's classes of
      common equity, as of the latest practicable date: 14,477,064 shares of
            common stock issued and outstanding as of May 16, 2003.

         Transitional Small Business Disclosure Format (check one);
         Yes [  ]  No  [X]

<PAGE>

                              Valesc Holdings Inc.

                                      INDEX

PART I - FINANCIAL INFORMATION

  Item 1. Financial Statements.                                            Page

            Consolidated Balance Sheet [Unaudited]
            Consolidated Statements of Operations [Unaudited]
            Consolidated Statements of Cash Flows [Unaudited]
            Notes to Unaudited Consolidated Financial Statements

  Item 2. Management's Discussion and Analysis or Plan of Operation.

  Item 3. Controls and Procedures.

PART II - OTHER INFORMATION

  Item 2.  Changes in Securities and Use of Proceeds.

  Item 6.  Exhibits and Reports on Form 8-K.

<PAGE>


                          Valesc Inc. and Subsidiaries
                     Consolidated Balance Sheet [Unaudited]
                                 March 31, 2003

<TABLE>
<CAPTION>
<S>                                                                 <C>
ASSETS
Current Assets
   Cash                                                             $    63,044
   Accounts receivable, net                                              55,791
                                                                    -----------
     Total Current Assets                                               118,835
                                                                    -----------

PROPERTY AND EQUIPMENT, NET                                               3,511
GOODWILL                                                                200,000
SECURITY AND DEPOSITS                                                     2,333
                                                                    -----------
TOTAL ASSETS                                                        $   324,679
                                                                    ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
   Current maturities of notes payable,
   net of debt discount of $21,538                                  $   215,202
   Bank loan - current portion                                           10,224
   Accounts payable and accrued expenses                                353,030
   Accrued interest                                                      18,270
   Accrued Consultants' fees                                            117,060
   Officers' salaries payable                                           229,329
                                                                    -----------
Total Current Liabilities                                               943,115
                                                                    -----------

NOTES PAYABLE                                                            50,000
BANK LOAN                                                                23,100
                                                                    -----------
TOTAL LIABILITIES                                                     1,016,215
                                                                    -----------

COMMITMENTS AND CONTINGENCIES [NOTE F]

Potentially refundable common stock                                      40,000

STOCKHOLDERS' DEFICIT
Preferred Stock; $0.0001 par value; 20,000,000 shares authorized,
none issued and outstanding                                                --
Common Stock; $0.0001 par value; 100,000,000 shares authorized,
13,267,170 shares issued and outstanding                                  1,327
Additional paid-in capital                                              778,606
Accumulated deficit                                                  (1,511,469)
                                                                    -----------
TOTAL STOCKHOLDERS' DEFICIT                                            (731,536)
                                                                    -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                         $   324,679
                                                                    ===========
</TABLE>

The accompanying notes are an integral part of these unaudited consolidated
financial statements.

<PAGE>

PART I - FINANCIAL INFORMATION

     ITEM 1. FINANCIAL STATEMENTS

                          Valesc Inc. and Subsidiaries
                Consolidated Statements of Operations [Unaudited]
                      For the Three Months Ended March 31,

<TABLE>
<CAPTION>
                                                         2003            2002
                                                     ------------    ------------
<S>                                                  <C>             <C>
Commission income                                    $    199,690    $     54,624
                                                     ------------    ------------



Selling, general and administrative expenses              327,155         164,840
                                                     ------------    ------------
Loss from Operations                                     (127,465)       (110,216)
                                                     ------------    ------------
Other Expenses

Interest expense                                          (18,373)        (29,206)

Interest expense, related parties                          (1,251)           --
                                                     ============    ============
NET LOSS                                             $   (147,089)   $   (139,422)
                                                     ============    ============



Net loss per share basic and diluted                 $      (0.01)   $      (0.01)
                                                     ============    ============

Weighted average shares outstanding
basic and diluted                                      12,173,988       9,785,470
                                                     ============    ============
</TABLE>

The accompanying notes are an integral part of these unaudited consolidated
financial statements.


<PAGE>

                          VALESC INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED]
                      FOR THE THREE MONTHS ENDED MARCH 31,

<TABLE>
<CAPTION>
                                                                2003        2002
                                                             ---------    ---------
<S>                                                          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Loss                                                  $(147,089)   $(139,422)
   Adjustments to reconcile net loss to net cash
     Used in operating activities:
       Depreciation and amortization                               500          593
       Issuance of warrants for services                          --          6,800
       Noncash interest accretion                               10,263        3,301
             Decrease (Increase) in operating assets:
             Accounts receivable                                12,862        4,855
             Prepaid expenses                                     --           (765)
             Security and deposits                              (1,568)
           Increase (Decrease) in operating liabilities:
             Accounts payable and accrued expenses             (20,400)     (65,524)
             Accrued interest                                    4,668         --
             Accrued Consultants' fees                            --         31,566
             Officers' salaries payable                         29,838       24,750
                                                             ---------    ---------
               Net cash used in operating activities          (110,926)    (133,846)
                                                             ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayments of bank loan                                      (3,183)        --
   Repayments of notes payable                                 (25,500)        --
   Proceeds from issuance of common stock                      162,546      150,000
                                                             ---------    ---------
               Net cash provided by financing activities       133,863      150,000
                                                             ---------    ---------

Net increase in cash                                            22,937       16,154

Cash, beginning of period                                       40,107       26,311
                                                             ---------    ---------
Cash, end of period                                          $  63,044    $  42,465
                                                             =========    =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest                                       $     772         --
                                                             =========    =========
</TABLE>

The accompanying notes are an integral part of these unaudited consolidated
financial statements.

