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 September 30, 1997

  [ ] 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: 000-22899

                          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              Outstanding  as of September 30, 1997.
          $.001                                   9,910,303

<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 September 30, 1997,
and the related audited balance sheet of the Registrant as of December 31, 1996,
the unaudited  related  statements  of  operations  and cash flows for the three
month  and  nine  month  periods  ended  September  30,  1997  and 1996 and from
inception  (September 7, 1989) through  September 30, 1997, are attached  hereto
and incorporated herein by this reference.

         Operating  results for the quarter and nine months ended  September 30,
1997 are not necessarily  indicative of the results that can be expected for the
year ending December 31, 1997.

<PAGE>

                          WASATCH PHARMACEUTICAL, INC.
                         ( A Development Stage Company)
                           Consolidated Balance Sheets

                                               SEPTEMBER 30,      DECEMBER 31,
                                                   1997               1996
                                                   ----               ----
                                                (Unaudited)
CURRENT ASSETS
 Cash                                      $          200       $        11,991
 Accounts receivable - trade                        7,090                 2,925
 Accounts receivable - stockholder                 17,667                 6,600
 Inventory                                          6,884                 8,586
 Prepaid expenses                                   4,848                     -
                                           --------------      ----------------
   Total Current Assets                            36,689                30,102
                                           --------------      ----------------
PROPERTY AND EQUIPMENT
 Oil and gas properties,
   successful efforts method                   3,790,478             3,719,536
 Furniture and office equipment                   41,490                39,749
                                          --------------       ---------------
                                               3,831,967             3,759,285
   Less accumulated depreciation                 (24,143)              (15,668)
                                          --------------       ---------------
 Net Property and Equipment                    3,807,824             3,743,617
                                          --------------       ---------------
OTHER ASSETS
       Deferred  offering costs                   60,124                     -
       Miscellaneous                                 875                 1,350

 Total Other Assets                               60,999                 1,350
                                         ---------------      ----------------
 TOTAL ASSETS                            $     3,905,512      $      3,775,069
                                         ===============      ================


 The accompanying footnotes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>


                          WASATCH PHARMACEUTICAL, INC.
                         ( A Development Stage Company)
                           Consolidated Balance Sheets

                                                             SEPTEMBER 30,      DECEMBER 31,
                                                                 1997               1996
                                                                 ----               ----
                                                              (Unaudited)
CURRENT LIABILITIES
<S>                                                      <C>                  <C>
  Accounts payable - trade                               $        19,510      $      168,159
  Accrued interest                                               223,270             161,226
  Other accrued expenses                                          81,360              44,109
  Notes and advances currently due
    Short-term shareholder loans                                  49,988                   -
    Debentures payable                                            50,000                   -
    Vendors                                                      112,333             117,333
    Stockholders                                                 854,388             794,387
                                                         ---------------      --------------
  Total Current Liabilities                                    1,563,848           1,285,214

LONG TERM LIABILITIES
  Notes payable (less current portion)                                 -               5,000
                                                        ----------------      --------------
TOTAL LIABILITIES                                              1,563,848           1,290,214

STOCKHOLDERS' EQUITY (DEFICIT)
  Preferred stock, $0.001 par value, 1,000,000
   shares authorized 49,258 issued & outstanding                      49                  49
  Common stock, $0.001 par value, 50,000,000
   shares authorized, 9,901,010 shares and
   6,635,956 shares issued and outstanding.                        9,910               6,636
  Additional paid-in capital                                   5,453,715           4,362,549
  Accumulated development stage deficit                       (2,037,011)         (1,584,379)
                                                        ----------------      --------------
                                                               3,426,665           2,784,855
    Less notes receivable shares issued                       (1,085,000)           (300,000)
                                                        ----------------      --------------
  Total Stockholder's Equity (Deficit)                         2,341,665           2,484,855
                                                        ----------------      --------------
  TOTAL LIABILITIES AND
      STOCKHOLDERS' EQUITY (DEFICIT)                    $      3,905,512      $    3,775,069
                                                        ================      ==============
</TABLE>

 The accompanying footnotes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>


                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
            Consolidated Statement of Changes in Shareholders' Equity
                                   (Unaudited)


                                                  PREFERRED                            ADDITIONAL   ACCUMULATED         TOTAL
                                                   STOCK          COMMON STOCK          PAID-IN     DEVELOPMENT      STOCKHOLDERS
                                                   AMOUNT      SHARES       AMOUNT      CAPITAL    STAGE DEFICIT       EQUITY
                                                   ------      ------       ------      -------    -------------       ------

