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 June 30, 1999

        [ ] 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 [] No [X ] 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-  16,265,831  Issued and outstanding as of
June 30, 1999 (This amount includes 10,044 shares paid for but unissued awaiting
appropriate issue  documentation and excludes 25,735,000 shares issued to secure
the Registrant's obligations and subscription receivable for 500,000 shares)

<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 June 30, 1999, and
the related audited balance sheet of the Registrant as of December 31, 1998, the
unaudited  related  statements of operations  and cash flows for the three month
and six month periods ended June 30, 1999 and 1998 and from inception (September
7, 1989) through June 30, 1999, are attached hereto and  incorporated  herein by
this reference.

Operating  results for the  quarter  and six months  ended June 30, 1999 are not
necessarily  indicative  of the results that can be expected for the year ending
December 31, 1999.

The following financial statements are included in this report:

         Consolidated Balance Sheet as of June 30, 1999 and
           December 31, 1998................................................F-1

         Consolidated Statements of Operations for the Six Months
           and Quarter ended June 30, 1999,1998, and from inception
           (September 7, 1989) through June 30, 1999.....................F-2, 3

         Consolidated Statements of Changes in Common Stockholders'
           (Deficit) for the Six Months and Quarter ended June 30,
           1999, 1998 and from inception (September 7, 1989) through
           June 30, 1999....................................................F-4

         Consolidated  Statements  of Cash Flows for the Six Months
           and Quarter ended June 30, 1999,  1998 and from inception
           (September 7, 1989) through June 30, 1999.....................F-5, 6

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

                                       2
<PAGE>

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

OVERVIEW

         The Company has  proprietary  technology  for the  treatment of various
common skin disorders,  including acne, eczema, and psoriasis.  After completing
successful clinical studies, prototype clinics were established with the goal of
duplicating  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 through  Company
clinics  across the country.  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  over the last five years 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 clinic  operation.  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 is seeking  funding to establish  an Internet  presence and
open additional  clinics in major  metropolitan  areas as well as 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  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.

LIQUIDITY AND CAPITAL RESOURCES

         At June 30, 1999, the Company had current assets of $10,047 and current
liabilities of $3,290,984,  generating a working  capital deficit of $3,280,937,
which is a 12.1% increase from December 31, 1998. The increase in the deficit is
due to the Company's  operating loss of $514,797 for the six-month  period ended
June 30,  1998.  The  deficit  was  financed  with new  borrowings  of  $90,659,
additional  shareholder  investment  of $150,071  and  creditor  forbearance  of
$115,257.

RESULTS OF OPERATIONS

         During the first six months  ending  June 30,  1999,  the  Company  had
revenues  of $25,664  compared  to $40,651  during the same six months of 1998,a
decrease of $ 14,987 or 36.9%.  The Company's  operating  expenses  increased by
7.9% or $9,825 in the first six months of 1999,  as  compared to the same period
in 1998.

         General and administrative  expenses increased $49,210 from $175,494 in
the first six months of 1998.

         Interest  expense  the first six  months  of 1999 was  $181,366  versus
$64,742 in 1998.  The  increase is  attributable  to increased  indebtedness  of
$909,000 in the last half of 1998.

For the first half of 1999 the Company had a net loss of $514,797  compared to a
net loss of $321,151 in the same period of 1998.  The Company  anticipates  that
the losses will continue  until funding is obtained  which will it to launch its
business plan and strategies.

                                       3
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS  -  None.

ITEM 2.  CHANGES IN SECURITIES

         During the second  quarter  the  following  common  share  transactions
occurred:

         a.       Issued  365,000  restricted  common  shares for cash  totaling
                  $140,000.

         b.       Issued 82,310 restricted common shares for loan fees.
         c.       Issued  2,918,700   restricted  common  shares  for  fees  and
                  commissions in connection with fund raising efforts.
         d.       Issued  5,000  restricted  common  shares  to  cancel  debt of
                  $6,342.47.
         e.       Issued 23,000 restricted common shares to employees as a stock
                  bonus.
         f.       Canceled  30,000  shares that had  previously  been issued for
                  collateral.
         g.       Issued  85,126   restricted  common  shares  in  miscellaneous
                  transactions.

         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.

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

         On April 5, 1999 the  Company  filed a report on Form 8K  describing  a
consulting  agreement  with The Vector  Group for  investment  banking  services
whereby they would receive 1.5 million shares.

