U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB/A


 {X} Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange
 Act of 1934 for the Fiscal Year Ended        December 31, 2001.
                                     ---------------------------------

 { } TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
 ACT OF 1934 For the transition period
                                  from              to
                                       -------------   ---------------
                         Commission File No. 0-20598
                             VITALLABS, INC.
                     ---------------------------------------
          (Name of Small Business Issuer as specified in its Charter)

            NEVADA                                       75-2293489
            ------                                       ----------
(State or other jurisdiction of                          (IRS Employer
incorporation or organization)                            Identification
No.)

                1375 South Fort Harrison Avenue, Clearwater, Florida 33756
                            -------------------------
          (Address of principle executive offices, including zip code)

                                  727-461-3200
                                -----------------
              (Registrant's telephone number, including area code)

                             Monogram Pictures, Inc.
                    -----------------------------------------
                    (Former name, changed since last report)

Securities Registered under Section 12(b) of the Exchange Act:  None

Securities Registered under Section 12(g) of the Exchange Act: Common stock,
$0.001 par value per share, traded on the OTC Electronic Bulletin Board;
Preferred Stock $0.01 par value per share

Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes {X} No {}

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. Yes { } No { }

State issuer's revenues for its most recent fiscal year: $0.

The aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the
average bid and asked prices of such stock as of May 17, 2002 was $1,194,790
based on the last sale price of $0.10 as reported by the OTCBB as of May 16,
2002. Registrant had outstanding 4,726,195 shares of common stock, 726,195
shares of which are held by non-affiliates.

Transitional Small Business Disclosure Format (Check one): Yes [  ] No [ X ]

                                      INDEX

PART I

Item  1. Description of Business.......................................  3
Item  2. Description of Property....................................... 25
Item  3. Legal Proceedings............................................. 25
Item  4. Submission of Matters to a Vote of Security Holders........... 25

PART II

Item  5. Market for Common Equity and Related Stockholder Matters...... 25
Item  6. Management Discussion and Analysis or Plan of Operation ...... 26
Item  7. Financial Statements.......................................... 29
Item  8. Changes In and Disagreements With Accountants................. 29

PART III

Item  9. Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act............. 30
Item 10. Executive Compensation........................................ 31
Item 11. Security Ownership of Certain Beneficial Owners and Management 32
Item 12. Certain Relationships and Related Transactions................ 33
Item 13. Exhibits and Reports on Form 8-K.............................. 33

SIGNATURES............................................................. 34
































PART I
Item 1. Description of Business

CORPORATE HISTORY
Vitallabs, Inc. was originally incorporated as Stone Grill, Inc. on March
13, 1989 in the State of Nevada. Originally, we acquired the rights and
license to sell and exploit commercially a patented stone hot plate that
operated without electrical connection, in the United States, Canada, Mexico
and the West Indies. We also obtained and further enhanced procedures for
the development, decoration, establishment and operation of restaurants in
the United States and such other countries using the Stone Grill for
tabletop cooking. From 1989 to 1993, we tried to market and sell Stone Grill
cooking and its Stone Grill products and, even tested a restaurant in 1991.
During 1993, we decided not to continue in the restaurant business. We sold
all of our interest to Stone Grill Restaurants, Inc., a related company.

During 1994, we started to acquire materials to do business in interactive
media and communications. We started to acquire programming, a broadcast
film library, computers, video, studio, broadcast and cable equipment and
prepaid air time.  Vitallabs changed its name to Definition, Ltd. from Stone
Grill, Inc. in September of 1994.

In 1999, Vitallabs purchased from a company controlled by two of the
officers of Vitallabs, whose only asset was a film library in exchange for
17,500 shares of preferred stock and 75,000 shares of common stock. These
shares where originally valued at approximately $3,000,000.  The same film
library was subsequently sold in 1999 and then re-purchased in 2000 from the
same related party.  The film library was then written off in year 2000 as
impaired.

In early 2000, Vitallabs changed its business direction to the Professional
Employment Organization (PEO) industry and began to seek out profitable
PEO's to acquire. In 2000 we acquired General Personnel Management, Inc.
(GPM). PEO's retain contracts with small to midsize businesses offering a
combination of services including payroll, unemployment insurance, workman's
compensation, group medical and dental insurance. PEO's function as a
liaison between a company and a benefit plan or financial service provider.
Small to mid size businesses with PEO representation are afforded the
benefits offered larger businesses specifically in the medical, dental, and
group health insurance industry. This allowed the business to focus on its
core business without incurring the in-house cost of labor and resources
necessary to complete everyday business tasks such as payroll processing and
continual updating of employee records.  On October 1, 2001, Vitallabs sold
GPM for $25,000 to the former owner.  All operations of GPM are shown as
discontinued operation.  On April 25, 2000, Vitallabs changed its name from
Definition, Ltd., to e Personnel Management.com. On September 25, 2000,
Vitallabs changed its name to Monogram Pictures, Inc. from e Personnel
Management.com

During 2000, Vitallabs attempted to acquired 75% of Interstate Management
Services, Inc. (IMSC), a PEO, in return for 750,000 shares of our common
stock. Initially, we received approximately $90,000 in cash at the
acquisition date. This attempt was not successful and was rescinded on
December 21, 2000. However, in connection with IMSC and the transaction,
Vitallabs prevailed in a settlement agreement involving Vitallabs, IMSC and
Employer Resource. IMSC was a Professional Employment Organization that
Employer Resource (ER) claimed had been performing payroll services for IMSC
clients. IMSC denied ER's claims to these rights. Per the settlement
agreement, ER agreed to pay Vitallabs $500,000 (discounted to $400,000 if
paid within 45 days of execution of the agreement) as a settlement for the
rights to the IMSC clients. As a result, ER paid $400,000 plus $58,669 in
default fees, including accrued interest.

Other efforts during 2000 included the following: In January we announced a
transaction with MegaMedia Networks, Inc., an Internet based company. In
February we announced a potential transaction with RBSI, a Nevada
corporation, involved in the Automated Teller Machine and Electronic Fund
Transfer data processing industry. Both potential transactions were
rescinded in April 2000 for nonperformance on the parts of MegaMedia
Networks, Inc. and RBSI.

On June 22, 2001, Vitallabs purchased 51% of Medical Discounts Limited, Inc.
(MDL), a Florida Corporation, in a cash/stock transaction.  Vitallabs paid
$38,982 in cash and issued 344,000 shares of its common stock at $0.26 per
share, or $89,440, for a net investment in subsidiary of $128,422.  Net
liabilities acquired were $17,578 representing cash, accounts receivable,
accounts payable and a note payable.  All of the directors of MDL resigned
and were replaced by the directors of Vitallabs.  The acquisition was
recorded using the purchase method of accounting and the subsidiary was
included in the consolidated financial statements because Vitallabs controls
the activities of the subsidiary.  Vitallabs further signed an agreement on
June 22, 2001, with two of the former principal shareholders of MDL to
purchase 165,000 shares of restricted stock for $1.00 per share, or
$165,000, in twelve months from the date of the agreement, or to issue
additional shares of Vitallabs stock equivalent to the original investment
of $165,000, to be issued within 10 days following the expiration of the
twelve month period of the agreement.  On August 22, 2001, Vitallabs paid
$20,000 for the remaining 49% interest in MDL.

Pursuant to a letter of intent between Vitallabs and ASK, Vitallabs is
required to distribute 95% of MDL's common stock which Vitallabs owns to
Vitallabs's stockholders.  This obligation by Vitallabs has been continued
in its agreement for the acquisition for Med Tech Labs, Inc.  Vitallabs
intends to make this distribution as a dividend to its stockholders pursuant
to a registration statement filed with the SEC.  The date of the
distribution has not been determined.

On November 19, 2001, Vitallabs entered into a Letter of Intent with A.S.K.
Consulting, Inc. ("ASK"). ASK was engaged to locate an operating company for
acquisition by Vitallabs.  Under the Letter of Intent Vitallabs issued an
aggregate of 8 million shares to two principals of ASK as compensation for
ASK's services.  ASK's principals became directors of Vitallabs, one also
becoming chief financial officer and the other secretary.

ASK arranged for Vitallabs's acquisition of Med Tech Labs, Inc.  (MSA) Med
Tech Labs, Inc. is a Florida corporation with which ASK's four principals
were affiliated as directors and officers at the time Vitallabs was
introduced to Med Tech Labs, Inc. and the acquisition agreement was
negotiated between the two companies.  Accordingly, the transaction between
Vitallabs and Med Tech was not arms' length.  See, "Certain Transactions."
Med Tech Labs, Inc. was acquired by Vitallabs on April 5th, 2002.  Under the
acquisition agreement, Vitallabs is required to issue 95% of its authorized
common stock to the stockholders of Med Tech Labs in exchange for all of Med
Tech's issued and outstanding common stock.  On the closing date Vitallabs
issued 3,529,414 shares, which is less than the required 95%, to the
stockholders of Med Tech Labs, who agreed to the reduction in shares so that
Vitallabs would have the capacity to raise additional equity funding.
Subject to completion of a reverse stock split or an increase in the number
of authorized shares Med Tech Labs' stockholders will be issued additional
shares such that the shares they then own will equal 95% of the authorized
common stock as calculated on the closing date.  See "Principal
Stockholders"

On May 7, 2002, Med Tech Labs, Inc. entered into a contract to acquire the
customer base of a clinical laboratory on the east coast of Florida.  This
acquisition depends upon Vitallabs raising $500,000 to fund the closing and
includes notes for an additional $200,000.

                         Vitallabs's Business

Vitallabs is a holding company which conducts its business through two
wholly owned subsidiaries.  These subsidiaries are Med Tech Labs, Inc. doing
business as Med Services of America and Medical Discounts Limited, Inc.
Both Subsidiaries are located in Clearwater Florida.  Med Tech Labs, Inc.
operates one of the largest independent laboratory testing facilities and
clinical laboratories on the west coast of Florida with 21 collection
locations. MDL remarkets a prescription benefits card and markets a medical
service discount card. MDL is shown as a discontinued operation in the
accompanying financial statements because it will be spun off pursuant to
the agreement with ASK.


Clinical Laboratory Business

On April 5, 2002, we acquired Med Tech Labs, doing business as Med Services
of America.  Med Services is one of the largest independent clinical
laboratory testing companies in Florida. We provide efficient and
competitively priced laboratory testing services to physicians, managed care
groups, hospitals and other healthcare providers. We offer over 1,000
different tests that help physicians diagnose, evaluate, monitor and treat
disease by measuring the presence, concentrations or composition of chemical
and cellular components in human body fluids and tissue. These tests range
from routine tests, such as glucose monitoring and complete blood count, to
highly specialized tests, such as those designed to measure HIV infection
and hepatitis C.

We focus on the high quality, efficient and competitively priced delivery of
a full range of clinical laboratory testing services. Our ability to serve
our clients effectively is based on our collection, transportation, testing
and reporting infrastructure, which we believe is the most efficient in
Florida. Our services include: the daily collection and transportation of
specimens over a coordinated courier route system; a computerized logging,
bar coding and tracking system that underlies our testing, record-keeping
and billing functions; the testing of specimens; and the rapid communication
of results in the format desired by the client.

We operate a large, full-service laboratory located in Clearwater. Our
network also includes 20 patient service centers, or PSCs, where technicians
procure specimens and route them to the appropriate testing site. Our 20
courier routes provide rapid collection, processing and distribution
services to our clients.

The Clinical Laboratory Testing Industry
Overview and Trends

The clinical laboratory testing industry is essential to America's
healthcare delivery system because physicians rely on timely and accurate
testing information to assess and treat their patients' health conditions.
According to Lab Industry Strategic Outlook 2000, published by Washington G-
2 Reports, the U.S. clinical laboratory testing market accounts for 3.6% of
the nation's total annual healthcare expenditures, with revenues of
approximately $31.8 billion in 1999. The clinical laboratory testing market
includes three segments: laboratories located in hospitals, which
represented 63%, or $20.1 billion, of the market in 1999; independent
clinical laboratories, such as Med Tech Labs, Inc., not owned or affiliated
with hospitals or physicians, which represented 26%, or $8.1 billion, of the
market in 1999; and laboratories located in facilities owned by physicians
and other medical providers, which represented 11%, or $3.6 billion, of the
market in 1999. (Morgan Keenan)

The $8.1 billion independent clinical laboratory market is comprised of
approximately 4,500 independent clinical laboratories throughout the United
States. In 1999, independent clinical laboratories generated approximately
$5.7 billion in revenues from tests ordered by physician offices, $1.4
billion from tests ordered by hospitals and $1.0 billion from tests ordered
by other healthcare clients, such as nursing homes and home health agencies.

Clinical laboratory testing is an integral part of the delivery of
healthcare services in the United States. We believe that the clinical
laboratory market will grow due to a number of factors, including: the aging
of the U.S. population, which is expected to result in increased use of
testing services as the number of senior citizens doubles in the period from
2000-2030;

 an increase in the number of routine tests and esoteric tests available due
to advances in technology and scientific knowledge and growth in molecular
testing;

 increased efficiency in testing procedures due to the development of highly
automated laboratory testing equipment;

 increased awareness among physicians and the general public concerning the
importance of preventive medicine,

 early detection and disease management; increased use of tests by
physicians as protection against potential malpractice suits;

 increased demand for screening of sexually transmitted and high-risk
diseases such as HIV/AIDS and hepatitis;

 and growing importance and awareness of gender-specific health concerns,
particularly with respect to prostate, ovarian and cervical cancer testing.

 increased consumer demand for veterinary testing and environmental testing
products;

 improved revenue margins through genomic testing as a result of the
completion of the human genome project (hgp).

We believe that there are opportunities for large, independent clinical
laboratories such as Med Tech Labs, Inc. to capture additional market share
from hospital and physician laboratories because of the cost and service
advantages associated with routine, high volume testing. These advantages
should enable larger clinical laboratories to more effectively serve
physician offices, managed care organizations and better manage the costs of
increasingly stringent regulatory requirements and billing practices imposed
by payors such as Medicare and Medicaid. We believe these competitive
advantages are becoming more important as the number of clinical
laboratories declines, as physicians exit the clinical laboratory testing
business and as industry consolidation occurs.

Our Strategy

Our business strategy is to continue to expand our market in the greater
Tampa Bay area independent clinical laboratory testing market and to
consider selected opportunities in other Florida markets, such as
acquisition of the customer base of a clinical laboratory in southeast
Florida, which is under contract.  The key elements of our strategy include
the following:

Leverage Our Infrastructure

We expect to benefit from anticipated growth in testing volume through both
organic growth and acquisitions and as a result of favorable trends in
diagnostic testing, demographics and managed care. We believe that we can
leverage our infrastructure to take advantage of increased testing volume to
increase revenues at low incremental cost and thus improve margins.
Additionally we can leverage our infrastructure to encompass veterinary
testing, environmental testing, and respiratory home services.

Improve Terms of Our Payor Contracts

We have implemented a company-wide initiative designed to better align
prices with the level of service we provide by:

Not accepting per member per month (at risk) capitation rates but we
anticipate with the shifting demographics of managed care that we can
negotiate profitable rates in the future.

Identifying insurance contracts that do not adequately reimburse us for the
levels of service we provide and either renegotiating or terminating these
contracts.

Pursuing selected acquisitions in the Greater Tampa Bay Area and other
strategic markets

The independent laboratory market in Florida is highly fragmented. We
believe there are a number of independent clinical laboratories with annual
revenues in the $1-15 million range that would make synergistic additions to
our service network.  In evaluating potential acquisition targets, we will
focus on financially sound businesses that have a history of strong
regulatory compliance. These targets may include fold-in type acquisitions,
which can extend or strengthen our current market presence.

Strengthen Our Sales and Marketing Efforts

We have redirected the efforts of some of our sales professionals to focus
exclusively on developing new business. Our sales team is focusing their
efforts on the physician office, veterinary practice, environmental testing,
and respiratory services markets.

Enhance Client Satisfaction Through Superior Customer Service

We provide a high level of customer satisfaction through superior customer
service. We have refocused our sales and service functions, so our service
professionals can focus primarily on improving customer satisfaction. Our
service professionals are trained to identify, respond to and resolve all
client service issues in a timely manner. We educate our clients by
distributing customer service materials and frequently visiting existing and
prospective accounts to educate them and identify ways to improve our
service. Additionally, our customer service representatives personally
assist clients with service issues and billing inquiries. We are developing
a system to improve the timely access of patient results through web-based
platforms available 24 hours a day. Our goal is to be the provider of choice
in Florida by offering the highest level of customer service and superior
turnaround of testing.

