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

                                   FORM 10-KSB

                  |X| ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                       OF THE SECURITIES EXCHANGE ACT OF

                1934 For the fiscal year ended January 31, 2004

                                       OR

                |_| TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

          For the transition period from _____________ to _____________

                         Commission file number 0-18349

                           MEDICAL NUTRITION USA, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           NEW JERSEY                                   11-3686984
  (State or other jurisdiction                       (I.R.S. Employer
of incorporation or organization)                   Identification No.)
---------------------------------                   -------------------

               10 West Forest Avenue, Englewood, New Jersey 07631
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (201) 569-1188

Securities registered under Section 12(b) of the Exchange Act:

                                      None

Securities registered under Section 12(g) of the Exchange Act:

Title of each class                    Name of each exchange on which registered
-------------------                    -----------------------------------------
  Common Stock                                     OTC Bulletin Board

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 such filing
requirements for the past 90 days. Yes |X|  No |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of the 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. |_|

<PAGE>

State issuer's revenues for its most recent fiscal year: $2,173,400
                                                        -------------

The aggregate market value of voting stock held by non-affiliates of the
registrant as of April 27, 2004 was approximately $4,784,544 (based on the
average of the closing bid price and closing ask price for shares of the
registrant's common stock as reported for the last trading date prior to that
date).

As of April 22, 2004 there were 2,783,759 shares of the registrant's common
stock outstanding.

Portions of the registrant's Proxy Statement for the 2004 Annual Meeting of
Shareholders scheduled to be held June 9, 2004 are incorporated by reference in
Part III hereof.


                                       2
<PAGE>

                                TABLE OF CONTENTS

PART I ....................................................................    1
     Item 1 ...............................................................    1
     Item 2 ...............................................................    8
     Item 3 ...............................................................    8
     Item 4 ...............................................................    8

PART II ...................................................................    8
     Item 5 ...............................................................    8
     Item 6 ...............................................................    9
     Item 7 ...............................................................   12
     Item 8 ...............................................................   12
     Item 8A ..............................................................   12

PART III ..................................................................   12
     Item 9 ...............................................................   12
     Item 10 ..............................................................   13
     Item 11 ..............................................................   13
     Item 12 ..............................................................   13
     Item 13 ..............................................................   13
     Item 14 ..............................................................   15
Signatures ................................................................   15
Power of Attorney .........................................................   15


                                       3
<PAGE>

                           FORWARD-LOOKING STATEMENTS

      This document contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. All statements other than
statements of historical fact are "forward-looking statements" for purposes of
federal and state securities laws, including, but not limited to, any
projections of earnings, revenue or other financial items; any statements of the
plans, strategies and objectives of management for future operations; any
statements concerning proposed new services or developments; any statements
regarding future economic conditions or performance; any statements of belief;
and any statements of assumptions underlying any of the foregoing.

      Forward-looking statements may include the words "may," "could," "will,"
"estimate," "intend," "continue," "believe," "expect" or "anticipate" or other
similar words. These forward-looking statements present our estimates and
assumptions only as of the date of this annual report. Except for our ongoing
obligation to disclose material information as required by the federal
securities laws, we do not intend, and undertake no obligation, to update an
forward-looking statements.

      Although we believe that the expectations reflected in any of our
forward-looking statements are reasonable, actual results could differ
materially from those projected or assumed or any of our forward-looking
statements. Our future financial condition and results of operations, as well as
any forward-looking statements, are subject to change and inherent risks and
uncertainties.

      For a detailed description of factors that could cause actual results to
differ materially from those expressed in any forward-looking statement, please
see "Risk Factors," beginning on page 9 below.

Item 1. BUSINESS

INTRODUCTION

      Medical Nutrition USA, Inc. (the "Company") was incorporated in the State
of New Jersey in 1981. On April 23, 2003, the Company changed its state of
incorporation to Delaware. The Company develops and distributes
nutrition-medicine products for sale to long-term care facilities, hospitals,
dialysis clinics, bariatric surgery clinics, physicians, and marketing companies
(under private label or licensing agreements). Unless the context otherwise
requires, references to the Company in this report include Medical Nutrition
USA, Inc. and its subsidiaries.

      On July 2, 2003, Francis A. Newman, 55 was appointed as Chairman replacing
Eugene Terry who resigned. Mr. Newman has been a director and consultant to the
company since November 2002.

INDUSTRY OVERVIEW / NUTRITIONAL SUPPLEMENTS/ NUTRITION-MEDICINE

      The nutritional supplements/nutrition medicine industry is highly
fragmented and intensely competitive. It includes companies that manufacture and
distribute products that are generally intended to enhance the body's
performance and well being. Nutritional supplements include vitamins, minerals,
dietary supplements, herbs, botanicals and compounds derived therefrom.
Opportunities in the nutritional supplements industry were enhanced by the
enactment of the Dietary Supplement Health and Education Act of 1994 ("DSHEA").
Under DSHEA, vendors of dietary supplements are able to educate consumers
regarding the effects of certain component ingredients. With certain limited
exceptions, the sale of nutritional supplements is not subject to FDA approval
prior to sale. See "Government Regulation" below.

      According to Nutrition Business Journal, (June 2002), sales in the market
in which the Company's products compete approach $100 billion annually. The
Institutional Nutritional Supplements market is $4.2 billion with 12% annual
growth 1995-2000 (The Resource Center, 2003).


                                       1
<PAGE>

      LONG-TERM CARE

      The Long-Term Care Market includes nursing, convalescent and
assisted-living facilities. There are approximately 17,000 nursing home
facilities in the United States with 535 nursing home chains, both large and
small. The number of Americans aged 65 and over is projected to increase from 35
million to over 70 million by 2030, (Administration on Aging - A Profile of
Older Americans: 2002). An important component of the Older Americans Act (the
"OAA") includes programs and services to specifically address nutrition among
older persons. Nursing home facilities are required by law to assure that each
resident maintain "acceptable parameters of nutritional status, such as body
weight and protein levels, unless the clinical condition demonstrates that this
is not possible." Within the nursing home patient population, Protein Energy
Malnutrition (PEM), a deficiency of protein and energy (calories), is a common
condition resulting in loss of lean body mass, development of Pressure Ulcers,
impaired immune response and organ function. In observational studies,
Pro-Stat(TM), the Company's patented, modular protein supplement has been shown
to be effective nutritional support in the treatment of pressure ulcers,
unintended weight loss and malnutrition. It delivers high nitrogen donor amino
acids to replenish depleted protein stores and correct PEM.

      BARIATRIC SURGERY

      Bariatric surgery for the morbidly obese is widely accepted as an
effective treatment for many of those who have waged a life-long and
unsuccessful struggle to control their weight. Common co-morbidities of obesity
include heart disease, cancer, stroke and diabetes, (Julie Gerberding of the
Centers for Disease Control,October 29, 2003). It is estimated that over 150,000
bariatric surgeries will be performed in the US in 2004, a number that is
expected to grow in the future.

      The most common surgical procedures include, among other things, reducing
the size of the stomach to a fraction of its normal size. Most surgeons
recommend that bariatric surgery patients remain on a clear liquid diet
immediately after surgery. Full liquids can generally be introduced after weeks
of recovery. Post-surgical patients are typically able to ingest only small
amounts at each feeding before becoming sated. One of the primary nutritional
issues that results is ensuring adequate intake of protein, which is notably
lacking in most clear liquid diets and is required by the body for post-surgical
wound healing. The Company has developed a line of pbs Nutritional Support
System(TM) liquid products and is marketing these products along with Pro-Stat
64 to the bariatric surgery market. Sales are generated both to the surgical
practices as well as directly to the patients through the Company's on-line
fulfillment process.

      RENAL CARE

      There are more than 400,000 End Stage Renal Disease patients undergoing
dialysis treatments in the United States. Dialysis patients need to maintain
high protein and calorie intake to avoid becoming malnourished. Dialysis causes
a higher need for protein intake because some protein loss occurs with each
treatment. Additionally, dialysis patients may suffer from poor appetite.
Pro-Stat(TM) has important benefits for dialysis patients: high protein to
volume ratio; small serving size; enhanced absorption; ease of administration;
and low sodium, potassium and phosphorous. The Company intends to strengthen its
Renal Care sales effort through staffing, advertising and attendance at trade
shows and conventions.

      INDUSTRY TRENDS

      Important trends in health care include the increased use of nutrition
medicine for prevention and treatment, the increased interest in anti-aging
preparations, and the increase in size of the elder population. The Company
believes that these markets for nutrition-medicine products are expanding and it
intends to continue developing products for that arena.

      The industry trends are fed by:

      o     The growth in understanding of the link between diet, nutrition, and
            health;
      o     Research into the role proper nutrition plays in healthcare and
            anti-aging;
      o     Use of preventive and alternative treatments, including bariatric
            surgery; and
      o     The aging of the American population.


                                       2
<PAGE>

PRODUCTS AND STRATEGY

      During the past three years the Company has changed its strategy from
focusing its business primarily on sales generated over the Internet, to
focusing primarily on the long-term care, bariatric and renal care markets,
while maintaining its private label business. During that transition, the
Company's sales have been generated primarily by the sale of private label
products for health food store marketing companies and medically supervised
weight management clinics. These products are sold under various brands
including:

      o     Amino Sculpt(TM), a collagen based protein supplement;
      o     Carbo Curb(TM), an alpha amylase inhibitor, (blocks the absorption
            of starch;
      o     The Healthy Nut(TM), a low fat soy snack nut; and
      o     Colostrum Gold(TM), a colostrum wafer formula to strengthen the
            immune system.

      During the fiscal year ending January 31, 2003, the majority of the
revenues generated by the Company resulted from the sale of a private label
collagen product primarily to one customer and sales of existing products,
including nutritional supplements and Pro-Stat(TM).

      During the past year, the Company has continued to implement its new
business strategy with increased sales of its own branded products, primarily to
nursing homes and nursing home distributors, and continues to increase the
proportion of its sales generated by its own brands. These products include
Pro-Stat(TM), an enzymatic hydrolyzed, liquid protein supplement used to treat
unintended weight loss, malnutrition and pressure ulcers.

      The Company's strategy includes expanding the number of nursing homes
employing Pro-Stat(TM) therapy through the use of consultant dietitians, sales
representatives , and exhibitions at trade shows that focus on long-term care.
Monthly sales of Pro-Stat(TM) have increased over 500% since February 2003. In
addition the Company has embarked on a clinical trial for Pro-Stat(TM) in the
treatment of decubiti ulcers among nursing home patients, the results of which
are expected to be available in the current fiscal year.

      During the fiscal year ending January 31, 2004, the revenues generated by
the Company resulted from the sale of existing branded products, including
Pro-Stat(TM) and private label products.

      For the fiscal year ended January 31, 2004, one private label customer
accounted for approximately 62% of total sales. The Company expects this
percentage to decrease to below 50% in the coming year as the Company expands
the amount of sales of its own branded products. The Company has no contractual
arrangement with this customer and if the customer were to discontinue
purchasing from the Company, it would have a material impact on its business
operations.

