U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                 Amendment No. 1
                                       to
                                   Form 10-KSB
(Mark One)

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

         For the fiscal year ended December 31, 1998

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

         For the transition period from _______________ to ________________

Commission file no.        0-24921

                         Surgical Safety Products, Inc.
                  --------------------------------------------
                 (Name of small business issuer in its charter)

          New York                                       65-0565144
-------------------------------                      -------------------
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                       Identification No.)

         2018 Oak Terrace
          Sarasota, Florida                                  34231
- -----------------------------------                      ----------
(Address of principal executive offices)                  (Zip Code)

Issuer's telephone number (941) 927-7874

Securities registered under Section 12(b) of the Exchange Act:

                                                Name of each exchange on
      Title of each class                       which registered

        None
-----------------------------                   ------------------------

Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.001 par value
                       -----------------------------------
                                (Title of class)

<PAGE>





     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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. [X]

        State issuer's revenues for its most recent fiscal year. $42,393.

     Of the  10,786,973  shares of voting  stock of the  registrant  issued  and
outstanding   as  of  December   31,   1998,   5,309,587   shares  are  held  by
non-affiliates.  The Company  trades on the OTC under the symbol  "SURG".  As of
March 29, 1999,  the average of the bid and asked price was $.656.  Accordingly,
the  aggregate  market value based of the  non-affiliate  shares based upon this
average as of March 29, 1999 was $3,483,089.




<PAGE>


<TABLE>
<CAPTION>
                                TABLE OF CONTENTS



PART I
<S>       <C>                                                            <C>
Item 1.   Description of Business                                         2

Item 2.   Description of Property                                        47

Item 3.   Legal Proceedings                                              48

Item 4.   Submission of Matters to a Vote of Security Holders            48

PART II

Item 5.   Market for Common Equity and Related Shareholder Matters       49

Item 6.   Management's Discussion and Analysis or Plan of Operation      50

Item 7.   Financial Statements - Commencing on                           56

Item 8.   Changes and Disagreements with Accountants on Accounting
          And Financial Disclosure                                       58

PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
          Compliance with Section 16(a) of the Exchange Act              58

Item 10.  Executive Compensation                                         65

Item 11.  Security Ownership of Certain Beneficial Owners and            75
          Management

Item 12.  Certain Relationships and Related Transactions                 76

Item 13.  Exhibits and Reports on Form 8K                                80
</TABLE>



                                        1

<PAGE>



                                     PART I

Item 1. Description of Business.

        (a)    Business Development

               Surgical Safety  Products,  Inc. (the "Company" or "Surgical") is
incorporated  in the State of New York and qualified to do business as a foreign
corporation in the State of Florida.  Surgical Safety Products,  Inc. originally
was  incorporated  under the laws of the State of  Florida on May 15,  1992.  On
November 28, 1994 the Company  merged into Sheffeld Acres Inc., a New York shell
corporation which had approximately 1,100 shareholders,  but had never commenced
operations.  Although Sheffeld Acres, Inc. was technically the surviving entity,
the Company changed its name after the merger to Surgical Safety Products,  Inc.
Articles  of Merger were filed with the State of Florida on October 12, 1994 and
a  Certificate  of Merger  was filed with the State of New York on  February  8,
1995.  The Company  filed to do business as a foreign  corporation  on April 11,
1995 in the State of Florida.  The  Company's  Common Stock is quoted on the OTC
Bulletin  Board under the symbol  "SURG".  The Company's  executive  offices are
presently  located at 2018 Oak Terrace,  Sarasota,  Florida 34231, its telephone
number is (941) 927-7874 and its facsimile number is (941) 925-0515.

               The  Company is filing this Form  10-KSB in  compliance  with the
effectiveness of its filing on Form 10-SB which was on a voluntary basis so that
the public will have access to the required  periodic  reports on the Surgical's
current status and financial  condition.  The Company will file periodic reports
in the  event  its  obligation  to file  such  reports  is  suspended  under the
Securities and Exchange Act of 1934 (the "Exchange Act".)

               The Company was formed for the initial  purpose of combating  the
potential spread of bloodborne pathogen  infections,  such as HIV and hepatitis.
The founding philosophy arose from a concern regarding the occupational risks of
healthcare  workers in the  operating  room.  Since  inception,  the Company has
broadened its mission to include the  research,  development  and  production of
innovative  products  and services  which  create and  maintain a safe  surgical
environment for medical and hospital staff,  healthcare workers and patients, as
well as enhance the level of surgical care available to patients.

               The Company is engaged in product development, sales and services
for the  medical  industry.  The  Company  is  currently  engaged in one line of
business  which is divided  into three (3)  divisions  each of which is involved
with specialty  medical product research and  development:  (1) a division which
develops  various   medical-related   services  to  be  marketed  to  healthcare
facilities,  including  an  entire  family  of  computer  software  applications
designed to  evaluate,  track,  organize and manage  infection  control data for
healthcare  facilities  and to provide  multi-media  information  centers  for a
facility's  healthcare workers ("Data Systems  Division");  (2) a division which
researches and develops medical  products for sale in the marketplace  ("Medical
Products Division"); and (3) a division which provides confidential consultation
services to third party developers of medical products,  usually  physicians and
healthcare  technicians ("Medical Products Consultation  Division").  The common
thread  interwoven  into each area requires  medical  research,  education and a
commitment to safety issues. It is the Company's intention to gradually make the
transition from a research and development-oriented  medical device company into
a multi-product device manufacturer and distributor.


                                        2

<PAGE>



               In  addition  to its current  activities,  the  Company  also had
operated a diagnostic  clinic  specializing in women's health.  On September 28,
1994 the Company formed a wholly-owned  subsidiary,  Women's  Diagnostic Center,
Inc.  ("WDC") under the laws of the State of Florida.  WDC immediately  acquired
certain personnel and assets,  consisting of a diagnostic clinic specializing in
women's health, the Women's Ambulatory  Services,  Inc., a Florida  corporation.
WDC catered exclusively to women and their specific  healthcare needs.  Patients
were attended to by an all female staff in order to provide a uniquely  personal
and  caring  atmosphere  while  emphasizing  women's  healthcare  education  and
awareness.  WDC specialized in mammography,  ultrasounds,  osteoporosis testing,
chest x-rays and comprehensive laboratory testing.

               To focus the Company's growth efforts in the medical products and
services industry, the equipment, furniture, accounts receivable, trade name and
goodwill,  net of related  liabilities  of WDC,  were sold to Sarasota  Memorial
Hospital on June 13,  1996.  All business  operations  of WDC had ceased and the
corporation liquidated by December 31, 1996.

               On May 30,  1995,  the Company  completed  the  preparation  of a
self-directed  private  placement  memorandum  offering  shares of the Company's
Common Stock and Warrants.  This offering was conducted pursuant to Section 4(2)
of the  Securities  Act of  1933,  as  amended  (the  "Act"),  and  Rule  506 of
Regulation D promulgated  thereunder  ("Rule 506").  The offering was amended on
October 30, 1995.  Initially,  the  offering  required a minimum  investment  of
$5,000 in exchange for which an investor  would  receive  5,000 shares of common
stock, $.001 par value per share (the "Common Stock") and three-year warrants to
purchase  2,500 shares of the  Company's  Common  Stock at an exercise  price of
$1.50.  Pursuant to this  offering,  the Company  received gross proceeds in the
amount of $37,500,  $5,000 of which was subsequently  refunded.  This refund was
made because  certain  paperwork and signatures were not properly  executed.  By
agreement with the  investors,  in lieu of the unit  arrangement,  the investors
each  acquired  shares  at $.50 per  share.  A total  of  65,000  shares  of the
Company's Common Stock were issued pursuant to this offering.

               On December 8, 1997,  the Company  acquired  all of the assets of
Endex Systems, Inc., d/b/a Interactive PIE ("Endex"), a Florida corporation. The
assets of Endex  were  valued at  approximately  $14,000  for which the  Company
issued 250,000 shares of restricted common stock. Endex was a medical multimedia
software  company,  experienced  in  computer  graphics  related to the  medical
industry.  The  acquisition  was made to implement  the  Company's  Data Systems
Division's  development of its surgical  safety,  touch-screen  network known as
OASiS.  The  President  and Chief  Executive  Officer  ("CEO") of Endex,  Donald
Lawrence,  became the Vice President of Sales and Marketing of the Company.  Mr.
Lawrence  has an  employment  contract  with  the  Company  which  is  renewable
annually.

               From March through June 1998, the Company received gross proceeds
in the amount of $999,000  from the sale or exchange  for services of a total of
920,000 shares of Common Stock in four (4) offerings . The Company undertook its
first  offering  of  400,000  shares of  Common  Stock  pursuant  to Rule 504 of
Regulation   D  ("Rule   504")  on  March  1,  1998,   exchanging   shares  with
Stockstowatch.com,  Inc. ("Stockstowatch") and its legal advisor in exchange for
services, 300,000 shares and 100,000 shares respectively; its second offering of
400,000  shares of Common  Stock  pursuant to Rule 504 on April 1, 1998 upon the
exercise of an option granted  pursuant to a Stock Option  Agreement;  its third
offering of 60,000 shares of Common Stock  pursuant to Rule 504 on June 8, 1998;
and its fourth offering of 60,000 shares of Common Stock pursuant to Rule 504 on
June 18, 1998.  While no offering  memorandum was used in connections with these
offerings, the business plan of the Company, which was disclosed to each

                                        3

<PAGE>



prospective  investor,  was for the provision of product development,  sales and
services  for the medical  industry.  The  Securities  and  Exchange  Commission
("SEC") has brought an action  against  Stockstowatch  alleging that it violated
the anti-fraud and anti-touting  provisions of the federal  securities laws with
reference to shares which it received for services to the Company.

               In April 1998,  the Company  issued  2,500  shares of  restricted
stock  subject to Rule 144 of the Act to an outside  consultant  in exchange for
computer  consulting  services  valued at $4,375.  The  Company  relied  upon an
exemption under Section 4(2) of the Act.

               In October 1998, the Company entered into an agreement with T.T.
Communications,  Inc. to provide  investor  relations  services for the Company.
T.T.  Communications,  Inc.'s  receives  monthly  compensation  and was  granted
options to purchase  25,000 shares of the Company's  Common Stock at an exercise
price of $1.50.  The agreement  continues on a month to month basis. The Company
issued these shares and granted  these  options  pursuant to Section 4(2) of the
Act and Rule 506.

               In  November  1998,  the  Company  entered  into a seven (7) year
collaborative  agreement with Dr. William B. Saye, the Medical  Director and CEO
of the Advanced Laparoscopy Training Center in Marietta,  Georgia ("ALTC") under
which the  Company  acquired  the  "digital  rights"  of ALTC and the  resulting
amalgam as it relates to surgical  education  and  marketing  rights to the ALTC
database.  Under this agreement, Dr. Saye became a member of the Company's Board
of Directors and agreed to act as the Medical Director of ALTC VirtualLabs.  Dr.
Saye is to be compensated  for travel expenses and will be paid an honorarium of
$2,500 per day when his services are  requested  by Surgical.  In addition,  Dr.
Saye was  awarded  stock  options  to  purchase  up to  1,000,000  shares of the
Company's Common Stock over the period, options for 300,000 of which were issued
upon the  execution  of the  agreement,  and the  balance of which are  issuable
monthly.

               In April  1999 the  Company  commenced  a  self-directed  private
placement  offering of its  restricted  Common  Stock and  warrants for which it
received gross proceeds of $475,000.  Pursuant to such offering,  950,000 shares
of restricted  Common Stock were issued and warrants to purchase  475,000 shares
of  the  Company's  restricted  Common  Stock  at an  exercise  price  of  $1.00
exercisable within five (5) years were granted. Three directors purchased shares
under this offering.  The Company  conducted  this offering  pursuant to Section
4(2) of the Act and Rule 506. No offering memorandum was used in connection with
this  offering.  Rather  investors  were  provided  with access to the Company's
Registration Statement on Form 10-SB, as amended, its Form 10-K and its Form 10Q
for the 1st  Quarter  1999,  all of which  are  filed  with the  Securities  and
Exchange Commission ("SEC").

               In April,  1999, the Company executed a Consulting and Assistance
Agreement  with Koritz  Group LLC.,  a  Connecticut  limited  liability  company
("Koritz") to identify  sources of capital or potential  business  relationships
and to assist the Company in (i) raising  equity or debt financing in the amount
of $15,000,000 (ii) arranging for trade financing for production,  sale,  lease,
rental or other disposal of the Company's products;  and (iii) arranging for the
sale, merger, or consolidation of the Company or for joint ventures or strategic
alliances with other appropriate business. This agreement was terminated on July
30, 1999.

               In April 1999,  the Company  entered into an  agreement  with KJS
Investment  Corporation of Tampa Florida ("KJS") to provide consulting services.
KJS agreed to accept  7,000 shares of the  Company's  common stock valued at the
current  bid price of $.50 as part of an initial  retainer  with the  balance of
$1,500 to be paid in cash at such time as KJS introduces the Company to five

                                        4

<PAGE>



institutional funding sources. The issuance was made pursuant to Section 4(2) of
the Act and Rule 506.

               In April  1999,  the  Company  issued  2,000  shares  each to two
consultants of the Company for services relating to their production of a CD-Rom
disc to be used to promote  OASiS.  Such 4000 shares were valued at $2,250 which
was based upon the closing  price for the shares on the dates the services  were
due to be paid.  Such  issuance  was made in reliance on Section 4(2) of the Act
and Rule 506.

               In May 1999, the Company entered into an agreement with Ten Peaks
Capital  Corp. of Berkeley,  California  ("Ten Peaks") to pay a finder's fee for
successfully  securing specifically defined financing for the Company. Ten Peaks
agreed  to  accept  6,000  shares  of the  Company's  common  stock in lieu of a
retainer  provided  such stock had a fair market value as reported on Bloomberg,
LLP on the date of  execution  of not less  than  $.66.  The  issuance  was made
pursuant to Section 4(2) of the Act and Rule 506.

               In May 1999,  the Company  issued a total of 46,000 shares of its
restricted  Common Stock to Frank Clark and David  Collins and 11,400  shares of
its restricted  Common Stock to three (3) other  employees in lieu of salary and
consulting  fees  due  from  the  Company  to each of  them,  which  salary  and
consulting  fees were valued at $31,222 in the case of Mr. Clark and Mr. Collins
and at $7,832 in the case of the three (3)  employees.  The Company  issued such
shares pursuant to Section 4(2) of the Act and Rule 506.

               See (b) "Business of Issuer"  immediately below for a description
of the Company's business.

(b)      Business of Issuer.

General

               The Company was formed in 1992,  and until  1996,  was  primarily
engaged in women's  healthcare,  medical research and product development with a
focus on safety-related  products geared to the reduction of occupational  risks
to healthcare workers. To date, the Company has received four (4) patents on two
(2)  products,  is seeking  patent  protection  on other  products and is in the
process  of  developing  or  acquiring  the  rights  to  approximately  nine (9)
additional medical products intended to be marketed to the healthcare community.
The  concepts  and designs of the  additional  medical  products  are at various
stages of development or negotiation. The Company has an exclusive five (5) year
manufacturing  and  supply  agreement  for a  line  of  protective  prescription
eyeglasses.   The  Company  markets  its  product  lines  under  the  trademark,
Compliance Plus.

               The  Company's  premiere  product  in the  Compliance  Plus line,
marketed  under the trade name,  SutureMate(R),  is a  disposable  Food and Drug
Administration  ("FDA")  approved,  multi-function,  suturing  safety device for
surgery. Three (3) of the patents apply to this product. The original instrument
and its developmental variations facilitate advanced surgical techniques,  which
increase  surgical  efficiency and reduce the  occupational  risk of exposure to
bloodborne  pathogens  such  as HIV  and  hepatitis.  The  original  product  is
currently  being  re-released.  The product has been  re-engineered  and updated
after feedback from over 4,000 surgeons and surgical technologists. New clinical
advantages and significantly lower manufacturing costs create potential for this
patented,  disposable  surgical  assist device which was originally  designed to
facilitate the preferred one-handed suturing technique.

                                        5

<PAGE>



               The   Company   intends   to  market   under   the  trade   name,
Prostasert(R),  a  FDA  listed  product  which  was  developed  to  improve  the
preparation of pregnant patients for labor by providing a mechanism for applying
and maintaining a  pharmaceutical  gel to the cervix and vagina.  One (1) of the
patents applies to this product.

               The Company has an exclusive marketing and supply agreement for a
semi- disposable,  custom-made  prescription  protective  eyewear for healthcare
workers which it markets under the trademark, MediSpecs Rx(TM), the initial term
of which  terminates  in September  2000.  In addition,  the Company  intends to
market an infection  control  equipment  kit for  healthcare  workers  under the
trademark, IcePak(TM).