                                       4
<PAGE>

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: April 18, 2000

By: /s/ David K. Giles
    ---------------------
    David K. Giles
    Principal Accounting Officer

                                       5
<PAGE>
<TABLE>
<CAPTION>
                          WASATCH PHARMACEUTICAL, INC.
                         (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEET
                       JUNE 30, 1999 AND DECEMBER 31, 1998
                    ----------------------------------------

                                     ASSETS

                                                                                          1999              1998
                                                                                       -----------       -----------
                                                                                       (Unaudited)
CURRENT ASSETS
<S>                                                                                    <C>               <C>
     Cash                                                                              $       230       $     2,589
     Accounts receivable - trade                                                             3,492             7,175
     Inventory                                                                               5,725             7,158
     Prepaid expenses                                                                          600               600
                                                                                       -----------       -----------
Total Current Assets                                                                        10,047            17,522
                                                                                       -----------       -----------
PROPERTY AND EQUIPMENT
     Clinic and office equipment                                                            43,038            41,554
     Less accumulated depreciation                                                         (31,977)          (28,492)
                                                                                       -----------       -----------
        Net Property and Equipment                                                          11,060            13,062
                                                                                       -----------       -----------
OTHER ASSETS                                                                                   200               200
                                                                                       -----------       -----------
TOTAL ASSETS                                                                           $    21,307       $    30,784
                                                                                       ===========       ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable - trade                                                            $ 278,837         $ 237,609
     Accrued interest                                                                      447,509           356,260
     Accrued salaries                                                                      430,999           291,114
     Payroll taxes                                                                          94,619            85,136
     Other accrued expenses                                                                 33,925            60,628
     Notes and advances currently due:
        Short-term shareholder advances                                                     27,166            18,157
        Vendors                                                                            112,333           112,333
        Stockholders and others                                                          1,865,597         1,783,946
                                                                                       -----------       -----------
Total Liabilities                                                                        3,290,984         2,945,183
                                                                                       -----------       -----------
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, 42,500,831 shares issued and outstanding                                42,501            38,823
     Additional paid-in capital                                                          1,477,937         1,322,096
     Accumulated development stage deficit                                              (4,739,429)       (4,224,632)
                                                                                       -----------       -----------
                                                                                        (3,218,941)       (2,863,664)

     Less shares issued for future transactions                                            (50,735)          (50,735)
                                                                                       -----------       -----------
Total Stockholders' Deficit                                                             (3,269,676)       (2,914,399)
                                                                                       -----------       -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                            $    21,307       $    30,784
                                                                                       ===========       ===========
</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          From Inception
                                                                                     June 30,                  To June 30,
                                                                            --------------------------        ------------
                                                                              1999              1998               1999
                                                                            ---------        ---------        ------------
REVENUES
<S>                                                                           <C>              <C>               <C>
     Professional fee income                                                  $ 3,661          $ 6,765           $ 222,029
     Product sales                                                              7,766           12,810             438,898
                                                                            ---------        ---------        ------------
             Total Revenues                                                    11,427           19,575             660,927
                                                                            ---------        ---------        ------------
OPERATING EXPENSES
     Cost of products sold                                                      1,319            1,248              49,619
     Salaries                                                                  40,490           37,899             556,325
     Employee leasing                                                               -                -             218,745
     Payroll taxes                                                              3,361            3,100              52,919
     Physicians fees                                                            7,800            9,000             253,284
     Rent                                                                       9,379            5,447             189,371
     Advertising                                                                  299             (543)            214,337
     Depreciation                                                               1,385            1,314              31,956
     Other                                                                      4,727              471              67,574
                                                                            ---------        ---------        ------------

             Total Operating Expenses                                          68,760           57,936           1,634,130
GENERAL AND ADMINISTRATIVE EXPENSE                                            140,597           95,981           2,624,765
INTEREST                                                                       89,366           29,522             731,744
                                                                            ---------        ---------        ------------
             Total Expenses                                                   298,722          183,439           4,990,639
                                                                            ---------        ---------        ------------
LOSS BEFORE DISCONTINUED OPERATIONS AND
     THE PROVISION FOR INCOME TAXES                                          (287,296)        (163,864)         (4,329,712)

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

NET LOSS BEFORE INCOME TAXES                                                 (287,296)        (163,864)         (4,739,430)

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

NET LOSS                                                                    $(287,296)       $(163,864)       $ (4,739,430)
                                                                            =========        =========        ============

     Loss per share before discounted operations                             $ (0.015)        $ (0.018)           $ (0.334)
     Loss per share from discounted operation                                       -                -              (0.032)
                                                                            ---------        ---------        ------------

BASIC LOSS PER COMMON  SHARE                                                 $ (0.015)        $ (0.018)           $ (0.366)
                                                                            =========        =========        ============
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING                                  19,484,466        8,863,734          12,955,331
                                                                           ==========        =========        ============
</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 OPERATIONS
                                   (Unaudited)


