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, 2000

        [ ] 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


                    714 East 7200 South, Midvale, Utah 84047
               (Address of principal executive offices) (Zip Code)

                                 (801) 566-9688
                 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,  24,293,534  shares issued and
outstanding.   The  issued  and  outstanding  shares  exclude  1,515,014  shares
contingently  issued for a specific  incomplete  common stock private  placement
program but include  738,101 shares to be issued the two principal  officers for
shares  they have  provided  in a private  sale  solely  for the  benefit of the
Company  and  10,044  shares  that  were  paid  for but  unissued  awaiting  the
appropriate documentation from the purchaser.

<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, 2000,  and the
related  audited  balance sheet of the  Registrant as of December 31, 1999,  the
unaudited  related  statements of operations  and cash flows for the three month
periods  ended March 31, 2000 and 1999 and from  inception  (September  7, 1989)
through  March 31, 2000,  are attached  hereto and  incorporated  herein by this
reference.

Operating  results  for the quarter  ended  March 31,  2000 are not  necessarily
indicative of the results that can be expected for the year ending  December 31,
2000.

The following financial statements are included in this report:

         Consolidated Balance Sheet as of March 31, 2000 and
           December 31, 1999  ..........................................   F-1

         Consolidated Statements of Operations for the Quarter
           ended March 31, 2000, 1999 and from inception (September
           7, 1989) through March 31, 2000..............................   F-2

         Consolidated Statements of Changes in Common Stockholders'
            (Deficit) for the Quarter ended March 31, 2000 and from
            inception (September 7, 1989) through March 31, 2000........   F-3

         Consolidated  Statements of Cash Flows for the Quarter
            ended  March 31, 2000, 1999 and from inception
            (September 7, 1989) through March 31, 2000..................   F-4

         Notes to the Consolidated Financial Statements.................   F-5

                                       2
<PAGE>

ITEM 2. MANAGEMENT  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITIONS AND RESULTS
        OF 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 to  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 supplemented by a physician referral program,
revenues could be increased  substantially with the infrastructure in place that
is operating at 10% to 15% of clinic capacity.

         On April 19, 2000, the Company entered into an agreement with a private
investment  group to provide up to  $13,000,000  in long-term  capital  funding.
Under the agreement,  the investment  group will provide  $800,000 during the 45
days following the original closing amount of $200,000. The funding structure is
built  around 8%  Convertible  Debentures,  due April 19,  2003,  and  issued in
$500,000 increments each 60 days following the above original two purchases. The
total funding level is at the discretion of the investor.

LIQUIDITY AND CAPITAL RESOURCES

         At March 31,  2000,  the  Company  had  current  assets of $36,214  and
current  liabilities  of  $3,465,385,  generating a working  capital  deficit of
$3,429,171,  which is a 1% increase from December 31, 1999.  The increase in the
deficit is due to the Company's  operating loss of $325,212 for the  three-month
period ended March 31, 2000.  The deficit was financed  with new  borrowings  of
$38,800 and additional shareholder investment of $300,000.

RESULTS OF OPERATIONS

         For the three months ended March 31, 2000,  the Company had revenues of
$7,682,  compared to revenues of $14,238 for the same period of 1999, a decrease
of 50%. The Company's  operating  expenses  increased  $6,000 in the first three
months of 2000, as compared to the first three months of 1999. In as much as the
company conducted its clinic practice in a traditional  profit motivated manner,
the costs increase because the Company maintains a core technical and management
staff in anticipation of rapid growth.

         The  Company's  corporate  expenses  increased  $96,400 to $190,600 and
interest  expense  decreased  $21,300  to $70,721  for 1st  quarter of 2000 when
compared to 1999.  These corporate  expense  variations are  attributable to the
timing of  expenditures  for fund  raising  activities,  increased  audit  costs
associated  with filing the annual SEC reports for the years 1997 through  1999,
increased  legal costs  attributable  to SEC filings and raising capital and the
increasing  Company  debt.  The  decrease  in interest  is  attributable  to the
settlement arrangement on a $300,000 debt which provided an interest free period
and the new  borrowing  were late in the first  quarter  of 2000.  For the first
quarter of 2,000,  the Company had a net loss of $325,212  compared to a loss of
$227,502 in the same period of 1999.  The  Company  anticipates  that the losses
will  continue  for a six to eight  month  period  until the  recently  obtained
funding will enable management to fully implement the Company's business plan.