               The Company has two (2)  additional  products in the  development
stage: Prepwiz(TM),  which is a revolutionary surgical prep and drape system and
FingerSafe(TM), which is a multi-featured surgical thimble.

               The Company  aggressively  protects its  intellectual  properties
through patents,  trademarks and copyrights,  as well as by proprietary software
designs (flow charts,  algorithms,  reports and  databases).  In addition to the
utility and design patents  already issued to the Company,  the Company has many
other products in various stages of development which have patent potential.

               The  Company  had   executed   distributorship   agreements   for
SutureMate(R)  with (1) Johnson & Johnson  Medical Pty., Ltd with respect to the
territories  of Australia,  New Zealand,  Papua,  New Guinea in April 1995;  (2)
Medicor  Corporation  with respect to the Netherlands in March 1995; and (3) ISC
Group, a company  organized under the laws of the country of Saudi Arabia,  with
respect to Saudi  Arabia and the  so-called  GCC  Nations  (comprising  of Oman,
Yemen, United Arab Emirates,  Qatar,  Bahrain and Kuwait) in December 1994. None
of these  agreements are currently  active since the original  distribution  was
thwarted  by  the  high   manufacturers   suggested   retail  price.   With  the
re-engineering  of the product and the lower cost of goods, it is anticipated to
receive a more favorable market response. In December 1996, the Company executed
an exclusive seven (7) year  distribution  agreement for  SutureMate(R)  for the
European market with Noesis Capital Group  ("Noesis")  under which Noesis was to
recruit,  hire and train European  master  distributors  and  distributor/dealer
networks  throughout  the European  continent.  This agreement is technically in
force  but  is   currently   inactive   for  the  same   reasons  as  the  other
distributorship  agreements.  The  inactivity  of these  agreements  reduces the
current  revenue  potential  of the Company.  Based upon the relative  number of
surgical procedures performed in the United States and overseas annually,  it is
estimated that the domestic market for  SutureMate(R)  is 15 to 20 million units
and that the foreign markets could represent 70% to 80% of the domestic  market.
In August, 1997, the Company entered into a distribution agreement for the State
of Florida for its MediSpecs Rx(TM)  prescriptive  eyewear with Hospital News of
Florida.  Hospital  News of Florida  sold no  MediSpecs  Rx(TM)  units under the
agreement and is no longer a publication. Since the Company is disappointed with
MediSpecs Rx(TM) sales, it is considering dropping the product line.

               In October 1996, the Company entered into a staff/client  leasing
agreement  whereby Staff Leasing II, L.P.  ("Staff") leases all existing and new
employees to the  Company.  The initial  term of the  agreement  was for one (1)
year. The agreement is automatically  renewable on a monthly basis until renewed
for a fixed term or terminated.  The agreement  remains open on a monthly basis.
All of the persons  described  herein to be employees of the Company are covered
by this agreement.


                                        6

<PAGE>



               In 1997, the Company focused on the creation and establishment of
an information  system for multiple  applications  within  healthcare.  Formerly
named Surgical Safety Network, this information system is now marketed under the
name OASiS which is the acronym for Occupational  Automated Services Information
System. In April 1998, the Company filed for two (2) patents on this system, one
related  to this  touch-access  information  system  and the other  related to a
technology transfer  application.  This touch access system has developed into a
platform for initially managing three areas of need: (1) exposure (to bloodborne
pathogen)   management;   (2)healthcare   training;   and  (3)  healthcare  risk
management.  Effective  January 30,  1998,  the Company  entered a ten (10) year
lease arrangement with a leading Florida medical facility, the Sarasota Memorial
Hospital  ("SMH"),  under  which four (4) OASiS  kiosks  were  installed  at the
healthcare site.

               In January  1998,  the Company  entered into a clinical  products
testing  agreement with SMH whereby such facility will provide  clinical testing
of designated products of the Company for a term of five (5) years.

               In  February  1998,  the  Company  executed a letter of intent to
joint  venture  with  U.S.  Surgical  Corporation  ("U S.  Surgical"),  a  major
manufacturer of surgical products which distributes its products worldwide,  for
the marketing of the OASiS system.  The parties executed a final agreement dated
October  28,  1998 (the  "Short  Term  Agreement").  On October  1,  1998,  Tyco
Healthcare Group LP ("Tyco") consummated a merger with US Surgical.  On July 30,
1999 Surgical entered into a private partner network agreement with US Surgical.
Under the July  agreement,  Surgical is to supply up to four hundred (400) OASiS
systems to US Surgical  under  licenses  calling for  installation  in nominated
hospitals (the "Long Term Agreement").

               In  March  1998,  the  Company  entered  into an  agreement  with
Stockstowatch  to provide investor  relations  services as a media consultant to
the Company.  Stockstowatch  was issued 300,000 shares of the Company's stock in
exchange for these services.

               In June  1998,  the  Company  executed  a letter of  intent  with
Ad-vantagenet,  Inc. for the  development  of Version 2.0 software for the OASiS
system.

               In October 1998, the Company entered into an agreement with T.T.
Communications, Inc. to provide investor relations services for the Company.

               In November 1998, the Company  committed to purchase  twenty (20)
OASiS units from Kiosk Information Systems, Inc.

               The  Company's   other   products  and  concepts  in  development
generally fall into the categories of occupational  safety,  infection  control,
obstetrics and  gynecology,  and new "minimally  invasive"  surgery  devices and
techniques.  Most of these  development  projects  originated  from  within  the
Company,  although  several  are being  co-developed  with  outside  third party
inventors who are mainly physicians and medical technicians for whom the Company
provides consulting services in new product development.

               The FDA lists Surgical as a medical device  specifier.  Under FDA
Registration No. 1056687,  as a medical device specifier,  Surgical is permitted
to control the  specifications of its products.  The Company spent its formative
years in research and development and in obtaining patent protection on its core
products and services.  Tangential to its core competency, the Company had found
it necessary to diversify its  offerings,  but has, over the past twelve (12) to
sixteen (16) months,  refocused its efforts towards the commercialization of its
existing product lines. Additionally, the Company has enhanced its product lines

                                        7

<PAGE>



with the development of the touch-access information system, OASiS.

               Surgical  efficiency  is  highly  valued  in  today's  healthcare
climate.  With  the  looming  threat  of  bloodborne  diseases  such  as HIV and
hepatitis, safety issues are also of critical importance. Hospitals and surgical
teams have required, and now demand,  constant improvement in available products
and  technology.  In this  rapidly  growing  market,  new options  for  personal
protective equipment are not only valued by the surgical team and appreciated by
patients,  but mandated by government  agencies such as the Occupational  Safety
and Health Administration ("OSHA").

               The changing healthcare  environment requires aggressive measures
to improve  efficiency  in medical care.  This is  especially  true in high-tech
areas such as surgery,  obstetrics, and emergency care. Time saving products and
techniques that improve patient care quality are of extreme value.

               Surgical's medical device lines are designated for wholesaling to
international  distributors.  These products are focused on improved  efficiency
and  safety.   Clinical  research  on  the  original  Compliance  Plus  product,
SutureMate(R),  has demonstrated  dramatic reductions in sharps injuries (sharps
injuries  are  injuries  to  healthcare  workers  or  patients  caused by suture
needles,  syringes,  intravenous  catheters,  scalpels,  screws, wires and other
sharp instruments in the operating room) and a 60% to 85% decrease in bloodborne
pathogen exposure,  while at the same time improving procedure efficiency.  This
study was conducted by Donna Haiduven,  BSN, MSN, CIC, a member of the Company's
OASiS Medical Advisory Panel.

               Surgical is attempting to secure a research-backed,  OSHA mandate
status for its OASiS  information  system which would make the  availability  of
Compliance  Plus  required  in  hospitals  and  other  medical  facilities.  The
Company's plan is to accumulate  enough research on product lines to demonstrate
statistically  their  significant  safety  advantages  to support such  products
inclusion in OSHA requirements for workplace safety compliance.  There can be no
assurance  that  such  statistics  will  demonstrate  such  facts,  or  even  if
demonstrated, that such products will be included in OSHA requirements.

               Fourteen   (14)  OASiS  unit  are  now  installed  in  seven  (7)
hospitals.  Lease  payments  from OASiS  currently are made directly to Surgical
from the customer hospital but may be made, in the future, through a third party
leasing intermediary.  In the case of the third party intermediary,  Surgical is
paid a lump sum at the front end of the lease and the  hospital  then  makes its
payments to the leasing company.  Selection of the leasing  arrangements is made
based upon  Surgical's  current  financial  status and based upon the  financial
strength of the hospital involved.  SutureMate(R) was originally sold in limited
quantities  and had  limited  success  due to the high  manufacturers  suggested
retail price. New  manufacturing  arrangements  will allow sales in the $5 to $6
range,  more in keeping with  disposable  products.  Due to limited  sales,  the
Company is considering  dropping the MediSpecs  Rx(TM) product line.  Consulting
fees are derived from the Medical  Consultation  Division on an as needed basis.
The Company now is positioned to commercialize Compliance Plus product lines and
its proprietary  OASiS system through its alliance with U.S.  Surgical and their
full size  international  sales force.  The Company is preparing other alliances
with  one or more  established  industry  leaders  in  healthcare.  The  Company
believes that recurring  multiple  revenue streams and a "cookie cutter" program
and  network  will  allow for  potentially  rapid  growth in the number of OASiS
system  installations.  When the OASiS system reaches the appropriate  size, the
Company will  consider the spin-off of a separate  subsidiary  for managing this
Internet-based healthcare information network and subsequently an initial public

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offering  related to the spun off  subsidiary.  If the Company grows and attains
its projected earnings,  it intends to apply for listing on the NASDAQ Quotation
System where it believes the market would apply an  appropriate  multiple to the
earnings  per share.  At such  time,  the  Company  will  position  itself as an
acquisition target for major medical or information system entities.

               The Company is seeking debt or equity  financing in the amount of
between  $2,000,000  and  $5,000,000.  In the event the Company is successful in
securing  equity  financing,  the  Company  is unable to  project  the number of
additional  shares of its Common  Stock  which will be  required  to secure such
financing.  As of December 31, 1998, the Company has no short term debt.  During
the first quarter of fiscal 1999, the Company drew down on its line of credit of
$100,000.  In the  event  that  the  Company  is  successful  in  securing  debt
financing,  the  amount  of such  financing,  depending  upon its  terms,  would
increase  either the short or long term debt of the Company or both. The Company
has entered into consulting  agreements with several  potential funding sources;
however,  to date,  has not  concluded  terms for any  financing  which it feels
appropriately  meets the  requirements of the Company.  In the event  additional
debt is raised, it will incur future interest  expense.  In the event additional
equity is raised,  management may be required to dilute the interest of existing
shareholders or forgo a substantial  interest in revenues,  if any. In the event
that the Company is successful in securing  debt  financing,  the amount of such
financing,  depending upon its terms,  would  increase  either the short or long
term debt of the Company or both.

               Subject to the  availability  of additional  financing,  of which
there can be no assurance, the Company plans (1) to facilitate implementation of
its  sales  strategies,   (2)  to  apply  additional  funding  to  existing  new
technology;  and (3) to apply additional  funding to complimentary  products and
services through corporate acquisition and exclusive licensing.

               The Company currently employ,  under the agreement with Staff and
on a full-time basis, seven (7) people, including its President, Vice President,
Treasurer and personnel added in 1998 to perform sales and marketing  functions.
Total employee  salaries for the year ending  December 31, 1998 were $397,210 of
which $266,530 was paid as Executive  Compensation,  including  salaries and the
value of Common  Stock and Options  issued and granted to such  executives.  The
Company's  executive  officers and directors  devote such time and effort as are
necessary to participate in the day-to-day management of the Company. During the
fourth  quarter of 1998, the Company  employed one (1) additional  individual in
the area of computer  systems and  continues to seek another  individual  in the
same area. Subject to the availability of additional funding, of which there can
be no  assurance,  the Company plans to add personnel as needed to implement the
Long Term Agreement with US Surgical and other growth plans.

               The  Company  is  dependent  upon  the  services  of three of its
officers and  directors.  Dr. G. Michael  Swor,  the founder and Chairman of the
Board and the Treasurer of the Company,  is  responsible  for inventing all four
(4) of the patents,  which  patents were assigned to the Company in exchange for
stock.  Dr.  Swor  is  responsible  for the  overall  corporate  policy  and the
financing  activities  of the  Company.  The  Company  is the  beneficiary  of a
"key-man"  insurance  policy  currently  owned by Dr.  Swor.  In addition to his
duties with the Company,  Dr. Swor is a board  certified,  practicing  physician
with a specialty in Obstetrics  and  Gynecology.  Frank M. Clark, a Director and
President  and  Chief  Executive  Officer,  is  responsible  for  the day to day
management of the Company and new product  development and the  manufacturing of
the  Company's  products.  In addition,  he manages new ventures for the Company
including,  mergers,  acquisitions,  joint  ventures,  strategic  alliances  and
licensing/distribution agreements. After a nineteen (19) year career with

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<PAGE>



Johnson & Johnson, Mr. Clark became the president of R. P. Scherer and then went
on to become a senior  partner in a consulting  firm with  responsibilities  for
business  development  with  Fortune 100  corporations.  Donald K.  Lawrence,  a
Director and Executive Vice President,  Sales and Marketing,  is responsible for
sales management,  market planning,  advertising for the Company and acts as the
Executive  Director of OASiS.  Mr. Lawrence in addition to nearly ten (10) years
in  medical  device  sales,  has  extensive  experience  in  computer  graphics,
multi-media  and  computer  equipment  leasing  programs.  The Company  plans to
continue  to use to its  advantage  the  reputations  and skills of these  three
officers in the medical industry.  Nevertheless,  while these officers have been
successful in the past,  there can be no assurance  that they will be successful
in the  continued  development  of the Company  which is needed for a successful
operation of the Company.  The Company has  employment  agreements  with each of
these individuals.

Data Systems Division

               In 1997,  the Company saw an  opportunity to establish a landmark
information  system for multiple  applications  within the healthcare  industry.
This proprietary  surveillance network, called OASiS, was originally designed to
export and track occupational  safety emergencies such as needlesticks and fluid
exposures.  The new  Version 2 OASiS  provides  information  consolidation  in a
secure network of touchports located throughout a health care facility.  At each
on-site   location,   a  healthcare  worker  has  touch  access  to  multi-media
information.  The OASiS system at its current level of development,  is designed
to function in three areas: (1) exposure (to bloodborne  pathogens)  management;
(2) healthcare training; and (3) healthcare risk management.

               In the area of exposure management, the healthcare industry is in
need of a standardized,  efficient  method for tracking,  managing and analyzing
occupational  safety emergencies such as needlesticks and other fluid exposures.
Standardized  and  accurate  reporting  methods  result in  superior  prevention
controls and better  post-exposure  management  for  follow-up  and  counseling.
Information  relating to the spread of bloodborne  pathogens  through  exposures
varies widely and OASiS allows for  cross-facility  standardization.  Healthcare
workers need and are now insisting  they receive  accurate,  timely  information
relating to exposures.

Sharps injuries and other exposures occur frequently.

               Current  reporting  protocols  incorporated into the OASiS system
involve  a typical  chain of  events  necessary  to  create  an  estimated  risk
assessment and to provide access to testing, treatment and follow-up.

               Under current non-computerized  protocols, after an exposure, the
injured worker may be required to complete an incident report  (provided by risk
management),  meet  with a  supervisor  and  then  leave  the  worksite  to seek
evaluation,  testing  and  treatment  at an  employee  health  facility  or  the
emergency  room.  Evaluation  techniques,  testing and  available  treatment and
follow-up recommendations are inconsistent,  inefficient,  not timely and breach
the employee's  confidentiality  due to the multiple points of contact which are
involved.

               With the use of  OASiS,  the  injured  worker  is  provided  with
confidential   access  to  information,   statistics  and  a  preliminary   risk
assessment.  The  healthcare  worker begins the reporting  process by "touching"
their  way  through  a very  detailed,  yet  easy  to use,  Occupational  Safety
Emergency  Report.  Data  collection  for  the  exposure  incident  is  mutually
exclusive and  exhaustive.  The system  calculates  the risk level based on data
inputted into the system directly by the healthcare  worker. The worker receives
a printed data sheet with risk assessment (weighted  towards  higher  risk) and

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<PAGE>



a recommended testing, treatment and follow-up plan. The worker then is directed
to  employee  health  or  emergency  care  for  direct,  complete  and  thorough
assessment by a facility staff member designated in that capacity. If the worker
decides  not to proceed,  full  confidentiality  is  maintained  while  critical
information  for  decision  making is provided to the  healthcare  facility  and
documented  for it. If the  worker  proceeds,  then  complete  incident  data is
already  collected in the system,  sent to the appropriate  locations within the
facility and printed for use by the provider of counseling and treatment.

