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

                                   FORM 10-QSB

(Mark One)

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

                  For the quarterly period ended March 31, 2001


         [ ]      TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

        For the transition period from _______________to_________________

                         Commission file number: 0-22899

                          Wasatch Pharmaceutical, Inc.
               (Exact name of registrant as specified in charter)

                 Utah                                  84-0854009
                 ----                                  ----------
     State or other jurisdiction of            (I.R.S. Employer I.D. No.)
     incorporation or organization

               310 East 4500 South, Suite 450, Murray, Utah 84047
               --------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (801) 266-2987
                                 --------------
                 Issuer's telephone number, including area code


                                 Not Applicable
                                 --------------
              (Former name, former address, and former fiscal year,
                          if changed since last report)

         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).  Yes [X] No [ ] and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the last practicable date.

         Class A Common  Stock,  $.001 Par Value,  32,389,547  shares issued and
outstanding.

<PAGE>

                         PART I - FINANCIAL INFORMATION


                          ITEM 1. FINANCIAL STATEMENTS

The Registrant's unaudited financial statements have been prepared in accordance
with the  instructions  to Form 10-QSB  pursuant to the rules and regulations of
the  Securities  and  Exchange  Commission  and,  therefore,  do not include all
information  and  foot  notes  necessary  for a  complete  presentation  of  the
financial position, results of operations,  cash flows, and stockholder's equity
in conformity with generally accepted accounting  principles.  In the opinion of
management,  all adjustments considered necessary for a fair presentation of the
results of  operations  and  financial  position have been included and all such
adjustments are of a normal recurring nature.

The  unaudited  balance  sheet of the  Registrant  as of March 31,  2001 and the
audited  balance sheet of the  Registrant as of December 31, 2000 along with the
related  un-audited  statements  of  operations,  changes  common  stockholders'
deficit and cash flows for the three month periods ended March 31, 2001 and 2000
and from  inception  (September 7, 1989)  through  March 31, 2001,  are attached
hereto and incorporated herein by this reference.

Operating  results  for the quarter  ended  March 31,  2001 are not  necessarily
indicative of the results that can be expected for the year ending  December 31,
2001.

This  report  contains   forward-looking   statements  that  involve  risks  and
uncertainties.  Actual results could differ  materially  from those discussed in
the forward-looking  statements as a results of certain factors, including those
risk factors  discussed  more fully in the Company's  annual report (Form 10KSB)
for December 31, 2000.

The following financial statements are included in this report:

         Consolidated Balance Sheet - Assets as of March 31, 2001
         and December 31, 2000 ........................................   F-1

         Consolidated Balance Sheet - Liabilities as of March 31,
         2001 and December 31, 2000 ...................................   F-2

         Consolidated Statements of Operations for the Quarter
         ended March 31, 2001, 2000 and from inception (September
         7, 1989) through March 31, 2001...............................   F-3

         Consolidated Statements of Changes in Common
         Stockholders' (Deficit) for the Quarter ended March 31,
         2001 and from inception (September 7, 1989) through
         March 31, 2001.................................................  F-4

         Consolidated Statements of Cash Flows for the Quarter
         ended March 31, 2001, 2000 and from inception (September
         7, 1989) through March 31, 2001 ................................ F-5

         Notes to the Consolidated Financial
         Statements...................................................... F-6


<PAGE>

ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTSOF
OPERATIONS

OVERVIEW

         The Company has developed  proprietary  technology for the treatment of
various  skin  disorders,   including  acne,   eczema,   and  psoriasis.   After
successfully  completing  controlled  clinical studies,  the company established
prototype  clinics to  duplicate  the success  rates  achieved  in the  clinical
environment and to establish  medical,  business and  administrative  procedures
that could be  duplicated  in an Internet  network of  patients  and doctors and
Company owned clinics across the country.  The two prototype  treatment  clinics
are  currently  in operation in Utah.  Although  the Company has  confirmed  the
technology through the successful  treatment of hundreds of patients and has set
up the business and  administrative  procedures,  the clinics have not reached a
profitable level due to the lack of funds for advertising and marketing.

         To this date, the Company has not had the resources to fully  implement
its  plan  for  the  development  and  expansion  of  its  Internet  and  clinic
operations.  Due to  the  lack  of  working  capital,  the  Company's  financial
statements contain a "going concern" disclosure,  which places into question the
Company's  ability to  continue  without  substantial  increases  in revenues or
additional long-term financing.