      In the past year, the Company has developed a number of new products for
introduction over the next twelve months including various derivative
formulations of its Pro-Stat(TM) liquid protein supplement. These derivative
formulations have expanded the potential uses of Pro-Stat(TM) to patients
covered under Medicare Part B, and to those receiving supplements as a Med Pass
item. In addition, the Company has developed the pbs Nutritional Support
System(TM) liquid nutrient line for bariatric surgery patients. There is no
assurance that the Company will be able to successfully market these new
products or that the sale of these products will be profitable for the Company.

      The Company believes that the success of its strategy will be dependent
upon the quality of its products; its ability to establish brand name
recognition for its products; its ability to continue to develop new products,
as well as the ability of its management and the people associated with the
Company to implement and execute its strategy. In addition, the market for
nutrition medicine supplements is extremely competitive. There are many
companies with substantially greater resources than the Company and with
established brands presently being marketed.

MANUFACTURING

      The Company uses contracted third parties to manufacture its products. In
August 2003, the company entered into a cross-ownership agreement with its
principal manufacturer whereby mutual protections were established regarding
intellectual property and pricing. The third party manufacturers are responsible
for receipt and storage of raw material, production and packaging, and labeling
of finished goods. At present, the Company is dependent upon manufacturers for
the production of all of its products. To the extent the manufacturers should
discontinue their relationship with the Company, the Company's sales could be
adversely impacted. The Company believes at the present time it will be able to
obtain the quantity of products it will need to meet orders.


                                       3
<PAGE>

COMPETITION

      The nutritional supplement/nutrition-medicine industry is highly
competitive. Many of the Company's competitors are large well-known companies
that have considerably greater financial, sales, marketing and technical
resources than the Company. Additionally, these competitors have research and
development capabilities that may allow them to develop new or improved products
that may compete with product lines the Company markets and distributes. In
addition, competitors may elect to devote substantial resources to marketing
their products to similar outlets and may choose to develop educational and
information programs like those developed by the Company to support their
marketing efforts. The Company's business, financial condition and results of
operations could be materially and adversely affected by any one or more of such
developments.

      Competition for the nutrition-medicine products the Company offers is
significant. These products compete against a number of well-known brands of
similar products. The Company's failure to adequately respond to the competitive
challenges faced by the products it offers could have a material adverse effect
on its business, financial condition and results of operations.

INTELLECTUAL PROPERTY

      The Company regards the protection of copyrights, trademarks and other
proprietary rights that it may own or license as material to its future success
and competitive position. The Company intends to rely on a combination of laws
and contractual restrictions such as confidentiality agreements to establish and
protect its proprietary rights. Laws and contractual restrictions, however, may
not be sufficient to prevent misappropriation of proprietary rights or deter
others from independently developing products that are substantially equivalent
or superior.

PATENTS

      Since 1977, the Company has been issued four patents for its collagen
Hydrolysate product. These are for (1) Method Of Providing High-Protein
Nutrition By The Oral Administration Of A Predigested Protein Composition, (2)
Method Of Composition For Preventing Nutritional Deficiency, (3) Method Of
Treating Nutritional Deficiency During Cardiac Cachexia, Diabetes, Hypoglycemia,
Gastroenterology, Lipid, Cell Glycogen And Keratin Related Skin Conditions And
Alcoholism, and (4) Method Of Treating Obesity By The Oral Administration Of A
Predigested Protein Composition. The Company has applied for a patent for
Pro-Stat(TM) for the treatment of Pressure Ulcers. Some of the products that the
Company offers incorporate patented technology owned by others, but patents do
not protect most of the Company's products.

TRADEMARKS

      The Company has been using the Pro-Stat(TM) mark since August 2002, the
pbs Nutrition Support System(TM) since August 2003, and the Healthy Nut(TM) mark
for three years. It has been using the CraveEnder mark since January 2003. While
the Company intends to take the actions that it believes are necessary to
protect its proprietary rights, it may not have the capital necessary to protect
the trademarks or be successful in doing so.

GOVERNMENT REGULATION

      The formulation, manufacture and labeling of the Company's products are
subject to regulation by one or more federal agencies, including, principally,
the Food and Drug Administration ("FDA"). These activities are also regulated by
various agencies of the states and localities in which the Company's products
are sold.

      Principally through the efforts of the dietary supplement industry, DSHEA
was signed into law in 1994. DSHEA amends the Federal Food, Drug, and Cosmetic
Act and, in the judgment of the Company, is favorable to the dietary supplement
industry. First and foremost, the legislation creates a new statutory class of
"dietary supplements". This new class includes vitamins, minerals, herbs, amino
acids and other dietary substances for human use to supplement the diet. A
dietary supplement which contains a new dietary ingredient, one not on the
market as of October 15, 1994, will require evidence of a history of use or
other evidence of safety establishing that it will reasonably be expected to be
safe, such evidence to be provided by the manufacturer or distributor to the FDA
before it may be marketed. DSHEA also recognizes the need for the dissemination
of information about the link between nutrition and health and provides that
publications, which are not false and misleading and present a balanced view of
available scientific information on a dietary supplement, may be used in
connection with the sale of dietary supplements to consumers. Among other
changes, DSHEA prevents the further regulation of dietary ingredients as "food
additives" and allows the use of statements of nutritional support on product
labels and in other labeling.


                                       4
<PAGE>

      In September 1997, the FDA issued final new regulations to implement
DSHEA. Among other things, these regulations establish a procedure for dietary
supplement companies to notify the FDA about the intended marketing of a new
dietary ingredient or about the use in labeling of statements of nutritional
support. The regulations also establish a new format for nutrition labeling on
dietary supplements. The new format became mandatory on March 23, 1999, and the
Company revised all of its dietary supplements labels to be in compliance by
that date.

      The FDA and other federal authorities are reviewing alternative approaches
to assure the safety of vitamins, minerals, herbals and other products sold as
dietary supplements. Increased regulatory oversight could subject the Company
and other manufacturers and distributors of dietary supplements to increased
production and compliance costs and possibly require capital expenditures.
Future regulation affecting dietary supplements could result in a recall or
discontinuance of certain products.

EMPLOYEES

      The Company has nine full time employees.

RISK FACTORS

      THE COMPANY GENERATES A SIGNIFICANT AMOUNT OF REVENUES FROM A SINGLE
CUSTOMER.

      For the fiscal year ended January 31, 2004, one customer accounted for
approximately 62% of total revenues. The Company expects this percentage to
decrease in the coming year as it expands the amount of product sales under its
own branded label. The Company does not have a contract with this customer and,
as a result, there is no assurance that this customer will continue to order
products from the Company or will continue to order the products in the same
amount. The loss of this customer would have a material effect upon the
operation of the Company.

      THE COMPANY HAS INSTITUTED ITS NEW BUSINESS STRATEGY. ITS BUSINESS MUST
EXPAND FOR IT TO ATTAIN PROFITABILITY.

      The Company has recently implemented its new business strategy. The
Company may not successfully complete the transition to successful operations or
profitability pursuant to its new strategy. The Company may encounter problems,
delays and expenses in implementing its new business strategy. These may
include, but not be limited to, unanticipated problems and additional costs
related to marketing, competition and product acquisitions and development.
These problems may be beyond the Company's control, and in any event, could
adversely affect the Company's results of operations. See "Management's
Discussion and Analysis or Plan of Operation."

      IF THE COMPANY DOES NOT SUCCESSFULLY MANAGE ANY GROWTH IT EXPERIENCES, IT
MAY EXPERIENCE INCREASED EXPENSES WITHOUT CORRESPONDING REVENUE INCREASES.

      The Company's business plan will, if implemented, result in expansion of
its operations. This expansion may place a significant strain on management,
financial and other resources. It also will require the Company to increase
expenditures before it generates corresponding revenues. The Company's ability
to manage future growth, should it occur, will depend upon its ability to
identify, attract, motivate, train and retain highly skilled managerial,
financial, business development, sales and marketing and other personnel.
Competition for these employees is intense. Moreover, the addition of products
or businesses will require the Company's management to integrate and manage new
operations and an increasing number of employees. The Company may not be able to
implement successfully and maintain its operational and financial systems or
otherwise adapt to growth. Any failure to manage growth, if attained, would have
a material adverse effect on the Company's business.


                                       5
<PAGE>

      THE COMPANY IS DEPENDENT ON A LIMITED NUMBER OF SOURCES OF SUPPLY FOR MANY
OF THE PRODUCTS IT OFFERS. IF THERE WAS AN INTERUPTION OF SUPPLY OF PRODUCTS,
THE COMPANY'S SALES MAY SUFFER AND THE COMPANY COULD BE REQUIRED TO ABANDON A
PRODUCT LINE.

      The Company is dependent on a limited number of sources of supply for many
of the products it offers. With respect to these products, the Company cannot
guarantee that these third parties will be able to provide adequate supplies of
products in a timely fashion. If the Company is unable to renew or extend an
agreement with a third-party supplier, if an existing agreement is terminated or
if a third-party supplier otherwise cannot meet the Company's need for a
product, the Company may not be able to obtain an alternative source of supply
in a timely manner or at all. In these circumstances, the Company may be unable
to continue to market products as planned and could be required to abandon or
divest itself of a product line on terms which would materially affect it.

      THE COMPANY MAY BE EXPOSED TO PRODUCT LIABILITY CLAIMS NOT COVERED BY
INSURANCE THAT WOULD HARM ITS BUSINESS.

      The Company may be exposed to product liability claims. Although the
Company believes that it currently carries and intends to maintain a
comprehensive multi-peril liability package, the Company cannot guarantee that
this insurance will be sufficient to cover all possible liabilities. A
successful suit against the Company could have an adverse effect on its business
and financial condition if the amounts involved are material.

      THE COMPANY'S FUTURE CAPITAL REQUIREMENTS WILL DEPEND ON MANY FACTORS. IF
THE COMPANY IS UNABLE TO OBTAIN ADDITIONAL FINANCING WHEN NEEDED, IT MAY NOT BE
ABLE TO CONTINUE TO OPERATE AT ITS CURRENT LEVEL.

      The Company believes that the net proceeds from the Company's recent
private offerings of debt will be sufficient to completely implement its
strategy in fiscal year 2004. See "Management's Discussion and Analysis or Plan
of Operation - Liquidity and Capital Resources". The Company's future capital
requirements will depend on many factors including: the costs of its sales and
marketing activities and its education programs for its markets, competing
product and market developments, the costs of developing new products, the costs
of expanding its operations, and its ability to generate positive cash flow from
its sales.

      Additional funding may not be available on acceptable terms, if at all. If
adequate funds are not available, the Company may be required to curtail
significantly or defer one or more of its marketing programs or to limit or
postpone obtaining new products through license, acquisition or other
agreements. If the Company raises additional funds through the issuance of
equity securities, the percentage ownership of its then-current stockholders may
be reduced and such equity securities may have rights, preferences or privileges
senior to those of the holders of its common stock. If the Company raises
additional funds through the issuance of additional debt securities, these new
securities would have certain rights, preferences and privileges senior to those
of the holders of its common stock, and the terms of these debt securities could
impose restrictions on its operations. For a further discussion of expenditures
and other factors that could affect the Company's need for future capital, see
"Management's Discussion and Analysis or Plan of Operation -- Liquidity and
Capital Resources."