               In the  area  of  employee  training,  current  training  systems
involve a number of methods  including  small groups,  large  groups,  video and
other audiovisuals. Staff training on required courses is commonly done in small
groups. New surgical equipment and techniques are typically done by way of small
groups by product  representatives  or other  trainers and often are enhanced or
reinforced  with printed  materials or videotapes.  This procedure  requires the
worker to arrange his or her schedule around a predesignated time.

               Practice also requires annual  training on various  subjects such
as modes of disease  transmission,  information on the  epidemiology of disease,
procedures  to follow  in the event of a  potential  exposure,  use of  personal
protective equipment and standard precautions.  Training is provided at the time
of job entry, at annual  re-training and whenever tasks are modified which alter
the hazards posed. The person conducting the training must be knowledgeable, not
only on the subject matter, but also on how it relates to the emergency response
personnel. This procedure also requires rescheduling to a pre-designated time.

               The  Association  of  Operating  Room Nurses  ("AORN")  regularly
issues a list of training  recommendations  on its website  (AORN.org) or in the
AORN  monthly  journal.  One such  recommendation  was a proposal to develop and
evaluate continuing education  requirements to assure the continuing  competence
of  regulated  healthcare  professionals.  Because of the rapid  development  of
technologic  and  scientific  advances,  AORN  believes that one of the greatest
challenges is ensuring the continued competence of the workers providing nursing
care. The competent use of technology involves not only the understanding of the
equipment but also the decision  making/critical  thinking  skills needed to use
the equipment effectively, safely and appropriately.

               Inadequate  training  has been  implicated  as a common  cause of
patient  safety  incidents.  This issue has  gained  increased  publicity  among
consumer  advocacy  groups.  Recent  surveys  by  the  National  Patient  Safety
Foundation presented in or about August 1998 at the American Medical Association
("AMA")  indicate  that  42% of  those  surveyed  said  they  were  involved  in
situations  where a medical mistake was made. Of these  mistakes,  22% were made
during a medical  procedure.  The causes cited by the respondents  included what
they believed to be carelessness, improper training and poor communications. The
survey was  commissioned  by the AMA to  evaluate  the need for  initiatives  to
reduce errors in the healthcare industry.

               With the use of OASiS,  the worker has access to a  directory  of
various  succinct  multimedia  interactive  training  modules  on  the  job  and
available  when the worker can assign the time to do the  training.  The Company
produces these modules using multimedia  material  provided by outside agencies,
organizations and product suppliers.  Quick reference is accessible to important
safety-related  features  and key user  information  on medical  devices and new
techniques.  The system was designed to decrease the need for personal  training
and to improve  patient and worker  safety by  increasing  the  availability  of
critical  information.  Improved  awareness  of new  techniques  and  devices by
healthcare  workers has shown improvement in the quality of care provided by the
facility.

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<PAGE>



               The Company  believes  that the use of the OASiS system  benefits
device  distributors and critical care departments and that better trained users
of  devices  should  lower the rate of  incidents  occurring  due to misuse of a
device.  The system also provides a mechanism whereby alleged defective products
may be  efficiently  reported to the facility and  manufacturer.  This aspect is
expected to assist product  distributors and manufacturers with field reporting.
OASiS  training  programs  are  designed to provide not only a thorough and cost
effective method for employee training, but also to provide the documentation of
the learner's  comprehension of the subject.  Further, an established network of
OASiS terminals within a facility also acts as a point-of-sale for the Company's
other medical devices such as SutureMate(R) and MediSpecs Rx(TM) semi disposable
prescription eye protection and for other medical providers' devices.

               Each OASiS system involves "touch access" to a computer  terminal
designed as a stand-alone kiosk. In essence,  kiosks are computers equipped with
software  designed to guide people to information,  help them accomplish a task,
or  effect  a  transaction.  Kiosks  can  provide  text  information,  graphical
presentations, and video and sound clips.

               Each  OASiS  touch  point is  located  strategically  within  the
hospital environment and is linked to a main center for accumulation of hospital
data.  The system is  designed to provide  healthcare  workers  with  previously
unavailable  access  to  a  wide  variety  of  pertinent   information.   Unlike
traditional  systems which require a certain level of computer aptitude (even if
only using a mouse or keyboard),  OASiS' distinct  advantage is its foundational
design in a "touch access"  format.  Virtually every command or task on OASiS is
performed by touching a user friendly icon driven interface.  In other words, if
one can point to and touch a picture on a screen, then one has access to a world
of valuable and potentially life saving  information  through the OASiS network.
By using Apple Quicktime  VR(TM) at an OASiS  touchpoint,  the system allows the
user to touch an image on OASiS,  drag  their  finger on the screen and view the
image from  multiple  angles.  The Company  markets this feature  under the name
"Virtual Touch Reality".

               Upon approaching  OASiS, the healthcare  worker may select from a
menu of icon based  options  including  exposure  reporting,  hospital  exposure
policies, device inservices,  safety training,  communicable disease information
and safety news and events.  Each of these areas is accessed and  navigated by a
simple  touch of the  screen.  The  graphic  design of the system is designed to
accommodate workers with minimal reading skills and little computer experience.

               The  uniqueness  of OASiS is not only the fact that it is a touch
access system,  but that it is the first nationwide network for healthcare which
is totally  independent  of the facility's  existing  information  system.  Once
thought to be a  disadvantage,  the absence of  integration  into the facility's
existing  systems is  actually  one of the  features  of OASiS  which has gained
praise for the system from the Information  Systems Department of SMH, the first
installation of OASiS.

               The Company  has applied for two (2) patents on the OASiS  system
which cover propriety aspects of the software,  algorithms and reports,  as well
as the  inservice  training  modules  which are owned by the  Company.  OASiS is
powered by a Windows NT platform with  full-multimedia,  Pentium 233  processors
operating at each  station.  The stations  connect to the OASiS server by way of
the Internet and send and receive data at  prescheduled  times.  This allows the
OASiS server to send new information,  training or updates to single stations or
on a broadcast basis to the entire network.

               Hospitals employing OASiS will use an average of one (1) to three

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<PAGE>



(3) units  initially.  The units are  strategically  placed in varying  hospital
departments.  Pricing is  structured so as to simplify the  hospital's  approval
process.  The  OASiS  system  can be  leased to the  hospitals  on a  three-year
contract  arranged through Rockford  Industries,  Inc. of Santa Ana,  California
("Rockford"),   which  acts  as  the  third  party  lessor.  After  early  stage
discounting  to the hospital,  the Company  expects that leasing fees,  industry
content production and use fees and software  subscription fees will combine for
a per unit  revenue of  approximately  $1,500 per  month.  After the  three-year
period expires,  the residual value of each OASiS will be added to the Company's
assets.  The OASiS  system will be  upgraded at that time and it is  anticipated
that additional gross revenue for each unit in place.

               Under the leasing arrangement with Rockford,  lease approval will
be based upon the credit-worthiness of the lessee hospital.  Once approved,  the
Company,  as the supplier of the equipment,  receives a discounted present value
of the lease income stream in advance.  It is these funds which the Company will
use to cover  the  acquisition  costs of the  OASiS  hardware  delivered  to the
lessee.

               Fees also are  anticipated  in the future on a percentage  of the
product  sales made  through  the OASiS  platform  and on  information  sales of
generic  occupational  safety data. Market share is expected to increase for the
Company as it brings on additional  facility users,  additional industry content
providers and added on plug-in program modules developed by the Company in house
or through Company acquisitions.

               As  an  information  system,  OASiS  production  consists  of  an
integration  of  proprietary  software with  hardware  from  original  equipment
manufacturers  ("OEM's").  The  Company  designed  and is the sole  owner of the
software portion of OASiS. This was as a result of approximately three (3) years
of research and development. The software presentation consists of the frontline
user interface,  the programs and all supporting database gathering programs and
administrative "back office" facilities.  The software exists as a user ready or
standardized  foundation with widespread adaptability as the system is installed
at  the  hospital's  facility.  As  of  January  1998,  Version  1.1  was  fully
operational at the initial installation at SMH and was ready for installation in
additional facilities. OASiS Version 1 worked acceptably for accident reporting,
but  was   unacceptable   for   constant   updating  of  content  and  from  the
administrative monitoring standpoint.  Version 2, now operational,  uses nothing
from Version 1. Plans for  additional  upgrades to Version 2 are in progress and
are being adapted to the needs of the end-user market as they are discovered.

               Within the original  site  installation,  OASiS is being used for
exposure  reporting,   inservices  and  new  technology,   communicable  disease
information,  news and events,  safety  education  and  hospital  policies.  New
installations will add user identification log on capability,  additional levels
of news and events and training with certification. Since Version 2.0 has become
operational,   the  Company  has  expanded  the  system  with  software  plug-in
integrations and advanced data reporting and management.

               In  initially  designing  a system for a hospital  facility,  the
Company completes a site survey to determine the needs of the facility regarding
OASiS and system installation, as well as other pertinent information related to
station location within the facility and available telecommunication  resources.
The site survey also  includes  details for  customizing  the  software  for the
specific facility's application.

               The  Company  has  determined  that  the most  economical  way to
deliver the  integrated  hardware/software  product to the customer is through a
full service integration specialist (the  "Integration  Specialist").  The

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<PAGE>



services and  responsibilities  covered by such specialist will be: (1) hardware
installation  into the OASiS kiosk and configuring the components;  (2) software
installation; (3) software configuration; (4) 24-hour "burn in" and testing; (5)
hardware  disassembly,  packing  and  shipping;  (6) on-site  installation;  (6)
on-site  testing;  and  (7)  three-year  24 hour  turn  around  warranty  on all
hardware.  Many  potential  integrators  exist and the Company had entered  into
preliminary  agreements with two initial  candidates which were never reduced to
writing.  Rather  the  Company  operates  on a purchase  order  basis with Kiosk
Information  System and  already  has  purchased  units from them.  The  Company
expects to use no fewer than two  integrators  on a regular  basis to ensure the
quality, service and performance required in a competitive situation.

               The production cycle begins at the end of the initial sales cycle
with the  completion of the site survey.  Information  regarding  communications
availability,  station location and on-site  coordinator data is integrated into
the  customization  process.  A purchase  order is placed  with the  Integration
Specialist who in turn orders components from the various OEM's. The site survey
is then used by the integration  house for coordination of on-site services such
as station location, service subcontractors and others.

               Effective  January 30, 1998,  the Company  entered into a Prepaid
Capital Lease Agreement with Community  Health  Corporation  (the  "Lessee"),  a
Florida not-for-profit corporation which acts in support of SMH ( the "SMH Lease
Agreement").  Since  delivery under this agreement was in December 1997, the SMH
Lease  Agreement  was treated as income in 1997.  SMH is the site of the initial
OASiS installation. Pursuant to the terms of the SMH Lease Agreement, SMH leased
four (4) OASiS kiosks and accompanying software and technical support for a term
of ten (10) years  commencing  on a date  which was to follow an  initial  trial
period.  The Company was required to install the kiosks  within five (5) days of
the  execution  of the SMH Lease  Agreement.  SMH was  entitled  to  review  the
performance  of the  installations  for a  period  of  thirty  (30)  days  after
installation.  Provided the systems performed in accordance with pre-established
standards during such trial period,  the SMH Lease Agreement term would commence
at the time of  acceptance.  Pursuant to the SMH Agreement,  at acceptance,  the
Lessee  agreed  to  prepay  all  rent  payments  for the  term of the SMH  Lease
Agreement,  which sum amounted to  $250,000.  All  modifications,  improvements,
additions and enhancements ("Modifications") which result from this installation
belong to the Company;  however,  in the event a Modification is proposed by SMH
and the Company  incorporates it into the OASiS system, the Company will pay SMH
one  half  of one  percent  (.5%)  of  any  net  revenue  the  Company  receives
attributable to such  Modification.  SMH has proposed no  Modifications to date.
The Company is obligated  during the term of the SMH Lease  Agreement to provide
software maintenance,  improvements and updates to the OASiS system and training
for the use of the  units  to SMH's  personnel.  In  addition,  the  Company  is
required to carry comprehensive  general and products liability insurance in the
amount of $2,000,000 covering the use of the OASiS system and naming SMH and the
Lessee as co-insured parties.  And further,  the Company agreed to indemnify the
Lessee and SMH against any liens,  liabilities or other damages  incurred by the
Lessee or SMH as a result of the installation or use of the OASiS system. At the
end of the term,  the Lessee has an option to purchase the four (4) OASiS kiosks
for the sum of $1.  Neither  party to the SMH Lease  Agreement  may  assign  nor
delegate any of the rights or  obligations  contained in the agreement The units
were installed and are operational.  At the current time the SMH Lease Agreement
is in full force and effect.  The Company received the payment due under the SMH
Lease Agreement on January 30, 1998.

               Following a  presentation  before the  Association  of  Infection
Control  Professionals  and  Epidemiologist  ("APIC") in May,  1998, the Company
received nearly a dozen applications from  multi-facility  hospital  systems

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<PAGE>



wanting to be a part of the next wave of OASiS installations and inquires for at
least  four  times  that many  facilities  seeking  more  information  about the
development of OASiS.  To date, none of these inquiries has resulted in an OASiS
installation agreement.

               From  March  31st  through  April  2nd,  1998,  the  Company,  in
conjunction with U S Surgical,  demonstrated the OASiS touch-access  information
system at the AORN convention in Orlando,  Florida.  This is the largest nursing
convention in the world.  OASiS accounted for over 21% of all leads generated by
US Surgical at AORN. Based upon the evaluation forms completed by the nurses, it
was found that (1) the most useful  section of OASiS,  as it now exists,  is the
device  inservices;  (2)  most  of the  nurses  characterized  the  system  as a
convenient way to receive  inservices,  while a few of them viewed it as a sales
and marketing tool for device  manufacturers;  (3) an overwhelming number of the
nurses who responded  stated that they would rely on OASiS on a daily basis; (4)
the most requested additional features were a Surgeons' Preference Card which is
scheduled for Version 3.x testing, electronic PDR and Latex sensitivity which is
under  development;  and (5) most of the nurses would  recommend OASiS for their
operating room.

               Following the AORN convention, the Company and US Surgical agreed
to terms for the further presentation of OASiS. On October 28, 1998, the parties
executed  the Short Term  Agreement  for a term of three  years  under  which US
Surgical  was to  arrange  for the  installation  of ten (10)  OASiS  systems in
hospital  facilities  which US  Surgical  defines as  "Centers  of  Excellence."
"Centers of Excellence" refers to US Surgical's designation given to their prime
hospital  customers  which  are  usually  teaching  facilities  with a  national
reputation.  Following the merger in October 1998, US Surgical became a division
of Tyco Healthcare Group LP ("Tyco").  Tyco is a limited  partnership  organized
under the laws of the State of  Delaware  and  having  its  principal  office in
Norwalk, Connecticut.

               Under the Short Term Agreement,  each system  installed  includes
thirty (30)  inservice  training  modules.  Following  an initial nine (9) month
trial at each of these facilities and subject to satisfactory performance by the
system  and the  technical  support  group,  US  Surgical  has the right to have
additional  systems  installed in other  healthcare  facilities  nationwide.  US
Surgical  financed the development and installation of the ten (10) systems.  No
decision has been made as to which party will pay for such additional systems as
US Surgical elects to have installed.  If it is the Company,  additional capital
may be needed, the securing of which on favorable terms to the Company cannot be
assured. The Company receives a fee in the amount of $36,000 for the initial ten
(10) installations during the testing period and a fee in the amount of $108,000
for the  balance  of a three (3) year term for such  initial  installations.  In
addition,  the Company can generate profits on the sales of its products through
the  point-of-sale  facility  in the OASiS  system and from the fees it receives
from other  device  providers  and  training  companies  through  the use of the
inservice modules. Provided US Surgical is not in default on any payment, at the
end of the term,  they have the option to purchase the OASiS hardware at a price
of $8,500 for each Model 1062 unit. Although ten (10) units were to be installed
in November  1998,  due to a delay caused by the  acquisition  of US Surgical by
Tyco  and a  strategic  decision  by  them  to  delay  the  commencement  of the
installations until after the holiday season, the Company has thus far installed
six (6) units in five (5)  hospitals.  The balance  were to be  completed in the
third quarter of 1999; however,  such additional  installations have been merged
into the Long Term Agreement.

               On June 30,  1998,  the Company  executed a letter of intent with
Ad-vantagenet Inc. of Sarasota,  Florida  ("Ad-vantagenet").  Under the terms of
the letter of intent,  Ad-  vantagenet  assisted in the  creation of Version 2.0
OASiS software, including creating the art and graphics. Version 2.0 is designed
to allow for more  dynamic  features on the system  including  instant  updates,
information-gathering  and editing features.  The Company chose Ad-vantagenet to
complete Version 2.0 after unsatisfactory results were achieved by Gambit, Inc.,
d/b/a  MediaWorks.  The functions  Ad-vantagenet  incorporated  into Version 2.0
include  features  which had been requested of MediaWorks but were not provided.
The total  projected  cost of the Ad-  vantagenet  project was one-fourth of the
cost which MediaWorks  projected.  The Company was in litigation with MediaWorks
over  the  termination  of  their  agreement.  (See  Part  II,  Item  2.  "Legal
Proceedings.")  Subject  to the  successful  completion  of the letter of intent
project with Ad-vantagenet, the Company intends to enter into a more structured,
long-term  agreement  for further  OASiS  development  with  Ad-vantagenet  or a
similar company.