         The Company had been seeking funding to establish an Internet presence,
open  additional  clinics  in  major  metropolitan  areas  and  launch  a  major
advertising and marketing  campaign to support each of its business  strategies.
Based on successful historical models,  management concludes that through direct
patient treatment on the Internet,  working with health insurance  companies and
HMOs, an advertising campaign and an physician referral program,  revenues could
be increased substantially with the infrastructure in place that is operating at
5% to 10% of clinic capacity.

LIQUIDITY AND CAPITAL RESOURCES

         At March 31,  2001 the  Company  had  current  assets of  $303,243  and
current  liabilities  of $4,218,966  resulting in a working  capital  deficit of
$3,915,723,  which is a $119,000 decrease in the deficit from December 31, 2000.
The  slight  decrease  in  the  deficit  is  due  to  the  Company's  continuing
infrastructure  investment partially offset by an operating loss of $951,881 for
the three-month  period ended March 31, 2001. The operating loss was principally
financed with  additional  shareholder  investment of $657,500 and common stock,
totaling  $469,200,  issued for goods and  services to commence its Internet and
direct sales business.

RESULTS OF OPERATIONS

         For the three  months  ended March 31,  2001,  the  Company's  revenues
remained  nominal at $23,700 but were  substantially  greater  when  compared to
revenues of $7,682 for the same period of 2000. The Company's operating expenses
increased  $88,800 in the first three  months of 2001,  as compared to the first
three  months of 2000.  This  increase  reflects  the emphasis on ramping up the
marketing and sales efforts for the Internet and the Utah clinics.

         The Company's corporate expenses increased $518,700 to $708,091 for 1st
quarter of 2001 when compared to 2000. That increase was principally financed by
$469,200 in new common stock issues. The increase in corporate expense is due to
increased staff costs in preparation of commencing the clinic and Internet sales
and marketing  programs (increase of $129,000) and the many costs of funding the
Company's  business  start up  operations  for the first  quarter  (increase  of
$313,000). The Company had a net loss of $951,881 for the first quarter of 2,001
as  compared  to a loss of  $325,212  in the same  period of 2000.  The  Company
anticipates  that the losses will continue until the it obtains the funding that
will enable management to fully implement the Company's business plan.

<PAGE>

                           PART II - OTHER INFORMATION


                            ITEM 1. LEGAL PROCEEDINGS

Convertible  Debenture  Settlement - On April 19, 2000, the Company entered into
an securities  purchase  agreement  with a private  investment  group to provide
long-term  capital funding.  Under the agreement,  the investment group provided
$180,000 in cash and received a 3 year  $200,000 8%  convertible  debenture.  In
June  2000,  the  Company's  management  concluded  not to pursue  this  funding
opportunity  because of  operational  restrictions  and changes  demanded by the
investment group that were not in the original agreement.

The private  investment  group and the Company  entered  into  negotiations  and
reached an  agreement  on  November 7, 2000.  Under the terms of the  settlement
agreement,  the Company  delivered 750,000 shares of the Company's common stock,
and agreed to repay the private  investment group the original $180,000 borrowed
and a  monetary  and stock  premium  to set aside the  original  agreement.  The
premium escalated if the Company was not able to meet its commitment.

The Company was unable to meet the repayment requirements and by January 5, 2001
the premium resulted in a total obligation of $350,000 cash and 1,500,000 shares
of the Company's common stock.

The settlement  agreement was amended on January 16, 2001 and required the issue
of an  additional  3,500,000  shares of the Company  common stock to  completely
rescind the original  agreement  and the initial  settlement  arrangement.  Even
though the Company  issued these shares in January  2001,  management  concluded
that  conditions  precedent  required  this  transaction  to be  included in the
December 31, 2000 financial statements.

The only remaining  condition of the settlement  agreement is for the Company to
register,  by May 1, 2001,  all of the shares  issued to the private  investment
group. The original registration  statement was filed on January 8, 2001 with an
amendment  to  the   registration   statement  filed  on  April  12,  2001.  The
registration statement became effective with the SEC on April 12, 2001.