                                                                             For the Six Months Ended        From Inception
                                                                                     June 30,                  To June 30,
                                                                            --------------------------        ------------
                                                                              1999              1998               1999
                                                                            ---------        ---------        ------------
REVENUES
<S>                                                                           <C>             <C>                <C>
     Professional fee income                                                  $ 7,942         $ 14,337           $ 222,029
     Product sales                                                             17,722           26,314             438,898
                                                                           ----------        ---------        ------------
             Total Revenues                                                    25,664           40,651             660,927
                                                                           ----------        ---------        ------------
OPERATING EXPENSES
     Cost of products sold                                                      1,610            2,670              49,619
     Salaries                                                                  76,755           74,708             556,325
     Employee leasing                                                               -                -             218,745
     Payroll taxes                                                              6,600            6,535              52,919
     Physicians fees                                                           15,416           19,200             253,284
     Rent                                                                      19,438           17,165             189,371
     Advertising                                                                1,785           (1,176)            214,337
     Depreciation                                                               2,700            2,629              31,956
     Other                                                                     10,085            2,835              67,574
                                                                           ----------        ---------        ------------
             Total Operating Expenses                                         134,391          124,566           1,634,130

GENERAL AND ADMINISTRATIVE EXPENSE                                            224,704          175,494           2,624,765
INTEREST                                                                      181,366           64,742             731,744
                                                                           ----------        ---------        ------------
              Total Expenses                                                  540,461          364,802           4,990,639
                                                                           ----------        ---------        ------------
LOSS BEFORE DISCONTINUED OPERATIONS AND
     THE PROVISION FOR INCOME TAXES                                          (514,797)        (324,151)         (4,329,712)

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

NET LOSS BEFORE INCOME TAXES                                                 (514,797)        (324,151)         (4,739,430)

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

NET LOSS                                                                   $ (514,797)       $(324,151)       $ (4,739,430)
                                                                           ==========        =========        ============

     Loss per share before discounted operations                           $   (0.034)       $  (0.034)       $     (0.334)
     Loss per share from discounted operation                                       -                -              (0.032)
                                                                           ----------        ---------        ------------

BASIC LOSS PER COMMON  SHARE                                               $   (0.034)       $  (0.034)       $     (0.366)
                                                                           ==========        =========        ============

BASIC WEIGHTED AVERAGE SHARES OUTSTANDING                                  15,336,347        9,464,303          12,955,331
                                                                          ===========        =========          ==========
</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)

Shares issued in connection with:
  Loan extensions                                              62,314          62             2,990                          3,052
  Securities sold for cash                                    400,000         400           139,600                        140,000
  Services rendered                                         2,957,696       2,958                 -                          2,958
  Retirement of debt and interest                               5,000           5             6,337                          6,342
Cost of Raising Funds                                                                           (16)                           (16)
Shares return by potential investor                           (30,000)        (30)                                             (30)
Net loss for the quarter ended June, 1999             -             -           -                 -       (287,296)       (287,296)
                                                   ----    ----------    --------       -----------   ------------     -----------
Balance June 30, 1999 of stockholders'
  equity-per committed contracts                     49    42,500,831      42,501         1,477,937     (4,739,428)     (3,218,941)

Shares issued for future transactions                 -   (26,235,000)        (51)          (50,684)             -         (50,735)
                                                   ----    ----------    --------       -----------   ------------     -----------
Net equity June 30, 1999                           $ 49    16,265,831    $ 42,450       $ 1,427,253   $ (4,739,428)    $(3,269,676)
                                                   ====    ==========    ========       ===========   ============     ===========
</TABLE>
 The accompanying footnotes are an integral part of this financial information

                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

                                                                             For the Six Months Ended        From Inception
                                                                                     June 30,                  To June 30,
                                                                            --------------------------        ------------
                                                                              1999              1998               1999
                                                                            ---------        ---------        ------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                        <C>              <C>               <C>
         Net loss                                                          $ (514,797)      $ (324,151)       $ (4,739,429)
     Adjustments to reconcile net (Loss) to net cash
         used by operating activities:

         Depreciation and depletion                                             3,485            3,415              31,977
     Depreciation and losses on fixed asset disposals