                                       3
<PAGE>

                           PART II - OTHER INFORMATION

                            ITEM 1. LEGAL PROCEEDINGS

         On November 1 and 15, 1996 the Company entered into certain contractual
arrangements with Lindbergh  Hammar,  Inc.  ("Lindbergh")  which resulted in the
Company  issuing 12 million shares of restricted  Common Stock in exchange for a
note issued by Lindbergh with a face value of $60 million.  The Company retained
voting rights on the Common Stock issued.  Upon default of the note, the Company
made demand for payment and, failing to receive payment,  proceeded to terminate
the contract and instructed  its transfer agent to cancel the shares.  After the
contract was  terminated,  Lindbergh  transferred  the 12 million  shares of the
Common Stock issued in the transaction to a newly formed  offshore  corporation,
Crestport Insurance,  which the Company believed had been organized by the owner
and CEO of Lindbergh.

         On October 15, 1997,  Crestport filed a lawsuit against the Company and
its stock transfer agent seeking damage arising out of the  cancellation  of the
12 million shares.  Crestport  claimed that it was an innocent third party and a
holder in due course who had paid  Lindbergh for the shares.  As of December 31,
1997, the lawsuit was in the discovery stage. Crestport has asserted a claim for
$5,000,000 in damages arising out of cancellation of the share  certificate.  On
July 20, 1999,  the Company  moved for summary  judgment in the  proceeding  and
requested that the  plaintiff's  claim be dismissed.  The presiding judge denied
the Company's  request for summary  judgment and scheduled the matter for trial,
which is now set for May 2000.

         The Company  believes  that the claim by Crestport is without merit and
intends to vigorously defend the proceedings.  An adverse determination in these
proceedings would have a material adverse effect on the Company.

         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

During the first quarter the following common share transactions occurred:

         a.  Issued 22,000 restricted common shares to creditors for extensions.
         b.  Issued  1,290,807  restricted  common  shares  for cash  totaling $
             300,331.86
         c.  Issued 125,000 shares for cancellation of debt totaling $16,990.71.
         d.  Issued 1,193,336 shares to consultants for services.
         e.  Cancelled  1,500,000 shares  previously  issued as collateral for a
             future loan that didn't materialize.

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.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES  - None.

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

ITEM 5.  OTHER INFORMATION  - None.

                                       4
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits.

         Exhibit
         Number:      Exhibit
           27         Financial Data Schedule (included only in the electronic
                      filing of this document).

     (b) Reports on Form 8-K - Dated May 3, 2000 - Debenture  Sale -  Summarized
as follows.

         On April 19, 2000 Wasatch signed a Securities  Purchase  Agreement with
Aspen Capital Resources, L.L.C. in connection with a $10,000,000 program to fund
the growth and development of the Company.  Under the program,  the Company will
issue 8% Convertible  Debentures over a three year period. The initial issue was
for $200,000 with a subsequent issue of $800,000 within ninety days and $500,000
bi-monthly there after until the entire program is funded. Purchasing the entire
Debenture  issue is at the discretion of the investors and the issue will be due
April 19, 2003.

         The debentures  are  convertible 90 days after the initial issue at 80%
of the  market  value  of the  Company's  stock on the  date of  conversion.  In
addition,  the Company  issued  detached  warrants that allows Aspen to purchase
common  shares  based on a formula  related  to the  conversion  price of the 8%
Debentures.  The  purchase  price of the warrant  rights is based on the trading
price of the Company's stock.

         The Company  plans to use the funds to initiate its Internet e commerce
development, to commence the commercial development of its prototype clinics, to
bring to a conclusion the FDA product  application  and introduce the associated
products in the  marketplace,  to develop  relationships  with major HMO's,  PPO
groups and insurance companies and to meet other working capital needs.




                                   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 16, 2000


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

                                       5
<PAGE>
<TABLE>
<CAPTION>
                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEET

                                     ASSETS

                                                                       March 31,          December 31,
                                                                         2000                 1999
                                                                      ----------           ----------
                                                                      (Unaudited)
CURRENT ASSETS
<S>                                                                   <C>                  <C>
  Cash                                                                $   10,600           $   10,038
  Accounts receivable - trade                                              3,186                2,616
  Inventory                                                                9,103                3,673
  Prepaid expenses                                                        13,324                8,305
                                                                      ----------           ----------
Total Current Assets                                                      36,214               24,632
                                                                      ----------           ----------