Our Competitive Strengths

We attribute our length of service in the greater Tampa Bay area independent
clinical laboratory testing market and our opportunities for profitable
growth to the following competitive strengths:

Low-Cost Provider

We have created a fully integrated collection, testing and distribution
network with significant operating leverage, which allows us to expand
testing capacity at a low incremental cost and with minimal additional
capital expenditures. We believe that we have the ability to increase the
number of specimens processed by approximately 100%, on average, without
significant additional operating expenses or capital expenditures.
Subsequent to 100% growth management believes it can sustain increments of
25% growth without significant additional operating expenses or capital
expenditures. We continue to evaluate our capacity to ensure that it is
sufficient for our business.

Comprehensive Testing Services

We provide one of the most comprehensive anatomic and clinical pathology
testing menus available to the Florida medical community, providing over 96%
of the tests ordered by our clients, the remaining 4% of tests are performed
by third-party specialty reference laboratories. We monitor our test menu
monthly to ensure that the tests that we perform in-house generate
sufficient volume for cost-efficient operations. We also maintain a
commitment to client education and routinely disseminate information such as
technical bulletins and product brochures, to assist the medical community
with ordering new tests as they become available. Finally, we also actively
market new technologies and testing capabilities to specific market segments
to tap demand for new products.

Positioned as a Preferred Vendor

We current serve 13 counties in the west coast of Florida.  We believe that
with a strong statewide presence, including a focus on important regional
population centers, comprehensive testing services and our commitment to
superior customer service and support we will become one of the few
providers of laboratory testing services with the ability to provide one
stop shopping to local and regional clients. We can assess the
characteristics of each geographic territory to customize professional
service routes that ensure proper specimen collection and report
distribution. This enables us to offer highly effective services to meet the
different needs of clients both in rural and urban areas of Florida.

Reputation for Quality

We maintain a comprehensive quality assurance program to ensure the
effectiveness and accuracy of the clinical laboratory services for our
clients and their patients. Our full-service laboratory participates in the
College of American Pathologists Proficiency Testing Program. We believe
that our procedures meet or exceed the highest standards in the industry. We
believe that our accuracy rates are among the highest in the industry.

Facilities and Testing

We currently operate a full-service clinical laboratory in Clearwater that
offers over 1,000 clinical testing procedures, ranging from routine
screening to advanced technical procedures, used in the diagnosis,
monitoring and treatment of diseases and other medical conditions. We
utilize a fully integrated collection and processing system. Patient
specimens are collected from client offices or our own collecting stations
and transported to the laboratory, where each specimen and related test
request form is checked for completeness, bar coded and entered into our
computer system for testing and billing purposes. Laboratory technicians
then perform the requested tests, with most results available to clients the
next morning electronically. Our clinical computer program tracks patients'
samples, reports test results and maintains records and billing information.

Tests performed by MTL measure the levels of, and analyze chemical and
cellular components in, human body fluids and tissue and are used in the
diagnosis, monitoring and treatment of disease. They include procedures in
the areas of blood chemistry, hematology, urine chemistry, tissue pathology
and cytology, among others. Commonly ordered individual tests include red
and white blood cell counts, Pap smear tests, blood cholesterol level tests,
urinalysis and procedures to measure blood sugar levels and to determine
pregnancy. Routine test groups include tests to determine the function of
the kidney, heart, liver and thyroid, as well as other organs, and a general
health screen that measures several important body health parameters. Many
of the routine tests are performed by automated equipment. Results on
routine tests are generally reported electronically within 24 hours after
being taken. We consider approximately 85% of the tests conducted by us to
be routine. We perform approximately 96% of the tests requested by our
clients, with the remaining 4% performed by third-party reference
laboratories with whom we contract. We have strong professional and
contractual relationships with esoteric laboratories, including American
Medical Laboratories, Tampa Pathology Laboratory, and Quality Pathology
Services. More than 90% of our subcontracted clinical and toxicology testing
is referred to these companies. On a revenue basis, approximately 4% of
testing fees collected by us are paid to third-party reference laboratories
or pathology services providers

As the volume, and therefore revenue potential, of a specific test that we
outsource increases, we will consider performing the test in-house. For
example, we are currently reviewing the economic viability of conducting in-
house certain outsourced genetically based tests.

Our test implementation strategy can be observed in practice in anatomical
and clinical testing services. We are a locally recognized leader in
cytopathology response time by cultivating professional relationships with
pathology groups which effects the highest level of client service. We have
historically maintained a leading role in the greater Tampa Bay area for
cytology testing services for the detection and management of pre-cancerous
cervical disease. We have transitioned from the use of the conventional Pap
smear test to an improved liquid-based Thin Prep Pap test. Use of the Thin
Prep Pap smear test enables greater correct detection of cervical disease
and reduces false-positives. In addition, the Thin Prep Pap smear test makes
it possible to test for human papilloma virus (HPV) using the same sample.
HPV testing more readily and precisely resolves inconclusive Pap smear test
findings than conventional Pap smear testing. The combination of tests
quickly identifies women requiring further attention. This testing
complements wellness programs sponsored by many health providers.

We also conduct esoteric testing services. Esoteric tests generally require
more complex manual techniques, a higher degree of technical skill and
knowledge and more sophisticated equipment than routine tests require. As a
consequence, esoteric tests are priced higher than routine tests. Two
examples of esoteric tests provided by us include immunoelectrophoresis,
used for the diagnosis of autoimmune disorders and myelomas, and hepatitis
markers, used for the diagnosis of acute hepatitis A and B and for
identification of chronic carriers of these diseases. The number of esoteric
tests performed by us has been increasing as new medical discoveries are
made and testing procedures developed.

We operate an extensive distribution and collection system of 20 PSCs, 22
courier routes and 3 courier hubs. Courier routes are logically designed
based on lab location, geographic density and specimen volume. Strategically
located full service labs and satellite courier "hubs" serve as control
centers to ensure that courier routing is efficient and tightly controlled.
In addition, PSCs act as initial specimen processing centers, effectively
putting control of the specimen in our possession earlier in the testing
process. We believe that our collection and transport infrastructure is
integral to providing efficient, convenient and reliable service to our
clients.

Clients

We provide testing services to a broad range of healthcare providers. Our
primary categories of clients are described below:

Physicians and Physician Groups.
Physicians performing testing for their patients who are unaffiliated with a
prepaid health plan, are a major source of our clinical laboratory testing
business. Florida law provides that non-Program business (Medicare,
Medicaid, etc.) may be billed to the physician who in turn may bill the
patient's insurance. We therefore bill some clients for a portion of their
referred testing. Otherwise, services rendered for physicians' patients who
are not part of a managed care organization are billed to various other
payors such as insurance companies, patients, Medicare or Medicaid.

Health Maintenance Organizations and Other Managed Care Groups.
HMOs and other managed care payors, which designate the laboratory to be
used for tests ordered by the physician, represent another small portion of
our business. HMOs generally select an independent laboratory based on
competitive pricing, capability of the laboratory to effectively service
incremental blocks of business, field distribution system, including
couriers and PSCs to service their networks of physician providers, and the
reputation of the laboratory in the medical community. We believe that we
can be awarded more managed care contracts than any other lab in the Florida
marketplace and that we can become a preferred lab service provider to
managed care companies for several reasons. First, we will have a statewide
presence, which gives managed care clients the ability to partner with a
laboratory subcontractor that has statewide coverage, instead of several
subcontractors with limited geographic coverage. Second, our internal cost
efficiencies allow us to offer competitive pricing to the cost-conscious
managed care community. Third, we possess considerable expertise in
addressing the needs and issues of managed care payors.

Independent Clinical Laboratories.
We provide testing services to three smaller independent clinical
laboratories that do not have the full range of our testing capabilities.

Clinics.
We have arrangements with over one hundred community health clinics within
our service area that provide preventive healthcare and/or medical attention
for the lower-income and indigent patient population (frequently Medicaid
recipients). Under these arrangements, we are the primary provider of
testing services for patients who choose to use these clinics.

We believe that lives that were previously covered by HMOs may increasingly
move to fee-for-service plans. In addition, the Florida Department of Elder
Affairs statistics indicate that total HMO enrollment as of January 2001
declined statewide from enrollment in January 2000.

Payors

Tests in the clinical laboratory industry are often billed to a party other
than the physician or patient. We bill, and receive reimbursement for our
services from, third-party payors, such as managed care providers, Medicare
and Medicaid, direct payors, such as physicians, hospitals, clinics and
employers, insurance companies and patients.

Quality Assurance

We maintain a comprehensive quality assurance program through our Laboratory
Information System (LIS) to ensure the effectiveness and accuracy of the
clinical laboratory services we perform for our clients and their patients.
This program was developed with specific evaluation and control criteria to
systematically monitor proper specimen collection and transport and accurate
analytical measurement of clinical laboratory tests, and to assess
reporting, billing and archiving of physician and patient demographics and
test results.

Our quality assurance system contains specific indicators for the following
aspects of care: specimen collection supplies and collection procedures;
specimen logistics and courier services; close initial evaluation and
maintenance of personnel qualification and training records including
mandatory compliance with all federal and state personnel standard
regulations; rigorous utilization of quality control samples to ensure the
highest degree of analytical accuracy and precision for all reported
clinical test results; stringent testing procedures with annual medical
director review; automatic computer directed repeat confirmation of all
basic chemistry and routine confirmation of many out-of-range esoteric test
results; computer enhanced screening of conventionally collected Pap smear
tests and availability of Thin Prep Pap smear test liquid cytology; daily
monitoring of incoming client inquiries; comprehensive new test evaluation
procedures; and enhanced preventative maintenance schedules of laboratory
testing equipment.

Our laboratory is licensed by, and operates in compliance with regulations
issued by, numerous federal and state regulatory agencies. Our laboratory is
licensed by appropriate state authorities and is certified by the Centers
for Medicare and Medicaid Services, or CMS, for participation in the
Medicare program. In addition, all of our reference laboratories participate
in the College of American Pathologists, or CAP proficiency-testing program.
Continuing education and proficiency testing programs are administered by
the independent, nongovernmental CAP organization of board certified
pathologists. The State of Florida acts in the capacity of inspector for all
agencies and programs and our most recent inspection found zero
deficiencies.

Our laboratory operates in compliance with and is licensed in accordance
with the U. S. Clinical Laboratory Improvement Amendments of 1988, or CLIA.
Federal CLIA regulations require that all high complexity clinical testing
laboratories participate in a recognized proficiency-testing program. We
successfully participate in the CAP proficiency-testing program.

In addition to analytical testing processes, our quality assurance program
also closely monitors pre-analytical specimen collection and transport and
post-analytical reporting processes. We operate according to standardized
phlebotomy operating procedures for optimal control of specimen integrity to
further enhance the reliability of our tests results. We routinely provide
the following services: standardized specimen collection devices, transport
materials and preprinted requisition forms; tightly managed logistics and
courier services to ensure specimen integrity; statewide implementation of
safety needles; computerized bar-coding of specimens to ensure positive
specimen identification; extensive computer resources with on-site
programmers for custom applications; remote computer result reporting,
including dedicated printers and custom computer applications for qualified
accounts; extensive monthly quality assurance operating reports and
scheduled internal review meetings to assess lab performance; and
notification systems to contact clients for critical and alert test results.
Sales, Service and Marketing

We have approximately 15 full-time sales and service employees. Sales
representatives are primarily responsible for executing focused sales
initiatives established within their regions. Service representatives are
primarily responsible for account retention and enhancing client relations,
although some will also have defined selling responsibilities. We intend to
more clearly delineate between the sales and service functions, which will
allow us to identify new clients and better serve existing clients. In
addition, incentive compensation will be aligned to more closely reflect
either sales or service responsibilities so that sales and service employees
will specialize in their respective disciplines. Incentive compensation paid
on new sales generation, achieved by either sales or service
representatives, is designed to recognize the cost of supporting new
business and reward dedication to client support and client retention.

Our marketing department is committed to promoting our high-quality and
cost-effective laboratory services that are responsive to the values and
needs of patients and physicians. We promote various initiatives through the
creation and targeted dissemination of marketing materials to clients and
prospects by our sales and service representatives (as well as our
couriers). More specifically, our marketing initiatives and materials
address four distinct objectives: enhance medical community awareness of our
full spectrum of services; promote and sell new services and technological
advances; educate clients on regulatory and compliance issues that will
affect the medical community; and address customer needs and concerns about
new testing procedures.

We prioritize these marketing initiatives through a collaborative effort
among senior management and sales and service employees.

Competition

The independent clinical laboratory testing industry in the United States
and Florida is highly fragmented and is characterized by intense
competition. According to the Centers for Medicare and Medicaid Services
(CMS), formerly the Health Care Financing Administration (HCFA) of the
Department of Health and Human Services of the United States Government,
there are approximately 4,500 independent clinical laboratories in the
United States. We believe that approximately 500 of these laboratories are
located in Florida.

Our primary competitors are hospitals and other independent clinical
laboratories. The hospital laboratory segment accounts for approximately one
half of the $4.0 billion Florida clinical laboratory testing market and is
characterized by a large number of hospital laboratories that operate with
low volumes and quick turn-around times.

Independent clinical laboratories fall into two categories. The first
category, which includes laboratories such as Med Tech Labs, Inc., consists
of larger regional or national laboratories that provide a broader range of
tests and services. In Florida, our two largest independent clinical
laboratory competitors are Quest Diagnostics Incorporated and Laboratory
Corporation of America, or LabCorp.

The second category includes smaller, local laboratories that generally
offer fewer tests and services and have less capital available to them than
larger laboratories. These laboratories seek to differentiate themselves by
maintaining a close working relationship with their physician clients by
providing a high level of personal and localized services.  We compete
primarily on the basis of the following: service capability and convenience
of facilities, including accessibility of Patient Service Centers (PSC);
size and scope of testing services performed; accuracy, timeliness and
consistency in reporting test results; reputation in the medical community;
and pricing of testing services.

We believe that we compete on a favorable basis on all of these factors. Our
goal is to gain market share from both independent clinical laboratories and
hospital laboratories in the coming years.

Information Systems

Effective information systems are a key component of our growth and success.
The complexity of our business requires that we constantly evaluate our
systems to ensure that they provide the tools required to deliver laboratory
results and bills in a timely manner. We realize that ineffective systems
for core business processes are a barrier to consistent client service. Our
laboratory operates with the SCC SOFT Lab Information System. SOFT is a
specimen tracking, test result and instrument interface laboratory system
which is prevalent throughout the industry and provides a flexible platform
to interface current and future laboratory instruments. In addition, the
SOFT system provides our clients with the tools they require to deliver the
best quality medicine for patients. We believe that SOFT offers us the
flexibility to address new technologies and features as improved testing and
new delivery options become available in the market.

We currently utilize the CSS billing system. This system allows us to better
control bill submission and compliance-related issues and has the ability to
produce programs and make changes that can be run at all locations. We are
in the process of upgrading the system to newer AR software which will
utilize a relational database and automate many of the current manual
functions. We anticipate that the end of 2002 will conclude this upgrade.

We are investigating agreements with WebMD Corporation, ProxyMed, Inc. and
SCC, companies that provide medical information over the Internet. We
believe these contracts will put us at the forefront of the clinical
laboratory testing market by allowing clients to order lab work over the
Internet. We expect that these contracts will ultimately increase the volume
of work ordered electronically, increase the accuracy of billing
information, and thereby have a positive impact on our profitability.

Acquisitions

We are actively pursuing acquisitions within the State of Florida. In
reviewing the merits of a potential acquisition, our management develops a
highly detailed integration plan by examining the target's existing
operations and assessing the ongoing requirements of the combined
businesses. The actual results and timing of integration will be closely
monitored against the plan.

Billing

Billing for laboratory services is complicated. Laboratories must bill
various payors, such as patients, insurance companies, Medicare, Medicaid,
doctors and employer groups, all of whom have different requirements.
Billing difficulties often result in bad debt expense. Most of our bad debt
expense is the result of several noncredit related issues, primarily missing
or incorrect billing information on requisitions. We perform the requested
tests and report test results regardless of incorrect or missing billing
information. We subsequently attempt to obtain any missing information and
rectify incorrect billing information received from the healthcare provider.
Missing or incorrect information on requisitions slows the billing process,
creates backlogs of unbilled requisitions and generally increases the aging
of accounts receivable.

Among many other factors complicating billing are:

pricing differences between our fee schedules and those of the payors;

disputes between payors as to which party is responsible for payment;

disparity in coverage among various payors; and

the difficulties of adherence to specific compliance requirements and
procedures mandated by various payors.

Ultimately, if all issues are not resolved in a timely manner, the related
receivables are charged to the allowance for doubtful accounts.

Governmental Regulation

Numerous aspects of our operations, including our testing processes,
business practices and, in some instances, the amount and methods by which
we are paid, are subject to governmental regulation at the federal, state
and/or local levels.