<S>                                            <C>           <C>           <C>        <C>           <C>              <C>
Balance December 31, 1996                      $    2,463    6,635,956     $ 6,636    $ 4,360,135   $(1,584,379)     $ 2,784,855
  Retroactive adjustment to the merged
    Preferred Stock Amount                         (2,414)           -           -          2,414             -                -
                                                   ------   ----------     -------    -----------   -----------      -----------

Stockholders equity-per committed contracts            49    6,635,956       6,636      4,362,549    (1,584,379)       2,784,855

  Stock subscription notes outstanding                  -     (300,000)       (300)      (299,700)            -         (300,000)
                                                  -------     --------        ----       --------    ----------         --------

Net equity December 31, 1996 - Restated        $       49    6,335,956     $ 6,336    $ 4,062,849   $(1,584,379)     $ 2,484,855
                    === ====                   ==========    =========     =======    ===========   ===========      ===========

Stockholders equity-per committed contracts
  Balance December 31, 1996                    $       49   $6,635,956     $ 6,636    $ 4,362,549   $(1,584,379)     $ 2,784,855

  Proceeds from the exercise
    of stock options
    Cash                                                -      125,000         125        124,875             -          125,000
    Notes                                                      500,000         500        319,500             -          320,000
  Stock issued in connection with:
    Past services of officers and directors             -    2,200,000       2,200        547,800             -          550,000
    Acquisition of West Virginia oil &
       gas properties                                   -      151,000         151         37,599             -           37,750
    Services rendered in connection with
       raising development stage funds                  -      180,000         180         44,820             -           45,000
    Note extensions                                             16,666          17          4,150                          4,167
    Services rendered for operations                            30,000          30          7,470                          7,500
  Shares returned with cancelled contract                      (50,000)        (50)                                          (50)
  Proceeds from sale of shares                                 121,681         122         42,467                         42,588
  Cost of funds raised                                                                    (37,514)                       (37,514)
  Net loss for the Nine months ended
     September 30, 1997                                                                                (452,631)        (452,631)
                                                    ------    --------     -------      ---------      --------         --------

Stockholders equity per committed contracts            49    9,910,303      9,910      5,453,715     (2,037,010)       3,426,664

  Stock subscription notes outstanding                  -   (2,915,000)    (2,915)    (1,082,085)             -       (1,085,000)
                                                    -----   ----------     ------     ----------     ----------       ----------

Balance September 30, 1997                         $   49    6,995,303    $6,995     $ 4,371,630    $(2,037,010)     $ 2,341,664
                                                   ======    =========    ======     ===========    ===========      ===========
</TABLE>

 The accompanying footnotes are an integral part of these financial statements.

<PAGE>
<TABLE>
<CAPTION>


                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                      Consolidated Statement of Operations
                                   (Unaudited)

                                                               FOR THE                       FOR THE                     INCEPTION
                                                         NINE MONTHS ENDED             THREE MONTHS ENDED                 THROUGH
                                                             SEPTEMBER 30,                 SEPTEMBER 30,               SEPTEMBER 30,
                                                        1997            1996            1997            1996                1997
                                                        ----            ----            ----            ----                ----
REVENUES
<S>                                              <C>                  <C>             <C>             <C>                <C>
  Professional fee income                        $     27,498         $ 23,389        $ 10,760        $  6,785           $  173,364
  Product sales                                        47,351           65,387          16,104          18,981              353,429
  Oil and gas sales                                     5,168                -           1,712               -                8,189
                                                        -----           ------           -----          ------                -----
      TOTAL REVENUES                                   80,016           88,776          28,576          25,766              534,981
                                                       ------           ------          ------          ------              -------