      A GOING CONCERN QUALIFICATION IS CONTAINED IN THE REPORT OF INDEPENDENT
AUDITORS.

      The Company has received from its auditors a report that raises doubt
about the Company's ability to continue as a going concern. If the Company's new
operating plan is not successful, an investor in the Company could lose his
entire investment. Please see the Auditor's Report included in the Consolidated
Financial Statements.

      THE COMPANY'S INABILITY TO OBTAIN NEW PROPRIETARY RIGHTS OR TO PROTECT AND
RETAIN ITS EXISTING RIGHTS COULD IMPAIR ITS COMPETITIVE POSITION AND ADVERSELY
AFFECT ITS SALES.

      The Company believes that the trademarks, copyrights and other proprietary
rights that it owns or licenses, or that it will own or license in the future,
will continue to be important to its success and competitive position. If the
Company fails to maintain its existing rights or cannot acquire additional
rights in the future, its competitive position may be harmed. While some
products the Company offers incorporate patented technology, most of the
products the Company sells are not protected by patents.


                                       6
<PAGE>

      The Company intends to take the actions that it believes are necessary to
protect its proprietary rights, but it may not be successful in doing so on
commercially reasonable terms, if at all. In addition, parties that license
their proprietary rights to the Company may face challenges to their patents and
other proprietary rights and may not prevail in any litigation regarding those
rights. Moreover, the Company's trademarks and the products it offers may
conflict with or infringe upon the proprietary rights of third parties. If any
such conflicts or infringements should arise, the Company would have to defend
itself against such challenges. The Company also may have to obtain a license to
use those proprietary rights or possibly cease using those rights altogether.
Any of these events could harm the Company's business.

      THE PUBLIC MARKET FOR THE COMPANY'S COMMON STOCK MAY BE VOLATILE, AND THE
PRICE OF THE COMMON STOCK MAY FLUCTUATE FOR REASONS UNRELATED TO THE COMPANY'S
OPERATING PERFORMANCE.

      There has been a very limited public market for the Company's common
stock, and the Company does not know whether investor interest in the Company
will lead to the development of a more active trading market. The market prices
and trading volumes for securities of emerging companies, such as the Company,
historically have been highly volatile and have experienced significant
fluctuations both related and unrelated to the operating performance of those
companies. The price of the Company's common stock may fluctuate widely,
depending on many factors, including factors that may cause the Company's
quarterly operating results to fluctuate as well as market expectations and
other factors beyond the Company's control. This could restrict the Company's
ability to access the capital markets for necessary funding.

Item 2. DESCRIPTION OF PROPERTIES

      The principal executive offices of the Company are located at 10 West
Forest Avenue, Englewood, New Jersey 07631, where it leases approximately 7,500
square feet. The lease is for a period of five years commencing January 1, 2000.
The annual rent for the initial three years is $65,625 and for the fourth and
fifth year of the lease is $67,500.

      Approximately 2,500 square feet of this facility house the Company's
administrative offices with the balance utilized for shipping and warehousing.
The Company has arrangements with co-packers pursuant to which such suppliers
manufacture, package and ship the Company's products to major customers. The
Company believes its present facility is adequate for its present and reasonably
foreseeable future operational needs.

Item 3. LEGAL PROCEEDINGS

        None.

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

        None.


                                       7
<PAGE>

                                    PART II

Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The Company's common stock is currently quoted on the OTC Bulletin
Board. Information as to the range of high and low bid quotations for the
Company's common stock, for the periods indicated, as furnished by National
Quotation Bureau Incorporated, is set forth below and adjusted for the one for
twenty five reverse split:

                                                          BID
                                                 ----------------------
THREE MONTHS ENDED                               HIGH              LOW
------------------                               ----             ----
April 30, 2002                                   1.25             1.25
July 31, 2002                                    1.50             1.50
October 31, 2002                                 0.75             0.75
January 31, 2003                                 1.75             1.75
April 30, 2003                                   1.45             1.45
July 31, 2003                                    2.40             2.40
October 31, 2003                                 3.00             3.00
January 31, 2004                                 2.80             2.75

      The above bid quotations represent prices between dealers and do not
include actual retail mark-ups, mark-downs or commissions and may not represent
actual transactions.

      As of April 22, 2004, there were approximately 120 record holders of the
Company's common stock.

      The Company has not declared any cash dividends on its common stock and it
has no intention to pay cash dividends in the foreseeable future.

ITEM 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations

                           FORWARD-LOOKING STATEMENTS

      This document contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. All statements other than
statements of historical fact are "forward-looking statements" for purposes of
federal and state securities laws, including, but not limited to, any
projections of earnings, revenue or other financial items; any statements of the
plans, strategies and objectives of management for future operations; any
statements concerning proposed new services or developments; any statements
regarding future economic conditions or performance; any statements of belief;
and any statements of assumptions underlying any of the foregoing.

      Forward-looking statements may include the words "may," "could," "will,"
"estimate," "intend," "continue," "believe," "expect" or "anticipate" or other
similar words. These forward-looking statements present the Company's estimates
and assumptions only as of the date of this report. Except for the Company's
ongoing obligation to disclose material information as required by the federal
securities laws, the Company does not intend, and undertakes no obligation, to
update any forward-looking statements.

      Although the Company believes that the expectations reflected in any of
the forward-looking statements are reasonable, actual results could differ
materially from those projected or assumed or any of the Company's
forward-looking statements. The Company's future financial condition and results
of operations, as well as any forward-looking statements, are subject to change
and inherent risks and uncertainties.


                                       8
<PAGE>

EXECUTIVE SUMMARY

      2004 Highlights

Branded Product Sales -- The national launch of Pro-Stat that began in August
2003 contributed to a 108% increase in branded product sales for the year ending
January 31, 2004. Approximately 200 additional long-term care facilities and 15
additional distributors began using Pro-Stat during the year, including national
distributors such as McKesson Corporation and MedLine Industries.

Private Label Sales - Private label sales increased 39% for the year. One
customer that markets and distributes products to health food stores was
responsible for 62% of private label sales.

New Product Development -- In October 2003, we completed the development of the
PBS Nutritional Support System(TM) line of small dose, liquid supplements
specifically engineered for bariatric surgery patients. While no PBS revenue was
generated prior to year end, in the first quarter of the current year we shipped
initial orders to two large, multi-facility bariatric surgery companies.

Cash Balance and Cash Flow - Our cash balance at January 31, 2004 was
$2,337,200. For the year, cash used in operating activities totaled $920,800 on
a reported net loss of $1,109,000. Our total cash position at year-end increased
$2,176,700 from the prior year.

2004 Challenges - During the year we recapitalized the Company, reincorporated
as a Delaware corporation and sold approximately $3,337,500 of three-year
convertible notes. We also completed the preparations for the national launch of
Pro-Stat and developed the PBS Nutritional Support System. We invested
approximately $597,000 in the sales and marketing effort to launch Pro-Stat, and
approximately $600,000 in costs related to the recapitalization and financing
effort and the increased staff required for the Pro-Stat launch.

2005 Expectations - As a result of the investments we made last year, our
revenues are growing at a rapid rate. For example, first quarter sales are
expected to increase over 300%. During the year we expect to add approximately
800 new facilities using Pro-Stat. We also expect to be profitable for the full
year.

Results of Operations
---------------------

      The following discussion of the financial condition and results of
operation of the Company should be read in conjunction with the Consolidated
Financial Statements and the related Notes included elsewhere in this report.

      In the past, the Company's quarterly operating results have fluctuated
significantly, with the fourth quarter traditionally being the softest. Because
the Company is in the process of implementing its new business strategy,
seasonality of the Company's business and other factors, which may contribute to
fluctuations in quarterly operating results, are not yet known.

FISCAL YEAR ENDED JANUARY 31, 2004 COMPARED TO FISCAL YEAR ENDED JANUARY 31,
2003

      Sales for the fiscal year ended January 31, 2004 were $2,173,400 as
compared with $1,427,000 for the fiscal year ended January 31, 2003, an increase
of 52.3%. This increase was primarily attributable to an increase in private
label sales to approximately $1,587,100 and an increase of branded product sales
to approximately $586,300.

      Cost of sales for the fiscal year ended January 31, 2004 was $1,127,500,
or 51.9% of sales, as compared with $783,000 for the fiscal year ended January
31, 2003, or 54.9% of sales. This increase in cost of sales was attributable to
the increase in sales in the current fiscal year. Gross profit percentage
increased from 45.1% to 48.1% for the fiscal year ended January 31, 2004
compared to the fiscal year ended January 31, 2003. This increase in gross
profit percentage was primarily due to an increase in branded product sales.

      Selling, general and administrative expenses for the fiscal year ended
January 31, 2004, increased by $1,080,400 to $1,968,400, from $888,000 for the
prior comparable fiscal year. The increase is primarily attributable to
increased salary expense of approximately $ 545,400 for additional personnel;
increases in selling expenses of approximately $453,800 (primarily due to costs
related to the national roll-out of Pro-Stat(TM) into the long-term care
market), increases in insurance costs of approximately $41,000 (primarily due to
higher rates for directors and officers liability coverage). Selling, general
and administrative expenses for the fiscal year ended January 31, 2004 consisted
of personnel costs of approximately $968,100; selling and marketing expenses of
approximately $521,000; legal and professional costs of approximately $192,900;
and other operating costs of approximately $286,400.


                                       9
<PAGE>

      Other expense was $185,100 for the fiscal year ended January 31, 2004 and
other income was $20,100 for the fiscal year ended January 31, 2004, as compared
to other expense of $37,500 and $1,000 other income during the comparable prior
fiscal year. The increase in other expense was primarily due to the interest on
the issuance of the 2002 and 2003 Notes.

      For the fiscal year ended January 31, 2004, the Company incurred an
operating loss of $944,000 as compared to operating loss of $245,000 for the
fiscal year ended January 31, 2003. This increase in loss was due to the
increase in selling, general and administrative expenses.

      The Company incurred a net loss for the fiscal year ended January 31, 2004
of $1,109,000 or ($0.48) per share compared to net loss for the fiscal year
ended January 31, 2003 of $281,500 or ($0.19) per share.

FISCAL YEAR ENDED JANUARY 31, 2003 COMPARED TO FISCAL YEAR ENDED JANUARY 31,
2002

      Sales for the fiscal year ended January 31, 2003 were $1,427,000 as
compared with $488,200 for the fiscal year ended January 31, 2002, an increase
of 192%. This increase in sales was primarily attributable to a significant
increase in private label products sales to a major customer of approximately
$833,500. The Company's major customer represented approximately $987,800 or
69.2% of sales for the fiscal year ended January 31, 2003.