PROPERTY AND EQUIPMENT
  Clinic and office equipment                                             58,827               44,819
  Less accumulated depreciation                                          (36,389)             (35,122)           9,697
                                                                      ----------           ----------
    Net Property and Equipment                                            22,438                9,697            14,008
                                                                      ----------           ----------
OTHER ASSETS                                                              40,000               10,200            (2,334)
                                                                      ----------           ----------
TOTAL ASSETS                                                          $   98,651           $   44,529            21,371
                                                                      ==========           ==========

                   LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable - trade                                            $  254,622           $  239,812
  Accrued interest                                                       500,047              463,375
  Accrued salaries                                                       562,126              557,726
  Payroll taxes                                                           91,003              103,418
  Other accrued expenses                                                  56,671               57,018
  Notes and advances currently due:
    Short-term shareholder advances                                       55,103               57,171
    Vendors                                                              112,333              112,333
    Stockholders and others                                            1,816,639            1,796,708
                                                                      ----------           ----------
Total Liabilities                                                      3,448,544            3,387,561
                                                                      ----------           ----------
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, 24,293,534 shares issued and outstanding                  24,419               23,162
  Additional paid-in capital                                           2,345,134            2,029,388
  Accumulated development stage deficit                               (5,718,744)          (5,393,382)
                                                                      ----------           ----------
                                                                      (3,349,143)          (3,340,783)
  Less consideration due on shares issued                                   (750)              (2,250)
                                                                      ----------           ----------
Total Stockholders' Deficit                                           (3,349,893)          (3,343,033)
                                                                      ----------           ----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                           $   98,651           $   44,529
                                                                      ==========           ==========
</TABLE>

 The accompanying footnotes are an integral part of this financial information

                                      F-1
<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,
                                                                         2000                 1999                     2000
                                                                      ----------           ----------              ----------
REVENUES
<S>                                                                   <C>                  <C>                     <C>
  Professional fee income                                             $    1,380           $    4,281              $  215,467
  Product sales                                                            6,302                9,957                 427,478
                                                                      ----------           ----------              ----------
      Total Revenues                                                       7,682               14,238                 642,945
                                                                      ----------           ----------              ----------
OPERATING EXPENSES
  Cost of products sold                                                    1,268                  291                  49,276
  Salaries                                                                48,030               36,266                 527,600
  Employee leasing                                                             -                    -                 218,745
  Payroll taxes                                                            4,630                3,239                  50,949
  Physicians fees                                                          4,350                7,616                 242,218
  Rent                                                                     6,739               10,059                 176,672
  Advertising                                                                  -                1,487                 212,552
  Depreciation                                                             1,267                1,314                  30,523
  Other                                                                    5,311                5,359                  62,800
                                                                      ----------           ----------              ----------
      Total Operating Expenses                                            71,595               65,631               1,571,335

GENERAL AND ADMINISTRATIVE EXPENSE                                       190,578               84,108               2,590,639

INTEREST                                                                  70,871               92,000                 621,248
                                                                      ----------           ----------              ----------
      Total Expenses                                                     333,044              241,739               4,783,222
                                                                      ----------           ----------              ----------
LOSS BEFORE DISCONTINUED OPERATIONS AND
  THE PROVISION FOR INCOME TAXES                                        (325,362)            (227,502)             (4,140,277)

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

NET LOSS BEFORE INCOME TAXES                                            (325,362)            (227,502)             (4,549,995)

     PROVISION FOR INCOME TAXES                                                -                    -                       -
                                                                      ----------           ----------              ----------

NET LOSS                                                              $ (325,362)          $ (227,502)            $(4,549,995)
                                                                      ==========           ==========             ===========
Loss per share before discounted operations                           $   (0.014)          $   (0.017)            $    (0.179)
     LOSS PER SHARE FROM DISCONTINUED BUSINESS                                 -                    -                  (0.018)
                                                                      ----------           ----------              ----------
BASIC LOSS PER COMMON  SHARE                                          $   (0.014)          $   (0.017)             $   (0.196)
                                                                      ==========           ==========              ==========
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING                             23,122,579           13,196,095              23,161,462
                                                                      ==========           ==========              ==========
</TABLE>
 The accompanying footnotes are an integral part of this financial information

                                       F-2
<PAGE>
<TABLE>
<CAPTION>
                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