         Clinic assets                                                              -            (5,413)            15,234
         Oil and gas assets                                                         -                -               4,189
     Loss on disposal of oil and gas properties                                                      -             382,933
     Expenses paid with common shares                                                             1,150
     Increase (decrease) in working capital                                                                                     -
         (Increase) decrease in receivables                                     3,683            6,936              (3,492)
         (Increase) decrease in related party receivable                            0                -                         -
         (Increase) decrease in inventory                                       1,433              434              (5,725)
         (Increase) decrease in prepaid expenses                                    -           15,063                (600)
         Increase (decrease) in accounts payable                               41,228              794             278,837
         Increase (decrease) in accrued interest                               91,249           64,367             447,509
         Increase (decrease) in other accruals                                122,665           21,265             559,543
                                                                             --------          --------          ---------
         Net cash used by operating activities                               (251,054)        (216,140)         (3,029,024)
                                                                             --------          --------          ---------
CASH FLOWS FROM INVESTING ACTIVITIES
         Purchase of fixed assets                                              (1,484)               -             (29,248)
         (Increase) decrease in other assets                                        -             (200)               (200)
                                                                             --------          --------          ---------
         Net cash provided (used) by investing activities                      (1,484)            (200)            (29,448)
                                                                             --------          --------          ---------
CASH FLOWS FROM FINANCING ACTIVITIES
         Proceeds from borrowings                                              90,659          216,644           2,466,866
         Expenses paid by shareholder                                               -                -              38,323
         Repayment of loans                                                         -          (75,786)           (456,791)
         Proceeds from sale of common shares                                  150,071           10,000             660,536
         Capital contributed by shareholder                                         -                -             154,800
         Collection of share subscriptions                                          -           51,453             141,726
         Common shares exchanged for debt                                       9,464                -              21,782
         Exercised stock options                                                    -                -             125,250
         Redemption of common shares                                                -                -             (20,409)
         Cost of raising capital                                                  (16)              -              (73,382)
                                                                             --------          --------          ---------
         Net cash provided used by financing activities                       250,178          202,311           3,058,701
                                                                             --------          --------          ---------
NET INCREASE (DECREASE) IN CASH                                                (2,359)         (14,029)                230
     Balance at beginning of period                                             2,589           14,259                   -
                                                                             --------          --------          ---------
     Balance at end of period                                                $    230          $   230           $     230
                                                                             ========          ========          =========
</TABLE>
 The accompanying footnotes are an integral part of this financial information

                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

                                                                               For the Quarter Ended
                                                                                     June 30,                      From
                                                                             -------------------------         Inception To
                                                                               1999             1998          Jun. 30, 1999
                                                                             --------         --------          ----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                        <C>              <C>               <C>
         Net loss                                                          $ (287,296)      $ (163,864)       $ (4,739,429)
     Adjustments to reconcile net (Loss) to net cash
         used by operating activities:
         Depreciation and depletion                                             1,778            1,709              31,977
     Depreciation and losses on fixed asset disposals
         Clinic assets                                                              -           (5,413)             15,234
         Oil and gas assets                                                         -                -               4,189
     Loss on disposal of oil and gas properties                                     -                -             382,933
     Expenses paid with common shares                                               -            1,107
     Increase (decrease) in working capital
         (Increase) decrease in receivables                                      (350)           6,631              (3,492)
         (Increase) decrease in related party receivable                            -                -                         -
         (Increase) decrease in inventory                                       1,169            1,204              (5,725)
         (Increase) decrease in prepaid expenses                                    -                -                (600)
         Increase (decrease) in accounts payable                               (5,024)           6,326             278,837
         Increase (decrease) in accrued interest                               20,976           31,720             447,509
         Increase (decrease) in other accruals                                 76,354           12,215             559,543
                                                                             --------         --------          ----------
         Net cash used by operating activities                               (192,392)        (108,365)         (3,029,024)
                                                                             --------         --------          ----------

CASH FLOWS FROM INVESTING ACTIVITIES
         Purchase of fixed assets                                              (1,484)               -             (29,248)
         (Increase) decrease in other assets                                  200,000             (200)               (200)
                                                                             --------         --------          ----------
         Net cash provided (used) by investing activities                     198,516             (200)            (29,448)
                                                                             --------         --------          ----------

CASH FLOWS FROM FINANCING ACTIVITIES
         Proceeds from borrowings                                            (184,526)          75,348           2,466,866
         Expenses paid by shareholder                                               -                               38,323
         Repayment of loans                                                    26,065          (33,214)           (456,791)
         Proceeds from sale of common shares                                  142,958                              660,536
         Capital contributed by shareholder                                         -                              154,800
         Collection of share subscriptions                                          -           35,299             141,726
         Common shares exchanged for debt                                       9,394                               21,782
         Exercised stock options                                                    -                -             125,250
         Redemption of common shares                                                -                              (20,409)
         Cost of raising capital                                                  (16)               -             (73,382)
                                                                             --------         --------          ----------
         Net cash provided used by financing activities                        (6,125)          77,433           3,058,701
                                                                             --------         --------          ----------
NET INCREASE (DECREASE) IN CASH                                                    (0)         (31,132)                230
     Balance at beginning of period                                               230           31,362                   -
                                                                             --------         --------          ----------
     Balance at end of period                                                $    230         $    230          $      230
                                                                             ========         ========          ==========
</TABLE>
 The accompanying footnotes are an integral part of this financial information