      Cost of sales for the fiscal year ended January 31, 2003 were $783,000, or
54.9% of sales as compared with $303,700 or 62.2% of sales for the fiscal year
ended January 31, 2002. This increase in cost of goods sold is primarily
attributable to the increased sales for the period. The increase in gross profit
percentage from 37.8% to 46.4% was due to the write-off of approximately $30,000
of obsolete inventory in the fiscal year 2002.

      Selling, general and administrative expenses increased 19.0% to $888,000
from $746,600 for the fiscal year ended January 31, 2003. The main reason for
the increase was due to increased salary expense, consulting and professional
fees. The $906,200 consisted mainly of personnel costs of approximately
$410,600, legal and professional services of $190,700, $64,600 in travel and
entertainment, $47,700 in selling expenses, $38,400 in net rent, $25,200 of
insurance expense, and other expenses of approximately $129,000. During the
fiscal year ended January 31, 2003, the Company incurred an expenditure of
$1,000 in website costs as compared to $116,700 in the prior fiscal year related
to the cost of closing the Company's previous website.

      Interest expense was $37,500 and interest income was $1,000 for the fiscal
year ended January 31, 2003, as compared to interest expense of $64,800 during
the fiscal year ended January 31, 2002. The decrease in interest expense was
primarily due to the Company's reduction in short-term debt and the conversion
of a $245,000 loan bearing interest at 10% from an entity affiliated with the
former Chairman of the Board into a one-year non-interest bearing loan effective
May 1, 2002.

      For the fiscal year ended January 31, 2003, the Company incurred an
operating loss of $245,000 as compared to an operating loss of $678,800 for the
fiscal year ended January 31, 2002. This decrease in loss was primarily due to
increased sales volume, resulting in an increase in gross profit of $477,700.

      The Company incurred a net loss for the fiscal year ended January 31, 2003
of $281,500 or ($0.19) per share compared to a net loss for the fiscal year
ended January 31, 2002 of $743,600 or ($0.63) per share.

LIQUIDITY AND CAPITAL RESOURCES

      Effective as of the close of business on February 7, 2003, the Company
implemented a 1-for-25 reverse split of the Company's outstanding shares of
common stock. The effect of the reverse stock split was to reduce the number of
the Company's outstanding shares of common stock from 39,109,680 to 1,564,387.
The reverse stock split also affected options, warrants and other securities
convertible into or exchangeable for shares of the Company's common stock that
were issued and outstanding immediately prior to the effective time of the
reverse stock split. All amounts reflected in this report and in the financial
statements included as part of this report have been restated to give effect to
the reverse stock split.


                                       10
<PAGE>

      At January 31, 2004, the Company had cash of $2,337,200 as compared to
cash of $160,500 on January 31, 2003. During the fiscal year ended January 31,
2004, cash used for operations was $920,800 as compared to $355,200 in the
comparable period of the last fiscal year.

      During the fourth quarter of fiscal 2001, the Company received a loan of
$130,000 from Unity Venture Capital Associates Ltd., an affiliate of Lawrence
Burstein, a director and former Chairman of the Board of the Company. During
fiscal 2002, additional loans were received from this entity and the balance
owed at January 31, 2003 and 2002 was $245,000. Interest accrued at 10% per year
through April 30, 2002 and amounts to approximately $29,100 and $19,300, which
is included in accrued expense at January 31, 2003 and 2002, respectively.
Effective May 1, 2002, this loan was converted to a one year, non-interest
bearing loan. On January 14, 2003, in satisfaction and cancellation of the
Company's obligations to this entity, the Company approved the following
transaction: (a) in connection with the reincorporation of the Company approved
by the Company's shareholders on April 22, 2003, (i) the entire $245,000
principal amount owing to the affiliate was converted into 122,500 shares of the
Company's common stock; (ii) the affiliate received a warrant to purchase 5,875
shares of common stock at an exercise price per share of $2.50; and (iii) the
affiliate received a warrant to purchase 5,750 number of shares of the Company's
common stock at an exercise price per share of $2.50; and (b) the affiliate was
granted "piggyback" registration rights with respect to the shares issued upon
conversion of the principal and the exercise of the warrants; Effective April
22, 2003, upon shareholder approval of the Company's reincorporation in
Delaware, the $245,000 principal amount of the loan was converted into 122,500
shares of common stock and accrued interest on the loan was converted into
11,625 warrants. (See Note 6 to the Condensed Consolidated Financial
Statements).

      In November 2001, Arnold and Myra Gans, President and Secretary of the
Company respectively, personally borrowed $150,000 and loaned the proceeds to
the Company. The Company recorded a $150,000 liability due to them and agreed to
a repayment schedule equal to the repayment schedule of their loan. The balance
at January 31, 2003, was approximately $139,100. During the quarter ended
October 31, 2003, this loan was paid in full (see Note 6 to the Consolidated
Financial Statements).

      From April through June 2002, the Company raised $195,000 ($190,000 net to
the Company after offering expenses) in connection with the sale of 390,000
shares of common stock at $0.50 per share (before giving effect to the 1-for-25
reverse stock split). In November 2002, the Company borrowed $450,000 from
Francis A. Newman and Richard Ullman (The Ullman Family Trust) and issued the
2002 Notes. Each of the 2002 Notes evidencing the loans is substantially the
same, other than the principal amount thereof. The 2002 Notes were for a term of
three years. The 2002 Notes, including accrued and unpaid interest, if any, were
convertible at any time prior to maturity at the option of the note holder into
shares of the Company's common stock at a conversion price of $1.25 per share.
The 2002 Notes, including accrued and unpaid interest, if any, were convertible
at any time prior to maturity automatically if the Company completed an equity
financing in which the Company obtained net proceeds of $2,000,000 or more, at a
rate that is the lower of $1.25 per share or the price per share sold in the
equity financing. If the price per share in such equity financing was equal to
or less than $1.25, the 2002 Notes would be converted into shares of either the
Company's preferred stock or common stock, depending upon the class of equity
securities sold by the Company in such financing. If the price per share in such
equity financing were more than $1.25, the 2002 Notes would be converted into
shares of the Company's common stock. In connection with this transaction, the
Company also issued to the investors common stock purchase warrants (see Note 5
to the Condensed Consolidated Financial Statements). At January 31, 2003, the
outstanding balance of the 2002 Notes was $450,000 and accrued and unpaid
interest was approximately $8,800. Mr. Newman and Mr. Ullman became directors
and Mr. Newman also became Chief Executive Officer in March 2003. On July 31,
2003, the 2002 Notes were converted into 635,239 shares of the Company's common
stock. (See Note 7 to the Condensed Consolidated Financial Statements).


                                       11
<PAGE>

      From April 29, 2003 to August 31, 2003, the Company borrowed an additional
$3,127,500 from various individuals and issued the 2003 Notes. Each of the 2003
Notes evidencing the loans is substantially the same, other than the principal
amount thereof. The 2003 Notes are for a term of three years. The 2003 Notes,
including accrued and unpaid interest, if any, are convertible at any time prior
to maturity at the option of the note-holder into shares of the Company's common
stock at a conversion price of $0.75 per share. The 2003 Notes, including
accrued and unpaid interest, if any, are convertible at any time prior to
maturity automatically if the Company completes an equity financing in which the
Company obtains net proceeds of $2,000,000 or more, at a rate that is the lower
of $0.75 per share or the price per share sold in the equity financing. If the
price per share in such equity financing is equal to or less than $0.75, the
2003 Notes shall be converted into shares of either the Company's preferred
stock or common stock, depending upon the class of equity securities sold by the
Company in such financing. If the price per share in such equity financing is
more than $0.75, the 2003 Notes shall be converted into shares of the Company's
common stock. In connection with this transaction, the Company also issued to
the investors common stock purchase warrants (see Note 5 to the Condensed
Consolidated Financial Statements). At January 31, 2004, the outstanding balance
of the 2003 Notes was $3,127,500 and the accrued and unpaid interest was
approximately $148,100.

      In December 2003, the Company entered into a Clinical Trial Agreement
wherein the Company agreed to implement a clinical development program and
pursue a patent for one of its products in exchange for two loans aggregating
$250,000 from two private investors. As additional consideration, the Company
issued warrants to the investors to purchase up to 111,111 shares of the
Company's common stock. The warrants have a three-year term and are exercisable
at $3.00 per share. In addition, the investors have agreed to assist the Company
in the completion of the clinical trials and the dissemination and publication
of the clinical trial results. The loans are evidenced by convertible promissory
notes that are payable in a single installment on their third anniversary.
Interest accrues over the three-year term at a rate (up to a maximum of ten
percent) to be determined by calculating one-half percent for each one percent
increase in actual sales over projected sales (as set forth in the convertible
promissory notes) during the period July 1, 2004 through June 30, 2005. The
notes are convertible at any time at a conversion price per share of $2.25. The
notes are unsecured and may be prepaid without penalty.

      The Company believes that it has sufficient liquidity to meet its
operating cash requirements for the planned level of operations during the
remainder of the fiscal year as long as its current level of sales continues at
the same rate or increases. The Company's future capital requirements will
depend on many factors including: the costs of its sales and marketing
activities and its education programs for its markets, competing product and
market developments, the costs of developing new products, the costs of
expanding its operations, and its ability to generate positive cash flow from
its sales. Should the Company require additional financing, there can be no
assurance that financing will be available, or if available, that it will be on
terms acceptable to the Company. If the Company is unable to fund its operating
cash flow needs, the Company would be required to curtail its plans to expand
operations.

      If the Company raises additional funds through the issuance of common
stock or convertible preferred stock, the percentage ownership of its
then-current stockholders may be reduced and such equity securities may have
rights, preferences or privileges senior to those of the holders of its common
stock. If the Company raises additional funds through the issuance of additional
debt securities, these new securities could have certain rights, preferences and
privileges senior to those of the holders of its common stock, and the terms of
these debt securities could impose restrictions on its operations.

CRITICAL ACCOUNTING POLICIES:
-----------------------------

      Accounts Receivable - The Company provides an allowance for doubtful
accounts equal to the estimated uncollectible amounts in trade accounts
receivable. The Company's estimate is based on a review of the current status of
these accounts. It is reasonably possible that the Company's estimate of the
allowance for doubtful accounts will change. Accounts receivable are presented
net of an allowance for doubtful accounts of $3,300 at January 31, 2004. No
allowance was considered necessary at January 31, 2003.

      Inventories - Inventories, which consist primarily of purchased finished
foods, are stated at the lower of cost or market using the "first-in, first-out"
(FIFO) cost method.

      Patent Application Costs - Patent application costs relate to the
Company's U.S. patent applications and consist primarily of legal fees, the
underlying clinical studies and other direct fees. The recoverability of the
patent application is dependent upon, among other factors, the success of the
underlying clinical studies used to support the patent.

      Stock-Based Compensation - The Company accounts for employee stock options
in accordance with Accounting Principles Board Opinion No. 25 (APB 25),
"Accounting for Stock Issued to Employees." The Company recognizes no
compensation expense related to employee stock options, as no options were
granted at a price below the market price on the day of grant.