<PAGE>

                          VALESC INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                   Three Months Ended March 31, 2003 and 2002

NOTE A - DESCRIPTION OF BUSINESS AND FORMATION OF COMPANY

The accompanying unaudited consolidated financial statements of Valesc Inc. and
Subsidiaries ("the Company") consisting of OJI Surgical, Inc. (acquired on
December 17, 2001) and Morris Medical, Inc. (acquired on December 15, 2002) have
been prepared in accordance with Regulation S-B promulgated by the Securities
and Exchange Commission and do not include all the information and footnotes
required by generally accepted accounting principals in the United States of
America for complete financial statements. In the opinion of management, these
interim financial statements include all adjustments necessary in order to make
the financial statements not misleading. The results of operations for such
interim periods are not necessarily indicative of results for a full year. The
unaudited consolidated interim financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
of the Company and management's discussion and analysis of financial condition
and results of operations included in the annual report on Form 10-KSB for the
year ended December 31, 2002. All material inter-company accounts and
transactions between the Company and its subsidiaries have been eliminated.

Valesc Inc., a New Jersey corporation ("Valesc NJ"), was incorporated on October
24, 2000, and at the date of inception was owned 100% by Atlas Holdings Inc
("Atlas"). Atlas was owned 50% by Jeremy Kraus, the Company's Chairman and Chief
Executive Officer, 25% by Samuel Cohen, the Company's President and Director
and, 12.5% by Garrett Miller, the Company's Director and former Vice President.

NetCentral Capital Fund, Inc. ("NetCentral") was incorporated in the State of
Delaware on June 2, 2000, for the specific purpose of providing a method,
through a merger or otherwise, for a foreign or domestic private company to
become a reporting company with a class of registered securities. NetCentral had
a single shareholder. It had no operating business from the date of inception
until March 22, 2001. At March 22, 2001, NetCentral had no assets. From
inception through March 22, 2001 NetCentral had no revenues, and expenses of
approximately $30,000 of professional fees relating to the formation.

Founded as an Oregon corporation in 1988, OJI Surgical, Inc. ("OJI") is a
manufacturer's representative for medical devices and health care products,
primarily in the orthopedic field. OJI serves customers in the Pacific Northwest
of the US from its Portland, Oregon base.

Founded as a Texas company in 1991, Morris Medical, Inc. d/b/a Medex, Inc.
("Medex") is a contract sales organization for medical devices and health care
products, primarily in the orthopedic field. Medex serves customers in the
northern parts of Texas.

NOTE B - LIQUIDITY AND GOING CONCERN

<PAGE>

The accompanying financial statements of the Company have been prepared assuming
the Company will continue as a going concern. The Company has invested a
significant amount of its effort and cash in the development of its business
plan. As of March 31, 2003, the Company has a stockholders' deficit of
approximately $732,000. The Company has incurred recurring losses including
approximately $147,000 for the three months ended March 31, 2002. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. The Company will be required to seek external financing to continue
developing its business plan and to consummate planned acquisitions, and to
cover the overhead costs associated with Valesc. Operating losses are expected
to continue throughout 2003.

During the next year, the Company intends to devote its time and resources to
the growth of its medical device sales subsidiaries. The Company currently sells
a variety of medical products, including orthopedic implants and surgical
implements and tools, for use in the orthopedic care and surgical area. The
Company intends to expand its sales of these products in two ways: (i) the
addition of sales personnel to increase penetration in market areas already
covered and to expand its geographic coverage, and (ii) the addition of new
product lines for sales in these areas.

In addition to normal hiring costs, manufacturers' representatives like the
Company's subsidiaries generally "sponsor" new salespeople for a period of up to
one year during which the Company subsidizes the employee's wages until they
have built a sufficient customer base to support themselves solely on a
commission basis. The Company cannot predict at what rate these salespeople will
generate significant additional revenues to offset these costs.

In order for the Company's expansion to be successful, it will need to greatly
expand its administrative capabilities. The Company intends to invest
approximately $100,000 in the purchase, customization and installation of
accounting and back-office software to enable it to manage a larger number of
transactions, customers and suppliers without substantially increasing its
administrative staff. The Company will need to hire at least one additional
employee to perform administrative tasks. The Company also may need to rent
office space sufficient to house its expanded personnel and back office system.

The Company will need significant new financing in order to fund our expansion
plan. The total expenses of the expansion plan as outlined above will approach
$400,000 during the next year. Although the Company expects additional costs to
be offset by increased revenues, it cannot be certain whether increases in
revenues will occur and whether any such increases will offset costs.