Federal and State Clinical Laboratory Certification and Licensing

Our laboratory, similar to almost all clinical laboratories operating in the
United States, is required to maintain federal certification pursuant to the
Clinical Laboratory Improvement Act, as amended, commonly known, together
with its implementing regulations, as CLIA. CLIA imposes requirements
relating to test processes, personnel qualifications, facilities and
equipment, record keeping, quality assurance and participation in
proficiency testing, which involve comparing the results of testing of
specimens that have been specifically prepared for our laboratory to those
specimens' known values. The CLIA requirements also apply as a condition for
participation for clinical laboratories in the Medicare and Medicaid
programs. Similar requirements also apply to our laboratory under Florida's
clinical laboratory licensure laws.

Compliance with CLIA standards is verified by periodic on-site inspections.
Sanctions for failure to meet these certification, accreditation and
licensure requirements may include suspension, limitation or revocation of
certification, accreditation or licensure, civil penalties, criminal
penalties, injunctive actions, and the imposition of plans of correction to
remedy deficiencies. If a laboratory's CLIA certificate or Florida license
is revoked or suspended, the laboratory must then cease performing testing.
Notwithstanding compliance costs, we regard these certification,
accreditation and licensing requirements as favorable to our business
because they apply, with narrow exceptions, to all persons operating
clinical laboratories, and therefore to some extent constrain the ability of
physicians to compete with us by performing testing in their own offices.

The Florida Agency for Health Care Administration oversees regulations
establishing additional training, continuing education and other
requirements for laboratory personnel. Only personnel certified under the
rules or otherwise licensed under the clinical laboratory laws are permitted
to perform laboratory procedures in Florida.

Federal and State Billing and Fraud and Abuse Laws

Antifraud Laws/Overpayments. Federal Medicare/Medicaid laws apply a wide
array of fraud and abuse provisions to laboratories, such as ours, which
participate in these programs. These laws prohibit, among other things, the
submission of false claims or false information to government programs,
deceptive or fraudulent conduct, and excessive or unnecessary services or
services at excessive prices. Federal law also prohibits the defrauding of
private sector health insurers. Penalties for violating these laws may
include exclusion from participation in the Medicare/Medicaid programs,
asset forfeitures, civil penalties and criminal penalties. Civil penalties
for a wide range of offenses may be up to $10,000 per item and treble the
amount claimed. In the case of certain offenses, exclusion from
participating in Medicare and Medicaid is mandatory, and the government also
has the authority to impose permissive exclusions in response to a wide
range of less serious misconduct. In addition, the Centers for Medicare and
Medicaid Services, or CMS, may suspend Medicare payments to any provider it
believes has engaged in fraudulent billing practices. Because the financial
consequences to a laboratory of exclusion from participation in federal
health care payment programs would typically be devastating, fear of such
exclusion has been a motivating factor in the settlement of many fraud
investigations.

Florida law extends similar penalties beyond Medicare to punish laboratories
engaged in fraud or conduct which defrauds private insurers or patients.

Independent of fraud allegations, Medicare and Medicaid programs and private
payors may also retroactively determine that certain payments for services
must be repaid due to failure of a laboratory to satisfy applicable payor
requirements. Several federal agencies share responsibility for
investigating allegations of fraudulent and abusive conduct. These agencies
include, without limitation, the Department of Justice, or DOJ, the Federal
Bureau of Investigation, or FBI, and the Office of Inspector General, or
OIG, of the Department of Health and Human Services, or HHS. Many FBI agents
have been assigned to investigate healthcare provider fraud. Medicare
carriers and Medicaid state agencies, also have certain fraud and abuse
control authority. Moreover, private insurers may bring actions under the
fraud laws, and in certain circumstances, federal and Florida law authorize
private whistleblowers to bring fraud suits on behalf of the government
against providers and reward the whistleblower with a portion of any final
recovery. In addition, CMS has engaged a number of nongovernmental audit
organizations to assist the government in tracking and recovering fraudulent
billings for healthcare services. The practices which have been targeted
include, without limitation:

billing for tests not performed;

billing for tests which are not medically necessary;

billing for tests not ordered by physicians;

offering packages of tests to physicians (referred to as "panels" or
"profiles") and billing them as several tests to obtain higher
reimbursement;


"upcoding" tests to realize higher reimbursement than appropriate;

offering inducements to physicians in order to induce them to refer testing;
and

duplicate billing.

Such practices have led to governmental investigations and whistleblower
suits that have resulted in approximately $1 billion of aggregate settlement
payments made by a number of independent clinical laboratories in the past
decade, with several laboratories individually being fined in amounts in
excess of $100 million.

Federal and Florida "Self-Referral" and "Antikickback" Restrictions. A
federal "self-referral" law, commonly referred to as the "Stark" law,
prohibits Medicare payments for laboratory tests referred by physicians who,
personally or through a family member, have ownership interests in or
compensation arrangements with the testing laboratory. Florida, where we
conduct almost all of our business, has laws which impose similar
restrictions with respect to all patients and payors. These federal and
Florida laws contain an exception for investment interests in a publicly
traded company that has shareholders' equity of $75 million at the end of
the most recently completed year (or $100 million in total gross assets in
the case of laboratory testing for workers' compensation patients) and
satisfies certain additional requirements.

It therefore is possible that the self-referral laws will cause some
physicians who would otherwise use our laboratory to use other laboratories
for their testing, thereby adversely impacting our revenues. Moreover,
because many shareholders hold stock in the name of their stock brokerage
firm, it may not be possible for us to identify physician investors in order
to fully comply with the self-referral limitations, although we will
continue to monitor such relationships, including space rentals and
provision of information technology support, for compliance with the self-
referral laws. Sanctions for violations of the self-referral prohibitions
include denial of payment, refunds, civil money penalties of up to $15,000
for each service billed in violation of the prohibitions and exclusion from
the Medicare program. Based upon our efforts to comply with self-referral
laws and a federal court decision considering physician ownership of
laboratories, we believe that a challenge to any physician investment in our
company under the anti-kickback laws is unlikely.

Regulations implementing and interpreting certain provisions of the Stark
law were released by CMS on January 4, 2001, with an effective date of
January 4, 2002. The most substantial provisions of the new regulations
address the provision of services by physicians in their offices and define
the services, other than laboratory services, to which the Stark law
applies. New regulations that define the types of indirect compensation
relationships where the Stark law applies and which create new exceptions
for certain types of financial relationships may have some relevance to us.
For instance, the new regulations interpret an exception under the Stark law
which allows laboratories to provide physicians with supplies used solely to
collect, transport, process or store specimens for submission to the
laboratories. CMS believes this exception is limited to items of low value,
such as single use needles, vials and specimen cups. In contrast, CMS
believes that biopsy needles, and similar items such as snares, reusable
aspiration and injection needles and sterile gloves, do not function solely
as specimen collection devices, and therefore trigger self-referral
restrictions if a laboratory provides them without a fair market value
charge. The new CMS interpretations also allow the use of a phlebotomist at
the physician's office without charge so long as the phlebotomist only acts
on behalf of the laboratory. Complying with these new CMS interpretations
may result in cost-savings for laboratories. Nevertheless, we do not believe
that the new regulations will have a material impact on us because the prior
regulations largely implemented the Stark law as it applied to clinical
laboratory services.

The Medicare/Medicaid anti-kickback statute prohibits laboratories from
paying for patient or specimen referrals for testing paid for by Medicare or
Medicaid. Violation of the Medicare/Medicaid anti-kickback statute can
result in criminal penalties pursuant to the U.S. sentencing guidelines,
civil monetary penalties of $50,000 per violation plus treble damages, and
exclusion from Medicare and Medicaid participation. The OIG has criticized a
number of additional business practices in the clinical laboratory industry
as potentially implicating the anti-kickback statute, including providing
phlebotomy staff to clients who perform clerical or other functions for the
client which are not solely related to the collection or processing of
laboratory specimens, providing computers or fax machines to clients which
are not used exclusively in connection with performance of the laboratory's
work, the lease of space in a physician's office for rent which exceeds the
fair rental value of such space, certain acquisition agreements where the
sellers may make referrals to the buyer after the sale and various other
compensation relationships between laboratories and entities from which they
receive referrals, or to which they make referrals, if such relationships
are intended to induce referrals. In addition, the OIG has indicated that
discounts given by laboratories to clients concerning their private pay
patients and/or HMO patients must not be intended to induce a client to
refer Medicare or Medicaid patients to the laboratory. Our business
practices are governed by the anti-kickback laws, including our negotiated
discounted pricing arrangements, our participation as a provider to group
purchasing organizations and provision of information technology to our
clients. Florida law also prohibits compensation for referrals of patients
or test specimens, and this prohibition applies regardless of the source of
payment for such testing. Laboratories that violate the Florida anti-
kickback laws may be subject to loss of licensure and substantial criminal
and civil penalties. Laboratories offering pricing to their customers that
is not volume bases and is more favorable than that offered directly to
patients may be deemed to pay prohibited kickbacks under this law. However,
we believe that a kickback will not result if the laboratory's customer, as
our Florida clients are independently required by law to do, passes all of
its discount to its patients in the form of lower testing charges.

Our Compliance Program. In 1997, the OIG disseminated a model compliance
plan to serve as guidance for laboratory compliance programs. We conformed
our compliance program to meet or exceed the guidelines described in the
model compliance plan. We also established a compliance committee, comprised
of our senior officers. The compliance program is run under the supervision
of the Compliance Officer, who reports to our Board of Directors and general
counsel. Both the general counsel and the Compliance Officer update the
board of directors on compliance matters on a regular basis.

"Corporate Practice" of Medicine. Florida law prohibits physicians from
sharing professional fees with non-physicians such as laboratories, and
prohibits non-physicians from practicing medicine (including pathology) and
from employing pathologists or other physicians.

Privacy of Medical Information

The confidentiality of patient medical information is subject to substantial
regulation by state and the federal governments. Specific state and federal
laws and regulations govern both the disclosure and use of confidential
patient medical information, as well as access of patients to their own
medical records. Similarly, many other federal laws also may protect such
information, including the Electronic Communications Privacy Act of 1986 and
federal laws relating to confidentiality of mental health records and
substance abuse treatment.

Congress passed the Health Insurance Portability and Accountability Act,
known as HIPAA, in 1996. Among other things, HIPAA calls for the
establishment of national standards to facilitate the electronic exchange of
health information and to maintain the security of both the health
information and the system that enables the exchange of this information.
HHS has promulgated several sets of proposed regulations pursuant to its
authority under HIPAA. To date, the HIPAA regulations that have been
finalized pertain to electronic transactions and the privacy of individually
identifiable health information that is electronically transmitted and
received or transmitted and maintained in any other form or medium. Pursuant
to these final regulations, all medical records and other patient
identifiable health information must be maintained in confidence must not be
used for non-health purposes and must be disclosed to the minimum extent
required. In addition, patients must be given a clear notice of their rights
and access to their records by laboratories (other than to the extent that
access to their records is restricted by CLIA and by state law) and a
patient's consent or authorization generally must be obtained before
information is released. To ensure that these requirements are satisfied,
covered entities must adopt appropriate policies and practices, designate a
privacy officer, train employees and establish a grievance procedure. The
privacy regulations recognize, however, that laboratories have little direct
contact with patients, and therefore they allow healthcare providers with an
indirect treatment relationship to the patient to use protected health
information for purposes of treatment, without a separate consent.
Nonetheless, laboratories will still have to directly address HIPAA
regulations in other circumstances.

In most circumstances, entities covered by HIPAA must be in compliance with
the final HIPAA regulations within 24 months of the date the regulations
become final (April 14, 2003, for the electronic privacy rules and October
16, 2002 for the electronic transaction rules). The Bush Administration has
recently announced that it does not intend to further delay the
implementation date of these regulations. If we are found to have violated
any state or federal statute or regulation with regard to the
confidentiality, dissemination or use of patient medical information, we
could be liable for damages, or for civil or criminal fines or penalties.
Because laboratory orders and reports fall within the scope of HIPAA, the
costs of HIPAA compliance will impact others and us in the clinical
laboratory industry. In 2001 we assigned the Compliance Officer the task of
evaluating the HIPAA requirements and to make recommendations to us
regarding their implementation. Compliance with the HIPAA rules could
require us to spend substantial sums, which could negatively impact our
profitability. At this time, we cannot assess the total financial or other
impact of the HIPAA regulations upon us.

Other Laws

Occupational Safety.
In addition to its comprehensive regulation of safety in the workplace, the
Federal Occupational Safety and Health Administration, or OSHA, has adopted
rules that establish extensive requirements related to safety for workers
who may be exposed to blood borne pathogens such as HIV and the hepatitis B
virus. These regulations, among other things, require work practice
controls, protective clothing and equipment, training, medical follow-up,
vaccinations and other measures designed to minimize exposure to, and
transmission of, blood borne pathogens. OSHA has also adopted rules
establishing safety requirements for the use of chemicals as reagents and
for other purposes. At the state level, Florida imposes occupational safety
and health requirements administered by its Occupational Safety and Health
Administration. Additionally, we follow the requirements of recent federal
and state laws requiring the use of safety needles by medical providers.
Compliance with these mandates has increased our cost to perform specimen
collection by $0.18 per specimen.

Environmental Compliance.
Each of our laboratories must comply with numerous federal, state and local
statutes and regulations relating to public health and the environment
including: practices and procedures for the proper storage and labeling of
hazardous and toxic materials or other substances and the proper management
of medical waste, hazardous waste and low-level radioactive waste generated
by operation of clinical laboratories; public disclosure requirements
regarding certain hazardous and toxic materials or other substances;
employee training and notification; environmental protection requirements,
such as standards relating to the discharge of pollutants into the air,
water and land; emergency response and remediation or cleanup in connection
with hazardous and toxic materials or other substances; and other safety,
environmental and health standards.

Food and Drug Regulation.
The FDA requires pre-marketing approval for medical devices, including test
kits used in performing clinical laboratory procedures. The FDA's
requirements can affect the availability of test kits or our ability to have
certain tests performed on our behalf by reference laboratories.

Miscellaneous.
Regulations of the Department of Transportation, the Public Health Service,
and the Postal Service apply to the transportation of clinical laboratory
specimens.

Changes in Laboratory Reimbursement

Health Care Reform

A number of proposals aimed at increasing healthcare insurance coverage or
reducing healthcare costs have been considered in recent years. Such
proposals include: increased enrollment of Medicare beneficiaries in managed
care systems, increased availability of health insurance to individuals and
to small businesses, requirements that all businesses offer health insurance
coverage to their employees, the provision of tax credits for the purchase
of health insurance, the formation of "regional health alliances" to act as
healthcare purchasing agents and the creation of a government health
insurance plan that would cover all citizens. We cannot predict whether any
of these or other proposals will be adopted at the state or federal levels,
or what effect, if any, such proposals would have on our business.

Reductions to Reimbursement

Reductions to Medicare or Medicaid Fee Schedules.
For testing performed other than for hospitals, nursing facilities and other
laboratories, laboratories are required to bill Medicare and Medicaid
directly, and generally must accept reimbursement from these programs as
payment in full for services performed for Medicare and Medicaid patients.
Such direct billings by us to Medicare and Medicaid accounted for
approximately 25.0%-30.0% of our total net revenue in the year ended
December 31, 2000. Congress has established maximum fee schedules for
clinical laboratory testing paid for by Medicare. State Medicaid programs
are prohibited from paying more for testing than Medicare fee schedule
amounts and, in most instances, they pay significantly less. When initially
established, Medicare fee schedules were set at 60% of prevailing local
charges. Maximum reimbursement rates for clinical laboratory testing have
subsequently been substantially reduced, and such fee schedules may be
further reduced in the future. For example, Congress has reduced numerous
times in recent years a ceiling on Medicare and Medicaid payments to
laboratories commonly referred to as the "national cap". Most recently,
Congress reduced the national cap to 74% of the national median of local fee
schedules and eliminated consumer price index increases for the national cap
and local fee schedules through the year 2002. Medicare reimbursement has
also been reduced from time-to-time by an effective rate of between 1% and
2% pursuant to Gramm-Rudman-Hollings sequestration. In addition, proposals
have from time-to-time been made for beneficiary cost sharing to be applied
to laboratory testing paid for by Medicare. For example, the HHS Office of
Inspector Generals' 2001 "Red Book" of suggested Medicare program
improvements has endorsed this proposal and it has been reported that the
Bush Administration is seeking support for a 20% co-payment for Medicare
Part B laboratory services. The costs of billing and collecting co-payment
amounts and associated bad debt could reduce the revenue actually realized
by laboratories. Elimination of Dual Charge Structure. Proposals have been
made to restrict "dual charge" billing practices where laboratories charge
higher fees to Medicare and Medicaid for the same procedures that are
charged to physicians, hospitals, laboratories and other purchasers who are
in a position to negotiate favorable rates. Thus, it has been proposed that
existing authority for HHS to exclude from Medicare and Medicaid program
participation any providers that charge amounts to the Medicare program that
are "substantially in excess" of their "usual charges" be used to respond to
laboratory pricing practices. Similarly, CMS is permitted to adjust
statutorily prescribed fees for some medical services, including clinical
laboratory services, if the fees are grossly excessive and therefore not
inherently reasonable. CMS has issued an interim final rule setting forth
criteria on whether the otherwise statutorily prescribed fees should be
reduced. This interim rule includes considerations of whether such fees are
grossly higher or lower than the payment made for the services by other
purchasers in the same locality. Fees payable by Medicare for clinical
laboratory services may be reduced as a result of the application of the
above rules or by similar restrictions applied in the future. In addition,
Florida regulations require Medi-Cal to pay no more for testing than the
amount which a laboratory charges pursuant to any fee schedule it applies
generally to its physician or hospital customers. While the extent to which
this rule applies to our fee schedules and negotiated discounts is unclear,
it is possible that a recoupment action could be brought against us based
upon the fee schedules and negotiated discounts which we offer to certain of
our clients.