      Financial Accounting Statement No. 123 "Accounting for Stock Based
Compensation" (FAS 123) which prescribes the recognition of compensation expense
based on the fair value of options on the grant date, allows companies to
continue applying APB 25 if certain pro forma disclosures are made assuming
hypothetical fair value method application.


                                       12
<PAGE>

      Use of Estimates - In preparing financial statements in conformity with
accounting principles generally accepted in the United State of America,
management is required to make estimates and assumptions that affect the
reported amounts of assets and the disclosures of contingent assets and
liabilities at the date of the financial statements and revenues and expenses
during the reported period. Actual results could differ from those estimates.

Item 7: FINANCIAL STATEMENTS

      See Financial Data Section appearing on pages F1-F18.

Item 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

      None

Item 8A: CONTROLS AND PROCEDURES

      We carried out an evaluation, under the supervision and with the
participation of management, including the Company's principal executive officer
and principal financial officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures (as defined under
Rules 13a-15 (e) and 15d-15 (e) under the Securities Exchange Act of 1934, as
amended) as of the end of the year covered by this report. Based upon that
evaluation, the Company's principal executive officer and principal financial
officer concluded that the Company's disclosure controls and procedures are
effective in timely altering them to material information relating to us
(including the Company's consolidated subsidiary) that is required to be
included in the Company's periodic Security Exchange Commission reports.

      There was no change in the Company's internal control over financial
reporting that occurred during the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

PART III

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

      Information regarding the Company's directors and officers is set forth in
"Proposal 1 - Election of Directors" under the caption "Biographical Information
Regarding Directors" in the Company's definitive proxy statement for its 2003
Annual Meeting of Shareholders to be held April 22, 2003. Such information is
incorporated herein by reference. Information regarding compliance by the
Company's directors and executive officers and owners of more than ten percent
of common stock with the reporting requirements of Section 16(a) of the Exchange
Act is set forth in the proxy statement under the caption "Section 16(a)
Beneficial Ownership Reporting Compliance." Such information is incorporated
herein by reference.

Item 10. EXECUTIVE COMPENSATION

      Information regarding the compensation of the Company's executive officers
and directors is set forth in "Proposal 1 - Election of Directors" under the
caption "Director Compensation" and under the caption "Summary of Cash and
Certain Other Compensation" in the proxy statement. Such information is
incorporated herein by reference.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      Information regarding ownership of the Company's common stock by certain
persons is set forth under the caption "Security Ownership of Certain Beneficial
Owners and Management" in the proxy statement. Such information is incorporated
herein by reference.


                                       13
<PAGE>

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Information regarding relationships or transactions between the Company
and its affiliates is set forth under the caption "Certain Relationships and
Related Transactions" in the proxy statement. Such information is incorporated
herein by reference.

Item 13. Exhibits and Reports on Form 8-K

      (a) Documents filed as part of this report:

      1.    Financial Statements.

      The consolidated financial statements contained herein as listed on the
"Index to Consolidated Financial Statements" on page F-1 of this report.

      2.    Financial Statement Schedules

      Not applicable.

      3.    Exhibits

      See Exhibit Index

      (b)   Reports on Form 8-K:

      None

      (c)   Exhibits:

      The following exhibits are attached hereto and incorporated herein by
reference.

EXHIBIT  EXHIBIT
NUMBER   DESCRIPTION
------   -----------

3.1*     Employment Agreement dated March 1, 2003 by and between the registrant
         and Francis A. Newman.

3.2*     Form of Subscription Agreement between Medical Nutrition USA, Inc. and
         Organics Corporation of America

3.3*     Form of Subscription Agreement between Organics Corporation of America
         and Medical Nutrition USA, Inc.

3.4*     Product Development And Supply Agreement dated July 31, 2003

21.1*    Subsidiaries of the registrant

23.1*    Consent of Independent Accountants

24.1*    Power of Attorney (included after signatures below)

31.1*    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2*    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

32.1*    Certificate of Chief Executive Officer pursuant to 18 U.S.C.
         Section 1350.

32.2*    Certificate of Chief Financial Officer pursuant to 18 U.S.C.
         Section 1350.

----------
*Filed herewith.


                                       14
<PAGE>

Item 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

      Information regarding the Company's principal accountant fees and services
is set forth in "Proposal 2 - Ratification of Appointment of Independent Public
Accountants" in the proxy statement. Such information is incorporated herein by
reference.


                                   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.

Dated: APRIL 28, 2004                   MEDICAL NUTRITION USA, INC.


                                        By: /s/ FRANCIS A. NEWMAN
                                           -------------------------------------
                                           Francis A. Newman, CEO


                                       15

<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)

                          INDEX TO FINANCIAL STATEMENTS

                                                                        Page(s)
                                                                        -------

Independent Auditors' Report .........................................      F-2

Consolidated Balance Sheets at January 31, 2004 and 2003 .............      F-3

Consolidated Statements of Operations for the Years Ended
January 31, 2004 and 2003 ............................................      F-4

Consolidated Statements of Cash Flows for the Years Ended
January 31, 2004 and 2003 ............................................      F-5

Consolidated Statements of Stockholders' Equity for the Years Ended
January 31, 2004 and 2003 ............................................      F-6

Notes to Consolidated Financial Statements ...........................  F-7-F-18


                                      F-1
<PAGE>

                     [LETTERHEAD OF GOLDSTEIN & GANZ, P.C.]

                          Independent Auditors' Report

To the Board of Directors of
Medical Nutrition USA, Inc.
(f/k/a Gender Sciences, Inc.)

      We have audited the accompanying consolidated balance sheets of Medical
Nutrition USA, Inc. (f/k/a Gender Sciences, Inc.) as of January 31, 2004 and
2003 and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the two years in the period ended January 31,
2004. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Medical Nutrition USA, Inc.
(f/k/a Gender Sciences, Inc.) as of January 31, 2004 and 2003, and the results
of its operations and cash flows for each of the two years in the period ended
January 31, 2004 and 2003 in conformity with auditing standards generally
accepted in the United States of America.

      The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
10 to the financial statements, the Company has suffered recurring losses from
operations, and net capital deficiencies that raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 10. The consolidated financial statements do
not include any adjustments relating to the recoverability or reclassification
of any asset or liability that might result from the outcome of this
uncertainty.

                                        /s/ Goldstein & Ganz, CPA's, PC
Great Neck, NY
March 31, 2004


                                      F-2
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
ASSETS                                                                        JANUARY 31,
                                                                    -----------------------------
                                                                         2004            2003
                                                                    ------------    ------------
<S>                                                                 <C>             <C>
Current assets:
     Cash                                                           $  2,337,200    $    160,500
     Accounts receivable, net of allowance of $3,300 and
         -0- at January 31, 2004 and 2003, respectively                  161,500         139,200
     Inventories                                                          93,900          39,800
     Other current assets                                                 75,700          14,100
                                                                    ------------    ------------
         Total current assets                                          2,668,300         353,600

Fixed assets, net of accumulated depreciation
     of $117,900 and $108,500, respectively                               32,500          24,400

Other assets:
     Security deposits                                                    15,300          15,200
     Investment in Organics Corporation of America                       125,000              --
     Intangible assets, net of amortization                               65,100          11,800
                                                                    ------------    ------------
                                                                    $  2,906,200    $    405,000
                                                                    ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued expenses                          $    322,300    $    269,300
       Customer deposits                                                   1,000           2,500
     Bank loan, current portion                                               --          11,000
     Loan payable- Officer and stockholder                                    --         441,100
                                                                    ------------    ------------
         Total current liabilities                                       323,300         723,900
Non-current Liabilities:
       Convertible notes payable                                       3,377,500         450,000
       Bank loan, net of current portion                                      --           1,100
                                                                    ------------    ------------
         Total liabilities                                             3,700,800       1,175,000
                                                                    ------------    ------------

Stockholders' Equity:
       Common stock, no par value; 70,000,000 shares authorized;
            2,783,759 and 1,564,387 shares issued and outstanding
            at January 31, 2004 and 2003, respectively                10,837,200       9,752,800
     Accumulated deficit                                             (11,621,400)    (10,512,400)
                                                                    ------------    ------------
                                                                        (784,200)       (759,600)
     Less:  treasury stock, at cost                                      (10,400)        (10,400)
                                                                    ------------    ------------
       Total stockholders' equity  (deficit)                            (794,600)       (770,000)
                                                                    ------------    ------------
                                                                    $  2,906,200    $    405,000
                                                                    ============    ============
</TABLE>

                 See notes to consolidated financial statements.


                                      F-3
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                       Years Ended January 31,
                                                     --------------------------
                                                         2004           2003
                                                     -----------    -----------
Sales                                                $ 2,173,400    $ 1,427,000
Cost of Sales                                          1,127,500        783,000
                                                     -----------    -----------
      Gross Profit                                     1,045,900        644,000

Selling, general and administrative expenses           1,968,400        888,000
Web site costs                                            21,500          1,000
                                                     -----------    -----------
Operating (loss)                                        (944,000)      (245,000)
                                                     -----------    -----------

Other income (expense):
       Interest income                                    20,100          1,000
       Interest (expense)                               (185,100)       (37,500)
                                                     -----------    -----------
       Total other income (expense)                     (165,000)       (36,500)
                                                     -----------    -----------

Net (loss)                                           $(1,109,000)   $  (281,500)
                                                     ===========    ===========

Basic and diluted per share data:
Net (loss)                                           $     (0.48)   $     (0.19)
                                                     ===========    ===========

Weighted average number of shares outstanding          2,333,493      1,471,949
                                                     ===========    ===========

                 See notes to consolidated financial statements.


                                      F-4
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                    Years Ended January 31,
                                                                                   --------------------------
                                                                                      2004           2003
                                                                                   -----------    -----------
<S>                                                                                <C>            <C>
Cash flows from operating activities:
Net (loss)                                                                         ($1,109,000)   ($  281,500)
Adjustments to reconcile net (loss) to net cash provided by (used for) operating
activities:
         Depreciation and amortization                                                  10,400          7,800
         Employee compensation paid with common stock                                  205,900             --
         Change in operating assets and liabilities:
           Accounts receivable                                                         (22,300)       (61,600)
           Inventories                                                                 (54,100)        12,500
           Prepaid expenses and other current  assets                                  (61,600)       (13,200)
           Accounts payable and accrued expenses                                       111,400        (19,200)
           Customer deposits                                                            (1,500)            --
                                                                                   -----------    -----------
     Net cash used for operating activities                                           (920,800)      (355,200)
                                                                                   -----------    -----------

Cash flows from investing activities:
     Patent application cost                                                           (43,900)            --
     Purchase of equipment                                                             (18,300)        (4,800)
     Trademark costs                                                                    (9,600)       (13,600)
                                                                                   -----------    -----------
   Net cash used for investing activities                                              (71,800)       (18,400)
                                                                                   -----------    -----------
Cash flows from financing activities:
     Net proceeds from sale of common stock                                                 --        190,000
     Proceeds from sale of convertible promissory notes                              3,377,500        450,000
     Payment of loans from officers and stockholders                                  (196,100)      (110,400)
     Payment of bank borrowings                                                        (12,100)            --
                                                                                   -----------    -----------
     Net cash provided by financing activities                                       3,169,300        529,600
                                                                                   -----------    -----------

Increase in cash                                                                     2,176,700        156,000
Cash at beginning of year                                                              160,500          4,500
                                                                                   -----------    -----------

Cash at end of year                                                                $ 2,337,200    $   160,500
                                                                                   ===========    ===========

Supplemental information:
     Interest paid                                                                 $     7,500    $    25,800
                                                                                   ===========    ===========
</TABLE>

                See notes to consolidated financial statements.