On May 15,  2000,  a demand  letter was  received  by the Company to pay off the
mortgage of a former officer of the Company, Lee Hale, in the approximate amount
of $400,000.  In September 1998, while serving as interim President (not CEO) of
the Company,  he refinanced his personal  residence and signed the mortgage note
as  President  of  the  Company.   This  was  done  without  the   knowledge  or
authorization  of the  Company.  Because the  mortgage  company did not obtain a
board  authorization to obligate the Company and the Company received no benefit
from the transaction,  the Company feels the claim is entirely without merit and
will not have a material  adverse effect on the Company.  A lawsuit was filed on
December 15, 2000 and that suit is presently in the discovery stage.

Other Legal Proceedings - The Company is a party to other legal proceedings that
are  covered  by  liability  insurance,  the  outcome  of which  will not have a
material adverse effect on the Company.

                          ITEM 2. CHANGES IN SECURITIES

See the  attached  schedule  Item 2.  Changes  In  Securities  for  transactions
occurring during the first quarter of 2001.

The common  shares were issued in reliance on the  exemption  from  registration
provided by Section 4 (2) of the Securities Act of 1934 and the "Safe Harbor" of
Regulation D, Rule 504.


<PAGE>

                 ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None.


      ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS - None.


                           ITEM 5. OTHER INFORMATION

On January 8, 2001, the Company filed an SB-2 registration statement to register
11,426,297  Class A  shareholder  warrants  exercisable  at $.50 per  share  and
11,426,297 Class B shareholder  warrants  exercisable at $2.00 per share.  These
warrants were issued to shareholder of record February 23, 2001 who owned shares
that had been  issued  prior to June 22,  2000 on a basis of one Class A warrant
and one Class B warrant for each two shares owned.  The  registration  for these
warrants and the underlying  shares became effective April 12, 2001. This filing
also registered  3,500,000 million shares issued to Aspen Capital as part of the
final settlement agreement dated January 16, 2001.

                    ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits.
         Exhibit
         Number:

         1        Item 2.  Changes  In  Securities  for  transactions  occurring
                  during the first quarter of 2001

         (b) Reports on Form 8-K  - None

                                   SIGNATURES

Pursuant  to the  requirements  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.


WASATCH PHARMACEUTICAL, INC.

Dated: May 13, 2001


By: /s/ David K. Giles
   ------------------------------
   David K. Giles
   Chief Financial Officer &
   Corporate Secretary


<PAGE>
<TABLE>
<CAPTION>
                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEET

                                                                        March 31,            December 31,
                                                                          2001                   2000
                                                                       ---------              ---------
                                                                      (Unaudited)
                                     ASSETS
CURRENT ASSETS
<S>                                                                    <C>                    <C>
Cash                                                                   $   5,552              $     230
Accounts receivable - trade                                                3,278                  2,388
Inventory                                                                274,338                158,471
Prepaid expenses                                                          20,075                 30,158
                                                                       ---------              ---------
    Total Current Assets                                                 303,243                191,248
                                                                       ---------              ---------

PROPERTY AND EQUIPMENT - At cost
Leasehold improvements                                                    64,544                 60,002
Office fixtures and equipment                                            130,642                 76,062
Internet system and equipment                                             37,063                 37,063
Machinery and equipment                                                   38,711                 24,671
                                                                       ---------              ---------
                                                                         270,961                197,798
Less accumulated depreciation                                            (64,037)               (54,368)
                                                                       ---------              ---------

Net property and equipment                                               206,924                143,430
                                                                       ---------              ---------

OTHER ASSETS
Intangibles - net of amortization of $12,404                              48,972                 54,288
Deposits                                                                  30,364                 27,786
                                                                       ---------              ---------
    Total Other Assets                                                    79,336                 82,074
                                                                       ---------              ---------

TOTAL ASSETS                                                           $ 589,503              $ 416,752
                                                                       =========              =========
</TABLE>
                                      F-1
<PAGE>
<TABLE>
<CAPTION>
                          WASATCH PHARMACEUTICAL, INC.
                         (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEET

                                                                        March 31,            December 31,
                                                                          2001                   2000
                                                                       ---------              ---------
                                                                      (Unaudited)
                      LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
<S>                                                                    <C>                    <C>
Accounts payable - trade                                               $ 550,345              $ 534,929
Accrued interest                                                         700,879                648,291
Accrued executive compensation                                           822,236                828,036
Payroll taxes                                                            112,280                 88,384
Other accrued expenses                                                    43,847                 42,884
Notes and advances currently due:
Short-term shareholder advances                                           36,931                153,790
Vendors                                                                  112,333                112,333
Stockholders and others                                                1,840,114              1,817,642
                                                                       ---------              ---------
    Total Liabilities                                                  4,218,966              4,226,289
                                                                       ---------              ---------

STOCKHOLDERS' DEFICIT
Preferred stock, $0.001 par value, 1,000,000
shares authorized 49,258 issued and outstanding                               49                     49
Common stock, $0.001 par value, 50,000,000 shares                                                      -
authorized,32,389,547 & 27,405,518 shares issued and outstanding          32,390                 27,406
Additional paid-in capital                                             5,037,776              3,910,666
Accumulated development stage deficit                                 (8,698,189)            (7,746,308)
                                                                       ---------              ---------
                                                                      (3,627,974)            (3,808,187)
Less consideration due on shares issued                                   (1,489)                (1,350)
                                                                       ---------              ---------

    Total Stockholders' Deficit                                       (3,629,463)            (3,809,537)
                                                                      ----------             ----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                            $ 589,503              $ 416,752
                                                                       =========              =========
</TABLE>
                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)


                                                            For the Quarter Ended March 31,        From Inception
                                                            -------------------------------          To March 31,
                                                               2001                2000                  2001
                                                            -----------         -----------          -----------
REVENUES
<S>                                                         <C>                 <C>                  <C>
     Professional fee income                                $     2,946         $     1,380          $   239,952
     Product sales                                               20,754               6,302              493,415
                                                            -----------         -----------          -----------
            Total Revenues                                       23,700               7,682              733,366
                                                            -----------         -----------          -----------
OPERATING EXPENSES
     Cost of products sold                                        5,900               1,268               61,705
     Salaries                                                    62,450              48,030              912,488
     Consulting services                                         30,010                   -               30,010
     Public relations                                            24,580                   -               24,580
     Employee leasing                                                 -                   -              218,745
     Payroll taxes                                                    -               4,630              112,671
     Physicians fees                                              6,300               4,350              305,150
     Rent                                                        21,248               6,739              269,646
     Advertising                                                      -                   -              217,560
     Other                                                        9,879               6,578              161,909
                                                            -----------         -----------          -----------
            Total Operating Expenses                            160,367              71,595            2,314,464

GENERAL AND ADMINISTRATIVE EXPENSE                              708,091             190,453            5,244,452

INTEREST                                                        107,124              70,871            1,462,921
                                                            -----------         -----------          -----------
            Total Expenses                                      975,581             332,919            9,021,837
                                                            -----------         -----------          -----------
LOSS BEFORE DISCONTINUED OPERATIONS AND
  THE PROVISION FOR INCOME TAXES                               (951,881)           (325,237)          (8,288,471)

     LOSS FROM DISCONTINUED OPERATIONS                                -                   -             (409,718)
                                                            -----------         -----------          -----------

NET LOSS BEFORE INCOME TAXES                                   (951,881)           (325,237)          (8,698,189)
     PROVISION FOR INCOME TAXES                                       -                   -                    -
                                                            -----------         -----------          -----------

NET LOSS                                                    $  (951,881)        $  (325,237)         $(8,698,189)
                                                            ===========         ===========          ===========

     Loss per share before discounted operations            $    (0.032)        $    (0.015)         $    (0.795)
     Loss per share from discontinued business                        -                   -               (0.039)
                                                            -----------         -----------          -----------

BASIC LOSS PER COMMON  SHARE                                $    (0.032)        $    (0.015)         $    (0.834)
                                                            ===========         ===========          ===========

BASIC WEIGHTED AVERAGE SHARES OUTSTANDING                    29,682,858          21,178,929           10,428,578
                                                            ===========         ===========          ===========
</TABLE>
                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                    WASATCH PHARMACEUTICAL, INC.
                                    (A Development Stage Company)
                     CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
                                             (Unaudited)