Management's plans with respect to its liquidity issues include the following:

o The Company recently began trading on the Over-the-Counter Bulletin Board, a
change that management believes will increase investor interest in the Company.

o Raise additional funding through the sale of debt and equity instruments to
fund activities.

o From January 1 through March 31, 2003, the Company received proceeds from the

<PAGE>

issuance of common stock of approximately $163,000.

To date, the Company has supported its activities through debt and equity
investments. Management plans to continue to seek the funding required to
finance operations as the Company commences its business plan and expansion
plan. Failure to find additional financing, create a public market for its
stock, and execute its expansion plan, could negatively impact the Company's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. REVENUE RECOGNITION

In December 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin 101, "Revenue Recognition," to provide guidance on the
recognition, presentation, and disclosure of revenue in financial statements.
Our policies on revenue recognition are consistent with this bulletin.
Commission income as a manufacturers' representative on new product sales are
recorded in the period during which the underlying product sale occurs. Product
returns by our customers are rare due to the specialized nature of the product,
and therefore, we have concluded that no material allowance for refundable
commission income on returned products is necessary at March 31, 2003 and March
31, 2002. Our revenues from product sales and service income are derived from
the sale of new products distributed by us, and the refurbishment of used
products.
Revenue is recognized as products are delivered to our customers.

2. EARNINGS (LOSS) PER SHARE

Basic income (loss) per share is computed by dividing the income (loss) for the
period by the weighted average number of common shares outstanding during the
period. Diluted income (loss) per share is computed by dividing the loss for the
period by the weighted average number of common shares adjusted for the dilutive
effect of any potential common shares issuable during the period. The amount of
options or warrants not considered in the loss per share calculation because
their effect was antidilutive was 1,976,250 and 2,134,000 for the three months
ended March 31, 2003 and 2002, respectively. Equity instruments which could
dilute earnings per share in the future are listed in Note D2.

3. USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates and assumptions. Significant estimates that affect the financial
statements include, but are not limited to, the valuation of options and
warrants granted and the valuation allowance for the deferred tax asset.

<PAGE>

4. INCOME TAXES

The Company uses the liability method for reporting income taxes, under which
current and deferred tax liabilities and assets are recorded in accordance with
enacted tax laws and rates. Under this method, the amounts of deferred tax
liabilities and assets at the end of the period are determined using the tax
rate expected to be in effect when taxes are actually paid or recovered. Future
tax benefits are recognized to the extent that realization of such benefits is
more likely than not.

The deferred assets and liabilities are determined based upon the differences
between financial reporting and tax basis of assets and liabilities and are
measured using the enacted tax rates and laws that are expected to be in effect
when the differences are assumed to reverse.

5. FINANCIAL INSTRUMENTS / CREDIT RISK

SFAS No. 107, "Disclosures about Fair Values of Financial Instruments", requires
disclosing fair value to the extent practicable for financial instruments which
are recognized or unrecognized in the balance sheet. The fair value of the
financial instruments disclosed herein is not necessarily representative of the
amount that could be realized or settled, nor does the fair value amount
consider the tax consequences of realization or settlement. For certain
financial instruments, including cash, accounts receivable, accounts payable,
accrued expenses and consultants payable, the fair values were determined based
on the near term maturities of such obligations. The fair value of debt was
determined based on current rates at which the Company could borrow or advance
funds with similar remaining maturities, which amount approximates its carrying
value.

The Company maintains cash deposits with a major bank which from time to time
may exceed the federally insured limits of $100,000. The Company did not exceed
this limit at March 31, 2003. The Company periodically assesses the financial
condition of the bank and believes that the risk of any loss is minimal.

Sales of products from two primary suppliers, provided approximately 42% and 26%
respectively, of our total revenue for the three months ended March 31, 2003.
Accounts receivable consisted of approximately 81% from three different
customers for the three months ended March 31, 2003.

The Company routinely assesses the financial strength of all its clients and,
based upon factors surrounding the credit risk of the clients may establish an
allowance for uncollectible accounts in the future. At March 31, 2003, the
Company believes that it does not have an accounts receivable credit risk, and
therefore it has not established an allowance for uncollectible accounts.

The Company does not require collateral or other securities to support financial
instruments subject to credit risk.

6. LONG-LIVED ASSETS AND IMPAIRMENT OF LONG-LIVED ASSETS

<PAGE>

The Company records impairment losses on long-lived assets used in operations or
expected to be disposed of when events and circumstances indicate that the
assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of those assets. No
impairment losses were recorded during each of the operating periods being
reported thereon.

NOTE D - CAPITAL STOCK OF THE COMPANY

Valesc Inc. authorized capital stock consists of 100,000,000 shares of Common
Stock, $.0001 par value per share, and 20,000,000 shares of preferred stock,
$.0001 par value per share. Holders of Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of funds legally
available therefore and, in the event of liquidation, to share pro rata in any
distribution of assets after payment of liabilities. The Board of Directors is
not obligated to declare a dividend and it is not anticipated that dividends
will be paid in the foreseeable future. Holders of Common Stock do not have
preemptive rights to subscribe to any of our additional shares. There are no
conversion, redemption, sinking fund or similar provisions regarding the Common
Stock. All of the outstanding shares of Common Stock are fully paid and
non-assessable and all of the shares of Common Stock offered hereby will be,
upon issuance, fully paid and non-assessable. The Company has not designated any
terms for the preferred stock.