               In  November  1998,  the  Company  entered  into a seven (7) year
collaborative  agreement with Dr. William B. Saye, the Medical  Director and CEO
of the Advanced Laparoscopy Training Center in Marietta,  Georgia ("ALTC") under
which the  Company  acquired  the  "digital  rights"  of ALTC and the  resulting
amalgam as it relates to surgical  education  and  marketing  rights to the ALTC
database.  Under this agreement, Dr. Saye became a member of the Company's Board
of Directors and agreed to act as the Medical Director of ALTC VirtualLabs.  Dr.
Saye is compensated for travel expenses and paid an honorarium of $2,500 per day
when his services are requested by Surgical.  In addition,  Dr. Saye was awarded
stock options to purchase up to 1,000,000  shares of the Company's  Common Stock
over the term of the  agreement,  options  for 300,000 of which were issued upon
the execution of the agreement,  and the balance of which are issuable  monthly.
The intention of the agreement is that any educational  activity  involving ALTC
or Dr. Saye on the Internet or other digital  presence would become the property
of and under the control of Surgical.  The purpose of the  agreement is to shift
traditional   training  methods  in  advanced  surgical   techniques  to  a  new
distance-based  approach  delivered  through  OASiS,  the  Internet and emerging
mediums.  The goal is to educate and train a wide audience on safe and efficient
surgical  techniques and procedures  through the expansion of the OASiS network.
Dr. Saye has an existing  agreement  with Ethicon Endo-  Surgery,  a division of
Ethicon,  Inc.,  which  the  parties  do not  believe  will  conflict  with this
agreement.

               In November 1998, the Company  committed to purchase  twenty (20)
stand alone kiosk OASiS units from Kiosk Information  Systems,  Inc. for a total
purchase price of $133,000 plus freight  charges This commitment was in the form
of a purchase order from the Company. By December 31, 1998, the Company had paid
$66,500  and  received a partial  delivery  under the  agreement.  To date,  the
Company has paid $130,000 and is holding back the balance pending repairs on two
(2) of the units.

               In November 1998, the Company announced a planned  enhancement to
the OASiS system called "Vendor  Watch".  Currently in development  and testing,
this program is expected to aid the hospital  administration  in monitoring  the
presence of vendors and sales representatives visiting the hospital. Also, it is
planned as a  communications  tool for  sending  messages to the  vendors.  Beta
testing is planned for late 1999.

               OASiS Version 2.0 became  operational  at SMH in February,  1999.
For the installation,  Surgical has outsourced  Internet services to Verio, Inc.
("Verio") , a provider of Internet services such as broadband connectivity,  WEB
hosting  solutions,  virtual  private  networks,  e-commerce  and other enhanced
Internet services. Verio provides OASiS with fast, reliable and secure access to
the Internet via Tier 1 connectivity. In February 1999, Surgical entered into an
agreement with Verio for access service at SMH. The agreement required payment

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<PAGE>



of a set up fee of $60 and monthly charges of $199.  Surgical is responsible for
paying the monthly charges. A comparable  agreement with Verio or other provider
is contemplated for each hospital at which OASiS is installed.

               In  February  1999,  Surgical  completed  negotiations  which had
commenced  in the  summer of 1998 to install  OASiS  units as a test site in St.
Francis Hospital in Trenton,  New Jersey ("St. Francis  Hospital").  Three units
with Version 2.0 software  were  installed in February.  The Company has an oral
arrangement  with St.  Francis  Hospital  under which the hospital pays Surgical
$200 per month per unit as a monthly software license fee and pays $50 per month
per unit for "hot swap" maintenance service based upon a monthly invoice.

               In February 1999, the first  installations  under the US Surgical
agreement became operational,  each with Version 2.0 software.  One OASiS system
was installed at  Atlanticare  Hospital in  Massachusetts  and two OASiS systems
were installed at Columbia  Presbyterian  Hospital in New York. In addition,  US
Surgical  inservice  modules were  installed in the SMH system and in the system
installed at St. Francis Hospital.

               In March 1999, the Company  installed  additional units under the
US Surgical  agreement at the California  Pacific  Medical Center and the Kaiser
Permeante Medical Center, both in San Francisco, California.

               In April,  1999,  the  Company  shipped  and did the  preliminary
installation  at three  more US  Surgical  sites,  a second  California  Pacific
Medical Center in San Francisco,  the California  Pacific  Medical Center in Los
Angeles, California and the University of Washington in Seattle, Washington.

               In April 1999, the Company  attended the AORN convention where it
experienced  more acceptance from potential  content  providers and users partly
because of the commencement of the arrangement with US Surgical.

               In June 1999, the Company completed the installation and Internet
connection  on  the  unit  at the  University  of  Washington  in  Seattle.  The
preliminary  preparations  were  completed  for the units  under the US Surgical
agreement at theCalifornia Pacific Medical Center sites in San Francisco and Los
Angeles.  To date,  these  last two  sites are not  installed  fully and are not
connected to the Internet.

               On July  30,  1999,  the  Company  entered  into  the  Long  Term
Agreement with US Surgical which is a private partner network  agreement.  Under
the Long Term  Agreement,  Surgical is to supply up to four hundred  (400) OASiS
systems to US Surgical  under  licenses  calling for  installation  in nominated
hospitals.  Each  license  is for a term of  three  (3)  years  commencing  with
"substantial  installation:  of such unit. "Substantial installation" is defined
as delivery of the OASiS unit to the hospital and connection to the Internet.

               Under the  terms of the Long Term  Agreement,  US  Surgical  must
license two hundred  (200) units  within the first year,  and subject to certain
obligations  on the part of Surgical  to license  units to third  parties,  must
license an  additional  two hundred (200) units by the end of the second year to
third  parties.  Previously  installed  units under the Short Term Agreement are
counted toward the minimum units  required.  On August 10, 1999 US Surgical paid
Surgical $100,000.00 as an advance for such licenses. The first 200 licenses are
$1,500 each and additional licenses are $1,000 each.


                                       16

<PAGE>



               The Long Term Agreement  further provides that neither  Surgical,
nor any third party other than US Surgical,  may place OASiS units in any of the
"protected  departments"  of the  hospitals,  unless  it is  installed  prior to
receipt of a purchase  order from US  Surgical  or unless US  Surgical  does not
exercise  its  right  of first  refusal  after  notice  from  Surgical  for such
hospital.  The Long Term Agreement defines "protected  departments" as Operating
Room,  Labor  and  Delivery,  Emergency  Room,  Ambulatory/Same  Day  Surgery  /
Outpatient,  Nuclear Medicine,  Intensive Care, Orthopedic / Ortho Casting Room,
and Dialysis. US Surgical is required to have each hospital bear the entire risk
of loss  and  damage  to any  OASiS  system  except  if such  is  caused  by the
negligence or wilful misconduct of Surgical.  US Surgical must maintain casualty
insurance  in amounts  and with  companies  acceptable  to Surgical on the OASiS
units and its related amenities with Surgical as the loss payee. US Surgical may
elect to have the OASiS systems  installed in hospitals it nominates  co-branded
with its name.  Surgical  has the  discretion  to select  the  content,  related
services and  in-service  products for the OASiS  systems  installed  under this
agreement; however, during the term of the agreement, US Surgical is required to
pay for and maintain a minimum of one hundred  forty (140)  product  in-services
modules  in an  average of at least 80% of all OASiS  systems  installed  in the
United  States  whether or not covered by this  agreement and 100% on those that
are covered by the agreement.  US Surgical's  product-based  modules produced by
Surgical  become the  property  of US  Surgical.  Surgical  retains the right to
display such modules on other OASiS units. All other modules remain the property
of Surgical.  Surgical receives a fee for production of the modules. If Surgical
installs additional OASiS units in a designated hospital, US Surgical receives a
10% commission.  Surgical  receives a monthly  maintenance fee for each unit, of
$149,  unless  paid a year in advance in which case it may be  discounted  up to
10%.

               The Company  expected to complete the installation of the balance
of the US Surgical sites under the Short Term Agreement in 1999's third calendar
quarter;  however,  such  installations  have  been  merged  into the Long  Term
Agreement.

               The Company  knows of only one other  system which is designed to
accumulate  exposure data which is called  Epinet,  a single system  designed to
track and report  bloodborne  pathogen exposure in the healthcare  setting.  The
Company  believes that OASiS is the superior  product and that it represents the
leader in the industry at this time. The basis for this belief is that Epinet is
a  software  only  product  and that the OASiS  system  can be adapted to accept
Epinet.

Medical Products Division

               Compliance Plus is the designation  under which all the Company's
products are developed.  The Company  trademarked this term in order to indicate
that the criteria used in the research and development of every Surgical product
and service  meets or exceeds  compliance  mandates  set forth by the OSHA,  the
Centers for Disease Control and Prevention  ("CDC") and other governing  bodies.
It is the goal of the Company to exceed existing  standards in order to assume a
leadership role in the area of medical prevention and safety products.

               The Compliance Plus Exposure  Prevention Program includes several
safety   engineered   products   dedicated   to  reducing   exposure  and  cross
contamination  in the operating  room.  These exposure  prevention  products are
designed to maximize  surgical  efficiency  while reducing  bloodborne  pathogen
exposure to  healthcare  workers and  improving  patient care in a wide range of
applications.  The Company has already  introduced the first two Compliance Plus
products  into the market - MediSpecs  Rx(TM) and  SutureMate(R).  These are the
only two  Compliance  Plus products  which it currently  markets.  Both of these
products meet OSHA and CDC  mandates.  There is no  current  time table for the

                                       17

<PAGE>



release of additional  Compliance  Plus products.  The remainder of the proposed
Compliance  Plus line will be added through  further  in-house  development  and
acquisitions, which are already in process.

               The Compliance Plus devices  include:  SutureMate(R),  a patented
single-patient-use  surgical  assist  device  for safe and  efficient  suturing;
MediSpecs Rx(TM), a disposable  prescription  protective  eyewear for healthcare
workers;    Prostasert(TM),    a   patented   obstetrics/gynecology   ("OB/GYN")
pharmaceutical  applicator;  IcePak(TM),  an infection control equipment kit for
healthcare workers;  PrepWiz(TM), a revolutionary surgical preparation and drape
system (in development);  and FingerSafe(TM),  a multi-featured surgical thimble
(in development).

               The Company  believes that the use of Surgical's  Compliance Plus
exposure  prevention  strategy provides  numerous direct and indirect  benefits.
These benefits relate to a significant reduction in bloodborne pathogen exposure
from  needlesticks  and  glove  perforations,  as  well as  improved  procedural
efficiency. The Company believes that prevention through the use of its products
reduces expenditures in employee health post-exposure work-up and treatment, and
lost employee  time. The Company  further  believes that there are also benefits
from improved employee morale,  community  relations,  and reduced liability and
workers' compensation costs.

               In January 1998, the Company executed a clinical products testing
agreement  with  SMH  for a term of five  (5)  years.  Under  the  terms  of the
agreement,  Surgical will submit ten (10)  surgical and medical  products to SMH
for clinical  testing (the "SMH  Clinical  Testing  Agreement.")  Surgical  will
reimburse SMH for certain  designated  budgeted  costs and pay a fixed amount of
$25,000  for each  study,  payable in monthly  increments  over the term of each
study.  Further,  the  agreement  provides that Surgical is obligated to pay SMH
$250,000 over the term of the agreement in the event Surgical  determines not to
have SMH perform the clinical testing. In addition, SMH will receive one half of
one percent  (.5%) of the proceeds  received by the Company from the sale of the
products   tested.   The   products   to  be   tested   include   SutureMate(R),
Prostasert(TM),  PrepWiz(TM),  FingerSafe(TM)  and five (5)  other  products  in
various stages of development.

SutureMate(R)

                 SutureMate(R), a  patented, disposable, surgical assist device,
was initially  introduced  in 1993.  Its unique  design  facilitates  the highly
recommended  one-handed  suturing  technique  which is advocated by occupational
safety experts.  When one-handed  suturing is not used, extra steps are required
by the surgeon or the  assistant in cutting the needle free of the suture thread
and extra time and hand  movements  are  required  of the  surgeon  in  manually
adjusting  needles  while  using a needle  holder  in most  suturing  processes.
SutureMate(R)  allows  the  surgeon  to use a safer,  more  efficient  method of
surgical   stitching.   The  product   has   features   which   include  a  foam
needle-cushion, and a suture cutting slot.

               SutureMate(R)  can be  used  in a wide  variety  of  specialties,
including surgery, OB/GYN, emergency room treatment,  plastic surgery,  podiatry
and  dentistry.  It was designed by Dr. Swor, the Company's  Chairman,  who is a
surgeon himself for use by surgeons and surgical assistants.  The Company is not
aware of any comparable  product on the market. New applications for its use are
being devised  regularly and several  variations of the original  product are in
development, including a laparoscopic version, for use in the fast growing field
of minimally invasive surgery.


                                       18

<PAGE>



               The  product  acts as a  needle  bank for  temporarily  "parking"
suture  needles,  and has a cutting slot for removing the needle from the suture
thread.  Using  the  SutureMate(R)  device  enables  the user to  "free-up"  the
non-dominant hand to engage in additional tasks such as holding  instruments and
exposing tissues.

               Data from the CDC indicates that  seventy-seven  percent (77%) of
sharps  injuries are caused by suture  needles.  In one-third of all injuries to
surgeons,  the sharp  instrument was re-exposed to the patient.  When one-handed
suturing  is  not  used,  the  surgeon's   non-dominant   hand  is  particularly
vulnerable.  Sixty-six  (66%)  percent of all suture  needlesticks  occur to the
first  two  fingers  of the  non-dominant  hand.  This is where  SutureMate(R)'s
application is most significant.

               Clinical data suggests that SutureMate(R)  dramatically decreases
needlestick injuries and other exposures such as glove perforations. The cutting
slot feature  enables the user to efficiently  remove the needle from the suture
thread  without the need for an  assistant,  and with  greater  efficiency  than
traditional methods.

               SutureMate(R)  has been cited by safety  advocates  and infection
control specialists in several  publications and manuals. A study from Canada by
Drs.  Bebbington  and  Treissman  was published in the October 1996 issue of the
American  Journal of Obstetrics and Gynecology,  Volume 175, No. 1, Part I. This
study was  supported by the Company.  The study  concluded  that there was a 71%
reduction in glove perforations when SutureMate(R)n was used and stated that the
"surgical  assist  device  [SutureMate(R)]  appeared to be useful in  decreasing
glove  perforations  regardless  of the degree of training and  expertise of the
operator."  The  study  concluded  that  the "use of this  device  significantly
reduced the number of glove  perforations  that occurred  during  vaginal repair
after delivery. Therefore it can be of benefit to the safety of operators during
an  all-too-frequent  procedure  in  obstetrics.  This is  especially  true when
universal  precautions are being advocated for all patients. A decrease in glove
perforations  deceases the exposure to potential pathogens." The study did state
that the reduction in glove  perforations may not have been exclusively  related
to the use of the device.

               The need for sharps  management in surgery has generated a number
of  articles.  In an article by Dr. Mark Davis which was  published in the April
1995 issue of Infection Control & Sterilization Technology, Volume 1, No. 1, Dr.
Davis  stated that "most  percutaneous  injuries  can be prevented by the use of
currently  available  safety-engineered  devices and by the application of known
safety  protocols and  techniques...Other  techniques such as double gloving and
suturing with a device  requiring one hand,  offers some protection  against the
growing  threat of HIV, and hepatitis B and C." The one-handed  suturing  device
discussed  in the  article is  SutureMate(R)  which was being  evaluated  by the
surgical and OB/GYN  staff at Dr.  Davis'  institution.  Dr. Davis served on the
Scientific Advisory Board of the Company.

                SutureMate(R)  research  findings have been presented to several
major  medical  organizations  including:  the American  College of Surgeons and
Center of Disease  Control  and  Prevention  ("CDC")  at a joint  meeting on the
prevention of bloodborne  pathogens in surgery and obstetrics  which was held in
Atlanta,  Georgia in February  1994 (the  "February  1994  Conference");  at the
annual  meeting of the  Society of Hospital  Epidemiologist  of America in Santa
Clara,  California in March 1994; at the annual  meeting of the  Association  of
Surgical Technologists in Atlanta, Georgia in May 1995; at the annual meeting of
the Society of Perinatal Obstetricians in Vancouver, Canada in February 1996; at
the annual  meeting of the  Association  of Surgical  Technologists  in Atlanta,
Georgia in June 1996 and at the annual meeting of the ACORN in Atlanta,  Georgia
in April 1997.