                                      F-5
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                      YEARS ENDED JANUARY 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                           Common Stock
                                     -------------------------      Accumulated       Treasury        Total
                                      Shares         Amount           Deficit          Stock          Equity
                                     ---------     -----------     ------------      --------      -----------
<S>                                  <C>           <C>             <C>               <C>           <C>
Balance at January 31, 2002          1,174,387     $ 9,562,800     $(10,230,900)     $(10,400)     $  (678,500)

Proceeds from sales of shares of
Common stock                           390,000         190,000               --            --          190,000

Net (Loss)                                                             (281,500)                      (281,500)
                                     ---------     -----------     ------------      --------      -----------
Balance at January 31, 2003          1,564,387     $ 9,752,800     $(10,512,400)     $(10,400)     $  (770,000)
                                     =========     ===========     ============      ========      ===========

Share issued as payment for:
   Various liabilities                 761,706         753,500                                         753,500

   Compensation to Employees           291,000         205,900                                         205,900

   Acquisition of investment in
   Organic Corporation of America      166,666         125,000                                         125,000

Net (loss)                                                           (1,109,000)                    (1,109,000)
                                     ---------     -----------     ------------      --------      -----------
Balance January 31, 2004             2,783,759     $10,837,200     $(11,621,400)     $(10,400)     $  (794,600)
                                     =========     ===========     ============      ========      ===========
</TABLE>

                 See notes to consolidated financial statements.


                                      F-6
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2004

Note 1. Organization and Business:

      Medical Nutrition USA, Inc. (Medical Nutrition or the Company) is
primarily engaged in the development and distribution of nutritional and health
products. The Company develops nutrition-medicine products for sale to
physicians, dispensing medical clinics, nursing homes and network marketing
companies. The Company's products are sold under its own brands and/or under
private label or licensing agreements.

Re-incorporation - On April 22, 2003, the Company held its annual shareholder
meeting, at which the shareholders approved the re-incorporation of the Company.
To implement this, the Company formed a new Delaware corporation, Medical
Nutrition USA, Inc., a wholly owned subsidiary of the Company, which was then
named Gender Sciences, Inc. The Company merged into Medical Nutrition USA, Inc.
pursuant to an Agreement and Plan of Merger. As a result of the merger, Medical
Nutrition USA, Inc. was the surviving entity. Pursuant to the merger agreement,
each outstanding share of the Company's common stock automatically converted
into one share of common stock of Medical Nutrition USA, Inc. upon the effective
date of the merger. Each of the Company's shareholders owns shares in Medical
Nutrition USA, Inc. in the same amount and percentage as they held the Company
immediately before the re-incorporation.

Recapitalization - Effective as of the close of business on February 7, 2003,
the Company implemented a one-for-twenty-five reverse split of the Company's
outstanding shares of common stock. The effect of the reverse stock split was to
reduce the outstanding shares from 39,109,680 to 1,564,387. The reverse stock
split also affected options, warrants and other securities convertible into or
exchangeable for shares of the Company's common stock that were issued and
outstanding immediately prior to the effective time of the stock combination.
Unless stated otherwise, all amounts reflected in the January 31, 2004 financial
statements give effect to the reverse stock split.

Note 2. Significant Accounting Policies:

Principles of Consolidation - The consolidated financial statements include the
accounts of the Company and its wholly owned and majority owned subsidiaries
after elimination of inter-company accounts and transactions for ongoing
activities.

Concentration of credit risk - The Company maintains its cash in several bank
accounts at one high credit quality financial institution. The balances, at
times, may exceed federally insured limits. At January 31, 2004, the Company had
approximately $2.1 million in excess of FDIC insured limits.

The financial component, which principally subjects the Company to significant
concentrations of credit risk, is trade accounts receivable.

Accounts Receivable - The Company provides an allowance for doubtful accounts
equal to the estimated uncollectible amounts in trade accounts receivable. The
Company's estimate is based on a review of the current status of these accounts.
It is reasonably possible that the Company's estimate of the allowance for
doubtful accounts will change. Accounts receivable are presented net of an
allowance for doubtful accounts of $3,300 at January 31, 2004. No allowance was
considered necessary at January 31, 2003.

Inventories - Inventories, which consist primarily of purchased finished foods,
are stated at the lower of cost or market using the "first-in, first-out" (FIFO)
cost method.


                                      F-7
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2004

Note 2. Significant Accounting Policies (continued):

Fixed Assets - Furniture, fixtures and equipment, and leasehold improvements are
stated at cost and depreciated and amortized over their estimated useful lives,
which range from 3 to 10 years. Depreciation is calculated using the
straight-line method for financial reporting purposes. Expenditures for repairs
and maintenance, which do not extend the useful life of the property, are
expensed as incurred.

Patent Application Costs - Patent application costs relate to the Company's U.S.
patent applications and consist primarily of legal fees, the underlying clinical
studies and other direct fees. The recoverability of the patent application is
dependent upon, among other factors, the success of the underlying clinical
studies used to support the patent.

Research and Development - The Company and its subsidiaries utilize independent
third parties to design and test certain products. These expenditures are
accounted for as research and development costs and are expensed as incurred.

Income Taxes - The Company provides for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 (SFAS 109), "Accounting for
Income Taxes". SFAS 109 requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences between
the financial statement carrying amounts and the tax basis of assets and
liabilities.

Revenue Recognition - The Company follows the guidance in the Securities and
Exchange Commission's Staff Accounting Bulletin no. 101, "revenue recognition"
("SAB101"). Revenue is recognized when all four of the following conditions
exist: persuasive evidence of an arrangement exists; services have been rendered
or delivery occurred; the price is fixed or determinable; and collectibility is
reasonably assured. Revenue from product sales is recognized upon shipment of
products to customers.

Stock-Based Compensation - The Company accounts for employee stock options in
accordance with Accounting Principles Board Opinion No. 25 (APB 25), "Accounting
for Stock Issued to Employees." The Company recognizes no compensation expense
related to employee stock options, as no options were granted at a price below
the market price on the day of grant.

Financial Accounting Statement No. 123 "Accounting for Stock Based Compensation"
(FAS 123) which prescribes the recognition of compensation expense based on the
fair value of options on the grant date, allows companies to continue applying
APB 25 if certain pro forma disclosures are made assuming hypothetical fair
value method application. See Note 8 - Stockholders' Equity for pro forma
disclosures required by FAS 123 plus additional information on the Company's
stock options.

Earnings Per Share - The consolidated financial statement are presented in
accordance with Statement of Financial Accounting Standards no. 128 (SFAS 128),
"earnings Per Share". Basic earnings per common share are computed using the
weighted average number of common shares outstanding during the period. Diluted
earnings per common share incorporate the incremental shares issuable upon the
assumed exercise of stock options and warrants. In accordance with SFAS 128,
diluted earnings per share are not presented in periods during which the Company
incurred a loss from operations.

Amortization of Intangibles - In July 2001, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards No. 142 (SFAS
142), "Goodwill and Other Intangible Assets".


                                      F-8
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2004

Note 2. Significant Accounting Policies (continued):

Under SFAS No. 142, goodwill and intangible assets with indefinite lives are no
longer amortized but are reviewed annually, or more frequently if impairment
indicators arise, for impairment. Furthermore, under SFAS No. 142, separable
intangible assets that are not deemed to have an indefinite life will be
amortized over their useful lives. SFAS 142 was applied to previously acquired
intangibles in the first quarter of fiscal 2003. The adoption of SFAS 142 did
not have a material effect on the Company's results of operations or financial
position.

Carrying Values of Long-lived Assets - The Company evaluates the carrying values
of its long-lived assets to be held and used in the business by reviewing
undiscounted cash flows. Such evaluations are performed whenever events and
circumstances indicate that the carrying amount of an asset may not be
recoverable. If the sum of the projected undiscounted cash flows over the
remaining lives of the related assets does not exceed the carrying values of the
assets, the carrying values are adjusted for the differences between the fair
values and the carrying values.

Use of Estimates - In preparing financial statements in conformity with
accounting principles generally accepted in the United State of America,
management is required to make estimates and assumptions that affect the
reported amounts of assets and the disclosures of contingent assets and
liabilities at the date of the financial statements and revenues and expenses
during the reported period. Actual results could differ from those estimates.

Reclassification - Certain amounts in the January 31, 2003 financial statements
were reclassified to conform to the January 31, 2004 presentation.

Note 3. Fixed Assets:

      Fixed assets consisted of the following at January 31, 2004 and 2003,
respectively:

                                                              January 31,
                                                       -------------------------
                                                         2004             2003
                                                       --------         --------
 Furniture, fixtures and equipment                     $121,900         $107,700
 Leasehold improvements                                  28,500           25,200
                                                       --------         --------
                                                        150,400          132,900
 Less:  Accumulated depreciation
        and amortization                                117,900          108,500
                                                       --------         --------
                                                       $ 32,500         $ 24,400
                                                       ========         ========

Note 4 - Investment in Organics Corporation of America:

      On July 31, 2003, the Company entered into an agreement with Organics
Corporation of America to purchase 5% of their issued and outstanding capital
stock for aggregate consideration of $125,000. In turn Organics Corporation of
America agreed to purchase 166,666 shares of the Company's common stock at a
purchase price of $0.75 per share for aggregate consideration of $125,000. In
addition, Organics Corporation of America agreed to assist the Company to (a)
continue to develop and improve products of the Company that have been developed
or are in the process of being developed and improved as of July 31, 2003;


                                      F-9
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2004

Note 4 - Investment in Organics Corporation of America (continued):

(b) design, develop, implement, and provide merchantable and marketable
products; and (c) maintain the confidentiality of all proprietary product
technology (see Note 10 - "Commitments and Contingencies").

Note 5. Notes Payable:

Bank Loan

      The Company borrowed $50,000 from PNC Bank on January 29, 1998 bearing
interest at 10.25%. During the fiscal year ended January 31, 1999, this loan was
converted to an installment note. At January 31, 2003, the outstanding balance
was approximately $12,100. During the third quarter ended October 31, 2003,the
balance of the note was paid in full.