On March 21, 2000, Valesc NJ declared a 2:1 stock split. All share and per share
references have been updated to reflect the stock split.

1. COMMON STOCK ISSUANCES BY VALESC INC.

In two common stock transactions during 2002, the Company sold 62,500 shares of
common stock to Brian Kraus and 37,500 shares to Mark Walsh in sales intended to
qualify for the private placement exemption provided under Section 4(2) of the
Securities Act. In response to the due diligence requests of Mr. Kraus and Mr.
Walsh prior to the sales, the Company provided them with copies of our
registration statement on Form SB-2 currently on file with the Commission, but
not yet effective, and available publicly on the Commission's EDGAR database. By
providing copies of the Form SB-2, the Company may have engaged in a "general
solicitation" invalidating the Section 4(2) exemption from registration. Without
the Section 4(2) exemption, the sales of shares to Mr. Kraus and Mr. Walsh would
have violated Section 5 of the Securities Act, in which case the Company could
be liable to Mr. Kraus and Mr. Walsh under Section 12(a) (1) of the Securities
Act for the amount of the proceeds ($40,000) plus interest during the one year
period following the sales. If the Company is forced to repay these proceeds, it
would impact our cash flow and could cause us to have insufficient working
capital.

On January 22, 2003, we entered into an arrangement with First China Capital,
Inc., a Chinese corporation with its principal offices located in Beijing,
China, for the purchase from time to time by First China of up to 10,000,000
shares of our common stock in offshore transactions for 30% of the bid price per
share on the OTC Bulletin Board on the day of purchase. As of March

<PAGE>

31, 2003, we have sold 882,337 shares of common stock pursuant to this
arrangement, with net proceeds of approximately $63,700.

On February 25, 2003, we entered into arrangements with Simon Worship and Pan
European Investment, Spanish corporations with their principal offices located
in Madrid, Spain and Marbella, Spain respectively, for the purchase from time to
time of up to 2,000,000 shares of our common stock by each in offshore
transactions for 35% of the bid price per share on the OTC Bulletin Board on the
day prior to the date of purchase. As of March 31, 2003, we have sold 525,032
shares of common stock pursuant to this arrangement, with net proceeds of
approximately $98,800.

2. STOCK OPTION PLAN

On April 6, 2001, the Company adopted a Stock Option Plan (the "Option Plan").
The Option Plan authorized the granting of both incentive and nonqualified stock
options for up to 1,500,000 shares of common or preferred stock to officers,
directors and key employees. The objectives of the Option Plan include
attracting and retaining the best personnel, providing for additional
performance incentives, and promoting the success of the Company by providing
employees with the opportunity to acquire both Common and Preferred Stock.
Options under the company's Option Plan generally vest over a four-year period,
and generally expire ten years after the grant date.

As discussed in Note D-2, on January 1, 2001, 900,000 stock options were granted
pursuant to employment contracts. 300,000 of the granted shares become
exercisable on each of December 31, 2001, 2002 and 2003. There were no options
exercised through March 31, 2003. 300,000 options were forfeited by Garrett
Miller as part of his separation agreement with the Company. The exercise price
of the first-year element of the stock option grant is below the fair value of
the Company's stock, therefore a 2001 compensation charge of $75,000, computed
under the intrinsic value method, was recognized over the one-year vesting
period. The second and third-year elements contain an exercise price at or above
the fair value of the Company's stock at the date of grant and therefore no
compensatory charge has been recorded.

NOTE E - NOTES PAYABLE AND BANK LOAN PAYABLE

The principal amount of the notes payable issued by Valesc Inc. and bank loan
payable assumed during the Medex acquisition mature as follows:

2003         $246,964
2004         $ 61,004
2005         $ 12,096
            ----------
             $320,064
            ----------

1. RELATED PARTY NOTES

<PAGE>

During the year ended December 31, 2001, the Company received advances from
related parties aggregating $78,000. These notes included detachable warrants.
These loans bear interest at a rate of 14% per annum. Each of the notes is
guaranteed by the Company's officers and directors. Of the total proceeds of
this financing, approximately $49,200 was allocated to warrants. Approximately
$18,000 of the net Notes Payable of $28,800 was converted to equity during the
year ended December 31, 2002. All of these notes have been subsequently
converted to equity.

During the year ended December 31, 2002, the Company received advances from two
related parties aggregating $57,500. One loan ($50,000) bears interest at a rate
of 10% per annum and the other loan ($7,500) bears interest at a rate of 40% per
annum. The loan for $7,500 was repaid on March 31, 2003. The loan for $50,000
plus accrued interest remains outstanding as of March 31, 2003.

2. NON-RELATED PARTY NOTES

The Company is in default of its note for $175,000 to Christopher Coons. No
penalties for default are specified in the note, and the Company believes that
it will become current by June 30, 2003.

On March 25, 2003 the Company's note for $15,000 to Dean Vilone was repaid.