                                                                     For the Quarter Ended March 31,            From Inception
                                                                    -----------------------------------          To March 31,
                                                                         2000                 1999                     2000
                                                                      ----------           ----------              ----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                   <C>                  <C>                    <C>
    Net loss                                                          $ (325,362)          $ (227,502)            $(4,549,994)
  Adjustments to reconcile net (Loss) to net cash
    used by operating activities:
    Depreciation and depletion                                             2,334                1,707                  30,826
  Depreciation and losses on fixed asset disposals
    Clinic assets                                                              -                    -                  15,234
    Oil and gas assets                                                         -                    -                 387,122
  Loss on disposal of oil and gas properties                                                                                -
  Increase (decrease) in working capital                                                                                    -
    (Increase) decrease in receivables                                      (570)               4,033                  (7,745)
    (Increase) decrease in related party receivable                            -                    -
    (Increase) decrease in inventory                                      (5,431)                 264                 (12,589)
    (Increase) decrease in prepaid expenses                               (5,019)                   -                  (5,619)
    Increase (decrease) in accounts payable                               14,810               46,252                 252,419
    Increase (decrease) in accrued interest                               36,672               70,273                 392,932
    Increase (decrease) in other accruals                                 (8,362)              46,311                 428,516
                                                                      ----------           ----------             -----------
    Net cash used by operating activities                               (290,928)             (58,662)             (3,068,899)
                                                                      ----------           ----------             -----------
CASH FLOWS FROM INVESTING ACTIVITIES                                           -
    Purchase of fixed assets                                             (14,008)                   -                 (41,772)
    (Increase) decrease in other assets                                  (29,800)            (200,000)                (30,000)
                                                                      ----------           ----------             -----------
    Net cash provided (used) by investing activities                     (43,808)            (200,000)                (71,772)
                                                                      ----------           ----------             -----------
CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from borrowings                                                                  275,185               2,376,207
    Expenses paid by shareholder                                               -                    -                  38,323
    Repayment of loans                                                         -              (26,065)               (456,791)
    Proceeds from sale of common shares                                  300,171                7,113                 810,636
    Capital contributed by shareholder                                         -                    -                 154,800
    Collection of share subscriptions                                                                                 141,726
    Common shares exchanged for debt                                           -                   70                  12,318
    Exercised stock options                                                    -                    -                 125,250
    Redemption of common shares                                                -                    -                 (20,409)
    Cost of raising capital                                                    -                    -                 (73,366)
                                                                      ----------           ----------             -----------
    Net cash provided used by financing activities                       300,171              256,303               3,108,694
                                                                      ----------           ----------             -----------
NET INCREASE (DECREASE) IN CASH                                          (34,565)              (2,359)                (31,976)
  Balance at beginning of period                                          10,038                2,589                       -
                                                                      ----------           ----------             -----------
  Balance at end of period                                            $  (24,527)          $      230             $   (31,976)
                                                                      ==========           ==========             ===========
</TABLE>
 The accompanying footnotes are an integral part of this financial information

                                      F-3
<PAGE>
<TABLE>
<CAPTION>

                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
            ---------------------------------------------------------
                                   (Unaudited)


                                                 Preferred       Common Stock           Additional      Accumulated        Total
                                                   Stock    ----------------------       Paid - In      Development    Stockholders'
                                                  Amount     Shares        Amount         Capital      Stage Deficit       Equity
                                                 ---------  ----------   ---------      ------------  ---------------    -----------
<S>                                                <C>     <C>          <C>            <C>            <C>              <C>
Balance forward December 31, 1998                  $ 49    38,822,821    $ 38,823       $ 1,322,096    $(4,224,631)    $(2,863,664)

Shares issued in connection with:
      Note extensions                                 -        70,000          70                 -              -              70
      Securities sold for cash                        -        70,000          70             6,930              -           7,000
      Services rendered                               -        83,000          83                 -              -              83
      Employee benefits                                        30,000          30                 -              -              30

Shares issued to potential investor to be used
   as interim loan collateral                         -        30,000          30                 -              -              30

Net loss for the quarter ended March 31, 1999         -             -           -                 -       (227,502)       (227,502)
                                                   ----    ----------    --------       -----------    -----------     -----------
Balance March 31, 1999 of stockholders'
      equity-per committed contracts                 49    39,105,821      39,106         1,329,026     (4,452,133)     (3,083,952)

      Less shares issued for future transactions      -   (26,265,000)    (26,265)          (24,500)             -         (50,765)
                                                   ----    ----------    --------       -----------    -----------     -----------