2002 8% Convertible Promissory Notes

      In November 2002, the Company borrowed $450,000 from two individuals and
issued its 8% Convertible Promissory Notes (the "2002 Notes"). Subsequent to the
loan transaction, one individual became a director of the Company and the other
became a director and CEO of the Company. Each of the 2002 Notes evidencing the
loans is substantially the same other than the principal amount thereof. The
2002 Notes were for a term of three years. The 2002 Notes, including accrued and
unpaid interest, were convertible at any time prior to maturity at the option of
the noteholder into shares of the Company's common stock at a conversion price
of $1.25 per share. The 2002 Notes, including accrued and unpaid interest, were
convertible at any time prior to maturity automatically if the Company completed
an equity financing in which the Company obtained net proceeds of $2,000,000 or
more, at a price that is the lower of $1.25 per share or the price per share
sold in the equity financing. In connection with this transaction, the Company
also issued to the investors common stock purchase warrants at a ratio of one
warrant for each share to be converted. The warrants can be exercised for a
three-year period at a price of $1.25 per share. In connection with the issuance
by the Company of its 2003 8% Convertible Promissory Notes and common stock
purchase warrants (see below), the conversion rate of the 2002 Notes and the
exercise price of the related common stock purchase warrants was changed to
$0.75 per share. On July 31, 2003, the outstanding balance of the $450,000 and
the accrued interest of $26,400 were converted into 635,239 shares of common
stock of the Company. (See Note 8 - "Stockholders' Equity").

2003 8% Convertible Promissory Notes

      From April 29, 2003 to August 1, 2003, the Company borrowed an aggregate
of $3,127,500 and issued its 8% Convertible Promissory Notes (the "2003 Notes").
Of the $3,127,500 borrowed, $1,342,500 was borrowed from seven affiliated
parties who are officers, directors or entities affiliated with directors of the
Company. The balance of $1,785,000 was borrowed from unaffiliated parties. Each
of the 2003 Notes evidencing the loans is substantially the same other than the
principal amount thereof. The 2003 Notes are for a term of three years. The 2003
Notes, including accrued and unpaid interest, if any, are convertible at any
time prior to maturity at the option of the noteholder into shares of the
Company's common stock at a conversion price of $.75 per share. The 2003 Notes,
including accrued and unpaid interest, if any, are convertible at any time prior
to maturity automatically if the Company completes an equity financing in which
the Company obtains net proceeds of $2,000,000 or more, at a price that is the
lower of $.75 per


                                      F-10
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2004

Note 5. Notes Payable (continued):

share or the price per share sold in the equity financing. If the price per
share in such equity financing is equal to or less than $.75, the 2003 Notes
shall be converted into shares of either the Company's preferred stock or common
stock, depending upon the class of equity securities sold by the Company in such
financing. If the price per share in such equity financing is more than $.75,
the 2003 Notes shall be converted into shares of the Company's common stock. In
connection with this transaction, the Company also issued to the investors
common stock purchase warrants for each share to be converted. The warrants can
be exercised for a three-year period at a price of $.75 per share. At January
31, 2004, the outstanding balance of the 2003 Notes was $3,127,500 and the
accrued and unpaid interest was approximately $145,000.

December 2003 Convertible Promissory Notes

      In December 2003, the Company entered into a Clinical Trial Agreement
wherein the Company agreed to implement a clinical development program and
pursue a patent for one of its products in exchange for two loans aggregating
$250,000 from two private investors. As additional consideration, the Company
issued warrants to the investors to purchase up to 111,111 shares of the
Company's common stock. The warrants have a three-year term and are exercisable
at $3.00 per share. In addition, the investors have agreed to assist the Company
in the completion of the clinical trials and the dissemination and publication
of the clinical trial results. The loans are evidenced by convertible promissory
notes that are payable in a single installment on their third anniversary.

Interest accrues over the three-year term at a rate (up to a maximum of ten
percent) to be determined by calculating one-half percent for each increase in
actual sales over projected sales (as set forth in the convertible promissory
notes) during the period July 1, 2004 through June 30, 2005. The notes are
convertible at any time at a conversion price per share of $2.25. The notes are
unsecured and many be prepaid without penalty.

      Notes Payable at January 31, consisted of the following:

<TABLE>
<CAPTION>
                                                                  2004         2003
                                                               ----------     --------
<S>                                                            <C>            <C>
Convertible promissory note, bearing                           $3,127,500     $450,000
interest at 8% maturing at varying dates from April 29,
through August 1, 2006

Convertible promissory note, bearing
interest up to a maximum of 10%,
maturing in December 2006                                         250,000           --
Bank installment loans payable, bearing interest at 10.25%             --       12,100
                                                               ----------     --------
                                                                3,377,500      462,100

Less: current portion                                                  --       11,000
                                                               ----------     --------
Long term portion                                              $3,377,500     $451,100
                                                               ==========     ========
</TABLE>


                                      F-11
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2004

Note 6. Due to Officers and Stockholders:

During fiscal 2001 and 2002, the Company received various loans from an
affiliate of the former Chairman of the Board of the Company. At January 31,
2003, the balance owed to this entity was $245,000. Interest accrued at 10% per
year through April 30, 2002 and amounted to approximately $29,100, which is
included in accrued expense at January 31, 2003. Effective May 1, 2002, this
loan was converted to a one year, non-interest bearing loan. On January 14,
2003, in satisfaction and cancellation of the Company's obligations to the
affiliate, the Company approved the following transaction: (a) in connection
with the re-incorporation of the Company approved by the Company's shareholders
on April 23, 2003, (i) the entire $245,000 principal amount owing to the
affiliate was converted into 122,500 shares of the Company's common stock; (ii)
the affiliate received a warrant to purchase 5,875 shares of common stock at an
exercise price of $2.50 per share; and (iii) the affiliate received a warrant to
purchase 5,750 shares of the Company's common stock at an exercise price of
$2.50 per share; and (b) the affiliate was granted "piggyback" registration
rights with respect to the shares issued upon conversion of the principal and
the exercise of the warrants. Effective April 22, 2003, upon shareholder
approval of the Company's re-incorporation in Delaware, the $245,000 principal
amount of the loan was converted into 122,500 shares of common stock and accrued
interest on the loan was converted into 11,625 warrants.

      In November 2001, Arnold and Myra Gans, President and Secretary of the
Company, respectively, personally borrowed $150,000 and loaned the proceeds to
the Company. The Company recorded a $150,000 liability to them and agreed to a
repayment schedule equal to the repayment schedule of their loan. The balance at
January 31, 2003, was approximately $139,100. Also included on the Company's
balance sheet as "Due to officers and stockholder" at January 31, 2003 is unpaid
payroll for Arnold and Myra Gans of $30,800 and $25,400, respectively. All
unpaid payroll was paid in cash during the first quarter ended April 30, 2003.
In August 2003, the officer's loan was repaid in full.

Note 7. Lease Commitments:

     The Company leases an office and warehouse facility in New Jersey under a
lease, which expires in December 2004. Total gross rental expense for the year
ended January 31, 2004 and 2003 was approximately $91,600 and $90,100,
respectively. The future minimum annual rental payments for the year ending
January 31, 2005 are $61,900.

      The Company sub-let (on a month to month basis) a portion of its facility
to various entities at an annual rental income of approximately $44,700 and
$42,100 for the years ended January 31, 2004 and 2003, respectively.

      The Company leases equipment under various operating leases. During the
year ended January 31, 2004, the total payments under such leases were $7,000.
The future minimum annual lease payments for the year ending January 31, 2005
are $3,700.

Note 8. Stockholders' Equity:

      All amounts have been restated for the February 7, 2003
one-for-twenty-five reverse stock split.


                                      F-12
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2004

Note 8. Stockholders' Equity (continued):

Common Stock

      During the year ended January 31, 2004, the Company issued 291,000 shares
of its common stock valued at $205,900 for the payment of incentive compensation
to three of its officers. As further consideration for their efforts, four
officers of the Company were issued, in the aggregate, options to purchase
500,000 shares of the Company's common stock at $2.00 per share and two
employees were issued, in the aggregate, options to purchase 80,000 shares of
the Company's common stock at $1.20 per share. As of January 31, 2004, none of
the options were exercised.

      Additionally, during the year ended January 31, 2004, the Company issued
126,500 shares of its common stock in satisfaction of $248,000 of liabilities to
certain related parties, which were reflected on the balance sheet at January
31, 2003 (see Note 6). In connection with the satisfaction of $245,000 of such
liabilities, the Company also issued warrants to purchase 11,625 shares of
common stock at an exercise price of $2.50 per share as consideration for
accrued interest of $29,100. As of January 31, 2004, none of the warrants were
exercised.

      In connection with the subscription agreement to purchase 5% of Organics
Corporation of America (see Note 4), the Company issued 166,666 shares of its
common stock valued at $125,000.

      On July 31, 2003 the Company issued 635,239 shares of stock in connection
with the conversion of $450,000 of the 2002 Notes and $26,400 of accrued
interest thereon (see Note 5 - "Convertible Promissory Notes - 2002 Notes").

      In connection with the 2003 Notes (see Note 5 - "Convertible Promissory
Notes 2003 Notes"), the Company issued 4,170,000 warrants, with a term of three
years, to purchase the Company's common stock at $0.75 per share. As of January
31, 2004, none of the options were exercised.

Options

      The following table summarizes information concerning outstanding and
exercisable options at January 31, 2004 (contractual life in years):

<TABLE>
<CAPTION>
                                   Options Outstanding       Options exercisable
                                   -------------------       -------------------
                                   Weighted   Weighted
                                     avg.       avg.                    Weighted avg.
                                   exercise   exercise                    remaining
Range of prices        Number        life       price        Number        price
---------------        ------        ----       -----        ------        -----
<S>                   <C>             <C>      <C>         <C>            <C>
    $0.30-$3.00       1,352,600       5        $ 1.25      1,348,600      $ 1.26
    $3.01-$7.50          43,400       1          7.40         43,400        7.40
   $7.51-$25.00         166,310       1         21.68        166,310       21.68
---------------------------------------------------------------------------------
   $0.30-$25.00       1,562,310       4        $ 3.60      1,558,310      $ 3.61
---------------------------------------------------------------------------------
</TABLE>


                                      F-13
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2004

Note 8. Stockholders' Equity (continued):

      In recognition of the need to improve the capital structure of the
Company, effective May 15, 2002, two officers of the Company surrendered options
to purchase 82,000 shares of the Company's common stock, which had been received
prior to fiscal 2002.