On March 11, 2003, the Company's note for $5,000 to Tim Holk was repaid.

NOTE F - COMMITMENTS AND CONTINGENCIES

1. LEASES

The Company's OJI subsidiary entered into a lease agreement beginning March 1,
2002 which has a monthly rent expense of $880 and is on a month-to-month basis.

The Company's Medex subsidiary entered into a 22-month lease beginning February
2003 which has a monthly rent expense of $1,500.

2. EMPLOYMENT AGREEMENTS

Effective January 1, 2001, the Company entered into three-year employment
agreements with Jeremy Kraus and Samuel Cohen containing identical terms. During
2003, these agreements provide for a salary of the greater of (a) $60,500 or (b)
2.5% of the total revenue of the Company and its subsidiaries for such year, up
to a maximum of $181,500.

Accrued salaries under these agreements was approximately $229,000 at March 31,
2003.

In addition to the foregoing, each executive was granted the option to purchase
a total of 300,000 shares of Common Stock in equal installments of 100,000
shares at the end of each year of employment. The options shall be exercisable
for a period of three years following the date of vesting, and the exercise
price shall be as follows: (i) $.25 per share for the 100,000 shares

<PAGE>

that vest after the first year; (ii) $.50 per share for the 100,000 shares that
vest after the second year; and (iii) $.75 per share for the 100,000 shares that
vest after the third year.

On March 24, 2003 Garrett A. Miller resigned as a Vice President of the Company,
terminating his employment agreement. The Company owed Mr. Miller approximately
$78,000 in accrued but unpaid salary as of March 31, 2003.

Effective January 1, 2002 and in connection with our acquisition of OJI
Surgical, Inc., OJI entered into an employment agreement with its President,
Harry Kraus. The agreement provides as follows: (A) an initial term of one year,
with automatic one-year renewal terms thereafter; (B) a monthly salary of
$10,800; (C) all accrued and unpaid salary shall be immediately due and payable
upon the occurrence of any "change of control", defined as the sale of a
controlling interest in OJI's capital stock to one or more buyers acting in
concert, the sale of all or substantially all of our assets, or any corporate
merger or consolidation resulting in one or more parties, who did not previously
hold a controlling interest in OJI's capital stock, owning a controlling
interest in OJI's capital stock; and (D) the executive shall be eligible to
participate in bonuses awarded to senior management to the extent that such
bonuses are awarded or authorized by the Board of Directors of OJI from time to
time.

Effective January 1, 2003 and in connection with our acquisition of Medex, Medex
entered into an employment agreements with its President, Edward Kraus and its
key salesperson, Robert Kraus. The agreements provides as follows: (A) an
initial term of one year, with automatic one-year renewal terms thereafter; (B)
salary in the form of all commission income attributable to each up to $13,000,
plus 50% of amounts in excess of $13,000; (C) the executives shall be eligible
to participate in bonuses awarded to senior management to the extent that such
bonuses are awarded or authorized by the Board of Directors of Medex from time
to time.

3. DISTRIBUTION AGREEMENT

The Company entered into an exclusive distribution agreement with BioAccess in
December 2002 and expects to receive its first shipment of goods for sale during
the second quarter of 2003. Unlike the Company's sales representation
arrangements, the Company will carry inventory and take ownership of the
products it sells when acting as a distributor.

NOTE G - MEDEX GOODWILL

The Company recorded goodwill of $200,000 associated with the acquisition of
Medex. At the date of acquisition, Medex had assets of $47,775, liabilities of
$43,369 and a book value of $4,406. The purchase price of Medex was $204,406,
based on a per share valuation of $0.314 per share for 650,000 shares. This per
share value was arrived at based on a comparison of recent purchases of
restricted Valesc stock by non-related party investors, as well as an evaluation
of the additional illiquidity of the stock based on shareholders agreements
entered into by the sellers.

The estimated future cash flows of the Medex subsidiary exceed the goodwill.
However, those cash flows rely on several estimates including the success of the
BioAccess product line with

<PAGE>

Medex's customers and the Company's ability to fund the expansion of Medex's
sales force. If these new initiatives are less successful than expected, Medex
will fail to achieve the projected profitability. In this case, the Company will
re-evaluate the appropriateness of the goodwill and may take a charge due to
impairment of the goodwill.

NOTE H - SUBSEQUENT EVENTS

On April 21, 2003 the Company changed its name to Valesc Holdings Inc. This
change was made with the approval of the shareholders to be reflective of the
Company's intended conversion to become a Business Development Company as wells
as the exit of the Company's stock from the Depository Trust Company settlement
system.

On April 21, 2003 the Company entered into a letter of intent to acquire
Reliance Diagnostic Systems ("Reliance") of The Woodlands, Texas for a
combination of approximately 90% stock and 10% cash. Reliance Diagnostic Systems
is a distributor and manufacturers representative organization serving primarily
the adult monitoring, cardiology and surgical segments in both hospital and
alternate care markets throughout the western USA region. Reliance is believed
to have estimated annual revenues through commissions and distribution sales of
approximately $1.7M.