Contracts for Laboratory Services.
Proposals have been made to require competitive bidding procurement of
Medicare laboratory testing services and it has been reported that the Bush
Administration supports such a proposal. CMS is required to complete five
Medicare bidding demonstrations involving various types of medical services
by 2002, and it is expected to include a clinical laboratory demonstration
project in a metropolitan statistical area. In addition, a large portion of
Florida Medicaid has been converted into a managed care system, resulting in
negotiated laboratory service contracts between laboratories and other
providers of healthcare services. Increased enrollment of Medicare or
Medicaid beneficiaries in HMOs or negotiated contracting arrangements may
also result in a larger portion of our business being subject to negotiated
contracts with payors. To obtain competitively bid contracts to perform
services, it might be necessary for us to agree to substantial reductions in
our payments from Medicare and Medicaid. Such contracts may be exclusive and
laboratories which do not hold such contracts may be denied access to the
Medicare/Medicaid testing market and could have difficulty obtaining private
patient testing from physicians participating in the contracting or managed
care program.

"Bundling" of Medicare Services. Proposals have been made to reimburse
clinical laboratory testing services as part of a larger "bundle" of
healthcare services. Under one proposal, physicians would be reimbursed an
additional amount for each office visit they had with a Medicare beneficiary
and would be responsible for paying for any required laboratory services out
of this sum. Nongovernmental Efforts. Managed care arrangements may become
increasingly prevalent in the clinical laboratory services market. For
example, HMOs, insurance companies and self-insured employers may provide
laboratory services directly or contract with laboratories at favorable fee-
for-service or capitated rates and require their enrollees to obtain service
only from such contracted laboratories. To the extent that we or our clients
are unable to obtain contracts to provide such testing services or must
discount prices to obtain such contracts, our revenues and profit margins
could be adversely affected.

Requirements of Diagnosis Codes

Certain tests are only reimbursable by Medicare when the laboratory submits
an appropriate diagnosis code which it has obtained from the ordering
physician. To the extent that the requirements for such diagnosis codes are
expanded to additional tests or are adopted by additional Medicaid programs
or by private insurance programs, or we are unable to obtain required codes
from physicians, our reimbursement could be adversely affected.


Prescription and Medical Discount Cards
Medical Discounts Limited, Inc. (MDL)

MDL is a Florida corporation MDL operates as a membership health plan that
negotiates substantial medical discounts from physicians, clinical
laboratories and pharmaceutical companies for individuals and families that
cannot afford or qualify for health insurance and related services on a
membership basis.

Medical Discounts Limited, Inc. sells a membership card providing its'
customers with directly negotiated discounts from physicians, psychologists,
chiropractors, dentists, clinical laboratories, and imaging companies.  This
product is currently available in West Central Florida.   MDL also provides,
on a nationwide basis, a prescription benefits program through a national
provider allowing customers to receive as much as an 80% discount on
prescription drugs at over 66,000 locations. Pursuant to the agreement with
ASK, Vitallabs, Inc. will spin off MDL to its shareholders.  MDL is shown as
discontinued operations in the accompanying consolidated financial
statements.

OVERVIEW OF THE CONSUMER HEALTHCARE INDUSTRY. The healthcare industry
continues in a state of turmoil and crisis. It is estimated that 14 percent
of all Americans, or 42 million, were without health insurance coverage in
2000. [Source: "U.S. Census Bureau Statistics" published by the U.S.
Department of Commerce.] Nationally, healthcare expenditures topped $1.2
trillion in 1999, as the country continued to spend a larger share of its
gross domestic product than any other major industrialized country on
healthcare. [Source: "Urban and Rural Health Chartbook" published by the
National Center for Health Statistics.] Theses trends are the direct result
of significant increases in insurance rates due to increasing utilization by
participants and soaring prescription drug prices. Industry forecasters are
predicting double-digit inflation in insurance rates in the coming years,
including a 15.6 percent increase in health costs for employers. [Source:
The Atlanta Journal-Constitution, November 10, 2001, citing findings by
Hewitt Associates employee benefits consulting firm.] The average cost for
health insurance in 2001 was $2,652 per year for individuals, and $7,056 per
year for families. Source: "Employer Health Benefits 2001 Summary of
Findings," published by The Kaiser Family Foundation.

American citizens are utilizing healthcare services at an ever-increasing
rate. Behind this phenomenon is the fact that insurance plans and healthcare
management organizations are structured to encourage usage. Small co-pays,
generally from $10 or $15 per office visit, encourage insured consumers to
use the healthcare system more frequently because they generally do not
perceive themselves ultimately as having to pay the full costs of the
medical services received.

Failures of insurance companies and healthcare management organizations are
now common occurrences. In 2000, over 934,000 people were abandoned by their
healthcare management organizations, compared to 327,000 in 1999, and
407,000 in 1998. [Source: Newsweek, August 6, 2000.] A number of insurers
have pulled out of certain states due to state regulations that no longer
provide for a viable operating environment for many insurance companies. As
a result of these health coverage cancellations, some portion of those
formerly covered by medical insurance are required to pay more for their
coverage insurance, some cannot obtain any coverage for pre-existing
conditions or simply become uninsured for healthcare.

Corporate America has been hit hard by escalating insurance costs and many
companies are reacting by shifting the cost of insurance coverage to
employees or cutting benefits. Three quarters of large companies (200 or
more workers) report that they are very or somewhat likely to increase their
employee's share of the costs of healthcare in 2001. [Source: "Employer
Health Benefits 2001 Summary of Findings," published by The Kaiser Family
Foundation.] Smaller business are hit particularly hard by these costs. It
is estimated that 35% of businesses with fewer than 200 employees do not
offer any health benefits to their employees. [Source: "Employer Health
Benefits 2001 Summary of Findings," published by The Kaiser Family
Foundation.] This creates a dilemma for the employer--it is difficult to
attract and hire quality personnel if health benefits are not offered,
however, the cost of providing employee healthcare benefits is prohibitive
or unaffordable.

Tensions between medical providers and the payors are also escalating. The
medical decision is often no longer in the hands of the doctor and the
patient. Rather, administrators at healthcare management organizations and
insurance companies determine the procedures to be performed. Doctors and
hospitals are seeing their profits declining and are demanding higher
compensation, particularly from the healthcare management organizations.

As a result, the uninsured patients are being forced as never before to be
self-insured and pay for the cost of their healthcare. Costs of care in
doctors' offices and hospitals are often far higher than what an insurer
would pay for the same services on behalf of someone having their insurance
coverage. The uninsured patients have no one to broker deals for their care,
so patients without coverage subsidize the lower premiums for those patients
who have insurance.

OVERVIEW OF THE MEMBERSHIP SERVICE PROGRAM INDUSTRY. Membership service
programs are increasingly utilized by vendors for the marketing of their
products and services. Membership service programs offer selected products
and services from a variety of vendors with the objective of enhancing the
existing relationship between businesses and their customers.  We believe
that marketing through membership service programs is one of the fastest
growing areas of direct marketing. When designed, marketed and managed
effectively, membership service programs can be of significant value to:

consumers who become members of the membership program;

vendors through sales and marketing of their products and services; and

clients through which the program memberships are offered

Consumers are increasingly confronted with a growing number of product
and service choices that are advertised and offered to consumers through
media ranging from network and cable television to traditional print media
to the Internet. Furthermore, increasingly consumers, especially dual income
couples, have limited time to devote to making informed and efficient
purchasing decisions. We believe that in addition to network, cable
television and traditional print media well-designed membership service
program provides the benefits of allowing consumers to make purchase
decisions on a more informed, efficient and convenient basis through access
to the information services, discounted products and services, and other
types of assistance offered by such programs.

We believe membership service programs provide vendors a viable, cost-
effective method in addition to the traditional mass-marketing distribution
channels.


VITALLAB'S CONSUMER HEALTHCARE SAVINGS SOLUTION

Our consumer healthcare savings programs are offered under the name of
Medical Discounts Limited, Inc. and are designed in response to the growing
healthcare cost escalation and the number of people that can no longer
afford insurance coverage. Our approach to healthcare savings programs are
based upon and emphasize the following factors:

Responsibility for the use of healthcare must be put back in the hands of
the patient. Insurance policies with low co-pays and deductibles have become
very popular; however, these arrangements actually encourage utilization
which are driving up the cost of healthcare;

The healthcare decision must be put back in the hands of the doctor and the
patient. The doctor must be allowed to be an advocate of the patient; and

Healthcare must be affordable for the patient, while providing the medical
providers with adequate payment on a timely basis for services provided.

For years, insurance companies have been reaping the benefits of managed
care by being able to provide less expensive healthcare to their insured
compared to self-insured person. These benefits were provided through the
use of preferred provider organizations (PPO's) where steerage of patients
was promised in exchange for lower rates. We have contracted directly with
physicians , laboratories, and imagining companies to provide healthcare
savings to our program members.

In developing our healthcare programs, we have identified several elements
that are crucial to the operation, further development, and offering of our
new approach to managed healthcare. Those elements are:

A medical provider network that provides a means to effectively and
efficiently deliver healthcare savings to the patient who carries a
substantial portion of the financial risk by being self-insured. We have
accomplished this through arrangements with reputable, high quality
preferred providers. Over 1000 physicians and medical companies throughout
Florida have proven more than adequate.


A commitment to "hands on" customer service for both the patient-member and
the healthcare provider.

The combination of these elements has allowed us to become the "patient
advocate." We routinely assist our program members in saving an average of
45% to 50% on their medical bills, and oftentimes more by steering them to
the most cost effective healthcare providers in their area. We allow the
patient and the healthcare provider to decide treatment protocols with no
interference from any third party. We facilitate the financial transaction
between the healthcare provider and patient-member to allow the provider to
receive immediate payment. Finally, because the patient-member is directly
responsible for a significant portion of his or her medical expenses, the
patient has an incentive to minimize utilization to achieve cost savings,
regardless of whether the patient has a high deductible insurance policy or
is self-insured.

Our program encompasses the following aspects of healthcare Physicians ,
ancillary services, prescription drugs, vision care,  and chiropractic.
Memberships in our programs range from $49.95 to $199.95 per YEAR, per
family depending on the selected options.


SALES AND MARKETING CHANNELS

Our programs are sold through two primary channels. Our healthcare programs
are offered through retail marketing and under private labels of our
clients.

RETAIL MARKETING.  MDL markets through traditional print, network and cable
television and yellow pages as well as a customer referral program

WHOLESALE MEMBERSHIP OR PRIVATE LABEL CLIENTS. We are also contracting with
other companies under wholesale or private label arrangements. Under these
agreements, we conduct customer service and repricing operations and may
also provide the fulfillment and collections services. The client performs
all marketing functions. Wholesale and private label clients set their own
retail prices for the product based on their commission and expense
structure and income requirements.

BUSINESS OBJECTIVE AND PLAN

Our objective is to become one of the leading providers of unique membership
service programs. Key elements of our business plan are as follows:

CONTINUE TO DEVELOP UNIQUE SERVICE PROGRAMS. Our focus is on the continued
development and introduction of unique programs that address the health and
lifestyle needs of targeted consumer groups. We anticipate that this plan
will allow us to obtain a larger share of the membership program market,
both through existing marketing channels and through establishment of new
client and customer relationships.

With respect to our wholesale membership programs, we continue to expand our
existing distribution channels and seek new ones .  As part of this business
plan, we intend to continue to develop service programs that can be easily
modified to address the needs of a particular channel of distribution.


COMPETITION

CONSUMER HEALTHCARE SAVINGS PROGRAMS.  While the medical savings industry is
still in its early stages, competition for members is becoming more intense.
We offer membership programs that provide products and service similar to or
directly in competition with products and services offered by our
competitors.  Although not permitted under the current agreements with our
representatives and private label clients, in the future some of our clients
may provide, either directly or through third parties, programs that
directly compete with our programs.

Our principal competitors are AmeriPlan, United Service Association for
Healthcare (NHIC), Full Access Medical, CorVel Healthcard, Medical Health
Ventures (IAB), and American Benefits Card. We also compete with all types
of network marketing companies throughout the U.S. for new representatives.
Our other competitors include large retailers, financial institutions,
insurance companies, preferred provider organization networks, and other
organizations, which offer benefit programs to their customers. Many of our
competitors have substantially larger customer bases and greater financial
and other resources.

We distinguish ourselves from the competition through the offering of toll-
free live customer service to the providers as well as the members. We are
aware of one other competitor that offers customer service to the medical
providers in the same manner.

WHOLESALE MEMBERSHIP PROGRAMS. The environment within which we operate is
intensely competitive and subject to rapid change. To maintain or increase
our market share position, we must continually enhance our current product
offerings, introduce new product features and enhancements, and expand our
client service capabilities. We currently compete principally on the basis
of the specialized nature of our products and services.

We offer membership programs that provide products and services similar to
or directly in competition with products and services offered by our
competitors as well as the providers of such products and services through
other channels of distribution. Through contractual arrangements with a
competitor, potential clients may be prohibited from contracting with us to
design a membership program if the services or products provided by our
program are similar to, or merely overlap with, the services or products
provided by an existing competitor program. Although not permitted under the
current agreements with our clients, in the future some of our clients may
provide, either directly or through third parties, programs offered by our
competitors that directly compete with our programs. Competition for new
members is also intense, particularly as the market becomes saturated with
customers who are already members of competing programs.

Many of our competitors have substantially larger customer bases and greater
financial and other resources.

We believe that the principal competitive factors in the consumer healthcare
and wholesale membership industries, many of which are not within our
control, include:

the ability to maintain contracts with reputable preferred provider
organization networks that offer substantial savings;

the ability to identify, develop and offer unique membership healthcare
programs;

the quality and breadth of the programs offered;

the quality and extent of customer service;

the ability to offer substantial savings medical bills;

the ability to combine the programs with affordable insurance plans that
have high deductibles or no prescription benefits;

prices of products and service offered;

marketing expertise;

the ability to hire and retain employees;

responsiveness to customer needs;

Vitallabs is committed to distribute ninety-five percent of its ownership in
MDL to its stockholders as a dividend pursuant to a registration statement
filed under the Securities Act of 1933.  Vitallabs has not determined when
the dividend will be distributed."

Employees

As of March 1, 2002, we employed approximately 133 full-time equivalent
employees at Med Tech Labs, Inc., none of whom were under union contract. We
believe that our relations with employees are good. The number of full-time
equivalent employees is calculated by aggregating the number of payroll
hours worked by all employees and dividing the total by a standard 40-hour
workweek. MDL has two full time employees.


Item 2. Description of Property

Vitallabs' facilities are housed in a 19,668 square foot building that Med
Tech Labs, Inc. leases from a related party corporation for $10,000 per
month.  See "Related Party Transactions" The building is approximately 20
years old and contains adequate space for anticipated growth of the
business.  The building requires continual maintenance but has no
significant structural or ancillary problems. The building is fully insured
for replacement value.

MSA leases 20 offices that are used as Patient Service Centers (PSC). We
believe our facilities are suitable and adequate and have sufficient
production capacity for our operations as currently conducted and as
anticipated to be conducted.  All but one PSC averages approximately 800
square feet and less than $1000 per month lease cost. MDL leases one
facility that is approximately 1000 square feet at a cost of $1300 per
month.  MDL had occupied this space until May of 2002 when it relocated to
MSA's facility.  MDL is negotiating a lease term settlement on the previous
office space's remaining 8 months.