      A summary of option transactions for the two years ended January 31, 2004,
follows:

<TABLE>
<CAPTION>
                                                                         Weighted
                                                                         Average
                                                            Options    option price
-----------------------------------------------------------------------------------
<S>                                                          <C>           <C>
Outstanding at January 31, 2002                              528,310       $8.04
-----------------------------------------------------------------------------------
Granted                                                      506,000        0.58
Exercised                                                         --          --
Expired or Surrendered                                        82,000        0.75
-----------------------------------------------------------------------------------
Outstanding at January 31, 2003                              952,310        4.72
-----------------------------------------------------------------------------------
Granted                                                      610,000        1.86
Exercised                                                         --          --
Expired or Surrendered                                            --          --
-----------------------------------------------------------------------------------
Outstanding at January 31, 2004                            1,562,310       $3.60
-----------------------------------------------------------------------------------
</TABLE>

Pro Forma Fair Value Disclosures

      Had compensation expense for the company's stock options been recognized
based on the fair value on the grant date under the methodology prescribed by
FAS 123, the company's income from continuing operations and earnings per share
for the two years ended January 31, 2004 and 2003 would have been impacted as
shown in the following table:

                                             January 31, 2003   January 31, 2002
--------------------------------------------------------------------------------
Net Income (loss)
             As reported                       $  (1,109,000)     $    (281,500)
             Pro forma                         $  (1,490,900)     $  (1,148,755)
Basic and diluted earnings per share
             As reported                       $       (0.48)     $       (0.19)
             Pro forma                         $       (0.64)     $       (0.36)
--------------------------------------------------------------------------------

Warrants

In November 2002, in connection with the issuance of its 2002 8% Convertible
Promissory Notes (see Note 5), the Company also issued, to the investors of the
Notes, common stock purchase warrants (the Warrants) exercisable for an
aggregate 600,000 shares of the Company's common stock, at $0.75 per share. Each
of the warrants is substantially the same other than the number of shares of
common stock for which each Warrant is exercisable. The Warrants may be
exercised at any time, and from time to time, for a period of


                                      F-14
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2004

Note 8. Stockholders' Equity (continued):

three years from issuance. The exercise price of the Warrants is based on the
fair market value of the Company's common stock at the time of exercise,
determined in accordance with respect to whether the Company's common stock is
then trading on a stock exchange, Nasdaq, other quotation system or otherwise.
In the event that the Company completes an equity financing in which the Company
obtains net proceeds of $2,000,000 or more, at a price per share that is less
than the then-current exercise price of the Warrant, the exercise price of the
Warrant shall be adjusted to such lower price in the equity financing. The
Warrants also contain anti-dilution protection in the event of stock splits,
stock dividends, reorganization or other similar events.

      In July 2003, in connection with the issuance of the Company's 2003 8%
convertible promissory notes, certain shareholders who purchased 390,000 shares
of the Company's common stock with specific anti-dilution provisions in April
2002 received warrants to purchase 730,000 shares of common stock at $0.50 per
share in exchange for foregoing any future rights to additional shares under the
anti-dilution provisions. The warrants have a term of three years. At January
31, 2004, none of the warrants were exercised.

2000 Long-Term Incentive Stock Plan

      On October 19, 2000, the stockholders approved the 2000 Long-Term
Incentive Stock Plan (the Plan). Under the Plan, the Company may grant stock
options, stock appreciation rights (SAR's) or stock awards. All employees of the
Company are eligible to participate in the Plan. The Plan authorizes the
issuance, in the aggregate, of up to 240,000 shares of common stock. No stock
option, SAR or other award, may be granted under the Plan after October 27,
2009. The maximum number of shares for which awards may be granted to any person
in any fiscal year is 12,000. The purchase price per share for each stock option
may not be less than 100% of the fair market value on the date of grant and may
not be for more than ten years. In the case of incentive stock options granted
to an optionee who, at the time of grant, owns stock representing more than 10%
of the total combined voting power of all classes of stock of the Company, the
exercise price per share may not be less than 110% of the fair market value on
the date of grant and the option may not be exercisable for more than five
years. At January 31, 2004, no options were granted from the Plan.

Note 9. Income Taxes:

      The Company uses the liability method of accounting for income taxes. No
recognition has been made of the possible benefits of available net operating
loss carryforwards due to the uncertainty that future years will provide income
to be offset by such available benefits. The Company and its subsidiaries have
net operating loss carryforwards of approximately $8,090,200 , which could be
available to reduce income otherwise subject to income tax. The possible
deferred income tax benefits of such available net operating losses are
estimated to be approximately $2,831,600 as of January 31, 2004, with a
valuation allowance of an equal amount.

As a result of losses incurred through January 31, 2004, the Company has a net
operating loss carryforward of approximately $8,090,200. The losses expire
through 2024.


                                      F-15
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2004

Note 10. Commitments and Contingencies:

Government Regulations

      The Company's nutritional and health products are produced by third
parties in various plants under applicable government regulations. The Company
depends upon its vendors to comply with such regulations. Failure by such
vendors to comply with the applicable regulations could result in fines and/or
seizure of the food products. Presently, the Company is not a party to any such
lawsuits.

Product Development and Supply Agreement

      On July 31, 2003, the Company entered into a ten-year product development
and supply agreement with Organics Corporation of America. Organics Corporation
of America has agreed to assist the Company to continue to develop and improve
products that have been developed or are in the process of being developed and
improved; design, develop, implement, and provide merchantable and marketable
products; and maintain the confidentiality of all proprietary product
technology. Under the agreement, in consideration for Organics Corporation of
America's performance, the Company shall make payment to them for all invoices
submitted for products and services performed, at costs to which both parties
have agreed upon. In connection with this transaction, the Company and Organics
Corporation of America purchased shares of each other's common stock. (See Note
4 - "Investment in Organics Corporation of America").

Going Concern

      For the year ended January 31, 2004, the Company's sales increased to
$2,173,400 from $1,427,000 in the prior year. However, the net loss increased to
$1,109,000 in the year ended January 31, 2004, from $281,500 in the year ended
January 31, 2003.

      Although the Company's working capital and current ratio have improved,
the fact that the Company has continued to sustain losses creates uncertainty
about the Company's ability to continue as a going concern.

      Management of the Company has implemented a plan to improve cash flow
through expanding operations by utilizing funds raised through the issuance of
debt (See Note 5 - Notes Payable). Presently, management's efforts and the
Company's resources are primarily being directed toward expanded distribution of
its Pro-Stat(TM) liquid protein into the long-term care market, bariatric
surgery,and private label sales to existing customers.

      The Company raised $3,127,500 in its most recent round of financing. The
Company believes that it has sufficient liquidity to meet its operating cash
requirements for the planned level of operations during the fiscal year ending
January 31, 2005, as long as its current level of sales continues at the same
rate or increases. The Company's future capital requirements will depend on many
factors including: the costs of its sales and marketing activities and its
education programs for its markets, competing product and market developments,
the costs of developing new products, the costs of expanding its operations, and
its ability to generate positive cash flow from its sales. Should the Company
require additional financing, there can be no assurance that financing will be
available, or if available, that it will be on terms acceptable to the Company.
If the Company were unable to fund its operating cash flow needs, the Company
would be required to curtail its plans to expand operations.


                                      F-16
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2004

Note 10. Commitments and Contingencies (continued):

The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.

Employment Contracts

      Effective March 7, 2003, the Company entered into a three-year employment
agreement with Mr. Francis A. Newman, Chief Executive Officer. This agreement
provides for a base salary, which was $135,000 at January 31, 2004 to be
increased to $150,000 based upon review and the continued progress of the
Company. The employment agreement further provides for 1) annual salary
increases at the discretion of the Board of Directors (limited to 10%), 2)
annual incentive bonus in an amount up to 100% of base salary if the Company
achieves agreed upon targets, and 3) 250,000 shares of restricted common stock
(which vested 100% on the first anniversary of the agreement). Additionally, Mr.
Newman is entitled to various other benefits (such as auto allowance and
participation in employee benefit plans).

      Effective January 1, 2003, the Company entered into a three-year
employment agreement with Mr. Arnold Gans, President. The agreement provides for
a base salary which was $144,000 at January 31, 2004 to be increased to $160,000
based upon review by the Compensation Committee of the Board of Directors and
the continued progress of the Company. The employment agreement further provides
for annual salary increases at the discretion of the Board of Directors (limited
to 10%) and an annual incentive bonus in an amount up to 100% of Mr. Gans' base
salary if the Company achieves agreed upon targets. Additionally, Mr. Gans is
entitled to various other benefits (such as auto allowance and participation in
employee benefit plans).

      Effective January 1, 2003, the Company entered into a three-year
employment agreement with Mrs. Myra Gans, Executive Vice-President. The
agreement provides for a base salary which was $99,000 at January 31, 2004 to be
increased to $110,000 based upon review by the Compensation Committee of the
Board of Directors and the continued progress of the Company. The employment
agreement further provides for annual salary increases at the discretion of the
Board of Directors (limited to 10%) and an annual incentive bonus in an amount
up to 50% of Mrs. Gans' base salary if the Company achieves agreed upon targets.
Additionally, Mrs. Gans is entitled to various other benefits (such as auto
allowance and participation in employee benefit plans).

Bonus Award Plan

      Effective as of April 22, 2003, the board adopted the 2003 Omnibus Equity
Incentive Plan (the Plan). The purpose of the plan is to promote the long-term
success of the company and the creation of stockholder value by (a) encouraging
employees, outside directors and consultants to focus on critical long-range
objectives, (b) encouraging the attraction and retention of employees, outside
directors and consultants with exceptional qualifications and (c) linking
employees, outside directors and consultants directly to stockholder interests
through increased stock ownership. The plan seeks to achieve this purpose by
providing for awards in the form of restricted shares, stock units, options
(which may constitute incentive stock options or nonstatutory stock options) or
stock appreciation rights. As of January 31, 2004 no awards were issued from the
Plan.


                                      F-17
<PAGE>

                           MEDICAL NUTRITION USA, INC.
                          (f/k/a GENDER SCIENCES, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 2004

Note 11. Major Customers:

      For the years ended January 31, 2004 and 2003, one customer was
responsible for approximately $1,354,900 and $988,000 in sales, representing 62%
and 70% of the Company's sales, respectively.

Note 12. Quarterly Results of Operations (unaudited):

      Below is a summary of the quarterly results of operations for each quarter
of the years ended January 31, 2004 and 2003:

2004                         First        Second         Third         Fourth
----                         -----        ------         -----         ------
Sales                     $ 236,000     $ 620,700      $ 784,700     $ 532,000
Gross Profit                120,400       303,900        379,600       242,000
Net Income (loss)          (529,100)     (143,400)      (166,200)     (270,300)
Net Income (loss) per
common share                  (0.30)        (0.07)         (0.06)        (0.10)

2003
----
Sales                     $ 318,500     $ 411,000      $ 363,800     $ 333,700
Gross Profit                147,800       189,800        171,600       153,000
Net Income (loss)           (40,800)        8,300        (72,800)     (176,200)
Net Income (loss) per
common share                  (0.03)         0.01          (0.05)        (0.11)


                                      F-18
<PAGE>

                               ADDITIONAL EXHIBITS

3.1*  Employment Agreement dated March 1, 2003 by and between the registrant and
      Francis A. Newman.

3.2*  Form of Subscription Agreement between Medical Nutrition USA, Inc. and
      Organics Corporation of America

3.3*  Form of Subscription Agreement between Organics Corporation of America and
      Medical Nutrition USA, Inc.

3.4*  Product Development And Supply Agreement dated July 31, 2003

21.1* Subsidiaries of the registrant