                                      F-6
<PAGE>

                          WASATCH PHARMACEUTICAL, INC.
                        (A Development Stage Registrant)
                 Notes to the Consolidated Financial Statements
                                  June 30, 1999
                                   (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

         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.

         Disposition  of Oil and Gas Business - On November  20,  1996,  Wasatch
exchanged 2,000,000 of its common shares for a 25% interest in fifty oil and gas
wells  located  in  western  West  Virginia.  Under the terms of the  agreement,
Wasatch's  was entitled to 25% of the revenues and incurred 25% of the operating
expenses  from the wells.  The  property  operator  holds a  vendor's  lien that
entitles it to offset future revenues against accumulated operating deficits not
covered by revenues.

         At the time they were acquired,  the properties  were not  economically
productive.  The  transaction  was based on the property  developer  raising the
funds to increase  productivity  in each of the wells in 1997. The Company would
not bear any of the enhanced  production costs. There were no costs incurred for
reworking wells in 1997 or 1996.

         In third quarter of 1997,  Wasatch called upon the oil and gas property
developer to demonstrate its ability to meet  commitments  under the acquisition
agreement.  The  developer  acknowledged  that  they  were  unable  to meet  the
contractual  commitments.  .In  November  1997,  the Wasatch  Board of Directors
authorized  management  to exchange  the  Company's  West  Virginia  oil and gas
properties for the common shares issued by Wasatch.  Negotiations  commenced and
an  acceptable  solution  was  reached in February  1998.  Under the agreed upon
exchange arrangement,  Wasatch would return title to the fifty oil and gas wells
acquired in exchange for  1,800,000 of the original  shares issued and a release
from all obligations  associated  with the oil and gas operations.  In addition,
Wasatch  agreed to forgive a $520,390  debt owed it for the  purchase  of common
stock by an affiliate of the developer.

                                       F-7
<PAGE>

                          WASATCH PHARMACEUTICAL, INC.
                        (A Development Stage Registrant)
                 Notes to the Consolidated Financial Statements
                                  June 30, 1999
                                   (Unaudited)

NOTE 2 - CHANGES IN PRESENTATION

         Certain  financial  presentations  for the second quarter and first six
months of 1997 have been reclassified to conform to the 1998 presentation.

NOTE 3 - GENERAL AND ADMINISTRATIVE EXPENSES

         General and  administrative  expenses for the comparative  calendar six
month and three month  periods  ended and from  inception  through June 30, 1998
are:
<TABLE>
<CAPTION>
                                           SIX MONTHS            THREE MONTHS ENDED        INCEPTION
                                         ENDED JUNE 30,               JUNE 30,            TO JUNE 30,
                                       1999          1998         1999         1998           1999
                                   -------------- ------------ ------------ ----------- -----------------
<S>                                    <C>           <C>          <C>         <C>            <C>
      Officer's compensation           $ 114,518     $ 70.777     $ 74,479    $ 36,535       $ 1,090,043
      Legal and accounting                96,807       25,609       61,065      12,231           340,740
      Finders fee                            197       15,011           52       7,761            85,189
      Travel                               1,252        6.271          683       1,625            74,373
      Telephone                            3,169        6,465        1,928       2,826            64,245
      Insurance                                           716                      261            15,912
      Postage                                           1.812                      937            15,822
      Payroll tax penalties                                 0                        0            36,569
      Other                                8,761       28,834        2,389       6,465           901,872
                                   -------------- ------------ ------------ ----------- -----------------
                                       $ 224,704    $ 155,498    $ 140,597   $ 155,498       $ 2,624,764
                                   ============== ============ ============ =========== =================
</TABLE>

NOTE 5 - GOING CONCERN

         The  Registrant'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  Registrant  is in the  development  stage  and has not
established  a source of revenues  sufficient to allow it to continue as a going
concern.  The Registrant is seeking an agreement to raise short-term funding and
plans to seek long-term  funding through a stock offering.  Management  believes
that  sufficient  funding  will be  raised  to meet the  operating  needs of the
Registrant during the remainder of development stage.

                                       F-8