Item 3. Legal Proceedings
MSA is a defendant in actions for collection brought by four vendors seeking
recovery of an aggregate amount of less than $100,000.  Management believes
that an adverse outcome in one or more of these suits would not have a
material adverse effect on the business and prospects of MSA.  MSA may be
involved in various claims and legal actions arising in the ordinary course
of business.  These matters may include, but are not limited to,
professional liability, employee related matters, and inquiries from
governmental agencies and Medicare or Medicaid carriers requesting comment
on allegations of billing irregularities that are brought to their attention
through billing audits or third parties.


Item 4. Submission of Matters to Vote of Security Holders

No matters were submitted to a vote of Vitallabs's security holders during
the fourth quarter of the fiscal year ended December 31, 2001.


PART II
Item 5. Market for Vitallabs's Common Equity and Related Stockholder Matters

Trading of Vitallabs's common stock
(a)  Market Information
Vitallabs's common stock is traded on the OTC Bulletin Board under the
trading symbol "MOPP.  Vitallabs is seeking a symbol change to "VLAB".
There is only a limited and sporadic trading market for Vitallabs's common
stock and there can be no assurance that any trading market will develop
other than that which exist

The range of high and low bid quotations for each quarterly period during
the years ended December 31, 2001 and 2000, and the quarter ended March, 31,
2002, as reported by the OTC Bulletin Board is set forth in the table below.

    Quarter Ended       High    Low     Quarter Ended       High   Low
    ------------------  -----  ------  ------------------   ----  ------
    March 31, 2000      2.00    0.66    March 31, 2001      0.22   0.06
    June 30, 2000       0.87    0.44    June 30, 2001       0.48   0.035
    September 30, 2000  0.47    0.25    September 30, 2001  0.35   0.045
    December 31, 2000   0.20    0.08    December 31, 2001   0.35   0.041
                                        March 31, 2002      0.31   0.10

On May 17, 2002, the last reported bid for Vitallabs's common stock was $.07
per share. All of the foregoing information is based upon inter-dealer
prices without retail markup, markdown, or commissions and may not reflect
actual transactions.

(b)  Holders
As of May 16, 2002, there were approximately 1300 stockholders of record of
Vitallabs's common stock.

(c)  Dividends
Vitallabs has not paid any cash dividends on our common stock and no change
of this policy is currently under consideration by Vitallabs's Board of
Directors. The payment of cash dividends in the future will be determined by
the Board of Directors in light of conditions then existing, including
Vitallabs's earnings, financial requirements, and condition, opportunities
for reinvesting earnings, business conditions, and other factors.

RECENT SALES OF SECURITIES
During the fourth quarter of 2001, Vitallabs issued 200,000 shares of common
stock for services without registering the securities under the Securities
Act of 1933.  The common stock was issued to a consultant for services to be
rendered.  The common stock was valued at $0.08 per share.  The Shares were
issued in reliance upon an exemption from registration provided by Section
4(2) of the Act. No underwriting or other commissions were paid in
connection with the issuance of these shares.


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

GENERAL
The following discussion should be read in conjunction with Vitallabs'
financial statements and the notes thereto and the other financial
information appearing elsewhere in this annual report. In addition to
historical information, the following discussion and other parts of this
annual report contain certain forward-looking information. When used in this
discussion, the words "believes," "anticipates," "expects," and similar
expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties, which could cause
actual results to differ materially from those projected due to a number of
factors beyond Vitallabs' control. Vitallabs does not undertake to publicly
update or revise any of its forward-looking statements even if experience or
future changes show that the indicated results or events will not be
realized. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. Readers
are also urged to carefully review and consider Vitallabs' discussions
regarding the various factors which affect its business included in this
section and elsewhere in this report.  Furthermore, the following
discussions of historical financial performance and condition relate
entirely to discontinued activities, except with respect to forward looking
information about the financial performance and condition of Vitallabs'
newly acquired subsidiary, Med Tech Labs, Inc.

RESULTS OF OPERATIONS

REVENUES.

Vitallabs did not generate any revenue for the years ended December 31,
2000 and 2001.  The Company's two subsidiaries, General Personnel
Management, Inc. (GPM) and MDL have been reported in its financial
statements as discontinued segments.

On October 1, 2001, the Company sold all of the outstanding shares of
common stock of GPM it owned for $25,000.  Net sales of GPM for the
period ended January 1, 2001 to September 30, 2001 (date of disposition)
and the period June 1, 2000 (date of acquisition) to December 31, 2000
were $1,476,223 and $1,088,036, respectively.  These amounts are included
in the loss of $48,112 and $34,787 for the years 2000 and 2001
respectively for operations of discontinued segment in the consolidated
statements of operations.  As a result of this transaction, goodwill
previously recorded was written off and the operations have been treated
as discontinued segment for all periods presented in the accompanying
consolidated financial statements. The loss on disposal is $104,100

Vitallabs is contractually obligated to distribute 95% of the common
stock of MDL to its stockholder.  Therefore, Vitallabs has shown MDL's
operations as a discontinued segment.  Net sales of MDL for the period
June 22, 2001 to December 31, 2001 was $17,316, which was the measurement
date established by the Board of Directors.  These amounts are included
in loss on operations of discontinued segment in the accompanying
consolidated statements of operations.  As a result of this contractual
obligation goodwill previously recorded was written off and the
operations have been treated as discontinued segment for all periods
presented in the accompanying consolidated financial statements.  The
loss for the period is $187,769

General and Administrative Expenses.
General and Administrative costs decreased from $6,528,614 in 2000 to
$2,565,783, or a 61% decrease. The decrease was due to a reduction in
stock issued for services and the market value for the company's common
stock.  Vitallabs continues to issue common stock and options for
services rendered, which contributed to loss from operation during 2001
of $2,281,361 and 3,138,571 during 2000, a decrease of $891,205, or 28%.
The services rendered are primarily attributable to costs associated with
business development of advertising and marketing programs, public
relations, and legal and accounting services, resulting from Company's
attempt to inquire into the possible acquisition or merger with other
similar lines of business.

Other Income/Expense.
For the year ended December 31, 2000, included in Other Income is
$548,645 represents $89,976 cash received during the IMSC attempted
acquisition which later fell through and $458,669 cash received as a
result of a settlement agreement dated June 20, 2000 with Vitallabs,
Interstate Management Services, Inc. (IMSC), and Employer Resource (ER).
On March 14, 2000, Vitallabs entered into a "Stock Exchange Agreement"
with Russell P. Ferry owner of 75% of the outstanding shares of IMSC
common stock, and issued 750,000 shares of common stock in exchange for
Ferry's outstanding shares of IMSC common stock. IMSC was a Professional
Employment Organization which ER claimed had been performing payroll
services for IMSC clients. IMSC denied ER's claims to these rights. Per
the settlement agreement, ER agreed to pay Vitallabs $500,000 discounted
to $400,000 if paid within 45 days of execution of the agreement as a
settlement for the rights to the IMSC clients. ER paid $400,000 plus
$58,669 in default fees, including accrued interest.

The Financial Statements of Med Tech Labs, Inc. for the years ended
December 31, 2000 and 2001 are filed on form 8K/A.  Med Tech Labs, Inc.'s
revenue for the year ended December 31, 2000 was $9,614,018 and net loss
was ($509,760).  Med Tech experienced problems with the business it was
doing with nursing homes, primarily with payment both from Medicare and
from the individual homes.  Med Tech terminated its business with nursing
homes on July 13, 2001.  The results of operation were severely impacted
by these events.  Revenues for the year ended December 31, 2001 was
$11,245,885.  The net loss for the period was ($2,089,832) due to a write
off of accounts receivable and other charge offs of $1,946,241. The
accounts receivable write off primarily consisted of accounts written off
due to lack of authorization from a major insurance provider and the
termination of business with the nursing homes.


LIQUIDITY AND CAPITAL RESOURCES

The Financial Statements of Med Tech Labs, Inc. for the years ended December
31, 2000 and 2001 are filed on form 8K/A.  In January of 2001, Med Tech
Labs, Inc. created a division to provide service to the Nursing Home
Industry.  Med Tech Labs, Inc. experienced several problems with this
division primarily with payment both from Medicare and from the individual
homes.  Med Tech Labs, Inc. closed this division July 13, 2001 and
terminated its relationship with these homes.  The results of operation were
severely impacted by these events.  Revenues for the year ended December 31,
2001 were $11,245,885.  The net loss for the period was ($2,089,832) due to
a write off of accounts receivable and other charge offs of $1,946,241.  The
accounts receivable write off primarily consisted of accounts written off
due to lack of authorization from a major insurance provider and the
termination of business with the nursing homes.  Total assets were
$3,361,604 liabilities were $5,711,927 and total stockholders equity
($2,350,323).  Management has estimated that it needs approximately
$3,000,000 in debt/equity financial to complete its short-term business
plan, which includes the acquisition of other existing labs.  There can be
no assurance that if additional funds are required they will be available,
or, if available, that they can be obtained on terms satisfactory to
Management. There can be no guarantee that Vitallabs will be able to obtain
additional financing, or if successful, that it will be able to do so on
terms that are reasonable in light of current market conditions.

Vitallabs, Inc. net cash flows used by operating activities during 2001 was
$233,057 consisting primarily of net loss adjusted for noncash items such as
stock issued for services. Net cash flows provided by operating activities
for 2000 were $92,082.

Net cash flows used in investing activities during 2000 were $26,900 and
$2,266 in 2001 representing net repayments to one of our shareholders for
funds advanced over the years to fund operations and to raise money for
ongoing business development.  In addition, In 2001, the company received
proceeds of $25,000 from the sale of GPM and the company used $56,000 to
purchase MDL.

Net cash flows provided by financing activities were $165,261 during 2001
primarily representing proceeds from the issuance of notes payable.
Vitallabs's future funding requirements will depend on numerous factors,
some of which are beyond the Company's control.

Item 7. Financial Statements

See Index to Financial Statements included as an exhibit to this filing.

Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure

On March 1st 2002, Clancy and Co. resigned as registrants certified public
accountants.  That firm's report on Vitallabs' financial statements for 1999
and 2000 contained a  "going concern" qualification. The "going concern"
qualification was expressed in the audit report as NOTE 1". That going
concern qualification is as follows:

"Monogram continues to actively seek merger targets. There is, of course, no
assurance that Monogram will be successful in its endeavors. The financial
statements have been prepared on the basis of 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.
Accordingly, they do not purport to give effect to adjustments, if any, that
may be necessary should Monogram be unable to continue as a going concern.
The Company has incurred substantial net losses in recent years and used
substantial amounts of working capital in its operations. These factors
raise substantial doubt about its ability to continue as a going concern.
The continuation of Monogram as a going concern is dependent upon Monogram's
ability to establish itself as a profitable business. Management's plans to
seek additional capital include equity financing's and/or a merger with an
existing operating company (s). It is Monogram's belief that it will
continue to incur losses for the next 12 months, and as a result, will
require additional funds. There are no guarantees Monogram will be
successful in obtaining these funds. Monogram's ability to achieve these
objectives cannot be determined at this time. The financial statements do
not include any adjustments that might result from the outcome of these
uncertainties."

The decision to resign by Clancy and Co., P.L.L.C. was accepted by the Board
of Directors on March 7th, 2002.  Vitallabs' new management wished to retain
Pender Newkirk and Co. CPA's as its auditors both for geographic reasons and
Pender's recent accounting experience with Vitallabs' pending acquisition of
Med-Tech Laboratories, Inc. d/b/a/ Med Services of America.  To the
knowledge of current management, there were no disagreements with Clancy and
Co., P.L.L.C. during the past two fiscal years and the interim period since
the end of the most recent fiscal year on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
of procedure, which disagreements, if not resolved to the satisfaction of
Clancy and Co., would have caused it to make reference to the subject matter
of the disagreement in connection with this report.  During the past two
fiscal years and the interim period since the end of the most recent fiscal
year, to the knowledge of current management, Clancy and Co., P.L.L.C. did
not advise Vitallabs that the internal controls necessary for Vitallabs to
develop reliable financial statements do not exist, that Clancy and Co.,
P.L.L.C. would no longer be able to rely on management's representations,
that it was unwilling to be associated with the financial statements
prepared by management that it needed to expand significantly the scope of
its audit, that information had come to its attention that if further
investigated may (i) materially impact the fairness or reliability of
either: a previously issued audit report or the underlying financial
statements; or the financial statements issued or to be issued, that
information had come to its attention that it has concluded materially
impacts the fairness or reliability of either (i) a previously issued audit
report or the underlying financial statements, or (ii) the financial
statements issued or to be issued covering the fiscal period(s) subsequent
to the date of the most recent financial statements covered by an audit
report (including information that, unless resolved to the accountant's
satisfaction, would prevent it from rendering an unqualified audit report on
those financial statements).

(2) On March 7th, 2002, Vitallabs engaged Pender Newkirk and Company of
Tampa, Florida as its independent public accountant to audit its financial
statements for the fiscal year ended 2001 and to re-audit the fiscal year
ended 2000.  Pender had been engaged as the independent public auditor of
Med-Tech Laboratories, Inc., a company which was acquired by Vitallabs April
5th, 2002.  During the two fiscal years ended 2000 and 2001 and the interim
period since the end of the last such fiscal year, Vitallabs has not
consulted Pender regarding the application of accounting principles to a
specified transaction, either completed or proposed; or the type of audit
opinion that might be rendered on Vitallabs's financial statements.

See report on Form 8K filed March 20, 2002, with an amended Form 8K filed
February 5, 2003.

PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act


Directors and Executive Officers
The following table sets forth the names of the current officers and
directors of Vitallabs, who have filled vacancies and will serve until the
next shareholder's meeting:  Mr. Mullineaux was an Officer/Director up until
his death February 14, 2003.
                                                                Director
Name                      Age      Position                     Since
--------------------      ---      -----------------------      ------------
Edwin B. Salmon, Jr.      64       Chief Executive Officer     Jan. 25, 2002
                                   and Director
Patrick Barmore           51       President and Director      April 9, 2002
Thomas W. Kearney         53       Chief Financial Officer     Nov. 19, 2001
                                   and Director
Lee Mullineaux        Deceased     Secretary and Director      Nov. 19, 2001

The Directors are elected by a majority of stockholders at the annual
meeting to serve a term of one year.  The officers are appointed by the
board of directors who serve at the will of the board.  None of Vitallabss
officers nor the officers of its subsidiaries have employment agreements.
Nevada law permits Vitallabs to indemnify its directors and officers against
certain liabilities. The SEC has informed Vitallabs that to the intents such
indemnification would cover violations of federal securities laws such
indemnification is against public policy and is therefore void.

Edwin B. Salmon, Jr. (64) has over 40 years of business experience in
banking, finance, and computers. Prior to the acquisition of Med Tech Labs,
Inc. in September of 1999 Mr. Salmon was Chairman of the Board of Systems
Communications, Inc., a publicly traded company, from which he resigned when
that company acquired Hitsgalore.com, Inc. in February 1999.  Mr. Salmon
attended the University of Richmond.

Patrick Barmore (51) has twenty-five years experience in the clinical
laboratory business. He has been involved in the day-to-day operation of MTL
since June of 1999, and prior to that time was a consultant and developer
specializing in start-ups and turnarounds, including construction and
business development From 1997 through June of 1999 he was a self employed
development consultant and worked in the creation of medical real estate
developments with Charles Rutenberg, founder of US Homes, the development of
a chain of diagnostic imaging centers in Dallas, Texas, and compliance
programs for laboratories. He has managed a multidisciplinary health care
enterprise of 14 corporations as Vice President of Operations.

Mr. Barmore has an extensive regulatory and clinical background in dealing
with the Office of Inspector General, The Centers for Medicare and Medicaid
Services (formerly HCFA), CLIA Certification Agencies, and various state
health care agencies. He has established proof of concept for many new and
innovative laboratory and other healthcare delivery services. He has
authored compliance programs for many laboratories and other health care
entities. He possesses undergraduate degrees in Zoology and Clinical
Chemistry and a Masters Degree in Health Care Management.

Since joining Med Tech Labs, Inc. Mr. Barmore has also acted in the capacity
of Compliance Officer and has developed a comprehensive compliance program.

Thomas Kearney (53) has over 30 years experience in the health care industry
and has held executive positions with Brookwood Health Services (AMI),
Health Care Corporation and Hospital Corporation of America. In addition he
has participated in over 50 public equity transactions including IPO's,
Secondarys, reverse mergers, etc.  In 1997 through 1999 Mr. Kearney was
CFO/VP/Director of Alliance Broadcasting Group, a publicly traded company,
which owned and operated AM/FM radio stations in six major markets. In 2000
he was chief financial officer of Worldwide Intelcom, an Internet Service
Provider start-up which was also a reseller of prepaid phone cards. Since
January of 2001 he has been chief financial officer of Med Tech Labs, Inc.
Prior to this engagement, He is a graduate of Spring Hill College and holds
a CPA certificate from the state of Alabama.