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<PAGE>



               The February 1994  Conference  was the first joint  conference of
the American  College of Surgeons and the CDC. Donna J.  Haiduven,  an infection
control specialist and a member of the Company's  Scientific Advisory Board, and
Dr. Maria D. Allo of Santa Clara  Valley  Medical  Center  presented an abstract
entitled  "Evaluation  of a  one-handed  surgical  suturing  device to  decrease
intraoperative needlestick injuries and glove perforations." The study concluded
that the "[u]se of "Suture  Mate"  facilitates  one-handed  suturing  technique,
resulting  in  less  likelihood  of  glove   perforations  and   intra-operative
needlestick  injuries"  and "[t]he  "Suture  Mate" device  obviates the need for
two-handed  suturing and provides a safe place to "bank" needles on the surgical
field."

               The  use of  SutureMate(R)  eliminates  the  need  for  the  more
expensive "control  release-type" sutures. By virtue of improved surgical safety
efficiency,  the Company  believes that the patient will experience  significant
savings  through  reduced  anesthesia and operating room time. In addition,  the
Company believes that this product reduces the potential for cross contamination
which can save expenses related to surgical wound infection.

               SutureMate(R) was recently  re-released in late 1998. The product
was re-  engineered  and updated  after  feedback  from over 4,000  surgeons and
surgical technologists who used or reviewed the product since its inception.  As
a result of the re-design,  the Company believes that there will be new clinical
advantages  and  that the  product  can be  produced  at a  significantly  lower
manufacturing  cost.  These  beliefs  are based on the fact  that the  re-design
includes  a  tent-like  configuration  with a hidden  cutting  device  contained
between the  adhesive  base and the holding  device.  This allows the surgeon to
separate  the needle from the suture  without a scrub nurse  intervening  with a
scissor.  The cost reduction will result from the fact that the original version
cost  approximately  $6.00 per unit while the new  version  costs  approximately
$1.10 per unit including packaging and sterilization, allowing it to be marketed
in the $5 to $6 range which is more in keeping  with  pricing  for a  disposable
product.

               Currently,  the re-designed  SutureMate(R) is manufactured by the
Hansen  Plastic  Division  of  Tuthill  Corporation  at their  plant  located in
Clearwater, Florida ("Tuthill"). Tuthill manufactures each non-sterile unit at a
cost of $.902  per  unit.  The  non-sterile  product  is then  shipped  to Gamma
Services, Inc. in Lakeland, Florida for sterilization. The cost per unit for the
sterilization process is $.172. This results in a total cost per unit of $1.074.
The Company currently is considering other manufacturing sources.

MediSpecs Rx(TM)

               MediSpecs  Rx(TM)  is a  prescription  protective  eyewear  which
Surgical co-  developed  for use in the operating  room and related  areas.  The
Company has an exclusive,  renewable 5-year, distribution agreement which covers
the United States with Morrison International,  Inc., a Pennsylvania corporation
with its  principal  place of business in Sarasota,  Florida  ("Morrison").  The
initial term expires in September  2000.  Under the terms of the agreement  with
Morrison  executed  in  September,  1996,  the  Company  acquired  the  right to
purchase,  promote,  resell and distribute Morrison's  trademarked glasses under
the  Company's  private label  trademark,  MediSpecs  Rx(TM).  The price for the
product is fixed for the initial  five-year term and requires minimum  purchases
which are scaled over the first five-year period from 2,750 units the first year
to 56,000 the fifth year.  Under the  agreement,  the  Company  its  entitled to
distribute  the product either  directly or through other dealers.  Although the
Company  is not  reaching  its  quotas,  it has not  been  found in  default  by
Morrison.  Due to poor sales,  Morrison  discontinued the  manufacturing of this
product; however it has substantial inventory on hand for sale.

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<PAGE>




               MediSpecs  Rx(TM) are  featherweight  prescription  glasses  with
OSHA-  recommended  protective  side shields.  A proprietary  manufacturing  and
assembling  process  minimizes  the cost of  production  and  allows  healthcare
workers to purchase  prescription  protective eyeglasses for dedicated use in an
occupational  setting.  The Company  believes that users will purchase  multiple
pairs of glasses.  It is anticipated that each pair will have an average life of
approximately  50-100  uses.  While an average pair of  prescription  eyeglasses
costs over $150, MediSpecs Rx(TM) glasses are being sold for approximately $25 a
pair and can be  ordered by mail.  The cost to the  Company  under the  Morrison
agreement is $6.98 per pair.

               MediSpecs  Rx(TM) glasses protect against  splashing of blood and
bodily fluids into the user's eyes,  thus  reducing  exposure  risk.  Medi-Specs
Rx(TM) are ultra lightweight, making it unnecessary to the user to wear the more
cumbersome eyewear currently available for eye protection.

               In August 1997, the Company entered into a distribution agreement
for the sale of MediSpecs  Rx(TM) in the State of Florida.  This  agreement  was
with Hospital News, a Florida  corporation  with its principal place of business
in Tampa,  Florida  ("Hospital News"). SMH and Doctors Hospital of Sarasota were
excluded from the agreement and remain under the distributorship of the Company.
The initial term of the Hospital News  agreement was through  December 1997, and
was renewable by the parties for successive one (1) year periods.  The price for
the  product  was fixed for the  initial  term at $12.95  per pair and  requires
minimum  purchases  which was scaled  over the first six (6) months from 0 units
the first month to 800 the sixth month.  Under the agreement,  Hospital News was
entitled to distribute  the product  either  directly or through other  dealers.
Although Hospital News had not met its quota, the Company elected to extend this
arrangement  for an additional one (1) year period.  Hospital News sold no units
and is no longer a publication. The Company is disappointed with MediSpec Rx(TM)
sales and is considering dropping the product line.

               Due to the price at which  MediSpecs  Rx(TM)  may be  offered  to
users and the prevention of cross-case contamination,  the Company believed that
there would be a large national and  international  market available for the use
of this product; however, such market has not materialized.

Prostasert(TM)

               Prostasert(TM),   originally  named  LaborMate,  is  a  patented,
disposable, obstetrical/gynecological specialty device with many potential uses,
including  use for  patients  undergoing  the  induction  of labor.  The product
provides a vaginal  application of a precise dosage of pharmaceutical  gel which
is designed to shorten and  improve  the labor and  delivery  process.  Although
simple in design, the Company believes that  Prostasert(TM) is unique in that it
differs from its  competitors by allowing for a more  site-specific  application
and improved maintenance of the pharmaceutical gel used.  Prostasert(TM),  a FDA
listed  device,  is a specially  designed  medication  delivery and  maintenance
system which allows a physician to deliver the proper  dosage and maintain  that
dosage  precisely.  With over four (4)  million  births  annually  in the United
States alone, the Company  estimates the potential market for obstetrical use of
this  product  to be  approximately  200,000 to 400,000  cases  annually.  These
estimates  are based on the fact that 10% to 20% of the four (4) million  births
annually  are induced  (labor  stimulated  medically)  and that such  numbers of
induced  births are  increasing  because of the lower  risks and  patient/doctor
convenience factors.  Alternate uses and other applications for this product are
under  development  including  treatment for cervical  infections  and PAP smear
abnormalities for which the market is estimated to be 1,000,000 cases per year.

                                       21

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               No FDA  clearance  was  needed  for this  product  because  it is
assembled  from FDA  approved  parts.  The product was listed by the FDA in June
1994.  Prostasert(TM)  was approved for clinical  research by the  Institutional
Review  Board of the SMH where it has been  undergoing  clinical  trials for the
past four (4) years to document the clinical usefulness of the product.  Testing
continues and results are expected in Year 2000.  Once such trials are completed
and  provided  additional  funding  is  available  (of  which  there  can  be no
assurance),  the Company intends to make final engineering adjustments and plans
to market this product under a licensing arrangement with an independent company
for initial  market entry in the United States.  However,  no timetable for this
entry  into  the  market  has  been  established.   The  Company  is  seeking  a
distribution outlet for such licensing arrangement while the clinical trials are
being conducted.

Icepak(TM)

               The Company is researching  patent  protection for this specialty
product and its accessory  components.  This product is a belt which is designed
to carry various infection control-related products providing healthcare workers
with easy access to personal protective supplies.  The belt itself is a durable,
reusable  product with  consumable  supplies  attached.  The Company  intends to
market  and  sell  this  product  primarily  through  catalogs,  with a focus on
distribution  to nurses.  The Company  will be required to develop  arrangements
with  suppliers of the  consumable  supplies to be used in the belt. A prototype
has been  manufactured  and the  product is  expected to enter the market if the
required agreements with potential  manufacturers/suppliers  have been completed
and if  additional  funding is available  (of which there can be no  assurance).
Accordingly,  no timetable for release of this product has been set. There is no
requirement for regulatory approval of this product.

Research and Development

               The  Company   previously   engaged  in  extensive  research  and
development  of new medical  technology.  Many product  concepts  and  partially
developed designs have been accumulated from internal and external  sources.  As
funding becomes available, of which there can be no assurance, new products will
be brought  through the  development  process.  Initial  products in development
include:

               RD91862:  PrepWiz(TM):  This is a multiple  product for preparing
the patient's  surgical  site.  The Company  anticipates  that this product will
potentially  solve  major  efficiency,  costs and safety  problems.  The Company
currently   plans  to  co-develop   this  product  line  with  a  major  medical
manufacturer and subsequently license it for sales and distribution.  Currently,
pattern  designs  are in process and the Company  received  non-sterile  samples
which it is  currently  evaluating.  The  samples  were  provided  to a contract
converter who produced non-sterile disposable samples to be used in finalization
of the design.

               RD121096:   Finger-Safe(TM)  Surgical  Thimble:  The  Company  is
seeking patent  protection on this fingertip  protection  device. It is expected
that this product can be added to the Compliance  Plus product line in the event
that Company  secures  additional  capital,  of which there can be no assurance.
This  product is used much like a thimble for sewing,  but has special  features
that facilitate the suturing  technique and also has special safety features and
a storage  component.  The  product is  designed  to reduce  further the risk of
needlesticks and glove perforations to the non-dominant hand.

                                       22

<PAGE>



               Both RD91862 and RD121096  require  regulatory  approval from the
FDA.  PrepWiz(TM) is in the  development  phase and no application  under 501(K)
will be  undertaken  until  final  designs  and  approvals  have been  executed.
Finger-Safe(TM)  Surgical Thimble is on the shelf and no development activity is
currently underway.

Advanced Surgical Techniques

               The Company has several products in development that are designed
to contribute to the rapidly growing market of "minimally invasive" surgery with
increasing emphasis on small incisions,  laparoscopy,  laser treatment, and more
efficient  post-surgery  convalescence.  The  Company  believes  that there is a
significant  demand for improved  technology to facilitate these newly developed
procedures. The Company has several concepts and projects in development related
to this type of surgery,  and many of the new  product  ideas  presented  to the
Medical  Products  Consultation  Division by third  parties are included in this
group.

Medical Consultation Division

               The Medical Consultation Division  previously provided consulting
services to  individual  inventors on a fee basis.  Dr. Swor,  Mr. Clark and Mr.
Stuart, a Director of the Company, have provide such services depending upon the
type of expertise  required.  The principal  function of the division is to find
new ideas and potential products which compliment the Company's product mix.

               This  division  has been  retained  to conduct  several  research
evaluations of various  proprietary  medical products and has completed two such
projects, one for London International U.S. Holdings, Inc. (a study to determine
the spermicidal  activity of several  concentrations  of nonoxynol-9  lubricated
condom  products)  and another for Purely  Cotton (a study of a tissue made from
cotton rather than paper to determine whether the product was less irritating to
people with chronic skin conditions). Based upon the initial evaluation of these
products,  the Company  believes that one or more could be very  successful  and
lead to additional business for the Company.

Business Strategy

               The  Company's  business  strategy,  which is dependent  upon its
obtaining   sufficient   additional   financing   with  which  to  enhance   the
commercialization  of  existing  and  future  products  of the  Compliance  Plus
exposure   prevention  and  surgical  efficiency  product  line  and  the  OASiS
information  system (of which there is no assurance),  is to provide  innovative
products and services which create and maintain a safe surgical  environment for
medical and  hospital  staff,  healthcare  workers and  patients,  as well as to
enhance the level of surgical care available to patients. The Company's revenues
are based upon lease payments and fees for display of inservice modules from its
Data  Systems  Division,  sale of its products  and  distribution  fees from the
Medical Products Division and consulting fees earned by the Medical Consultation
Division.  The Company's  revenues are dependent on the volume of sales from its
products.

               Revenues  from sales are  recognized in the period in which sales
are made.  The  Company's  gross profit margin will be determined in part by its
ability to estimate and control direct costs of manufacturing and its ability to
incorporate such costs in the price charged to clients.



                                       23

<PAGE>


               The Company's  objective  is  to  become  a dominant  provider of
medical devices and systems which improve occupational safety,  advance surgical
techniques  and provide  greater  efficiency.  To achieve  this  objective,  and
assuming  that  sufficient  operating  capital  becomes  available,  the Company
intends to: (i) develop  international  distribution  channels and co- marketing
alliances for the Company's  products and services;  (ii) continue  research and
development and acquisitions of synergistic products and software programs;  and
(iii) frequently fine tune market  strategies based upon ongoing  evaluations of
customer needs, capital budgeting opportunities and market economy fluctuations.

               Management  believes  that Surgical is poised to lead in the ever
developing  surgical and medical  safety  market and plans to  capitalize on the
opportunity while providing  significant benefits to its customers and improving
overall patient care.  Management  expects,  in the event Surgical  continues to
achieve product acceptance, to increase the Company's market penetration through
additional  acquisitions  and potential  merger  opportunities  with appropriate
bases  of  business  development.   However,  such  expansion  presents  certain
challenges and risks and there could be no assurance  that Surgical,  even if it
were  successful  in  acquiring  other bases of business  development,  would be
successful in profitably penetrating these potential markets.

Sales and Marketing

               The following  discussion of the medical industry,  as it relates
to the  Company's  objectives,  is of course  pertinent  only if the  Company is
successful in obtaining sufficient debt and/or equity financing to commercialize
its existing products and OASiS, to add additional key personnel when needed and
to supplement new product and software  program  development.  In addition,  the
Company must be able to generate  significant profits from operations (which are
not expected in the foreseeable future) and/or additional  financing to continue
expanding  the  business  and/or  to  fund  the  anticipated  growth,   assuming
Surgical's  proposed expanded business is successful.  There can be no assurance
such financing can be obtained or that the Company's  proposed expanded business
will be successful.

Background

               According  to the World Health  Organization,  forty (40) million
people  will be  infected  with HIV by the year 2000.  There are nearly ten (10)
million people worldwide currently infected,  including close to one (1) million
children. Over four (4) million Americans carry the HIV virus. Approximately ten
percent  (10%) of  individuals  will  contract  this very  serious  illness when
exposed by way of a sharps injury.

               Auto Immune Deficiency Syndrome ("AIDS") is now the top killer of
men age 17 to 54 in the United  States.  The CDC and the National  Institutes of
Health  ("NIH") have focused a great deal of effort and research into  improving
occupational  safety and  decreasing  the risk of  bloodborne  pathogens  in the
healthcare setting.  The American Hospital  Association reports that needlestick
injuries are the most common  injury to  healthcare  workers and  represent  the
greatest  risk of  occupational  exposure  to AIDS,  Hepatitis,  and other viral
diseases.  There are over two (2) dozen  diseases  that  have been  involved  in
documented  transmission  by way of  exposure.  Over one and a  quarter  million
(1,250,000)  Americans have chronic  Hepatitis B and when their blood is exposed
to a healthcare  worker's intact skin, the  transmission  rate is thirty percent
(30%).  Since  operating room personnel and surgeons are in particular high risk
categories,  the  Company  has  committed  itself  to  developing  products  and
techniques to decrease the potential for deadly viral  transmission  to and from
healthcare workers and patients.