OPERATING EXPENSES
  Cost of products sold                                 4,625            5,519           1,958           1,879               41,919
  Salaries                                            103,283           78,300          44,143          22,085              286,362
  Employee leasing                                          -                -               -               -              218,745
  Payroll taxes                                        10,156            8,343           4,121           1,935               30,093
  Physicians fees                                      29,800           42,755           8,800           8,915              184,268
  Rent                                                 26,803           33,158          10,539           8,773              128,101
  Advertising                                           6,072           11,015           4,129           4,713              212,374
  Depreciation                                          3,943            3,576             558           1,592               21,143
  Other                                                 1,474                -            (666)              -                1,474
                                                        -----           ------            ----          ------                -----
    Total Operating expenses                          186,157          182,666          73,581          49,892            1,124,480
GENERAL& ADMINSTRATIVE EXPENSE                        261,227          197,199          77,679          49,012            1,121,858
OIL AND GAS EXPENSES                                   17,326                -           5,364               -               29,163
                                                       ------          -------           -----          ------               ------
      TOTAL EXPENSES                                  464,710          379,865         156,624          98,904            2,275,501
                                                      -------          -------         -------          ------            ---------
INCOME (LOSS) BEFORE OTHER
  INCOME (EXPENSE) AND THE
  PROVISION  FOR INCOME TAXES                        (384,694)        (291,089)       (128,047)        (73,138)          (1,740,520)
                                                     --------         --------        --------         -------           ----------

OTHER INCOME (EXPENSES)
        Interest expense                             (74,023)          (55,162)        (27,019)        (19,041)            (252,049)
        Other - Net                                    6,085            (2,667)            (68)         (1,126)             (44,441)
                                                       -----            ------             ---          ------              -------
    Total Other Expenses                             (67,937)          (57,829)        (27,087)        (20,167)            (296,489)
                                                     -------           -------         -------         -------             --------
NET INCOME (LOSS) BEFORE
    PROVISION FOR INCOME TAXES                      (452,631)         (348,918)       (155,134)        (93,305)          (2,037,009)

Provision for Income Taxes                                 -                 -               -               -                    0
                                                    --------          --------         --------         -------          ----------
NET INCOME (LOSS)                                  $(452,631)        $(348,918)      $(155,134)       $(93,305)         $(2,037,009)
                                                   =========         =========       =========        ========          ===========

NET INCOME (LOSS) PER SHARE
    OF COMMON STOCK                                $  (0.069)        $  (0.110)      $  (0.023)       $ (0.030)         $    (0.649)
                                                   =========         =========       =========        ========          ===========

WEIGHTED AVERAGE
    SHARES OUTSTANDING                             6,595,952         3,171,982       6,828,901       3,110,167            3,140,516
                                                   =========         =========       =========       =========            =========
</TABLE>

 The accompanying footnotes are an integral part of these financial statements.

<PAGE>
<TABLE>
<CAPTION>

                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                      Consolidated Statement of Cash Flows
                                   (Unaudited)
                                                                                                                           FROM
                                                                   FOR THE                         FOR THE              INCEPTION
                                                                NINE MONTHS ENDED             THREE MONTHS ENDED          THROUGH
                                                                  SEPTEMBER 30,                  SEPTEMBER 30,           SEPT. 30,
                                                              1997           1996            1997            1996           1997
                                                              ----           ----            ----            ----           ----
 CASH FLOWS FROM OPERATING
    ACTIVITIES
<S>                                                      <C>              <C>              <C>             <C>          <C>
    Net Income (Loss)                                    $ (452,631)      $ (348,918)      $ (155,134)     $ (93,305)   $(2,037,009)
 Adjustments to Reconcile Net Income
    (Loss) to Net Cash Provided (Used)
    by Operating Activities
   Depreciation                                               8,475            5,169            3,003          1,593         24,143
   Depreciation of retired assets                                 -                -                -              -          2,698
   Expenses paid by shareholder                                   -              756                -              -         46,737
   Increase (decrease) in working capital                   105,268           78,699           34,543         27,040        460,651
   Loss on asset disposal                                         -                -                -              -          3,513
                                                            -------           ------           ------         ------          -----
 Net Cash Provided (Used) by
   Operating Activities                                    (338,887)        (264,294)        (117,589)       (64,672)    (1,499,266)
                                                           --------         --------         --------        -------     ----------
 CASH FLOWS FROM INVESTING                                                                    (88,501)
    ACTIVITIES
    Purchase of fixed assets                                (34,932)            (755)             109              -        (60,892)
   (Increase) decrease in other assets                      (24,835)               -          (17,634)             -        (25,435)
                                                            -------            -----          -------         ------        -------
 Net Cash Provided (Used) by
   Investing Activities                                     (59,768)            (755)         (17,525)             -        (86,328)
                                                            -------             ----          -------                       -------
 CASH FLOWS FROM FINANCING
    ACTIVITIES
   Proceeds from borrowings                                 154,987          127,100           99,988         45,000      1,189,439
   Repayment of loans                                        (5,000)               -                -              -       (130,947)
   Expenses paid with common shares                          17,543                -           12,093              -         23,508
   Proceeds from sale of common shares                       42,589                -           42,589              -        180,089
   Capital contributed by shareholder                             -          137,625                -         20,125        154,800
   Collection of share subscriptions                         85,000                -            5,000              -         85,000
   Common shares exchanged for debt                               -                -                -              -         12,318
   Preferred shares exchanged for debt                            -                -                -              -              -
   Exercised stock options                                  125,000                -                0              -        125,250
   Redemption of common shares                                    -                -                -              -        (20,409)
   Costs of raising funds                                   (33,253)               -          (32,498)             -        (33,253)
                                                            -------           ------          -------         ------        -------
 Net Cash Provided (Used) by
   Investing Activities                                     386,865          264,725          127,171         65,125      1,585,794
                                                            -------          -------          -------         ------      ---------
 NET INCREASE (DECREASE) IN
    CASH AND CASH EQUIVALENTS                               (11,790)            (324)          (3,169)           453            200
 CASH AND CASH EQUIVALENTS
    AT BEGINNING OF PERIOD                                   11,990)             777            3,368              -              -
                                                             ------              ---            -----          -----          -----
 CASH AND CASH EQUIVALENTS
    AT END OF PERIOD                                       $    200           $  453         $    200        $   200      $     200
                                                           ========           ======         ========        =======      =========
</TABLE>
 The accompanying footnotes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>