Lee Mullineaux, age 80, former President of American Diagnostic Centers, has
an extensive medical and insurance background. Most recently he was a
consultant and an officer of SCMI (Systems Communications Management, Inc.).
Prior to that he held management positions with several of the leading
national insurance companies.  He was Regional Director for American General
Life Insurance Company out of Houston, Texas.

Compliance with Section 16(a) of the Securities Exchange Act.  Section 16(a)
of the Securities Exchange Act of 1934 requires Vitallabs' officers and
directors and persons who beneficially own more than ten percent of a
registered class of Vitallabs' equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater-than-ten-percent shareholders
are required by regulation of the Securities and Exchange Commission to
furnish Vitallabs with copies of all Section 16(a) forms which they file.
During the fiscal year ended December 31, 2001, Vitallabs has no record of
the timely filing of Statements of Changes in Beneficial Ownership of
Securities forms (Form 3 and Form 4).

Item 10. Executive Compensation

The following table sets forth remuneration paid to Vitallabs' executive
officers.  No other officer was paid compensation of more than $100,000 per
year during any of the last three fiscal years.
<TABLE>
                           SUMMARY COMPENSATION TABLE
<CAPTION>
                             Annual Compensation                Long Term Compensation
                          ------------------------  -------------------------------------------
-
                                                                  Securities              All
                                           Other                  Underlying              Other
Name and                                  Compen-    Restricted    Options/    LTIP     Compen-
Principle Position  Year  Salary  Bonus    sation   Stock Awards     SAR's    Payouts    sation
------------------  ----  ------  -----  ---------  ------------  ----------  -------  --------
-
<S>                 <C>   <C>     <C>    <C>        <C>           <C>         <C>      <C>
Charles Kiefner     2001     0      0         0           0           0          0         0
Chief Executive     2000     0      0     $47,500    $292,000         0          0      $1,769
Officer             1999     0      0         0      $249,438         0          0         0

Donna Anderson      2001     0      0     $10,000         0           0          0         0
Chief Executive     2000     0      0     $37,000    $304,000         0          0         0
Officer             1999     0      0         0      $ 60,000         0          0         0

John Anderson       2001     0      0     $10,000         0           0          0         0
President           2000     0      0     $37,000    $220,000         0          0         0
                    1999     0      0         0           0           0          0         0

Steven Swank        2001     0      0      $2,000     $406,000        0          0         0
Chief Executive     2000     0      0         0           0           0          0         0
Officer             1999     0      0         0           0           0          0         0

Edwin B. Salmon, Jr.2001     0      0         0           0           0          0         0
CEO and Chairman of 2000     0      0         0           0           0          0         0
the Board           1999     0      0         0           0           0          0         0

Thomas W. Kearney   2001     0      0         0           0           0          0         0
Chief Financial     2000     0      0         0           0           0          0         0
Officer             1999     0      0         0           0           0          0         0

Veronica Tully      2001     0      0         0           0           0          0         0
Executive Vice      2000     0      0         0           0           0          0         0
President           1999     0      0         0           0           0          0         0

</TABLE>
Subsequent to year end Vitallabs acquired MedTech Labs, Inc. in a business
combination accounted for as a reverse acquisition.  The following
officers had employment agreements with MedTech Labs:  Edwin B. Salomon,
Jr., CEO and Chairman of the Board, annual compensation of $180,000;
Thomas W. Kearney, Chief Financial Officer, annual compensation of
$80,000; Veronica Tully, Executive Vice President, annual compensation of
$150,000.  On July 2002, those employment agrrements were transferred to
Vitallabs.

EMPLOYMENT AGREEMENTS
Vitallabs has written employment contracts with respect to its executive
officers. Vitallabs a has compensatory plan or arrangement that results or
will result from the resignation, retirement or any other termination of an
executive officer's employment with Vitallabs and its subsidiaries.
Vitallabs has attached written employment contracts with respect to its
executive officers.

EMPLOYEE BENEFITS
Vitallabs adopted the 1999 KEY EMPLOYEE/DIRECTOR STOCK OPTION PLAN (the
"Plan") effective October 19, 1999, and has reserved 1,000,000 shares for
issuance thereunder. The objectives of the plan include attracting and
retaining the best personnel, providing for additional performance
incentives, and promoting the success of Vitallabs by providing employees
the opportunity to acquire common stock. Options outstanding under
Vitallabs' plan are granted at prices which are either equal to or above the
market value of the stock on the date of grant and expire at various dates
after the grant date.  On April 19, 2001, the Board of Directors approved
the issuance of 950,000 options to acquire shares under the Plan,
exercisable for a period of 2 years, at a price of $0.01 per share.

  Options          Number of         Exercise            Options
Granted to          options           Price             Remaining
------------------------------------------------------------------
Steven Swank       250,000            $ .01                    0
Charles Kiefner    300,000              .01                    0
John Bortoli       250,000              .01              250,000
David Hastings     150,000              .01              150,000

Mr. Swank and Mr. Kiefner exercised their options in December 2001.

Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding beneficial ownership as
of May 13, 2002 of Vitallabs' Common stock, by any person who is known to
Vitallabs to be the beneficial owner of more than 5% of Vitallabs' voting
securities and by each Director and officer and by Officers and Directors of
Vitallabs as a group.

                                             Amount and
                                             Nature of
Title      Name and Address of               Beneficial     Percent
of Class   Beneficial Owner                  Ownership    of Class **
--------   -------------------------------   ----------   -----------
 (i)       Edwin B. Salmon, Jr. (1)(2)(3)     1,235,294       26.13%

 (i)       Thomas W. Kearney (1)(5)
                                                426,471        9.02%

 (i)       Lee Mullineaux  (1)(5)(6)
                                                632,353       13.38 %

 (i)       Veronica Tully (1)(2)(3)           1,235,294       26.13%

           All Officers and Directors         3,529,412       74.68%
             as a Group (4 persons)


 (i)       V-Trademart, Inc. (4)
           4330 Miller Dr.
           St. Petersburg Beach, FL, 33706      352,942        7.47 %


Notes
(1)  These stockholders addresses are that of Vitallabs'
(2)  Ms. Tully's resides at Mr. Salmon's residence.  Both Mr. Salmon and
  Ms. Tully disclaim beneficial ownership to the other's shares.
(3)  Entitled to 3,581,753 more shares of common stock due from the
     acquisition of Med Tech Labs, Inc., pending a share combination or
     increase in authorized common stock.
(4)  Entitled to 670,417 more shares of common stock due from the
     acquisition of Med Tech Labs, Inc., pending a share combination or
     increase in authorized common stock.
(5)  Entitled to 435,123 more shares of common stock due from the
  acquisition of Med Tech Labs, Inc., pending a share combination or
     increase in authorized common stock.
(6)  220,588 shares held by Brittany Leigh, Inc., a Florida corporation of
     which Mr. Mullineaux has voting control. Mr. Salmon, Kearney and Ms.
     Tully own an aggregate of 15% of Brittany Leigh, Inc.

All securities are directly owned and the persons named hold the sole
investment and voting power.

Item 12.  Certain Relationships and Related Transactions

Mssers. Kearney and Mullineaux were Officers and Directors of Vitallabs,
Inc. and Officers of Med Tech Labs, Inc. at the time the Agreement to
acquire Med Tech Labs, Inc. was executed.  The acquisition was not an arm's
length transaction.

Vitallabs leases its main facility from ASK, a related Florida corporation.
See Item 2, "Description of Property".  ASK is owned by Messrs. Salmon,
Kearney, Mullineaux and Ms. Tully.  ASK Acquired the property at which Med
Tech Labs, Inc. facility is located in January 2002 from an unrelated
person, ASK reduced the rent charge to Med Tech Labs, Inc. to $10,000 per
month from $16,000 per month.  The lease in not an arm's length transaction.
Management believes the lease rate is below market value.

Item 13. Exhibits and Reports on Form 8-K.

(a) Exhibits.  See Index to Financial Statements.
(b) Reports on Form 8-K

(1.) On December 12, 2001, Vitallabs filed Form 8-K to announce the issuance
of an aggregate 8,000,000 shares of its common stock, $.001 par value, to
two persons who, on such date, have been appointed members of the Board of
Directors of the Registrant.  Vitallabs also announce the resignation of
three directors and the change of Vitallabs' business address.


                                   SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                            VITALLABS, INC.


                                       By:  /s/ Thomas W. Kearney
                                      -------------------------------
Date: March 10, 2003                            Thomas W. Kearney
                                        Chief Audit and Financial Officer
                                       (Principal financial and
                                            accounting officer)


                                       By:  /s/ Edwin B. Salmon, Jr.
                                      --------------------------------
Date: March 10, 2003                            Edwin B. Salmon, Jr.
                                        Chief Executive Officer
                                        Principal executive officer)




Exhibits.  Financial Statements

                          Index

Independent Auditors' Report on Consolidated Financial Statements      1

Consolidated Financial Statements:

   Consolidated Balance Sheet                                          2
   Consolidated Statements of Operations                               3
   Consolidated Statements of Changes in Stockholders' Deficit         4
   Consolidated Statements of Cash Flows                              5-6
   Notes to Consolidated Financial Statements                         7-16























                      Consolidated Financial Statements
                            Vitallabs, Inc.
                (Formerly Known As Monogram Pictures, Inc.)
                   Years Ended December 31, 2001 and 2000
                        Independent Auditors' Report






                            Vitallabs, Inc.
                (Formerly Known As Monogram Pictures, Inc.)
                  Years Ended December 31, 2001 and 2000










                              Contents


Independent Auditors' Report on Consolidated Financial Statements      1

Consolidated Financial Statements:

   Consolidated Balance Sheet                                          2
   Consolidated Statements of Operations                               3
   Consolidated Statements of Changes in Stockholders' Deficit         4
   Consolidated Statements of Cash Flows                              5-6
   Notes to Consolidated Financial Statements                         7-16





                        Independent Auditors' Report



Board of Directors
Vitallabs, Inc.
(Formerly Known As Monogram Pictures, Inc.)
Clearwater, Florida


We have audited the accompanying consolidated balance sheet of Vitallabs, Inc.
(Formerly Known As Monogram Pictures, Inc.) as of December 31, 2001 and the
related consolidated statements of operations, changes in stockholders'
deficit, and cash flows for the years ended December 31, 2001 and 2000.  The
consolidated financial statements are the responsibility of the management of
Vitallabs, Inc.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Vitallabs, Inc. as of December 31, 2001 and the results of its operations
and its cash flows for the years ended December 31, 2001 and 2000 in
conformity with accounting principles generally accepted in the United
States of America.

The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. The Company has
incurred substantial net losses for the periods indicated, has negative
working capital of approximately $232,000 at December 31, 2001, and its
liabilities exceed its assets by approximately $288,000 at December 31,
2001.  In addition, as more fully described in Note 9, the Company
subsequent to year end has acquired another company which is experiencing
financial difficulties.  These factors and others raise substantial doubt
about the Company's ability to continue as a going concern. Management's
plans in regards to these matters are discussed in Note 2. The consolidated
financial statements do not include any adjustments that might result from
the outcome of these uncertainties.





Pender Newkirk & Company
Certified Public Accountants
Tampa, Florida
April 19, 2002, except for Note 9, as to which the date is February 5, 2003



                           Vitallabs, Inc.
                (Formerly Known As Monogram Pictures, Inc.)
<TABLE>
                         Consolidated Balance Sheet
                             December 31, 2001


<S>                                                       <C>
Assets
Current assets:
  Cash                                                    $          58

Property and equipment, net of accumulated depreciation           3,009

Other assets                                                        163
                                                          -------------

                                                          $       3,230
                                                          =============


Liabilities and Stockholders' Deficit
Current liabilities:
  Note payable                                            $      34,061
  Accounts payable and accrued expenses                         131,255
  Due to related parties                                         37,008
  Net liabilities of discontinued operations,
    including related party of $31,171                           29,781
                                                          -------------
Total current liabilities                                       232,105
                                                          -------------

Common stock payable                                             58,700
                                                          -------------

Stockholders' deficit:
  Preferred stock; $.01 par value; 5,000,000 shares
     authorized; 17,500 shares issued and outstanding               175
  Common stock; $.001 par value; 100,000,000 shares
     authorized; 15,145,286 shares issued and
     outstanding                                                 15,145
  Additional Paid In Capital                                 22,610,467
  Accumulated deficit                                       (22,913,362)
                                                          -------------
Total stockholders' deficit                                    (287,575)
                                                          -------------

                                                          $       3,230
                                                          =============

<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
                                       2
----------------------------------------------------------------------------
<PAGE>


                            Vitallabs, Inc.
                (Formerly Known As Monogram Pictures, Inc.)
<TABLE>
                     Consolidated Statements of Operations

<CAPTION>
                                                 Year Ended December 31,
                                            ---------------------------------
                                                 2001              2000
                                            ---------------   ---------------
<S>                                         <C>               <C>
Revenues                                     $           0     $           0

General and administrative expenses              2,565,783         6,528,614
                                            ---------------   ---------------

Operating loss                                  (2,565,783)      (6,528,614)

Other income                                         -              548,645
                                            ---------------   ---------------

Net loss from continued operations             (2,565,783)     (5,979,969)
                                            ---------------   ---------------

Discontinued operations:
  Loss from operations of Medical
    Discount Limited, Inc. discontinued
    segment                                      (187,769)            -
  Loss from operations of General
    Personnel Management, Inc.
    discontinued segment                          (48,112)        (34,787)
  Loss on disposal of General Personnel
    Management, Inc. discontinued
    segment                                      (104,100)            -
                                            ---------------   ---------------
Total discontinued operations                    (339,981)        (34,787)
                                            ---------------   ---------------

Net loss                                    $  (2,905,764)  $  (6,014,756)
                                           ===============   ===============

Basic loss per share:
  Loss from continuing operations           $       (.49)    $      (3.10)
  Loss from operations of Medical
    Discount Limited, Inc. discontinued
    segment                                         (.04)            (.00)
  Loss from operations of General
    Personnel Management, Inc.
    discontinued segment                            (.01)            (.02)
  Loss on disposal of discontinued
    segment                                         (.02)            (.00)
                                           ---------------   ---------------
  Basic Net Loss Per Share                  $       (.56)    $      (3.12)
                                           ===============   ===============

Weighted average number of common shares
  used in basic loss per share calculations     5,226,828        1,925,556
                                           ===============   ===============

<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
                                       3
--------------------------------------------------------------------------
<PAGE>


                           Vitallabs, Inc.
                (Formerly Known As Monogram Pictures, Inc.)
<TABLE>
          Consolidated Statements of Changes in Stockholders' Deficit
                    Years Ended December 31, 2001 and 2000

<CAPTION>
                                Preferred Stock        Common Stock        Additional
                               -----------------   --------------------     Paid-In       Accumulated
                                Shares    Amount     Shares     Amount      Capital         Deficit      Total
                               --------   ------   ----------   -------   -----------   ------------   ----------
<S>                            <C>        <C>      <C>          <C>       <C>           <C>            <C>
Balance, December 31, 1999,
                                 17,500   $  175    1,235,123   $ 1,236   $16,821,928   $(13,992,842)  $2,832,072

Common stock issued for
   services                                           933,300       932     3,137,639                   3,138,571

Common stock issued for
   acquisition of subsidiary                           40,000        40       211,960                     212,000

Asset transferred under
   common control                                                             (71,882)                    (71,882)

Debt converted to paid-in
   capital                                                                     78,883                      78,883

Net loss for the year                                                                     (6,014,756)  (6,014,756)
                               --------   ------   ----------   -------   -----------   ------------   ----------
Balance, December 31, 2000       17,500   $  175    2,208,423   $ 2,208   $20,178,528   $(20,007,598)  $  174,888


Stock options issued for
   services                                                                    28,500                      28,500

Issuance of common stock
   for services                                    11,637,863    11,638     2,235,728                   2,247,366

Issuance of common stock,
   exercise of options                                550,000       550         4,950                       5,500

Common stock issued for
   acquisition of
   subsidiary                                         344,000       344        89,096                      89,440

Cancellation of common
   stock issued                                        (5,000)       (5)                                       (5)

Debt converted to common
   stock                                              410,000       410        72,090                      72,500

Net loss for the year                                                                     (2,905,764)  (2,905,764)
                               --------   ------   ----------   -------   -----------   ------------   ----------

Balance, December 31, 2001       17,500   $  175   15,145,286   $15,145   $22,610,467   $(22,913,362)  $ (287,575)

<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
                                       4
-------------------------------------------------------------------------------
<PAGE>


Vitallabs, Inc.
                (Formerly Known As Monogram Pictures, Inc.)
<TABLE>
                   Consolidated Statements of Cash Flows