<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

REVENUE

Revenues generated amounted to $199,690 for the three months ended March 31,
2003 and $54,624 for the three months ended March 31, 2002. Almost all of the
increase can be attributed to our acquisition of Morris Medical, Inc. and the
inclusion of its sales.

We also experienced an increase in sales personnel at our OJI Surgical
subsidiary, where we continue to attempt to build revenues from our newer
Ascension and Hand Innovations product lines.


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Our operating expenses increased from $164,840 for the three months ended March
31, 2002 to $327,155 for the three months ended March 31, 2003.

These increases were primarily a result of the inclusion of Morris Medical's
expenses for the quarter. In addition, we incurred expenses associated with the
acquisition of Morris Medical, primarily audit fees. The remaining Selling,
General and Administrative expenses for Valesc and OJI were relatively
consistent for both periods.

INTEREST EXPENSE

Interest expense decreased from $29,206 in 2002 to $19,624 in 2003. Interest
expense was reduced by the Company's conversion of certain loans to equity and
by the repayment of other loans.

NET INCOME (LOSS)

Our reported net loss of ($147,089) for the three months ended March 31, 2003 as
compared to net loss of ($139,422) for the three months ended March 31, 2002, is
not a significant change. While the Company had improved results from its OJI
subsidiary, these were offset by costs associated with the acquisition of Morris
Medical.

SIGNIFICANT COMMITMENTS

Our significant financial commitments include bank and other loans, customary
payables and employment contracts. $215,202 of our non-bank debt is categorized
as short-term as of March 31, 2003. We expect to be able to meet our obligations
under these agreements, or to receive extensions of these obligations as we have
in the past.

Our bank loan has a current portion of $10,224 and is being retired in equal
installments of approximately $1,000 monthly.

We have $229,000 in accrued officers' salaries on which we pay no interest, and
continue to be liable for $15,000 monthly in payments to our officers.

SUMMARY OF CRITICAL ACCOUNTING POLICIES

REVENUE RECOGNITION

In December 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin 101, "Revenue Recognition," to provide guidance on the
recognition, presentation, and disclosure of revenue in financial statements.
Our policies on revenue recognition are consistent with this bulletin.
Commission income as a manufacturers' representative on new product sales are
recorded in the period during which the underlying product sale occurs. Product
returns by our customers are rare due to the specialized nature of the product,
and therefore, we have concluded that no material allowance for refundable
commission income on returned products is necessary at March 31, 2003 and March
31, 2002. Our revenues from product sales and service income are derived from
the sale of new products distributed by us, and the refurbishment of used
products. Revenue is recognized as products are delivered to our customers.
Currently, we are not distributing any new or refurbished products.

VALUATION OF OPTIONS AND WARRANTS

The Company has issued substantial amounts of warrants to purchase common stock
in connection with financing activities and as payment to non-employees for
services and other items. We recorded the cost attributable to those issues on
the basis of the Black-Scholes option valuation model. The use of this model
requires some highly subjective assumptions including
<PAGE>

expected stock price volatility. The lack of comparable companies in the public
markets and our limited market experience tend to make those assumptions even
more subjective.

GOODWILL

The Company recorded goodwill of $200,000 associated with the
acquisition of Medex (see Note G). At the date of acquisition, Medex had assets
of $47,775, liabilities of $43,369 and a book value of $4,406. The purchase
price of Medex was $204,406, based on a per share valuation of $0.314 per share
for 650,000 shares. This per share value was arrived at based on a comparison of
recent purchases of restricted Valesc stock by non-related party investors, as
well as an evaluation of the additional illiquidity of the stock based on
shareholders agreements entered into by the sellers.

The estimated future cash flows of the Medex subsidiary exceed the goodwill.
However, those cash flows rely on several estimates including the success of the
BioAccess product line with Medex's customers and the Company's ability to fund
the expansion of Medex's sales force. If these new initiatives are less
successful than expected, Medex will fail to achieve the projected
profitability. In this case, the Company will re-evaluate the appropriateness of
the goodwill and may take a charge due to impairment of the goodwill.

STOCK-BASED COMPENSATION

As permitted by the Statement of Financial Accounting Standards No. 123 (SFAS
No. 123), Accounting for Stock-Based Compensation, the Company accounts for
stock-based employee compensation arrangements in accordance with provisions of
Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued
to Employees." In accordance with APB Opinion No. 25, compensation expense for
stock options issued to employees is based on the difference, on the date of
grant, between the quoted market price of the Company's stock and the exercise
price of the option. The Company accounts for equity instruments issued to
non-employees in accordance with the provisions of SFAS No. 123 and Emerging
Issues Task Force (EITF) Issue No. 96-18, "Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction With
Selling, or in Conjunction With Selling, Goods or Services." All transactions in
which goods or services are the consideration received for the issuance of
equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument issued,
whichever is more reliably measurable. The measurement date of the fair value of
the equity instrument issued is the date on which the counter-party's
performance is complete.

LIQUIDITY AND CAPITAL RESOURCES OF THE COMBINED ENTITY

As of March 31, 2003, we had cash of $63,044, negative working capital of
approximately $824,000 and a stockholders' deficit of approximately $731,500.
We have no credit or financing facility in place at the present time.