                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                      Consolidated Statement of Cash Flows
                       Supplemental Cash Flow Information
                                   (Unaudited)


                                                          NINE MONTHS ENDED          THREE MONTHS ENDED           INCEPTION
                                                           SEPTEMBER 30,                SEPTEMBER 30,             SEPT. 30,
                                                        1997            1996         1997            1996           1997
                                                        ----            ----         ----            ----           ----
Changes in Working Capital
<S>                                                  <C>            <C>           <C>             <C>            <C>
  (Increase) decrease in receivables                 $  (4,165)     $   (1,470)   $   (2,577)     $   (714)      $  (7,090)
  (Increase) decrease in related party receivable      (11,067)         (1,000)       11,067         3,850         (17,667)
  (Increase) decrease in inventory                       1,702            (766)        5,684         1,878          (6,884)
  (Increase) decrease in prepaid expenses               (4,848)              -        (4,848)            -          (4,848)
  (Increase) decrease in deposits                            -             135             -           135               -       
  Increase (decrease) in accounts payable               24,351          17,006            32        (8,545)        192,510
  Increase (decrease) in accrued interest               62,044          53,996        25,185        19,020         223,270
  Increase (decrease) in other accruals                 37,251          10,798             -        11,416          81,360
                                                        ------          ------        ------        ------          ------
    Increase (Decrease) in Working Capital          $  105,268      $   78,699    $   34,543     $  27,040       $ 460,651
                                                    ==========      ==========    ==========     =========       =========
Supplemental disclosure of cash flow
    Cash paid for interest                          $   10,144      $        -    $        -     $       -       $  21,748
                                                    ==========      ==========    ==========     =========       =========
    Cash paid for taxes                             $        -      $        -    $        -     $       -       $       -
                                                    ==========      ==========    ==========     =========       =========
Supplemental schedule for non-cash
  investing and financial activities
  Common shares issued for assets
    Clinical equipment                              $        -      $        -    $        -     $       -      $   13,790
    Oil and gas properties                              37,750               -             -             -       3,757,286
    Deferred offering costs                             39,125               -        18,500             -          39,125
    Prepaid marketing costs                                344               -             -             -             344
    Preferred stock                                          -               -             -             -             750
    Common share subscriptions and notes               870,000               -        20,000             -       1,170,000
</TABLE>

 The accompanying footnotes are an integral part of these financial statements.
<PAGE>

                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                    September 30, 1997 and December 31, 1996

NOTE 1 - NATURE AND HISTORY OF THE BUSINESS

         These   consolidated   financial   statements   are  those  of  Wasatch
Pharmaceutical,  Inc. (A Development Stage Company) (the Registrant or Company),
and its wholly owned  subsidiaries,  Medisys  Research Group,  Inc. and American
Institute  of Skin  Care,  Inc.  The  Company's  primary  business  segment,  as
described  below,  is in the skin  care  industry.  The  merged  Registrant  was
initially  engaged in oil and gas  exploration  and  development and the Company
returned to that line of business with a non-operator  investment in oil and gas
properties in 1996.