<CAPTION>
                                                        Year Ended December 31,
                                                   ---------------------------------
                                                        2001               2000
                                                   ---------------    --------------
<S>                                                <C>                <C>
Operating activities
  Net loss                                         $    (2,905,764)   $   (6,014,756)
                                                   ---------------    --------------
  Adjustments to reconcile net loss to net
     cash (used) provided by operating
     activities:
       Depreciation and amortization                        32,292            24,883
       Common stock and options issued for
          services                                       2,281,361         3,138,571
       Loss on discontinued operations                     104,101
       Write-off of film library                                           2,928,118
       Write-off of goodwill                               166,000
       (Increase) decrease in prepaid expenses
          and other assets                                   7,945            (2,156)
       Increase in accounts payable and
          accrued liabilities                               71,354            17,422
       Net liabilities of discontinued operations            9,654
                                                   ---------------    --------------
  Total adjustments                                      2,672,707         6,106,838
                                                   ---------------    --------------
  Net cash (used) provided by operating
     activities                                           (233,057)           92,082
                                                   ---------------    --------------

Investing activities
  Advances from related party                               37,008            18,100
  Repayments to related party                                                (45,000)
  Purchase of property and equipment                        (3,309)
  Acquisition of subsidiary, net of cash
     acquired                                              (56,433)
  Proceeds from sale of subsidiary                          25,000
                                                   ---------------    --------------
  Net cash provided (used) by investing
    activities                                               2,266           (26,900)
                                                   ---------------    --------------

Financing activities
  Proceeds from note payable                               175,261
  Payment on note payable                                  (10,000)
                                                   ---------------    --------------
  Net cash provided by financing activities                165,261                 0
                                                   ---------------    --------------

Net (decrease) increase in cash                            (65,530)           65,182

Cash, beginning of year                                     65,588               406
                                                   ---------------    --------------

Cash, end of year                                  $            58    $       65,588
                                                   ===============    ==============

<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
                                       5
------------------------------------------------------------------------------
<PAGE>


Vitallabs, Inc.
                (Formerly Known As Monogram Pictures, Inc.)
<TABLE>
                   Consolidated Statements of Cash Flows

<CAPTION>
                                                        Year Ended December 31,
                                                   ---------------------------------
                                                        2001               2000
                                                   ---------------    --------------
<S>                                                <C>                <C>
Supplemental disclosures of cash flow and
  noncash investing and financing activities:
    Acquisition of film library for
       cancellation of note receivable            $            0    $    2,928,118
                                                   ===============    ==============
    Goodwill recorded in acquisition of
       subsidiary in stock transaction            $      166,000    $      213,281
                                                   ===============    ==============

</TABLE>

During the year ended December 31, 2001, the Company issued 410,000 shares
of common stock as satisfaction of $72,500 of notes payable.  In addition,
the Company entered into an agreement to issue 300,000 shares of stock in
satisfaction of a $58,700 note payable.  These shares were not issued until
January 2002 and are recorded as a stock payable on the accompanying
consolidated balance sheet.

During December 31, 2001, the Company purchased Medical Discounts Limited,
Inc.  The following are the assets obtained and liabilities assumed in that
purchase:

    Fair Value of Assets Acquired                                 $ 168,745
    Cash Paid For The Acquisition                                   (56,433)
      (Less Cash Assumed of 2,549)
    Common Stock issued for the acquisition                         (89,440)
                                                                   ---------
    liabilities assumed                                           $ (22,872)
                                                                   =========

During December 31, 2000, the company purchased General Personnel Management,
Inc.  The following are the assets obtained and liabilities assumed in that
purchase.

    Fair Market of Assets Acquired                        $229,983
    Common Stock Issued For The Acquisition                212,000
                                                          --------
      Liabilities Assumed                                 $ 17,983
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.

                                       6
------------------------------------------------------------------------------
-
<PAGE>


                           Vitallabs, Inc.
             (Formerly Known As Monogram Pictures, Inc.)
               Notes to Consolidated Financial Statements
                Years Ended December 31, 2001 and 2000

1.  Background Information

Vitallabs, Inc. (the "Company") was incorporated in the state of Nevada in
1989, with authorized capital consisting of 100,000,000 shares of $0.001 par
value common stock and 5,000,000 shares of $0.01 par value preferred stock.
During 2000, the Company changed the corporate name from Definition, Ltd. to
e Personnel Management.com, Inc. to Monogram Pictures, Inc.  In 2002, the
company changed the corporate name to Vitallabs, Inc., from Monogram
Pictures, Inc.

During 2000, the Company directed its efforts to the professional employment
services industry and successfully acquired 100 percent of the outstanding
common stock of General Personnel Management, Inc. ("GPM"), a California
corporation.  The acquisition was accounted for by the purchase method of
accounting and, accordingly, the results of operations of the subsidiary are
included from the date of acquisition.  Goodwill was recognized for the
amount of the excess of the purchase price paid over the fair market value
of the net assets acquired and was amortized on a straight-line basis over
five years.  The fair market value of the liabilities assumed exceeded the
fair market values of the assets acquired by $1,280 and the cost of the
subsidiary was 40,000 shares of the Company's common stock at valued at
$212,000, for total goodwill recognized of $213,280. Amortization charged to
operations for 2000 was $24,286.  The following table reflects the results
of operations on a pro forma basis as if the acquisition had been completed
at the beginning of 2000:

     Unaudited
    -----------
     Revenues Including the Loss From
       Operations of General Personnel
       Management, Inc. Discontinued Segment (unaudited)  $     1,947,892
                                                         ================
     Net loss (unaudited)                                 $     6,015,603
                                                         ================
     Loss per share (unaudited)                          $        $(3.12)
                                                         ================

Additionally, each former stockholder agreed to serve upon an advisory board
for a period of not less than two years from the date the transaction was
consummated and received annual compensation of 5,000 shares of the
Company's common stock, for a total of 50,000 additional shares.  The
additional consideration for services rendered is accounted for as expenses
of the appropriate periods. As of December 31, 2001 and 2000, 30,000 and
20,000 shares were issued for services rendered for a total value of $13,500
and $10,000, respectively.

On October 1, 2001, the Company sold all of the outstanding shares of
common stock of GPM it owned for $25,000.  Net sales of GPM for the period
ended January 1, 2001 to September 30, 2001 (date of disposition) and the
period June 1, 2000 (date of acquisition) to December 31, 2000 were
$1,476,223 and $1,088,036, respectively.  These amounts are included in
loss on operations of discontinued segment in the accompanying
consolidated statements of operations.  As a result of this transaction,
goodwill previously recorded was written off and the operations have been
treated as discontinued segment for all periods presented in the
accompanying consolidated financial statements.

                                       7
------------------------------------------------------------------------------
<PAGE>


                         Vitallabs, Inc.
             (Formerly Known As Monogram Pictures, Inc.)
               Notes to Consolidated Financial Statements
                Years Ended December 31, 2001 and 2000

1.  Background Information (continued)
During 2000, the Company attempted to acquire 75 percent of Interstate
Management Services, Inc. ("IMS"), another professional employer
organization ("PEO"), in return for 75,000 shares of its common stock.
Initially, the Company received approximately $90,000 in cash at the
acquisition date.  This attempt was aborted on December 21, 2000.  However,
the Company prevailed in a settlement agreement involving the Company, IMS,
and Employer Resource ("ER").  ER claimed it had rights to the payroll
services for IMS clients.  IMS denied ER's claims to these rights.  Per the
settlement agreement, ER paid the Company $400,000 plus approximately
$59,000 in default fees, including accrued interest as a settlement for the
rights to the IMS clients.  These amounts are recorded as other income in
the accompanying consolidated financial statements.

On June 22, 2001, the Company purchased 51 percent of Medical Discounts
Limited, Inc. ("MDL"), a Florida corporation, for $38,982 in cash and
344,000 shares of its common stock valued $89,440, for a net investment in
the subsidiary of $128,422.  Net assets acquired were $17,578 consisting of
cash, accounts receivable, accounts payable, and a note payable.  The
acquisition was recorded using the purchase method of accounting.  The
Company also signed an agreement dated June 22, 2001 with two of the former
principal stockholders of MDL to purchase 165,000 shares of the Company's
restricted stock issued for $1.00 per share by 12 months from the date of
the agreement. As of April 19, 2002 they have not purchased these shares.

On August 22, 2001, the Company agreed to pay $20,000 for the remaining 49
percent interest in MDL, making it a wholly owned subsidiary as of that
date.

The following table reflects the results of operations on a pro forma basis
as if the acquisition had been complete at the beginning of 2001.

      Revenue Included In                      $        29,914
        Loss From Operations of
        Medical Discounts Limited, Inc.
        Segment (unaudited)
                                                ---------------
      Net loss (unaudited)                     $    (2,933,376)
                                                ---------------
      Loss per share (unaudited)               $          (.56)
                                                ---------------

As more fully explained in Note 8, pursuant to a Letter of Intent signed
with A.S.K. Consulting, Inc., the Company plans to distribute substantially
all of the common stock of MDL to the present stockholder of the Company.
Therefore, the Company has shown the operations as a discontinued segment.
Net sales of MDL for the period June 22, 2001 to December 31, 2001 was
$17,316, which was the measurement date established by the Board of
Directors.  These amounts are included in loss on operations of discontinued
segment in the accompanying consolidated statements of operations.  As a
result of this transaction, goodwill previously recorded was written off and
the operations have been treated as discontinued segment for all periods
presented in the accompanying consolidated financial statements.

As more fully explained in Note 9, subsequent to year-end, the Company
acquired MedServices of America ("MSA") in a reverse acquisition whereby the
stockholder of MSA gained control of the Company.

                                       8
------------------------------------------------------------------------------
<PAGE>


                          Vitallabs, Inc.
             (Formerly Known As Monogram Pictures, Inc.)
               Notes to Consolidated Financial Statements
                Years Ended December 31, 2001 and 2000



2.  Going Concern

The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern.  The Company has
incurred significant loses from operations for the last 2 years, had
negative working capital of approximately $232,000 at December 31, 2001 and
its liabilities exceed its assets by approximately $288,000 at December 31,
2001.  In addition, as more fully described in Note 9, the company
subsequent to year end had acquired another company which is experiencing
financial difficulties.  These factors and others raise substantial doubt
about its ability to continue as a going concern.  New management is
currently looking in to raising additional funds for the Company by means of
a private placement of some of the Company's equity securities although no
assurance can be given regarding how successful that private placement may
be.  The consolidated financial statements do not include any adjustments
that might result from the outcome of these uncertainties.


3.  Significant Accounting Policies

The significant accounting policies are as follows:

  (1) The Preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reported period.  Actual results could differ from
those estimates.

  (2) The accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries, General Personnel
Management, Inc. and Medical Discounts Limited, Inc. for those periods that
the subsidiaries were controlled by the Company.  All intercompany
transactions have been eliminated in consolidation.

  (3) Property and equipment are recorded at cost.  Depreciation is
calculated by the straight-line method over the estimated useful lives of
the assets, ranging generally from 3 to 7 years.

  (4) Intangible assets represent goodwill which is amortized using the
straight-line method over its estimated useful life of 5 years.









                                       9
------------------------------------------------------------------------------
<PAGE>


                            Vitallabs, Inc.
                (Formerly Known As Monogram Pictures, Inc.)
                   Notes to Consolidated Financial Statements
                   Years Ended December 31, 2001 and 2000



3.  Significant Accounting Policies (continued)

  (5) The Company follows Statement of Financial Accounting Standards Board
No. 121 (SFAS No. 121), "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of."  SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles to be held and used
by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of these assets may not be
recoverable. In performing the review of recoverability, the Company
estimates the future undiscounted cash flows that are expected to result
from the use of the assets and their eventual disposition. Because events
and circumstances frequently do not occur as expected, there will usually be
differences between the estimated and actual future undiscounted cash flows,
and these differences may be material.  If an asset is determined to be
impaired, the Company recognizes a loss for the difference between the
carrying amount and the fair value of the asset.  The fair value of the
asset is measured using quoted market prices or, in the absence of quoted
market prices, fair value is based on an estimate of discounted cash flow
analysis.

  (6) Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management.  The
respective carrying value of certain on-balance sheet financial instruments
approximated their fair values.  These financial instruments include cash,
accounts payable, notes payable, and accrued expenses.  Fair values were
assumed to approximate carrying values  for these financial instruments
since are short term in nature and their carrying amounts approximate fair
values or they are receivable or payable on demand.

  (7) Deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and their
respective income tax bases.  Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.  The effect on deferred tax assets and liabilities of a change in
tax rates is recognized as income in the period that included the enactment
date.

  (8) Loss per share is based on the weighted average number of common
shares outstanding.  All loss per share amounts in the consolidated
financial statements are basic loss per share, as defined by SFAS No. 128,
"Earnings Per Share."  Potential securities where not considered in their
calculation since there effect would be anti-dilutive.  All per share and
per share information are adjusted retroactively to reflect stock splits.

  (9) The Company accounts for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees."  Compensation cost for stock
options, if any, is measured as the excess of the quoted market price of the
Company's stock at the date of grant over the amount an employee must pay to
acquire the stock.


                                      10
------------------------------------------------------------------------------
<PAGE>


                           Vitallabs, Inc.
                (Formerly Known As Monogram Pictures, Inc.)
                   Notes to Consolidated Financial Statements
                    Years Ended December 31, 2001 and 2000



3.  Significant Accounting Policies (continued)

  (10) SFAS No. 123, "Accounting for Stock-Based Compensation," established
accounting and disclosure requirements using a fair-value-based method of
accounting for stock-based employee compensation plans.  The Company has
elected to remain on its current method of accounting as described above,
and has adopted the disclosure requirements of SFAS No. 123.

  (11) In June 2001, the financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets.  SFAS
141 requires the use of purchase method of accounting and prohibits the use
of the pooling-of-interest method of accounting for business combinations
initiated after June 30, 2001.  All the Company's business combination were
accounted for using the purchase method of accounting.  SFAS 142 addresses
financial accounting and reporting for acquired goodwill and other
intangible assets.  SFAS 142 requires, among other things, that companies no
longer amortize goodwill, but instead test goodwill for impairment at least
annually.  SFAS 142 is required to be applied for fiscal years beginning
after December 15, 2001.

In June 2001, the Financial Accounting Standards Board issued SFAS No. 143,
Accounting for Asset Retirement Obligation.  SFAS 143 addresses the
financial accounting and reporting obligations associated with the
retirement of tangible long-lived assets and the associated asset
retirement.  The Company does not expect the adoption of SFAS to have an
impact on its financial position or results of operations.

In August, the Financial Accounting Standards Board issued SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets.  SFAS 144
addresses the financial accounting and reporting for the impairment of long-
lived assets, excluding goodwill and tangible assets, to be held and used or
disposed of.  SFAS 144 is required to be applied for fiscal years beginning
after December 15, 2001.  The Company does not expect the adoption of SFAS
to have an impact on its financial position or results of operations.

  (12)Advertising cost are charged to operations when the advertising first
takes place.  Advertising expense for 2001 and 2000 were $5,200 and $3,278,
respectively.

  (13) Certain minor reclassifications have been made to the 2000
consolidated financial statements to conform to the classifications used in
2001.

4.  Property and Equipment

Property and equipment consist of:

    Office furniture                                       $  3,309
    Less accumulated depreciation                              (300)
                                                           --------
                                                           $  3,009
                                                           ========


                                      11
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<PAGE>


                          Vitallabs, Inc.
            (Formerly Known As Monogram Pictures, Inc.)
             Notes to Consolidated Financial Statements
              Years Ended December 31, 2001 and 2000



5.  Note Payable

At December 31, 2001, the Company has a note payable of $34,061 that bears
interest of 10 percent and is due on demand.  All of the Company's assets are
used as collateral.

6.  Stockholders' Equity and Reverse Stock Split

In 2001, the Company's Board of Directors approved a 1-to-10 reverse stock
split to all stock outstanding, both common and preferred.  All per share
information has been adjusted retroactively for the stock split in the
accompanying consolidated financial statement.

The Company is authorized to issue 5,000,000 shares of convertible preferred
stock.  Each share of convertible preferred stock contains a liquidation
preference over common shareholders.  In addition each share of preferred
stock is convertible at the option of the holder into 3 shares of common
stock.  The preferred shares entitle the shareholder to one vote for each
share on each matter presented to the Corporation's shareholder and shall
vote with the common shares on all matters.

7.  Stock Option Plan

The Company maintains a qualified stock option plan.  Under the terms of the
plan, the Company has reserved 1,000,000 shares of common stock for future
grants.

Under the stock option plan, the Company may grant incentive stock options
to certain officers, employees, and directors.  The options expire two years
from the date of grant.  Vesting occurs after 12 months of service, and
option holders are given credit for prior service.