                                               Preferrd          Common Stock         Additional        Accumulated       Total
                                                Stock     -----------------------      Paid - In        Development   Stockholders'
                                                Amount       Shares        Amount       Capital        Stage Deficit     Deficit
                                               -------    -----------     -------       --------      --------------     -------
<S>                                             <C>       <C>            <C>         <C>             <C>              <C>
Net equity December, 2000                       $ 49      27,405,518     $ 27,406    $ 3,910,666     $ (7,746,308)    $ (3,808,187)

Shares issued in connection with:
    Consulting fees                                -       1,094,338        1,094        241,109                -          242,203
    Loan extensions                                -         131,000          131          9,039                -            9,170
    Securities sold for cash                       -       2,589,691        2,590        654,892                -          657,482
    Replacement shares issued                      -       1,030,000        1,030        222,070                -          223,100


Shares issued as collaterial
    Change in contingent shares issued             -         139,000          139              -                 -             139

Net loss for the quarter ended March 31, 2001      -               -            -              -          (951,881)        (951,881)
                                                ----      ----------     --------    -----------      ------------    ------------
Stockholders equity at March 31, 2001 based
    upon executed and contingent contracts        49      32,389,547       32,390      5,037,776       (8,698,189)      (3,627,974)

Contingent common shares issued                   -       (1,489,000)      (1,489)            -                -            (1,489)
                                                ----      ----------     --------    -----------      ------------    ------------
Balance March 31, 2001                          $ 49      30,900,547     $ 30,901    $ 5,037,776      $ (8,698,189)   $ (3,629,463)
                                                ====      ==========     ========    ===========      ============    ============
</TABLE>
                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

                                                                                       For the Quarter                  From
                                                                                        Ended March 31,              Inception To
                                                                               ---------------------------------      March 31,
                                                                                   2001                2000              2001
                                                                                -----------         ------------    --------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                             <C>                 <C>             <C>
      Net loss                                                                  $  (951,881)        $   (325,237)   $   (8,698,189)
      Adjustments to reconcile net (Loss) to net cash
         used by operating activities:
           Depreciation and depletion                                                14,985                2,334            76,442
           Interest and fees paid in stock                                          469,157                1,365         1,081,863
           Depreciation and losses on fixed asset disposals
           Clinic assets                                                                  -                    -            15,234
           Loss on disposal of oil and gas properties                                     -                    -           387,121
      Increase (decrease) in working capital
           (Increase) decrease in receivables                                          (890)                (570)           (3,278)
           (Increase) decrease in inventory                                        (115,866)              (5,431)         (274,338)
           (Increase) decrease in prepaid expenses                                   10,083               (5,019)          (20,075)
           Increase (decrease) in accounts payable                                   15,416               14,810           550,345
           Increase (decrease) in accrued interest                                   52,589               36,672           700,879
           Increase (decrease) in other accruals                                     19,059               (8,362)          978,364
                                                                                -----------         ------------    --------------
             Net cash used by operating activities                                 (487,349)            (289,437)       (5,205,632)
                                                                                -----------         ------------    --------------
CASH FLOWS FROM INVESTING ACTIVITIES
         Purchase of fixed assets                                                   (73,162)             (15,075)         (257,171)
         (Increase) decrease in other assets                                          2,738              (29,800)          (79,337)
                                                                                -----------         ------------    --------------
             Net cash provided (used) by investing activities                       (70,424)             (44,875)         (336,507)
                                                                                -----------         ------------    --------------

CASH FLOWS FROM FINANCING ACTIVITIES
         Proceeds from borrowings                                                   473,847              100,171         4,074,374
         Expenses paid by shareholder                                                     -                    -            38,323
         Repayment of loans                                                        (568,233)             (65,467)       (1,486,464)
         Proceeds from sale of common shares                                        657,482              300,171         2,695,247
         Capital contributed by shareholder                                               -                    -           154,800
         Collection of share subscriptions                                                                     -           141,725
         Common shares exchanged for debt                                                                      -            12,318
         Exercised stock options                                                          -                    -           125,250
         Redemption of common shares                                                      -                    -           (20,408)
         Cost of raising capital                                                          -                    -          (187,474)
                                                                                -----------         ------------    --------------
             Net cash provided used by financing activities                         563,095              334,875         5,547,691
                                                                                -----------         ------------    --------------

NET INCREASE (DECREASE) IN CASH                                                       5,322                  563             5,552
      Balance at beginning of period                                                    230               10,038                 -
                                                                                -----------         ------------    --------------
      Balance at end of period                                                  $     5,552         $     10,600    $        5,552
                                                                                ===========         ============    ==============
</TABLE>
                                      F-5
<PAGE>

                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                 March 31, 2001
                                   (unaudited)

NOTE 1 - NATURE AND HISTORY OF THE BUSINESS

The consolidated  financial statements include Wasatch  Pharmaceutical,  Inc. (a
development  stage  company)  (Wasatch  or the  Company),  and its wholly  owned
subsidiaries,  Medisys Research Group, Inc. and American Institute of Skin Care,
Inc.