Net equity March 31, 1999                          $ 49    12,840,821    $ 39,055       $ 1,278,312    $(4,452,133)    $(3,134,717)
                                                   ====    ==========    ========       ===========    ===========     ===========

Shares issued in connection with:
     Loan extensions                                          147,000        147                                               147
     Securities sold for cash                                 713,829        714            168,191                        168,905
     Services rendered                                      1,193,336      1,193                  -                          1,193

 Shares issued in stock exchange arrangement
     Replacement shares issued                                      -          -                  -                              -
     Replacement shares to be issued                          576,978        577            130,689                        131,266

Shares issued as collaterial
     Contingent shares returned                            (1,500,000)    (1,500)                                           (1,500)
                                                                                                                                 -
Net loss for the quarter ended March 31, 2000         -             -          -                  -       (325,362)       (325,362)
                                                   ----    ----------    --------       -----------    -----------     -----------
Balance March 31, 2000 of stockholders'
     equity-per committed contracts                  49    24,293,534     24,294          2,328,268     (5,718,744)     (3,366,134)

Common shares issud without consideration             -      (750,000)      (750)                 -              -            (750)
                                                   ----    ----------    --------       -----------    -----------     -----------
Net equity March 31, 2000                          $ 49    23,543,534    $23,544        $ 2,328,268    $(5,718,744)    $(3,366,884)
                                                   ====    ==========    ========       ===========    ===========     ===========
</TABLE>
 The accompanying footnotes are an integral part of this financial information

                                      F-4
<PAGE>

                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                 March 31, 2000
                                   (Unaudited)

NOTE 1 - NATURE AND HISTORY OF THE BUSINESS

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

         The  Company's  predecessor,  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,  an  unrelated
publicly  held  company,   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.
In a January 1996  statutory  reorganization,  Ceron was merged with the Company
and the Company was reincorporated in Utah as 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 but 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.

NOTE 2 - CHANGES IN PRESENTATION

         Certain financial presentations for the first quarter of 1999 have been
reclassified to conform to the 2000 presentation.

NOTE  3 - GOING CONCERN PREMISE

         The  Company's  financial   statements  are  prepared  using  generally
accepted accounting principles applicable to a going concern, which contemplates
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 to operate.
The  Company  has sought  short-term  funding  and  planned to obtain  long-term
funding  through a broad based public stock offering.  Management  believes that
sufficient  funding to commence  profitable  operations  will be provided by the
debenture program set forth below.

         On April 19, 2000, the Company entered into an agreement with a private
investment  group to provide up to  $13,000,000  in long-term  capital  funding.
Under the agreement,  the investment  group will provide  $800,000 during the 45
days following the original closing funding of $200,000.  The funding  structure
is built around  Convertible  Debentures  issued in $500,000  increments each 60
days following the original two purchases.

                                       F-5
<PAGE>

                         WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                                 March 31, 2000
                                   (Unaudited)

NOTE 3 - GENERAL AND ADMINISTRATIVE EXPENSES

         General and  administrative  expenses for the  comparative  three month
periods ended in 2000 and 1999 and from inception through March 31, 2000 are:

                                                                    From
                                                                 Inception
                                        First  Quarter             To Mar. 31
                                  ------------ ------------    ---------------
                                     2000         1999              2000
                                  ------------ ------------    ---------------
         Officers' compensation       $56,250      $40,439         $1,343,377
         Professional services         86,363       35,742            476,740
         Fund raising expense          10,663        4,301             90,271

         Finders fees                       0          145             41,386

         Travel                        11,746          569             91,217

         Telephone                      1,872        1,241             70,182
         Insurance                          0            0             15,912
         Postage                           18            0             15,840
         Payroll tax penalties              0            0             36,569
         Other                         23,666        1,671            952,143
                                  ------------ ------------    ---------------
         Total                       $190,578      $84,108        $3,133,637
                                  ============ ============    ===============


NOTE 4 - EARNINGS PER SHARE

         Earnings Per Share is based on 24,293,534 shares issued and outstanding
March 31, 2000.  The issued and  outstanding  shares  exclude  1,515,014  shares
contingently  issued for an incomplete  specific common stock private  placement
program but include  738,101 shares to be issued the two principal  officers for
shares  they have  provided  in a private  sale  solely  for the  benefit of the
Company  and  10,044  shares  that  were  paid  for but  unissued  awaiting  the
appropriate  documentation  from the  purchaser.  In addition,  for Earnings Per
Share calculations,  750,000 collateral shares were excluded from the issued and
outstanding shares.

                                      F -6