The following table summarizes information about the qualified stock options
outstanding at December 31, 2001:

                          Weighted
                           Average      Weighted                  Weighted
                          Remaining     Average                   Average
Exercise     Number      Contractual    Exercise      Number      Exercise
 Price     Outstanding   Life (Years)    Price     Exerciseable    Price
----------------------------------------------------------------------------
 $.01        400,000         1.3          $.01        400,000      $.01


                                      12
------------------------------------------------------------------------------
<PAGE>


                          Vitallabs, Inc.
             (Formerly Known As Monogram Pictures, Inc.)
                Notes to Consolidated Financial Statements
                 Years Ended December 31, 2001 and 2000

7.  Stock Option Plan (continued)

Transactions under various qualified stock option plans for 2001 are
summarized as follows:

                                                         Weighted
                                                         Average
                                                         Exercise
                                              Options     Price
                                             ----------------------
       Outstanding at December 31, 2000             0      $.00
       Granted                                950,000      $.01
       Exercised                             (550,000)     $.01
       Cancelled                                    0
                                             ----------------------
       Outstanding at December 31, 2001       400,000      $.01
                                             ======================
       Options exerciseable at
          December 31, 2001                   400,000      $.01
                                             ======================

Under the accounting provisions of SFAS No. 123, the Company's 2001 pro
forma net loss and loss per share would have been $(2,909,964) and $(.56),
respectively.

The Company estimates the fair value of each stock option at the grant date
by using the Black-Scholes option pricing model with the following
assumptions:

       Dividend yield                                     0.00%
       Expected volatility                              135.70%
       Risk-free interest rate                            4.23%
       Expected life/years                                2.00
       Weighted average fair value of
          options granted                                 $.03

8.  Letter of Intent

On November 19, 2001, the Company entered into a Letter of Intent with
A.S.K. Consulting, Inc. ("ASK"), a related party.  ASK is a consulting firm
whose president is also a director and officer of the Company.  ASK is
seeking to locate another entity ("target") to form a business combination
with the Company.

The Letter of Intent contains certain anti-dilutive provisions indicating,
in summary, that the then present holders of the outstanding common stock of
the Company at the conclusion of the anticipated business combination
transaction will own not less than four percent of the shares of the
Company's common stock outstanding immediately subsequent to the
consummation of the business combination transaction.  Such anti-dilutive
provisions shall be effective for a period of 12 months from the date of any
definitive agreement that governs the business combination transaction
between the Company and Target.

In accordance with the Letter of Intent, the Company is required to take all
appropriate and necessary steps to permit the distribution of substantially
all of the common stock of Medical Discounts Limited, Inc. (MDL), the

                                      13
------------------------------------------------------------------------------
<PAGE>
                          Vitallabs, Inc.
             (Formerly Known As Monogram Pictures, Inc.)
                Notes to Consolidated Financial Statements
                 Years Ended December 31, 2001 and 2000

8.  Letter of Intent (continued)

Company's wholly owned subsidiary to the present holders of the outstanding
common stock of the Company.  Such distribution is required to be
accomplished in accordance with a registration statement to be filed under
the Securities Act of 1933, as amended, which will contain a form of
prospectus.  Prior and subsequent to such anticipated distribution, MDL will
continue to conduct its present business under its present management.  In
connection with the intended distribution of MDL common stock, ASK is
required to facilitate the purchase by the Company for $135,000 the number
of shares of MDL common stock that will equal five percent of the common
stock to be outstanding at the conclusion of the distribution which is
anticipated to be 50,000 shares.  ASK is required, per the Letter of Intent,
to loan the Company $135,000 to fund this transaction.

The Company has shown MDL as a discontinued operation in the accompanying
consolidated financial statements.


                                      14
------------------------------------------------------------------------------
<PAGE>


                          Vitallabs, Inc.
             (Formerly Known As Monogram Pictures, Inc.)
               Notes to Consolidated Financial Statements
                Years Ended December 31, 2001 and 2000



8.  Letter of Intent (continued)

In addition, ASK is required to engage legal counsel for $20,000 to provide
for and defray the legal fees to be incurred by MDL in connection with the
preparation, filing, and processing to effectiveness of the registration
statement relating to the distribution of MDL's common stock.

The Letter of Intent further provides that the presently outstanding 17,500
shares of preferred stock will be redeemed or cancelled prior to the time
that a definitive agreement is entered into between the Company and Target.

9.  Subsequent Events

On January 25, 2002, the Company entered into an Agreement to acquire all of
the outstanding voting common stock of Med-Tech Labs, Inc.("MSA")  Such
voting common stock is comprised of 7,500 shares of $1.00 par value stock.
MSA conducts its business under the name of MedServices of America.

Pursuant to the terms of the Agreement, all of the outstanding voting common
stock of MSA will be exchanged for that number of shares of the Company's
common stock which, when issued, will constitute 95 percent of the Company's
common stock then outstanding. This transaction will be accounted for as a
reverse merger, with MSA accounted for as the acquiror for financial
statement purposes.  This transaction closed effective April 02, 2002.

The Condensed Balance Sheet and Statement of Operations for MSA are as
follows:


<TABLE>
                          MedTech Labs, Inc.
                        Condensed Balance Sheet
                           December 31, 2001


<S>                                                        <C>
Assets
Current assets:
   Cash	                                                       $18,768
   Accounts receivable, net of allowance
     for doubtful accounts and
      contractual allowance of $1,608,070                    1,843,038
	   Inventory & other current assets                          240,160
                                                          ------------
Total current assets                                         2,101,966
                                                          ------------

Equipment, net of accumulated depreciation                   1,005,852
                                                         --------------
Other assets                                                   253,786
                                                         --------------

                                                         $   3,361,604
                                                         ==============


Liabilities and Stockholders' Deficit
Current liabilities:
   Accounts payable                                      $   1,477,394
   Accrued expenses, current                                   129,396
   Current portion of accrued payroll liabilities              834,097
   Current portion of notes payable                            809,165
   Current portion of notes
     payable, stockholders and related parties               1,229,935
   Current portion of capital lease obligations                 60,268
                                                          --------------
Total current liabilities                                    4,540,255
                                                          --------------


Long-term liabilities:
   Accounts payable, long-term                                 224,034
   Accrued payroll liabilities, net of current portion         474,222
   Notes payable, net of current portion                       226,000
   Notes payable, stockholders and related parties,
     net of current portion                                     75,000
   Capital lease obligations, net of current portion           172,416
                                                          --------------
Total long-term liabilities                                  1,171,672
                                                          --------------
Stockholders' deficit:
   Common stock; $1 par value; 7,500 shares authorized;
      6,750 shares issued and outstanding                        6,750
   Additional paid-in capital                                  252,519
   Accumulated deficit                                      (2,599,592)
                                                          --------------
                                                            (2,340,323)
   Treasury stock, at cost                                     (10,000)
                                                          --------------
Total stockholders' deficit                                 (2,350,323)
                                                          --------------
                                                         $   3,361,604
                                                          ==============
</TABLE>


MSA has experienced several problems primarily with payments both from
Medicare and from individual clients.  The results of operations were
severely impacted by these events, which has resulted in large losses
for the year ended December 31, 2001.  In addition, liabilities exceed
total assets as of December 31, 2001.

Management has estimated it will need approximate $3,000,000 in
debt/equity financial to complete its short-term business plan which
include the acquisition of other existing labs.  There can be no
assurance that Vitallabs will be able to obtain additional financing,
or if successful, that it will be able to do so on terms that are
reasonable in light of current market conditions.

The accompanying pro forma unaudited condensed statements of
results of operations are based upon the historical financial
statements of MedTech Labs, Inc. (the "Company") and Vitallabs,
Inc. ("Vitallabs") adjusted to give effect to the acquisition of
the Company by Vitallabs, accounted for as a reorganization, as if
the acquisition had occurred at January 1, 2000.  The stockholders
of the Company exchanged all of their shares of stock for a
controlling interest in Vitallabs, a publicly held company.  As
such, these stockholders gained control of Vitallabs in a business
combination accounted for as a reorganization of the Company, and
the Company became a wholly owned subsidiary of Vitallabs.  The
pro forma statements of results of operations are not necessarily
indicative of the results that would have been obtained if the
acquisition had occurred on the date indicated or for any future
period or date.  The pro forma adjustments give effect to
available information and assumptions that the Company believes
are reasonable.  The pro forma condensed financial information
should be read in conjunction with the Company's historical
financial statements and notes thereto and the historical
financial statements of Vitallabs, Inc. and the notes thereto.


<TABLE>
2001            2000

                                                <c>             <c>
                                          ------------------------------
   Revenues                                $   11,245,885  $   9,614,018
                                         ==============================
   Net loss                               $   (4,995,596) $  (6,524,516)
                                          ==============================
   Loss per share                                 $(1.23)       $(1.69)
                                          ==============================
   Weighted shares outstanding                 4,052,789      3,856,984
                                          ==============================
</TABLE>



                                      15
------------------------------------------------------------------------------
<PAGE>


                           Vitallabs, Inc.
             (Formerly Known As Monogram Pictures, Inc.)
                Notes to Consolidated Financial Statements
                 Years Ended December 31, 2001 and 2000



10.  Income Taxes

There is no current or deferred tax expense for the years ended December
31, 2001 and 2000 due to the Company's loss position.  Realization of the
future tax benefits related to the deferred tax assets is dependent on many
factors, including the Company's ability to generate taxable income within
the net operating loss carryforward period. Management has considered these
factors in reaching its conclusion as to the valuation allowance for
financial reporting purposes and believes it is more likely than not, that
these benefits will not be realized. The income tax effect of temporary
differences comprising the deferred tax assets and deferred tax liabilities
on the accompanying consolidated balance sheet is a result of the
following:

                                             Year Ended December 31,
                                       ------------------------------------
                                             2001               2000
                                       ----------------   ----------------
  Net operating loss carryforwards     $      7,882,000   $      5,980,386
  Valuation allowance                        (7,882,000)        (5,980,386)
                                       ------------------------------------
     Net deferred tax asset            $              0   $              0
                                       ====================================

The Company has available net operating loss carryforwards of approximately
$20,000,000 for tax purposes as of December 31, 2001 to offset future
taxable income, which expire through 2021.  Annual utilization of the
Company's net operating loss carryforwards will be limited due to a change
in ownership control of the company's common stock which took place in 2002
as more fully explained in Note 10 to the consolidated financial
statements.

11.  Lease Commitments

The following table is a schedule by year of future minimum rental payments
required under operating leases that have an initial or remaining non-
cancelable lease term in excess of one year as of December 31, 2001

           Year Ending
           December 31,
          --------------
               2002                           $  5,468
               2003                             10,935
                                              --------
                                              $ 16,403
                                              ========

Rent expense from continuing operations amounted to approximately $24,300
and $71,600 for the years ended December 31, 2001 and 2000, respectively.


                                      16
------------------------------------------------------------------------------
<PAGE>


                           Vitallabs, Inc.
              (Formerly Known As Monogram Pictures, Inc.)
                Notes to Consolidated Financial Statements
                 Years Ended December 31, 2001 and 2000



12.  Related Party Transactions

A related company has advanced the Company $37,008, and several
stockholders have advanced the Company $31,171.  These advances were
provided to fund the operating expenses of the Company.  The related party
advances are non-interest bearing and are due on demand.

The above amounts are not necessarily indicative of the amounts that would
have been incurred had comparable transactions been entered into with
independent parties.

13.  Litigation

The Company has been named as a defendant in certain legal actions that
arise in the ordinary course of business, the ultimate outcome of which, in
the opinion of management, will not have a material impact on the
consolidated financial statements.


                                      17
------------------------------------------------------------------------------
<PAGE>

         CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER
         PURSUANT TO 18 U.S.C 1350, AS ADOPTED, AND THE REQUIREMENTS OF
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Thomas Kearney, the Principal Financial Officer of VitalLabs,
Inc. (the "Company"), certify that:

1.   I have reviewed this annual report on Form 10-KSB/A of the Company;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact
     necessary to make the statements made, in light of the circumstances
     under which such statements were made, not misleading with respect to
     the period covered by this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all
     material respects the financial condition, results of operations and
     cash flows of the registrant as of, and for the years presented in
     this annual report;

4.   The Registrants other certifying officers and I am responsible for
     establishing and maintaining disclosure controls and procedures (as
     defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
     and have:

     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the Company, including its
          consolidated subsidiaries, is made known to me by others within
          those entities, particularly during the year in which this
          annual report is being prepared;

b)    evaluated the effectiveness of the registrant's disclosure
      controls and procedures as of a date within 90 days prior to
      the filing date of this annual report (the "Evaluation Date");
      and

     c)   presented in this annual report my conclusions about the
          effectiveness of the disclosure controls and procedures based
          on my evaluation as of the Evaluation Date;

5.   The Registrants other certifying officers and I have disclosed, based
 on
     my most recent evaluation, to the Company's auditors and the audit
     committee of Company's board of directors (or persons performing the
     equivalent functions):

     a)   all significant deficiencies in the design or operation of
internal
          controls which could adversely affect the Company's ability to
          record, process, summarize and report financial data and have
          identified for the Company's auditors any material weaknesses in
          internal controls; and
     b)   any fraud, whether or not material, that involves management or
          other employees who have a significant role in the Company's
          internal controls; and

6.   The Registrants other certifying officers and I have indicated in this
     annual report whether or not there were significant changes in
internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of my most recent evaluation,
including
     any corrective actions with regard to significant deficiencies and
     material weaknesses.


Dated: March 10, 2003               /s/ Thomas Kearney
                                    --------------------------------------
                                       Thomas Kearney
                                       Chief Financial Officer





         CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER
         PURSUANT TO 18 U.S.C 1350, AS ADOPTED, AND THE REQUIREMENTS OF
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Edwin B. Salmon, Jr., the Principal Executive Officer of VitalLabs,
Inc. (the "Company"), certify that:

1.   I have reviewed this annual report on Form 10-KSB/A of the Company;

2.   Based on my knowledge, this annual report does not contain any untrue
     statement of a material fact or omit to state a material fact
necessary
     to make the statements made, in light of the circumstances under which
     such statements were made, not misleading with respect to the period
     covered by this annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual report, fairly present in all
     material respects the financial condition, results of operations and
     cash flows of the registrant as of, and for the years presented in
     this annual report;

4.   The Registrants other certifying officers and I am responsible for
     establishing and maintaining disclosure controls and procedures (as
     defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and
     have:

     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the Company, including its
          consolidated subsidiaries, is made known to me by others within
          those entities, particularly during the year in which this
          annual report is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure
controls
          and procedures as of a date within 90 days prior to the filing
date
          of this annual report (the "Evaluation Date"); and

     c)   presented in this annual report my conclusions about the
          effectiveness of the disclosure controls and procedures based on
my
          evaluation as of the Evaluation Date;

5.   The Registrants other certifying officers and I have disclosed, based
on
     my most recent evaluation, to the Company's auditors and the audit
     committee of Company's board of directors (or persons performing the
     equivalent functions):

     a)   all significant deficiencies in the design or operation of
internal
          controls which could adversely affect the Company's ability to
          record, process, summarize and report financial data and have
          identified for the Company's auditors any material weaknesses in
          internal controls; and
     b)   any fraud, whether or not material, that involves management or
          other employees who have a significant role in the Company's
          internal controls; and

6.   The Registrants other certifying officers and I have indicated in this
     annual report whether or not there were significant changes in
internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of my most recent evaluation,
including
     any corrective actions with regard to significant deficiencies and
     material weaknesses.


Dated: March 10, 2003               /s/ Edwin B. Salmon, Jr.
                                     --------------------------------------
                                       Edwin B. Salmon, Jr.
                                       Chief Executive Officer

<PAGE>

         CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

                  18 U.S.C 1350, AS ADOPTED PURSUANT TO

               SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report on Form 10KSB/A of VitalLabs, Inc.
(the Company) for the year ended December 31, 2001 as filed with the
Securities and Exchange Commission on the date hereof (the Report), Thomas
Kearney, the Principal Financial Officer of the Company, hereby certifies,
pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-
Oxley Act of 2002, that, to the best of his knowledge:

1.   The Report fully complies with the requirements of Section 13(a) or
15(d)
     of the Securities Exchange Act of 1934; and

2.   The information contained in the Report fairly presents, in all
material
     respects, the financial condition and results of operations of the
     Company.


Dated: March 10, 2003               /s/ Thomas Kearney
                                     --------------------------------------
                                       Thomas Kearney
                                       Chief Financial Officer

This certification accompanies the Report pursuant to 906 of the Sarbanes-
Oxley Act of 2002 and shall not, except to the extent required by Sarbanes-
Oxley Act of 2002, be deemed filed by the Company for purposes of 18 of the
Securities Exchange Act of 1934, as amended.