                                       24

<PAGE>


Market Overview, Size and Occupational Safety

               Healthcare workers need secure and safe working  conditions.  The
Company  seeks to  provide  solutions  to meet  that need in the  critical  care
setting.   Value  is  built  into  Surgical's  products  by  reducing  costs  of
inefficient  surgery,  occupational  exposures  and patient  risks.  Exposure to
bloodborne  diseases occurs in up to fifty percent (50%) of surgical cases, with
needlesticks  and other sharps  injuries  magnifying the risk. (See G. Pugliese,
RN, MS, Blood Exposures in the Operating  Room: Risk and Prevention  Strategies,
APIC  Journal of  Infection  Control  1993;  pps. 21 and  337-42;  and Jagger J,
Blackwell  B,  Fowler  M,  Carter  K,   Funderburk  S,  Bradshaw  E,  Swapp  J.,
Percutaneous injury surveillance in a 58-hospital  network,  Tenth international
conference on AIDS,  Yokohama,  Japan,  8/9/94.) Up to 75% of sharps injuries in
the operating room are related to suturing. (See Journal of the American Medical
Association,  June 1992; Journal of the American Medical Association,  September
25, 1991; and Obstetrics and Gynecology, Volume 77, 1991.) Currently used safety
measures are inadequate,  with an unbelievable 23% exposure rate documented even
in known or suspected HIV cases. (See G. Michael Swor, M.D., A Touch Information
System for Healthcare Worker Exposure,  Risk, and Training Management,  Surgical
Technology  International  VII. 1998: pps. 48-56; and Tokars JI, Bell DM, Culver
DH, et al.,  Percutaneous  injuries during surgical  procedures,  Journal of the
American Medical Association 1992; ppgs. 262-288 and 904.) Hepatitis C is a new,
incurable  threat  and HIV is now the  number  one  cause  of  death in 25 to 44
year-olds in the United  States.  (See  Morbidity and Mortality  Weekly  Report,
Center for  Disease  Control,  November  19,  1993/Vol  42/No  45.)  Significant
resources  are  devoted to  occupational  risks,  with over $3 billion  expended
annually  in the United  States on sharps  injuries  and  bloodborne  exposures.
According to the Canadian Medical Association Journal, treating one HIV-infected
healthcare  worker may cost in excess of  $500,000.  In  addition to the risk of
exposure, significant pressures have been made to reduce costs in surgery and in
critical care units.

               With the increased  prevalence of HIV, hepatitis and other deadly
diseases,  OSHA has set increasingly strong standards.  Despite the standard use
of protective gloves and clothing,  operating room personnel and surgeons are at
a particularly  high risk.  According to the United States  Department of Health
and Human  Services,  healthcare  workers  contract more than 15,000  bloodborne
infections  from  occupational  exposure  per year,  resulting in 300 deaths and
thousands of illnesses.  Surgical wound  infections  are  relatively  common and
result in increased  costs,  longer  hospital  stays and increased  morbidity in
patients.  A Yale  University  study found that visible  contact with  patient's
blood occurred in 63% of surgical cases and sharps injury rates range from 7% to
50%,  depending on the type of case. At current  rates,  researchers  from major
medical institutions have estimated the lifetime career risk of occupational HIV
infractions  for surgeons as high as 20%,  depending on the patient  population.
Despite this data,  HIV is  overshadowed  by Hepatis B and C which are 100 times
more infectious.

               Due to increased  awareness of these  problems,  there has been a
movement from healthcare  workers  themselves for facilities to provide adequate
protection  and  safety  engineered  technology.  Hospitals  also  benefit  from
improved technology and can significantly  decrease  postexposure  follow-up and
treatment.

               A large  body of  research  and  statistical  evidence  has  been
accumulated  over the last ten (10)  years  regarding  the  significant  risk of
bloodborne  diseases  to  healthcare  workers.  Similar  kinds  of  risks  exist
regarding the transmission of disease from health workers to patients. Since the
AIDS virus was  discovered  and blood  testing  became  available in 1985,  even
greater  awareness has been focused on these  problems.  The Company has focused
its efforts on identifying  occupational  risks in the  healthcare  industry and
seeking to provide solutions to various problems regarding these risks.

                                       25

<PAGE>



               As noted,  the bloodborne  pathogens which have received the most
attention are AIDS and Hepatitis. There are an estimated ten (10) million people
infected  with the AIDS  virus  worldwide,  and  because  of the  nature  of the
disease, it is impossible to determine infected individuals with certainty, even
with blood tests. (See Centers for Disease Control,  Estimates of HIV prevalence
and projected AIDS cases,  Morbidity and Mortality Weekly Report,  1990; pps. 39
and 110-119; World Health Organization,  In Point of Fact, No. 74. Geneva, World
Health  Organization,  May 1991;  Piot P, Plummer F, Mhalu FS, et al,  AIDS:  An
international perspective, Science 1998; pps. 239 and 573-579; and Palca J., The
Sobering  Geography of AIDS,  Science 1991; pps. 252 and 373.) Hepatitis is even
more widespread and, according to medical experts,  much more contagious.  These
diseases and others are  transmitted  by contact with blood or bodily fluids and
reports of infection  through  needlesticks,  sharps injuries,  and skin to skin
contact are accumulating.  The American Hospital Association,  in 1992, reported
over 800,000  occupational  needlestick injuries in the United States each year,
and estimated  that  approximately  16,000 were  contaminated  by HIV. They also
estimated  that as many as 60 healthcare  workers may become  infected  annually
with HIV as a result of occupational exposure. There have been estimates as high
as 12,000 Hepatitis B infections annually to healthcare workers.  (See Applegate
EJ., The Anatomy and Physiology Learning System,  Philadelphia,  PA: WB Saunders
Company;  1995,  p.241.) A newer  form of  Hepatitis,  Hepatitis  C, is  rapidly
becoming even more important and more serious.

               OSHA now has strict guidelines for personal protective equipment,
such as gloves,  gowns,  and  eyewear.  However,  with a reported  rate of glove
perforation in surgery of up to 50%,  sharps  injuries of up to 25% and concerns
regarding  the  prevention  of  bloodborne  pathogen  transmission,   healthcare
professionals,  workers  and  patients  are  requesting  more  protection.  Most
professionals  agree that many sharps injuries in surgery are  preventable  with
changes in techniques and the use of new devices and protective equipment.

               The cost of these types of exposures is also a significant factor
in the Company's business.  The direct financial burden that facilities bear for
medical  evaluation and follow-up after a single needlestick injury is estimated
to be $200 to $1,300 ($3  billion in the United  States as  reported  in Nursing
Economics, Vol. 12, No. 4, pp. 208-214 (1994) based upon 1987 date regarding the
cost of diagnosis and treatment of needlestick  injuries in the United  States).
According to the United  States  Department  of Health and Human  Services,  the
average cost of treating an accidental  needlestick is $1,300.  This figure does
not  include  indirect  costs such as time lost from work,  medical  expense and
potential  liability  loss.  With annual  expenditures  in the United  States on
medical and surgical supplies estimated by current medical journals at more than
$6 billion annually,  there would appear to be a large budget for safety-related
products.  Surprisingly,  there  have  been  few  significant  advances  in  new
technology regarding bloodborne pathogens.  The Company is focusing its research
and  development  efforts  directly on  improvements in this area with operating
room,  infection  control and reporting,  and personal safety equipment  product
lines.

               The  Company's  initial  product,  SutureMate(R),   was  designed
primarily  to  reduce  the risk of  needlestick  and  glove  perforation  during
suturing.  Infection  can also be  transmitted  by skin to skin  (mucocutaneous)
contact, and the Company's Infection Control Equipment Pack (IcePak(TM)) product
was developed from the need to reduce this hazard. The Company's OASiS system is
designed primarily for accident reporting and training.  Customer demand for the
Company's'  products and services is expected to be stimulated further by recent
scientific  data  suggesting  that  the  risks  related  to these  hazards  were
originally   underestimated.   In  addition,  new  serious  viral  diseases  are
discovered regularly.


                                       26

<PAGE>



               With an estimated 25 million  surgical  procedures  and 4 million
births annually in the United States alone (See  Statistics  published on health
and  nutrition  from the American  Hospital  Association's  Hospital  Statistics
Annual,  Chicago,  IL, 1990.), and a fertile  international  market as well, the
Company is focused upon the  development  of  innovative  reporting and training
equipment,  efficiency  related  instruments,  and cost  efficient  supplies for
furthering the concept for cost conscious safety in healthcare.

               Hospitals are under increasing pressure to evaluate and adopt the
use of safetyrelated technology, especially with regards to sharps injuries. New
regulations,  hospital  policies,  and federal  guidelines  will  encourage  any
efficient means of improving safety, especially with regard to HIV transmission.
Because of the size and demands of these markets, the Company believes that this
is an area of  potentially  significant  growth if it can continue to strengthen
the market niche it has created.

Markets

               The  primary  medical   industry   markets   include   hospitals,
healthcare facilities, surgeons, nurses, and technologists in procedure-oriented
specialties,  including  obstetricians,  dentists,  emergency room personnel and
other medical professionals.

               The potential global market for Surgical's  products (devices and
information systems) is estimated at over $1.3 billion.  This data was presented
in an  article  written  by Dr.  Swor  which  appeared  in  Surgical  Technology
International,  Vol.  II where Dr.  Swor was  referencing  an  article  from the
Florida Healthcare Report and Hospital News which appeared in December 1997.

               The  initial  target  market  areas for the  product  side of the
Company's  business are in the major  metropolitan  centers in the United States
and  abroad  that  presently  have  large  teaching  programs,   higher  disease
prevalence  and acute  problem  awareness.  Entry  into  these  target  areas is
expected by the Company to significantly ease general market penetration.

               The Company  plans to export its  products  worldwide  to markets
including  Europe,  South America and Asia, the Middle East and the Pacific Rim.
Previously it had exclusive  distributorship  agreements  with Johnson & Johnson
Medical Pty. Ltd.  with respect to the  territories  of Australia,  New Zealand,
Papua,  New Guinea and Fiji,  with Medicor Corp. with respect to the Netherlands
and with ISC Group with  respect to Saudi Arabia and the  so-called  GCC Nations
which agreements expired principally due to the Company's financial inability to
sustain sufficient levels of production under prior manufacturing  arrangements.
Although  technically in force,  the agreement with Noesis relative to Europe is
inactive.  The  Company  believes  that it will  be  able  to  reactivate  these
distribution   arrangements  with  the  re-designed   SutureMate(R)   under  the
manufacturing  arrangement  with  Tuthill  or  other  suitable  suppliers  under
consideration,  provided  additional  funding  is  available  to the  Company to
manufacturer  adequate  inventory.  The  basis of this  belief  is that  initial
marketing efforts were thwarted by the high manufacturers suggested retail price
and in discussions  with one of these  distributors,  it has been indicated that
such  distributor  would  reinstate  its agreement  when  adequate  inventory is
available.  There can be no assurance that such distribution arrangements can be
re-established  or  that  there  will be  additional  funding  available  to the
Company.

               OASiS has been  foundationally  designed to accept  multi-lingual
applications.  The Company expects that this will not only facilitate acceptance
in the  cosmopolitan  markets  within the United  States,  but also will  enable
instant adaptations to international markets which traditionally follow the

                                       27

<PAGE>



United States leadership in developments of safety and exposure guidelines.

               A major  portion of the safety  products and  services  currently
ready for  marketing  by the  Company,  including  both  device and  information
services,  are unique and are without apparent  competition by design since they
were  specified  and  designed by the Company to create  previously  unavailable
products and  services.  In most cases,  Surgical's  state-of-the-art  products,
techniques and services  position the Company as a pioneer in new markets.  This
is a direct  result of the  Company's  election to avoid the  typical  commodity
sales of gloves, gowns, shields, and other products of that type and to focus on
innovative,  safety related products such as SutureMate(R),  which was the first
device of its kind to provide for lower risk, one-handed suturing.

               The  market for  Surgical's  products  is divided  into three (3)
segments: end users, healthcare risk managers and medical-related companies.

               The  primary  end user market for the  products  and  services of
Surgical include 8,000 hospitals,  100,000 surgeons and over 1,000,000  surgical
nurses  and  technologists.  Secondary  end  user  markets  include  out-patient
clinics,   dental  offices,   emergency  medical   services,   fire  and  rescue
organizations,  medical offices and laboratories.  This segment of the Company's
market will be the ultimate user of both the medical devices and OASiS and it is
particularly defined by the need for protection against bloodborne diseases from
body fluids and sharps injuries, such as needlesticks.

               The  healthcare   risk  manager  market  is  defined  by  similar
statistics as the end user market.  The major difference is that this segment is
represented at an administrative level.  Additionally,  it encompasses insurance
companies and other  parties  interested  in capturing  safety and  occupational
injury  data.  This  segment of the market  focuses  on  ensuring a safer,  more
efficient  workplace  for the  healthcare  worker  and in  obtaining  previously
unavailable information about actual occurrences of bloodborne pathogen exposure
and the management thereof.

               The market  segment  for  medical-related  companies  consists of
approximately 11,600 medical device manufacturers,  360 pharmaceutical companies
and 1,260 training and educational organizations. The Company believes that this
is a significant segment for them for three reasons. First, these companies will
be enlisted as content  providers (a content provider supplies OASiS with device
information and other educational  components)  ("Content  Providers").  Content
Providers are potential customers for the Company because they pay a reoccurring
fee to broadcast their  information on OASiS.  Secondly,  this market segment is
desirous  of the  data  collected  by  OASiS as it  relates  to the  information
surrounding exposure occurrences.  The Company already has received requests for
access to this (yet-to-be collected) data. The third reason the Company believes
this segment to be  significant  is that these  companies are a key component to
the Company's sales strategy for its medical devices.  The Company believes that
its  relationship  with US  Surgical  as a  strategic  partner  is  based on the
integration of OASiS and the Company's  Compliance Plus line of products and the
venue potential for US Surgical products.

               The Company  believes  that the criteria for another  appropriate
strategic  partner  for an  alliance  with the  Company  would have a  worldwide
presence,  maintain a dedicated,  highly  trained sales force with access to the
operating  room, be a respected and an acknowledged  leader in the industry,  be
among  the  Fortune  500  companies  or  equivalent  and  have  an  interest  in
diversification  of its existing  product  lines.  In this  regard,  the Company


                                       28

<PAGE>



believes  that  its  long  term  arrangements  with US  Surgical  establishes  a
strategic alliance with a company which meets these criteria.

Distribution of Products

               SutureMate(R),  MediSpecs  Rx(TM)  and  OASiS are  currently  the
Company's only products in the marketplace. With reference to such products, the
Company has entered into a number of agreements  regarding  their  distribution.
See Part I, Item 1.  "Description  of  Business  (b)  Business  of Issuer - Risk
Factors."

               In December  1994,  the Company  entered  into a  distributorship
agreement for a period of one (1) year with ISC Group,  a corporation  organized
under  the laws of the  country  of Saudi  Arabia,  for the  exclusive  right to
purchase,  inventory,  promote and re-sell SutureMate(R) in Saudi Arabia and the
GCC Nations. An initial order was placed and shipped.

               In March 1995, the Company entered into a distribution  agreement
with  Medicor   Corporation  for  the  exclusive  right  to  purchase  and  sell
SutureMate(R) in the Netherlands.  An initial order was shipped pursuant to this
agreement in April 1995. The agreement had no term and the parties were awaiting
evaluation of the product in the marketplace.

               In  April  1995,  the  Company  entered  into  a  distributorship
agreement with Johnson & Johnson Medical Pty. Ltd.  ("J&J") to exclusively  sell
SutureMate(R) in Australia,  New Zealand, Papua, New Guinea and Fiji. An initial
order was placed.  Under the terms of the agreement,  J&J had no sales quota for
the first  ninety (90) days and the parties were to agree by July 1995 as to the
sales quota for the remaining  term. J&J had a right to terminate this agreement
on sixty (60) days notice.

               ISC Group,  Medicor  Corporation  and  Johnson & Johnson  Medical
Pty., Ltd. are not currently  distributing  Surgical's product.  The Company has
not actively  pursued  additional  business  from these  companies  since it has
placed such business on hold pending further  developments  in the Company.  The
Company  believes  that it can  reinstate  these  agreements  and has  discussed
reinstatement  with one of these  former  distributors  which  advised  that the
agreement can be reinstated when adequate inventory is available. However, there
can be no  assurance  that such  distribution  agreements  can be  re-activated.
Further, since each of these companies distribute many other products, there can
be no assurance that they will agree to distribute SutureMate(R) at such time as
the Company is ready for such additional distribution. And further, although the
Company  currently  plans to  proceed  with  attempting  to  re-establish  these
relationships at such time as the Company has sufficient funding to fully supply
the re-  engineered  SutureMate(R),  there can be no assurance that such funding
will be available to it.

               In  December  1996,   the  Company   entered  into  an  exclusive
distribution  agreement with Noesis Capital  Corporation  ("Noesis"),  a Florida
corporation,  for a term of seven (7) years for the European  market under which
Noesis  was  to  recruit,  hire  and  train  European  master  distributors  and
distributor/dealer networks throughout the Continent for sales of SutureMate(R).
Under  the  terms of the  agreement,  the  parties  were to set  minimum  annual
quantities  which had to be sold.  The  price per unit to Noesis  was set at the
greater  of $1.50  or,  in the  event of a cost  increased  to the  Company  for
manufacturing, 150% of the Company's revised cost. Although still technically in
force,  this contract is not currently active and has been placed on hold by the
Company  pending  further  developments,   including  the  availability  of  the
re-designed SutureMate(R) currently being manufactured by Tuthill.