Valesc received approximately $162,500 during the three months ended March 31,
2003 from private placements of equity. Cash used in operating activities of
Valesc was approximately $110,900 during the period.

The consolidated financial statements indicate that the profitability and
operating contribution of OJI and Morris Medical have not been sufficient to
offset the developmental and expansion expenses of Valesc. Until we can
significantly expand the businesses of OJI and Morris Medical, we will be
unlikely to achieve profitability. As of March 31,

<PAGE>

2003, our current assets are less than the cash requirements of the Company for
three months' activities. As a result of our lack of profitability, our
accountants, in their report on our financial statements for the year ended
December 31, 2002, included an explanatory paragraph indicating there is
substantial doubt about our ability to continue as a going concern.

The time and money required before we can complete our expansion plan and
implement our growth strategy cannot be estimated with precision. We expect
significant expenditures associated with entering into the expansion plan,
including the cost of hiring and "sponsoring" new salespeople and the cost of
the upgraded software and administrative infrastructure necessary to manage
them, as well as travel and other expenses associated with acquiring new product
lines and territories. Our anticipated cash requirements for the next twelve
months are approximately $750,000, which includes $400,000 to fund the expansion
plan and an expected cash-flow deficit from regular operations and repayment of
debt of $300,000. Because we do not expect the expansion plan to begin
contributing significantly to revenue during the next twelve months, we
anticipate a negative cash-flow from regular operations similar to last year.
The Company has commitments under employment agreements with each of its
executive officers. Additionally, the Company has lease commitments totaling
approximately $33,000 through March 31, 2005.

We intend to seek additional capital financing in order to assist in the funding
of the above operations and expansion plan.

ITEM 3. CONTROLS AND PROCEDURES

Within 90 days prior to the filing date of this report, we carried out an
evaluation, under the supervision and with the participation of our principal
executive officer and principal financial officer, of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on this
evaluation, our principal executive officer and principal financial officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information required to be included in our periodic
SEC reports. The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions, regardless of how remote.

In addition, we reviewed our internal controls, and there have been no
significant changes in our internal controls or in other factors that could
significantly affect those controls subsequent to the date of their last
evaluation.


PART II -- OTHER INFORMATION

   ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

(c)  Recent Sales of Unregistered Securities

On January 22, 2003, we entered into an arrangement with First China Capital,
Inc., a Chinese corporation with its principal offices located in Beijing,
China, for the purchase from time to time by First China of up to 10,000,000
shares of our common stock in offshore transactions for 30% of the bid price per
share on the OTC Bulletin Board on the day of purchase. As of May 16, 2003, we
have sold 1,959,369 shares of common stock pursuant to this arrangement. The
sales were accomplished in reliance upon Regulation S promulgated under the
Securities Act. The facts relied upon for the exemption were that the purchaser
was a non-U.S. person as defined under the Securities Act.

<PAGE>

On February 25, 2003, we entered into an arrangement with Simon Worship and Pan
European, two Spanish corporations, each with its principal offices located in
Madrid and Mirabella, Spain, for the purchase from time to time by each of up to
2,000,000 shares of our common stock in offshore transactions for 35% of the bid
price per share on the OTC Bulletin Board on the day prior to the date of
purchase. As of May 16, 2003, we have sold 657,894 shares of common stock
pursuant to those two arrangements. The sales were accomplished in reliance upon
Regulation S promulgated under the Securities Act. The facts relied upon for the
exemption were that the purchasers were a non-U.S. person as defined under the
Securities Act.

   ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits: See Exhibit Index on page 25.

     (b) Reports on Form 8-K: On March 4, 2003, the Company filed a report on
Form 8-K/A to amend its report on Form 8-K dated December 27, 2002 to amend Item
7 to include (a) Financial Statements of Business Acquired and (b) Pro Forma
Financial Information in connection with the acquisition by the Company of
Morris Medical, Inc.

<PAGE>

                                   SIGNATURES

           In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Date: May 21, 2003
                                       Valesc Holdings Inc.
                                       (Registrant)

                                       By: /s/ Samuel Cohen
                                          -------------------------------------
                                           Samuel Cohen
                                           President

<PAGE>

                                 CERTIFICATIONS
I, Jeremy Kraus, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Valesc Holdings Inc.;

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

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

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

<PAGE>

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 21, 2003


-----------------------
Jeremy Kraus
Chief Executive Officer


I, Samuel Cohen, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Valesc Holdings Inc.;

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

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

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

<PAGE>

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 21, 2003


-----------------------
Samuel Cohen
President and Principal
Financial Officer


<PAGE>

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Index of exhibits required by Item 601 of Regulation S-B:

2.1 Merger Agreement dated as of March 21, 2001 between Valesc Inc. and
NetCentral Capital Fund, Inc. (filed as part of our Form 8-K filed on March 23,
2001 and incorporated herein by reference);

2.2 Share Purchase Agreement dated December 3, 2001 between Valesc Inc., SMT
Enterprises Corporation and OJI Surgical, Inc. for the acquisition of OJI by
Valesc (filed as part of our Form 8-K filed on December 21, 2001 and
incorporated herein by reference);