         In December 1995, the Company (formerly Ceron Resources Corporation;  a
dormant Delaware  Corporation)  merged with Medisys Research Group, Inc. and its
wholly owned subsidiary,  American Institute of Skin Care, Inc. In January 1996,
the Company changed it corporate domicile to Utah.

         On December 29, 1995 Wasatch Pharmaceutical, Inc. (Wasatch) and Medisys
Research Group, Inc. (Medisys) completed an Agreement and Plan of Reorganization
whereby  Wasatch  issued its common  stock in exchange for all of the issued and
outstanding common stock of Medisys. Pursuant to the reorganization, the name of
the Company was changed to Wasatch  Pharmaceutical,  Inc.  The  acquisition  was
accounted for as a purchase by Medisys of Wasatch,  because the  shareholders of
Medisys control the Company after the  acquisition  and,  therefore,  Medisys is
treated  as the  acquiring  entity.  Wasatch is the  acquiring  entity for legal
purposes and Medisys is the surviving entity for accounting purposes.

         Medisys Research Group, Inc.  (Medisys),  was incorporated on September
7, 1989 (the inception of the Company's development stage) as a Utah Corporation
for the purpose of  developing  treatment  programs for various skin  disorders.
American  Institute of Skin Care, Inc.  (AISC),  was incorporated on January 21,
1994 as a Utah corporation to administer the skin treatment  programs  developed
by Medisys.

NOTE 2 - CHANGES IN PRESENTATION

         Certain  financial  presentations  for the third  quarter and the first
nine months of 1996 have been reclassified to conform to the 1997 presentation.


<PAGE>

                          WASATCH PHARMACEUTICAL, INC.
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                    September 30, 1997 and December 31, 1996

NOTE 3 - GENERAL AND ADMINISTRATIVE EXPENSES

         General and administrative  expenses for the comparative  calendar nine
and three month periods of 1997 and from  inception  through  September 30, 1997
are as follows: 
<TABLE> 
<CAPTION>

                                           Nine Months                   Three Months            Inception to
                                       1997           1996            1997           1996         Sept.,1997
                                   -------------- -------------- ---------------- ------------ -----------------
                                                                                               -----------------
<S>                                     <C>            <C>              <C>          <C>             <C>
     Officer's Compensation             $122,558       $106,580         $ 41,466     $ 49,450        $  505,142
     Legal and accounting                 27,724         33,158            5,426        9,079           202,481
     Travel                               13,685         17,684            3,615        7,057            48,045
     Telephone                            10,968         11,298            3,308        6.900            44,302
     Insurance                               577          4,564              577        1,186            14,959
     Postage                               3,766          1,014            3,766        1,014            11,761
     Payroll Tax                           3,576              0            3,576            0            15,673
     Other                                78,373         22,903           15,944     (21,806)           279,495
                                   ============== ============== ================ ============ =================
                                        $261,227      $ 197,199         $ 77,678     $ 52,878      $  1,121,858
                                   ============== ============== ================ ============ =================
</TABLE>

NOTE 4 - GOING CONCERN

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

NOTE 5 - COMMON STOCK

         During the third quarter of 1997, the following common share and common
share option  transactions  occurred (See the 10Q's for the quarters ended March
31 and June 30, 1997 for transactions occurring during those periods):

        a. Issued  104,000  restricted  common shares were issued to consultants
        for services  rendered.  b. Issued  16,666  restricted  common shares to
        creditors for  extensions  of due dates.  c. Issued  121,681  restricted
        common  shares for cash  consideration  totaling  $42,588 d. Options for
        500,000  common shares were  exercised and notes for the exercise  price
        totaling $320,000 were recorded.
<PAGE>

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

OVERVIEW

Skin Care Business

         The Company has  proprietary  technology  for the  treatment of various
common skin disorders,  including acne, eczema, and psoriasis.  After completing
successful  clinical studies,  prototype treatment 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 a network of 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  three  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 brings into question the Company's ability to continue
without substantial increases in revenues or additional long-term financing.

         The Company is seeking funding to open two additional  clinics in major
metropolitan  areas and to launch a major advertising and marketing  campaign to
support each of its clinics. Management feels that through advertising,  working
with  health  insurance  companies  and HMOs  and  supplemented  by a  physician
referral program,  treatment revenues could be increased  substantially  thereby
improving the 10% to 15% of clinic patient capacity currently being experienced.