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<PAGE>



               In July 1997, the Company  entered into a distribution  agreement
with Hospital News of Florida, a Florida corporation  ("HNF").  Pursuant to this
agreement, HNF was granted the exclusive distributorship of the MediSpecs Rx(TM)
eyewear  in the  State of  Florida.  SMH was  specifically  excluded  from  this
agreement.  The original  agreement  was to terminate on December 31, 1997,  but
could be renewed if the parties so agreed for  successive  one (1) year periods.
The price of each pair of eyewear was set at $19.95 plus $4.95 for  shipping and
handling.  The  Company  agreed  to pay HNF  $7.00  for  each  pair  sold and no
commission  was  due to HNF  for  any  subsequent  re-orders  from  an  existing
customer.  The agreement  required HNF to generate 800 orders by December  1997.
HNF was responsible for  soliciting,  collecting and delivering  completed order
forms on the form  designated  by the Company.  Although HNF did not achieve its
initial quota,  the Company  elected to extend this  arrangement.  Hospital News
made no sales and is no longer a  publication.  Morrison  has  discontinued  the
manufacturing of this product and is selling off existing inventory. The Company
is considering dropping this product line.

               In February  1998,  the Company  executed a Letter of Intent with
United States Surgical Corporation ("U S Surgical").  Pursuant to such letter, U
S Surgical stated that, after investigation of the Company, it intends to pursue
a joint venture or equity buy-in relationship,  subject to due diligence review.
Part of such  due  diligence  review  was to be  observation  of the  healthcare
workers'  reactions  to the OASiS  presentation  at the AORN 1998  meeting.  The
Company  granted U S  Surgical  status as a Charter  Sponsor  of OASiS and a 33%
discount off the proposed retail value of services provided at the AORN meeting.
OASiS  accounted  for over 21% of all leads  generated  by US  Surgical  at AORN
meeting.

               In July 1998, the parties agreed to terms of under the Short Term
Agreement which was executed October 28, 1998. Under the terms of the Short Term
Agreement,  US Surgical  obligated itself to arrange for the installation of ten
(10) OASiS systems in hospital  facilities which US Surgical defines as "Centers
of Excellence",  including  initially Harvard and Yale. US Surgical continued to
change the centers and Harvard was replaced with Northwestern University Medical
Center.  Each system  includes  thirty (30) inservice  training  modules with US
Surgical products. In addition,  the Company is permitted to include modules for
other manufacturers subject to the approval of US Surgical. Following an initial
nine (9) month trial at each of these  facilities  and  subject to  satisfactory
performance by the system and the technical  support group,  US Surgical has the
right  to have  additional  systems  installed  in other  healthcare  facilities
nationwide.  US Surgical agreed to finance the  development and  installation of
the ten (10)  systems.  No decision has been made as to which party will pay for
the additional  installations which US Surgical elects to have installed. In the
event the Company is required to pay, additional  financing may be required from
outside sources, the securing of which cannot be assured. The Company receives a
fee in the amount of $36,000 for the initial ten (10)  installations  during the
testing  period and a fee in the amount of  $108,000  for the balance of a three
(3) year term for such initial  installations.  In addition, the Company is able
to earn profits on the sales of its products through the point-of-sale  facility
in the OASiS system and from the fees it receives  from other  device  providers
and training  companies  through the use of the inservice  modules.  Provided US
Surgical is not in default in any payment, at the end of the term, they have the
option to purchase  the OASiS  hardware at a price of $8,500 for each Model 1062
unit.  Although ten (10) units were to be installed in November  1998,  due to a
delay caused by the acquisition of US Surgical by Tyco and a strategic  decision
by them to delay the commencement of the  installations  until after the holiday
season the Company has thus far installed  six (6) units in five (5)  hospitals.
The balance were to be completed in the third  quarter of 1999;  however,  these
installations have been merged into the Long Term Agreement..



                                       30

<PAGE>



               On  July 30, 1999, the  Company  entered the Long Term Agreement,
a private  partner  network  agreement,  with US  Surgical.  Under the Long Term
Agreement,  Surgical is to supply up to four hundred  (400) OASiS  systems to US
Surgical under licenses  calling for installation in nominated  hospitals.  Each
license  is  for  a  term  of  three  (3)  years  commencing  with  "substantial
installation" of such unit. "Substantial installation" is defined as delivery of
the OASiS unit to the hospital and connection to the Internet.

               Under the  terms of the Long Term  Agreement,  US  Surgical  must
license two hundred  (200) units  within the first year,  and subject to certain
obligations  on the part of Surgical  to license  units to third  parties,  must
license an  additional  two hundred (200) units by the end of the second year to
third parties.  Previously  installed units under the October 1998 agreement are
counted toward the minimum units  required.  On August 10, 1999 US Surgical paid
Surgical $100,000.00 as an advance for such licenses. The first 200 licenses are
$1,500 each and additional licenses are $1,000 each.

               The Long Term Agreement  further provides that neither  Surgical,
nor any third party other than US Surgical,  may place OASiS units in any of the
"protected  departments"  of the  hospitals,  unless  it is  installed  prior to
receipt of a purchase  order from US  Surgical  or unless US  Surgical  does not
exercise  its  right  of first  refusal  after  notice  from  Surgical  for such
hospital.  The Long Term Agreement defines "protected  departments" as Operating
Room,  Labor  and  Delivery,  Emergency  Room,  Ambulatory/Same  Day  Surgery  /
Outpatient,  Nuclear Medicine,  Intensive Care, Orthopedic / Ortho Casting Room,
and Dialysis. US Surgical is required to have each hospital bear the entire risk
of loss  and  damage  to any  OASiS  system  except  if such  is  caused  by the
negligence or wilful misconduct of Surgical.  US Surgical must maintain casualty
insurance  in amounts  and with  companies  acceptable  to Surgical on the OASiS
units and its related amenities with Surgical as the loss payee. US Surgical may
elect to have the OASiS systems  installed in hospitals it nominates  co-branded
with its name.  Surgical  has the  discretion  to select  the  content,  related
services and  in-service  products for the OASiS  systems  installed  under this
agreement; however, during the term of the agreement, US Surgical is required to
pay for and maintain a minimum of one hundred  forty (140)  product  in-services
modules  in an  average of at least 80% of all OASiS  systems  installed  in the
United  States  whether or not covered by this  agreement and 100% on those that
are covered by the agreement.  US Surgical's  productbased  modules  produced by
Surgical  become the  property  of US  Surgical.  Surgical  retains the right to
display such modules on other OASiS units. All other modules remain the property
of Surgical.  Surgical receives a fee for production of the modules. If Surgical
installs additional OASiS units in a designated hospital, US Surgical receives a
10% commission.  Surgical  receives a monthly  maintenance fee for each unit, of
$149,  unless  paid a year in advance in which case it may be  discounted  up to
10%.

Methods of Distribution

               Whether or not the Company is  successful  in raising  additional
capital (of which there can be no  assurance),  since Surgical was successful in
completing the alliance with US Surgical,  the Company  intends to provide sales
support to such  partner.  The partner will manage the primary  sales  functions
with the Company acting as an additional  resource for sales support.  As to the
OASiS system, Surgical and its strategic partner will complete a site survey for
each customer facility. The Company also will seek additional strategic partners
for these functions.  Surgical will coordinate the necessary follow-through with
the Integration Specialist.

               Notwithstanding  the US Surgical  contract and until such time as
the Company establishes  alliances with additional strategic partners,  Surgical
will  continue to rely on a  significant  database  and network of  consultants,
international business contacts, researchers, medical advisors and potential

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<PAGE>



distributors, suppliers and manufacturers for sales of its products. The Company
has accumulated  over 3,000 sales leads and customer  contacts,  with a majority
being United States based surgeons and operating room technologists. The Company
will  continue to sell its products  direct to hospitals  and other medical care
providers.

               In  addition  to sales by U.S.  Surgical  and  distributors,  the
Company also solicits orders through direct mail sales,  trade  publications and
advertising by targeting specific market groups.  Since joining the Company, Mr.
Clark has begun an active  campaign to establish  repeat  markets for Surgical's
products.  Customer  follow-up is currently  handled by in-house  sales staff of
which there are five (5). Orders obtained can be shipped from in-house inventory
or  warehousing  arrangements.  The Company has the original  SutureMate(R)  and
MediSpecs  Rx(TM) in stock and is finalizing  manufacturing,  sterilization  and
inspection procedures for the re-designed SutureMate(R) so that inventory can be
established.  Customers  may return  defective  merchandise  for a full  refund,
credit or replacement. In recent years, such returns have been insignificant.

Status of Publicly Announced Products and Services

               Based  upon   feedback   from   surgeons   and   operating   room
technologists  since the introduction of SutureMate(R) in 1993, this product has
been  re-engineered  and is  currently  ready for  distribution,  subject to the
availability  of additional  funding,  of which there can be no  assurance.  The
original  SutureMate(R)  is available and on the market.  The Company is seeking
additional distribution channels for this product.

               MediSpecs Rx(TM) currently is available;  however, the Company is
considering dropping the line due to poor sales.

               Once  trials are  completed  and subject to the  availability  of
additional funding, the Company intends to make final engineering adjustments to
Prostasert(TM)  and then commence  manufacturing for initial market entry in the
United States. There is no current timetable for such entry.

               The OASiS system is fully operational at its initial sight at SMH
in Sarasota,  Florida,  at five (5)  hospitals  under the  arrangements  with US
Surgical  and at St.  Francis in  Trenton,  New  Jersey.  Although  the  Company
expected  to  complete  the  balance of the  installations  under the Short Term
Agreement  with US  Surgical  installations  in the  third  quarter  1999,  such
installations  have been  merged  into the Long Term  Agreement.  The Company is
ready for additional  installations at other locations as soon as agreements can
be completed.  Version 2.0 is being installed at the US Surgical sites and is in
final stages of test trials.

               A prototype of IcePak(TM) has been  manufactured  and the product
is  expected  to enter the  market if the  required  agreements  with  potential
manufacturers/suppliers have been completed and additional funding is available.
There is no current timetable for such entry.

Competition

               There is intense  competition in the markets in which the Company
engages in business.  However,  the Company  believes  that there is  relatively
little competition for its products at this time.

               Notwithstanding its innovative product line, there are many major
companies  which  could  compete  with the  Company due to their size and market


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<PAGE>



share  in the  medical  products  area.  These  include  such  companies  as U S
Surgical,  Ethicon,  Inc.  ("Ethicon"),  a  Johnson  &  Johnson  subsidiary  and
Sherwood-Davis & Geck, a division of American Home Products Corporation,  all of
which have a wider range of other  medical  products  and  dominate  much of the
markets for these other  products.  These companies focus on sutures and related
suturing  devices.  Traditionally  such  companies  have not  focused  on safety
related products but they are now modifying the design of some sutures to reduce
needlesticks.  Several medical products firms,  including  Johnson & Johnson and
Graphics  Controls,  Inc.  ("Graphics  Control") have operations in the surgical
safety product niche.  Graphics  Control sells  approximately  50% of all safety
devices to the medical industry. The Company believes that these major companies
will continue their efforts to develop and market competitive devices. It is for
this reason that the Company has sought to align itself with a strategic partner
and has entered into the Long Term Agreement with US Surgical.

               A major purveyor of safety devices is Devon Industries  ("Devon")
which  commands  about  75%  of  this  market.  Devon's  product  line  includes
approximately  one hundred "me-too" type products;  that is products designed to
copy or which copy products already in the market.  Specialized  Health Products
International,  Inc. ("SHPI") designs and develops products to minimize the risk
of accidental  needlesticks in order to reduce the spread of bloodborne diseases
in heathcare workers.  SHPI's strategy is to become a single source provider for
needle  protection  devices.  Many  other  device  companies  market  these same
products with only slight variations.  However, the Company believes that one of
the  major  pitfalls  with  these  types  of  companies  is  that  they  have no
distinctive new product concepts to distinguish  themselves from other companies
in their industry.  The Company  believes that its product line does distinguish
Surgical from other medical device providers.  For example: (1) SutureMate(R) is
the only  device  of its kind  which  allows  for  one-handed  suturing  and its
tent-like  configuration,  combined  with the  adhesive  backing  and the hidden
cutting device,  separates it from all competitive  products;  and (2) MediSpecs
Rx(TM)  is the only  low-cost,  ultra-light  prescriptive  eyewear  specifically
designed to protect against splashing blood and bodily fluids.

               There is  intense  competition  in sales of  products  for use in
gynocological,  spinal,  vascular,  cardiovascular,  interventional  cardiology,
breast biopsy, urologic, orthopedic and oncological procedures. A broad range of
companies  presently  offer products or are  developing  products for the use in
such procedures. Many of these companies have significantly greater capital than
the Company and are expected to devote substantial  resources to the development
of newer technologies which would be competitive with products which the Company
may  offer.  There are also a number  of  smaller  companies  which  offer  such
products which present additional competition.

               Many of the large  chemical  companies  market  solvents that are
claimed to be useful as a barrier protection to bloodborne  pathogen  infection.
Some of these  companies are being  scrutinized  by the FDA because of a lack of
proper clinical research and statistics to substantiate barrier effectiveness.

               The market for products for minimally  invasive surgery is highly
competitive.  The Company believes if it enters this market that it could gain a
significant  share of the market as the  result of its  innovative  efforts  and
superior products. This is principally due to the Company's involvement with Dr.
Saye and the ALTC which is currently training surgeons in advanced  laparoscopic
surgery  since it is felt that if the Company  develops a suitable  product,  it
could be incorporated  into this training program.  Ethicon,  through a division
known  as  Ethicon  Endo-  Surgery,  markets  a line of  endoscopic  instruments
directly competitive with the Company's  contemplated  products and this company
would be Surgical's principal competitor in minimally invasive surgery.  Ethicon

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<PAGE>



Endo-Surgery has an agreement with Dr. Saye. However,  Dr. Saye's agreement with
the Company  specifically  provides  that it will not  compete  with the Ethicon
agreement.  Dr. Saye's agreement with Ethicon calls for him to travel to various
sites to conduct seminars and to provide teaching  services for physicians.  His
agreement  with  Surgical  conveys to Surgical  the right to market his Advanced
Laparoscopy  Trauma  Center  database.  Therefore  it is  believed  that the two
arrangements  do not  compete.  The Company  understands  that  Ethicon  devotes
considerable  resources to research and  development  and sales  efforts in this
field. Numerous other companies manufacture and distribute single use endoscopic
instruments.  In addition,  Richard Wolf Medical Instruments Corp. (a subsidiary
of Richard Wolf, GmbH) and Karl Storz  Endoscopy-America,  Inc. (a subsidiary of
Karl Storz, GmbH), would compete directly with the Company in this area.

               Surgical  faces  competition in its data service line by a system
developed  by the  University  of Virginia  and  promoted  by the  International
Healthcare  Worker Safety  Center.  Designated  EpiNet,  this is a single system
designed to track and report  bloodborne  pathogen  exposures in the  healthcare
setting.  It is installed in approximately  seventy (70) healthcare  facilities;
however,  Company  research  indicates  that EpiNet is  actually  used in only a
fraction of those  facilities.  This  research  was  assembled  by  interviewing
healthcare  workers  who were  users of the  system at the  American  College of
Surgeons annual meeting and by interviews  with members of the Medical  Advisory
Panel who are  familiar  with the  system.  This  system  has been  analyzed  by
infection  and  systems  control  experts  and has been  found  to be  "non-user
friendly".  That  is  because  it  is a  DOS  based  systems  which  requires  a
sophisticated  user, it is limited to bloodborne  pathogen programs and content,
it  requires  keyboard   interface  and  is  research  based  rather  than  user
information based. Although this system has been available for several years, it
has  not  achieved   large  market   acceptance   most  likely  because  of  the
characteristics which make it "non-user friendly".  The Company is encouraged by
the fact that EpiNet has been  installed in so many  facilities as evidence that
computer aided  reporting and services are desired by the  healthcare  community
and notwithstanding  EpiNet's failure to gain large market acceptance,  believes
that the  Company's  OASiS system could find greater  acceptance  because of its
ease of use due to the touch  access  concept  and the broader  availability  of
information which OASiS can provide on site.

               There are approximately two hundred (200) companies with at least
some products  designed to  facilitate  healthcare  training.  With a technology
shift toward  computer based training  ("CBT"),  this market is undergoing  some
redefinition.  Certain  companies  are  shifting  from a  VCR/booklet  format to
multimedia applications. Other companies are new and were formed specifically to
develop CBT programs for healthcare  training.  The Company  believes that these
competitors  are relying  upon the  healthcare  facility to provide the delivery
system, a personal computer,  for such training  programs.  The Company believes
that OASiS,  which offers a complete system,  software and hardware,  in a touch
access format, will have greater market attraction.