Medisys Research Group, Inc., a Utah corporation,  (Medisys) was incorporated on
September 7, 1989 for the purpose of developing  treatment  programs for various
skin  disorders.  On January 21, 1994,  American  Institute  of Skin Care,  Inc.
(AISC)  was  incorporated  as a wholly  owned  Utah  subsidiary  of  Medisys  to
administer the skin treatment programs developed by Medisys.

On December 29,  1995,  Ceron  Resources  Corporation  and Medisys  completed an
Agreement and Plan of Reorganization whereby Ceron issued 85% of its outstanding
shares of common stock in exchange for all of the issued and outstanding  common
stock of Medisys and the name was changed to Wasatch  Pharmaceutical,  Inc.  The
acquisition  of Medisys  by Ceron was  accounted  for as a  purchase  by Medisys
because the shareholders of Medisys control the surviving company.  There was no
adjustment  to the carrying  value of the assets or  liabilities  of Ceron in as
much as its market  value  approximated  the  carrying  value of net assets.  In
summary,  Ceron is the  acquiring  entity for legal  purposes and Medisys is the
surviving  entity for  accounting  purposes.  For the purpose of this  financial
presentation   "Inception"   shall  mean  September  7,  1989,   which  was  the
commencement of Medisys operations.

         The Statement of  Operations  for the three months ended March 31, 2001
and 2000 and for the period from inception (September 7, 1989) through March 31,
2001, the Statement of changes in Stockholders Equity for the three months ended
March 31,  2001 and the  Balance  Sheet as of March  31,  2001  include,  in the
opinion  of  management,  all of the  adjustments,  consisting  only  of  normal
recurring  adjustments,  necessary  for a fair  presentation  of the results for
these periods and the financial  condition as of that date.  Historical  interim
results are not  necessarily  indicative of results that may be expected for any
future period.

NOTE 2 - CHANGES IN PRESENTATION

Certain  financial  presentations  for  the  first  quarter  of 2000  have  been
reclassified to conform to the 2001 presentation.

NOTE 3 - GOING CONCERN

The  Company's  financial  statements  are  prepared  using  generally  accepted
accounting principles applicable to a going concern. Such principles contemplate
the realization of assets and liquidation of liabilities in the normal course of
business.  However,  the  Company  is in  the  development  stage  and  has  not
established  a source of revenues  sufficient to allow it to continue as a going
concern. The Company is negotiating an agreement to raise short-term funding and
plans to seek long-term  funding through a stock offering or private  placement.
Management believes that sufficient funding will be raised to meet the operating
needs of the Company during the remainder of development stage.

                                      F-6
<PAGE>

                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
           Notes to the Consolidated Financial Statements (unaudited)

NOTE 4 - GENERAL AND ADMINISTRATIVE EXPENSES

General  and  administrative  expenses  for the  comparative  calendar  nine and
three-month  periods of 2001 and 2000 and from inception  through March 31, 2001
are as follows:

                                         Three Months       Inception to
                                   ----------------------     March 31,
                                     2001         2000           2001
                                     ----         ----           ----
   Officer's Compensation          $185,727     $ 56,250    $ 2,010,688
   Profession  Services              78,384       86,363        971,825
   Funding Fees                     103,604           22        176,145
   Fund Raising                     219,476       10,663        355,840
   Travel                            11,336       11,746        123,282
   Telephone                          6,564        1,872         86,834
   Insurance                          2,470            0         19,035
   Postage                           11,825           20         32,635
   Payroll Tax Interest                   0            0         36,569
   Other                             88,705       23,517      1,255,454
                                   --------     --------    -----------
                                   $708,091     $190,453    $ 5,068,307
                                   ========     ========    ===========

                                      F-7