         During the nine months of 1997,  skin care  revenues for the  prototype
clinics were down 10% and expenses increased 2% when compared to the prior year.
Part of the effect on the revenue decrease and expense increase was attributable
to the Pocatello, Idaho clinic that was closed in the first quarter of 1996.

Oil and Gas Operations

         In the fourth quarter of 1996, the Company acquired a 25% "net profits"
interest in proven oil and gas  reserves in West  Virginia.  In order to realize
the full  potential for this asset,  substantial  resources  will be required to
improve  production and to recomplete  previously drilled oil and gas wells. The
Company's  joint  interest  operator  is in the  process of raising the funds to
commence the  redevelopment  process  that is  scheduled  for the latter part of
1997.  It is not  management's  intention to be involved in raising funds for or
the development of this mineral interest.

<PAGE>

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

LIQUIDITY AND CAPITAL RESOURCES

         At September  30, 1997,  the Company had a working  capital  deficit of
$1.5  million  which is up  $148,000  from what it was at the end of the  second
quarter and is a 21% increase from the prior year. The Company's  operating loss
for the nine months ending September 30, 1997 was $452,600.  The loss was funded
through an extension of credit terms by the Company's  vendors and  note-holders
($85,000),   the  sale  of  stock  ($215,500),   and  additional  net  borrowing
($150,000).

         For the three months ended  September 30, 1997, the clinics'  operating
loss  increased  $22,600 to $46,700 when compared to the same quarter last year.
From inception to date, the majority of the expenses have been  associated  with
the development of the treatment process for the clinics.

         During the nine  months of 1997,  the  Company  incurred  approximately
$117,200 in costs  associated with completing the oil and gas acquisition and in
efforts to raise additional  operating capital.  Those costs included $40,400 in
cash expenditures and the issuance of shares of common stock valued at $76,800.

RESULTS OF OPERATIONS

Skin Care Business

                  During the nine months ending  September 30, 1997, the Company
had revenues of $74,800 compared to $88,700 during the same nine months of 1996.
There are two  reasons  for this  decrease  in  revenue.  During the first three
months of 1996, the Company had three prototype clinics  generating revenue from
operations.  The clinic in Pocatello, Idaho was closed in February, 1996 and the
operating  hours of the  Provo  clinic  were  severally  curtailed.  The  clinic
operating expenses have remained approximately the same in comparable nine month
periods of 1997 and 1996.  During the three months ended September 30, 1997, the
clinic  operating  expenses  increased  $24,000  because of increased  personnel
training  costs in  anticipation  of opening  additional  clinics.  The  Company
anticipates  that the losses will continue  until funding is obtained which will
be used to launch the advertising marketing and development program.

Oil and Gas Operations

         During   1997,   there  has  been  no   significant   progress  in  the
redevelopment  of the Company's West Virginia oil and gas  properties.  Revenues
and expenses  from  producing  wells were  minimal and the loss from  operations
totaled  approximately  $12,100 for the nine months  ended  September  30, 1997.
Investment in the oil and gas property has increased $70,900 since the beginning
of the year  because of the costs to close the  transaction  and comply with SEC
rules.

<PAGE>

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

RESULTS OF OPERATIONS (Continued)

General and Administrative Expenses

         Increases in General & Administrative Expenses during the third quarter
were up $64,000  when  compared  to the prior year and are  attributable  to the
reasons  set  forth  in the  following  discussion.  Increases  in  general  and
administrative  expenses  during the nine months ended  September 30, 1997, when
compared to the same period in the prior year,  are  attributable  to  increased
officer's compensation,  approximately $16,000, that was inordinately low in the
prior  year  and  the  Company's  other   corporate   expenses  which  increased
substantially  ($55,000)  due to  increased  administrative  expenses  that were
associated with raising  capital and the cost of being a fully reporting  public
entity.

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
                  None.

ITEM 2.  CHANGES IN SECURITIES
                  None

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.
                  Attached is the financial data schedule  required by paragraph
                  (b)(27) of this item.  Attached is a Debenture dated September
                  24, 1997 which is Exhibit #6.4.

                   (b)  Reports on Form 8-K
                  A Form 8-K was filed on  October  1, 1997 for the  purpose  of
                  reporting  under  Item 9 the  sale of  convertible  debentures
                  pursuant to Regulation S.


<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.
                              [Registrant]


Dated: November 15, 1997


/S/ David K. Giles
Principal Accounting Officer