2.3 Merger Agreement dated May 20, 2002 between Valesc Inc. and Atlas Holdings
Inc. (filed as part of our Form 8-K filed on May 22, 2002 and incorporated
herein by reference);

2.4 Share Purchase Agreement dated December 15, 2002 by and among Valesc Inc.,
Medex, and SMT Enterprises Corporation for the acquisition of Medex by Valesc
(filed as part of our Form 8-K filed on December 27, 2002 and incorporated
herein by reference);

3.1 Amended and Restated Certificate of Incorporation (filed as part of our Form
8-K filed on March 23, 2001 and incorporated herein by reference);

3.2 Amended and Restated By-Laws (filed as part of our Form 8-K filed on March
23, 2001 and incorporated herein by reference);

4.1 Specimen Certificate for Common Stock (filed as part of our Form SB-2 on
June 27, 2002 and incorporated herein by reference);

10.1 2001 Stock Option Plan (filed as part of our Form S-8 filed April 6, 2001
and incorporated herein by reference);

10.2 Amended and Restated Employment Agreement between Valesc Inc. and Jeremy
Kraus dated January 1, 2002 (filed as part of our Form SB-2 on June 27, 2002 and
incorporated herein by reference);

10.3 Amended and Restated Employment Agreement between Valesc Inc. and Samuel
Cohen dated January 1, 2002 (filed as part of our Form SB-2 on June 27, 2002 and
incorporated herein by reference);

10.4 Amended and Restated Employment Agreement between Valesc Inc. and Garrett
Miller dated January 1, 2002 (filed as part of our Form SB-2 on June 27, 2002
and incorporated herein by reference);

10.5 Amended and Restated Employment Agreement between OJI Surgical, Inc. and
Harry Kraus dated January 1, 2002 (filed as part of our Form SB-2 on June 27,
2002 and incorporated herein by reference);

10.6 Manufacturer's Representative Agreement dated June 1, 1996, as amended,
between OJI Surgical, Inc., and Acumed, Inc. (filed as part of our Form SB-2 on
June 27, 2002 and incorporated herein by reference);

<PAGE>

10.7 Sales Representative Agreement dated July 1, 2000, between Harry Kraus, as
representative, and Smith & Nephew, Inc. (filed as part of our Form SB-2 on June
27, 2002 and incorporated herein by reference);

10.8 Sales Representative Agreement dated July 2, 2000, between Harry Kraus, as
representative, and Smith & Nephew Orthopaedics (filed as part of our Form SB-2
on June 27, 2002 and incorporated herein by reference);

10.9 Sales Representation Agreement dated March 1, 2002 between OJI Surgical,
Inc./Harry Kraus and Hand Innovations, Inc. (filed as part of our Form 10-QSB
filed on May 15, 2002 and incorporated herein by reference);

10.10 Lease dated as of February 13, 2002 between Harry Kraus and OJI Surgical,
Inc., and American Property Management Corp. (filed as part of our Form 10-QSB
filed on May 15, 2002 and incorporated herein by reference);

10.11 Second Amended Commitment Warrant to Purchase Common Stock between Valesc
Inc. and Swartz Private Equity, L.L.C. with an issue date of May 21, 2002 (filed
as part of our Form SB-2 on May 24, 2002 and incorporated herein by reference);

10.12 Shareholders Agreement dated May 21, 2002 by and among Valesc Inc., Harry
Kraus, Edward Kraus, Jeremy Kraus, Garrett Miller and Samuel Cohen (filed as
part of our Form SB-2 on May 24, 2002 and incorporated herein by reference);

10.13 Termination Agreement dated May 21, 2002 by and between Valesc Inc. and
Swartz Private Equity, LLC (filed as part of our Form SB-2 on May 24, 2002 and
incorporated herein by reference);

10.14 Distribution and Purchase Agreement dated December 6, 2002 between Valesc
Inc. and Bioaccess, Inc. (filed as part of our Form 10-KSB on April 15, 2003 and
incorporated herein by reference);

10.15 Lease dated as of January 7, 2003 between Medex and The Dialog Corporation
(filed as part of our Form 10-KSB on April 15, 2003 and incorporated herein by
reference);

10.16 Shareholders Agreement dated September 18, 2002 by and among Valesc Inc.,
Harry Kraus, Edward Kraus and Milton and Golda Toorans (filed as part of our
Form 10-QSB filed on November 20, 2002 and incorporated herein by reference);

10.17 Addendum to Shareholders Agreement dated September 18, 2002 amending
Shareholders Agreement dated May 21, 2002 by and among Valesc Inc., Harry Kraus,
Edward Kraus, Jeremy Kraus, Garrett Miller and Samuel Cohen (filed as part of
our Form 10-QSB filed on November 20, 2002 and incorporated herein by
reference);

10.18 Separation Agreement dated March 24, 2003 between Garrett Miller and
Valesc Inc. (filed as part of our Form 10-KSB on April 15, 2003 and
incorporated herein by reference);

10.19 Stock Option Agreement dated March 24, 2003 between Garrett Miller and
Valesc Inc. (filed as part of our Form 10-KSB on April 15, 2003 and
incorporated herein by reference).