               The Company's  principal methods of competing are the development
of  innovative  products,  the  performance  and  breadth of its  products,  its
technically  trained  sales  force,  and  its  educational  services,  including
sponsorship  of  training  programs.  Most  of  the  Company's  potential  major
competitors  have greater  financial  resources  than the  Company.  Some of its
potential  competitors,  particularly Ethicon, have engaged in substantial price
discounting  and other  significant  efforts  to gain  market  share,  including
bundled  contracts  for  a  wide  variety  of  healthcare  products  with  group
purchasing   organizations.   In  the  current  healthcare   environment,   cost
containment  has  become  a  significant  factor  in  purchasing   decisions  by
hospitals. Additional cost effectiveness was one of the principle factors in the
redesign of  SutureMate(R)  and a principle  consideration  in the lease pricing
structure for OASiS.

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<PAGE>





               Surgical's  sales force is being  trained on an ongoing  basis to
focus on healthcare worker safety issues. In the ten (10) years prior to joining
the Company,  its President,  Mr. Clark, was instrumental in assisting three (3)
companies in establishing sales organizations within the healthcare industry. He
has  recruited,  trained and  supervised  these sales  organizations.  For these
reasons,  the Company believes that it has the management  expertise to have its
sales force  distinguish  itself from the competition.  More  specifically,  the
Company is developing a clear and concise  understanding  of the inherent safety
risks  associated  with  the  healthcare  worker's  everyday  work  place.  This
understanding  is  accomplished   through  its  personnel  which  has  extensive
experience  in  the  healthcare   industry,   medical   expertise,   engineering
capabilities,  communications skills with customers, as well as an understanding
of the medical marketplace and a variety of manufacturing practices. The Company
believes  that the end result is that it is able to provide the customer  with a
unique product or service specifically  developed with individualized safety and
utility in mind, while providing that product or service to the customer so that
its value exceeds its cost.

               One of the  biggest  attractions  to the  Company of a  strategic
alliance with US Surgical is the fact that U S Surgical  collaborates  with some
of the most  prestigious  academic  medical  centers  in the world to  establish
Centers of Excellence  for training in many diverse  disciplines.  These centers
are   devoted  to   teaching   residents   and   surgeons  in  the  use  of  new
instrumentation,  developing new technologies, conducting preclinical trials and
other  research  projects.  Under  the terms of the joint  venture  between  the
Company and U S Surgical, the OASiS system was to be installed in a total of ten
(10) of these Centers of Excellence  for an initial nine (9) month trial period.
Although such trials have not been  completed,  U S Surgical has entered into an
additional  agreement  for 200 units and a  potential  of 200 more.  In  today's
managed care environment, these multi-center installations are expected to bring
into sharper focus the cost benefits of a wide range of the Company's products.

               The Company  believes that the advantages of its various products
and its customer  assistance programs will continue to provide the best value to
its customers. However, there is considerable competition in the industry and no
assurance can be given as to the Company's competitive  position.  The impact of
competition will likely have an effect on sales volumes and on prices charged by
the Company.  In addition,  increased cost consciousness has revived competition
from reusable  instruments to some extent.  The Company believes that single use
instruments  are safer and more cost  efficient for hospitals and the healthcare
system  than  reusable  instruments,  but it cannot  predict the extent to which
reusable  instruments will  competitively  impact the Company.  The Company also
offers semi-disposable instruments,  components of which may be reused a certain
number of times, to respond to the preferences of its customers.

               Current and future  customers  were  interviewed at major medical
organization  exhibits.  Overall  statistics  indicate  that  50%  of  vascular,
thoracic and general  surgeons found the Compliance  Plus products to be useful,
safe and potentially  cost effective.  OB/GYN's  urologists and plastic surgeons
gave a 90% favorable evaluations,  while over 90% of surgical technologists gave
"high" to "very high" ratings to SutureMate(R) and MediSpecs Rx(TM). The Company
believes  that it has  chosen  a  developing  market  with  no  well-established
industry leaders at this time.  Further it believes that its products are unique
and  that by  maintaining  a  relatively  narrow  market  focus,  combined  with
technical expertise, that it can achieve rapid growth.




                                       35

<PAGE>



Sources and Availability of Raw Materials

               Raw  materials  necessary  for the hardware  requirements  of the
OASiS  system are  available  from  numerous  third-party  OEM's.  The  software
integrated into the assembled system is proprietary to the Company.

               Raw materials necessary for the manufacturer of parts, components
and packaging  supplies for all of the Company's  products  manufactured  by the
Medical  Products  Division  are readily  available  from  numerous  third-party
suppliers.

               The Company does not rely on any  principal  suppliers for any of
its raw materials. However, with regard to MediSpecs Rx(TM), the Company entered
into a manufacturing  agreement with Morrison, the initial term of which expires
in September 2000 and, with regard to SutureMate(R),  the Company has received a
price   quotation   from  Tuthill  for  the   manufacture   of  the   redesigned
SutureMate(R).

Dependence on Major Customers

               At the  current  time,  Surgical  is  reliant  upon  a few  major
customers for several of its products.  For the fiscal year ending  December 31,
1997,  the Company  derived  approximately  99% of its revenue from sales of its
OASiS to SMH.  For fiscal year ending  December 31,  1998,  the Company  derived
approximately  93% of its  revenue  from  technical  services  it provided to US
Surgical during a medical products convention.

               With regard to the OASiS system,  the Company is reliant upon its
agreement for the installation at SMH, its agreements with US Surgical for sales
revenues and further  exploitation of the system,  its arrangement with Rockford
for  the  financing  of the  leasing  to  facilities  and its  arrangement  with
Ad-vantagenet for completion of the Version 2.0 software.

               SutureMate(R)  sales  are  currently   principally  reliant  upon
in-house distribution and re-establishment of various distribution  arrangements
for generating revenues for this product.

               Due to the  failure  of the sales  efforts  by  Hospital  News of
Florida,  the Company is reliant on  in-house  sales  efforts  for it  MediSpecs
Rx(TM) product line and is considering dropping the line due to poor sales.

               Subject to the availability of additional funding, of which there
can be no assurance, the Company believes that it can increase its customer base
so that the loss of any one client will not adversely  impact upon the financial
condition of Surgical.

Research and Development

               The  Company   believes  that  research  and  development  is  an
important  factor in its future  growth.  The Company  has engaged in  extensive
product research and development.  The Company's  research and development group
(currently  consisting  of three (3) persons)  has at least four (4)  additional
products for the medical and healthcare  community,  all of which are in various
stages of  development,  from prototype to patent.  The Company has in the past,
and subject to the  availability of additional  funding may devote a substantial
amount of time to the  research  and  development  of products  within  distinct
product  lines.  Substantially  all of the products in research and  development
have been designed,  drawn, had preliminary  market research  conducted and have
been submitted for review to the Company's patent counsel.

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<PAGE>



               As a natural  by-product  of an active  research and  development
department,  some  product  concepts  have been  generated  which do not fit the
Company's  chosen  focus.  Several  surgical and  obstetrical  devices have been
designed and either will be licensed or sold outright to  appropriate  corporate
entities.

Patents, Copyrights and Trademarks

               Patents are significant to the conduct of the Company's business.
The Company owns four (4) patents on two (2) products. Dr. Swor was the inventor
who  originally  secured the patents  which he later  assigned to the Company in
exchange for stock.

               The Company's first medical device patent is United States Patent
No.  4,969,893,  issued on November 13, 1990 for  SutureMate(R),  The patent was
filed on June 16,  1989 and  covers a unique  surgical  suturing  device for its
suture cutting and needle rest utility.  Additional  patents (U. S. Patent No.'s
Des.  353,672 and  5,385,569)  were issued on December  20, 1994 and January 31,
1995 and both  were  filed  on May 21,  1993.  The  additional  patents  are for
surgical  accessories  to  SutureMate(R)  for both design and  utility.  Patents
number  4969893  and  353,672  are for a term of  seventeen  (17) years from the
issuance  date;  while patent  number  5,385,569 is for a term of fourteen  (14)
years from the issuance date.

               Prostasert(TM)  is the Company's second medical device on which a
patent was issued. This patent,  United States Patent No. 5,364,375,  was issued
on November 15, 1994 and filed on September 24, 1993. The patent covers a unique
device  designed to introduce  and maintain a precise  amount of  pharmaceutical
material to the uterine  cervix and upper  vagina.  This patent is for a term of
seventeen (17) years from the issuance date.

               The  Company  filed a Section  501(k)  notification  of intent to
market  SutureMate(R)  with the FDA.  On May 19,  1998,  the Company was granted
permission by the FDA to market this device.  Prostasert(TM) was listed with the
FDA under its original  name,  LaborMate on June 2, 1994.  No FDA  clearance was
required  because the components  were all FDA approved prior to assembly in the
Prostasert(TM) format.

               On June 1, 1998,  the  Company  filed for two (2)  patents on the
OASiS system which includes  propriety  aspects of the software,  algorithms and
reports,  as well as the  inservice  training  modules  which  are  owned by the
Company. Neither of these patents have been issued to date.

               The  Company  currently  has the  rights to several  new  product
concepts in various  stages of  development.  These  products  are  surgical and
obstetrical  devices  for which  patent  protection  is in  progress  or will be
initiated in the near future.

               The patents held by the Company  have  expiration  dates  ranging
from eight (8) to thirteen (13) years.

               The Company has an extensive  library of copyrighted  educational
and training  material related to occupational  safety and surgical  techniques.
These include the Surgical Safety Manual published in 1994, which was revised in
1996.

               The Company filed on July 1, 1993 for trademark registration with
the United States Patent and Trademark Office for SutureMate(R).  This trademark
was registered on April 5, 1994.

                                       37

<PAGE>



               The Company applied for trademark  registration on the Compliance
Plus on December  6,1996.  It was published for opposition on June 23, 1998. The
Company received an opposition and decided to withdraw its application.

               The Company  applied  for  trademark  registration  for the OASiS
Touch  Access  Information  on  April  29,  1998  and  the  examination  of this
application is pending.

               The Company applied for trademark  registration for TouchPort and
VirtualTouch Reality on November 16, 1998. Examination of these applications are
pending.

               The  Company  is not a  party  to  any  actions  claiming  patent
infringement of any of its products.

Governmental Regulation

FDA Approval

               Regulation by  governmental  authorities in the United States and
foreign  countries is a significant  factor in the development,  manufacture and
marketing  of the  Company's  proposed  products and services and in its ongoing
research and product  development  activities.  It is anticipated that virtually
all of the products  developed by the Company's  Medical Products  Division will
require regulatory approval by governmental agencies prior to commercialization.

               It is expected that many of the Company's products,  as presently
contemplated, will be regulated as medical devices. Prior to entering commercial
distribution, all medical devices must undergo FDA review under one or two basic
review  procedures:  a Section  510(K)  premarket  notification  ("510(K)") or a
premarket approval application ("PMA").

               A 510(K)  notification is generally a relatively  straightforward
filing  submitted to demonstrate  that the device in question is  "substantially
equivalent"  to  another  legally  marketed  device.  The  term   "substantially
equivalent"  for 501(K)  purposes  does not mean that a product  is not  unique.
Rather it means that a product can be  categorized  with  existing  products for
sterilization and safety purposes.  Pursuant to 21 C.F.R.  807.100(b),  the "FDA
will determine that a device is  substantially  equivalent to a predicate device
using the following criteria:  (1) [t]he device has the same intended use as the
predicate  device;  and (2)  [t]he  device:  (i)  [h]as  the same  technological
characteristics   as  the  predicate   device;   or  (ii)(A)   [h]as   different
technological  characteristics,  such as a significant  change in the materials,
design,  energy  source,  or other  features  of the  device  from  those of the
predicate  device;  (B) [t]he  data  submitted  establishes  that the  device is
substantially  equivalent  to the  predicate  device and  contains  information,
including   clinical  data  if  deemed  necessary  by  the  Commissioner,   that
demonstrates  that the device is as safe and as effective as a legally  marketed
device; and (C) [d]oes not raise different questions of safety and effectiveness
than the predicate  device."  Approval under this procedure is typically granted
within ninety (90) days if the product  qualifies,  however,  this procedure may
take longer.

               When the product does not qualify for  approval  under the 510(K)
procedure, the manufacturer must file a PMA which shows that the product is safe
and effective based on extensive  clinical testing among several diverse testing
sites and population groups,  and shows acceptable  sensitivity and specificity.
This  requires  much more  extensive  prefiling  testing  than  does the  510(K)
procedure  and  involves a  significantly  longer  FDA review  after the date of
filing.



                                       38

<PAGE>



               In the past, the Company's  products have been cleared by the FDA
under the 501(K)  expedited  form of pre-market  review or have not required FDA
approval. While the industry had for several years experienced lengthy delays in
the FDA approval process, more recently,  the timeliness of the FDA's review has
improved.  Timely  product  approval is important to the  Company's  maintaining
and/or obtaining a technological  competitive advantage.  Other than FDA product
approval  waiting  periods,  the Company has not  encountered  any other unusual
regulatory impediments to the introduction of new products.

                To the  extent the  Company  develops  products  for use in more
advanced  surgical  procedures,  the regulatory  process may be more complex and
time  consuming.  Some of the Company's  potential  future  products may require
lengthy  human  clinical  trials and the PMA  application  relating to class III
medical  devices.  The Company has no reason to believe that it will not be able
to obtain regulatory approval for its products,  to the extent efficacy,  safety
and other standards can be  demonstrated,  but the lengthy approval process will
require additional capital (of which there is no assurance that the Company will
be able to  secure),  risk of entry by  competitors  and risk of  changes in the
marketplace prior to market approvals being obtained.

               Overseas,  the  degree of  government  regulation  affecting  the
Company varies considerably among countries,  ranging from stringent testing and
approval  procedures in certain locations to simple  registration  procedures in
others,  while in some countries there is virtually no regulation of the sale of
the  Company's  products.  In the past,  when the  Company  had  active  foreign
distribution  agreements,  it had not  encountered  material  delays or  unusual
regulatory impediments in marketing its products internationally.  Establishment
of uniform  regulations for European Economic Area nations took place on January
1, 1995. The new regulations  subject the Company to a single  regulatory scheme
for all of the participating countries. Once the Company's domestic channels are
satisfied,   Surgical   will   commence  its  program  for  meeting   regulatory
requirements internationally. The Company expects that it will be able to market
its  products  in  Europe  with  a  single   registration   applicable   to  all
participating  countries. The Company also is establishing procedures to respond
to various local  regulatory  requirements  existing in all other  international
markets in which it intends to market its products should adequate  financing be
available.

               By letter dated May 19, 1993, the Company received  notifications
from the FDA that the 510(K)  notification of intent to market device related to
SutureMate(R)  had been received and reviewed,  and the FDA had determined  that
the device was  substantially  equivalent to the devices  marketed in interstate
commerce  prior to May 28, 1976.  The receipt of this letter allowed the Company
to immediately begin marketing and selling SutureMate(R).  The Prostasert device
was listed with the FDA on June 2, 1994 under its original name, LaborMate.

OSHA Mandatory Reporting of Illness and Injury

               Federal rules administered by the OSHA require healthcare workers
to report if they have been accidentally  stuck with a needle previously used by
a patient, or splashed by blood or bodily fluids.

               On February  11,  1997,  in the Federal  Register,  OSHA issued a
final rule,  effective March 13, 1997, that amended the Occupational  Injury and
Illness  Reporting  Regulation (29 CFR Part 1904) established in 1971. Under the
1971  regulation,  employers  were  required to collect and maintain  injury and
illness  data and have it  available  for OSHA to examine when they came on site
for an inspection.  It was determined that OSHA needed a separate  provision for
collection of data by mail.



                                       39

<PAGE>



               The final rule requires,  employers, upon request,  to  report to
OSHA their illness and injury data, in addition to the number of workers and the
number of hours worked in a designated  period.  It  establishes a mechanism for
OSHA to conduct an annual survey of ten (10) or more  employers by mail or other
remote  transmittal.  The specific  request may come  directly  from OSHA or its
designee,  e.g.,  the  National  Institute  of  Occupational  Safety  and Health
("NIOSH").

               The  rule  was   finalized   since   OSHA   believed   that  this
comprehensive data on worker injury and illness would provide more reliable data
suited to OSHA's needs than any other available source. The data also is planned
to  provide   information  to  target  OSHA  activities,   including   workplace
inspections;  to evaluate the  effectiveness  of  educational  programs;  and to
determine the need for additional standards.

               Under the  finalized  rule,  employers  have  thirty (30) days to
submit their data after the request is received.  Regulations set forth the type
of  information  which needs to be  collected.  Much of the  initial  injury and
illness information reported was taken from records which employers already were
required to create, maintain, and post.

               The  finalized   rule   provides  an  additional   incentive  for
healthcare  facilities  to implement  worker  safety and health  programs and to
provide  the  necessary  safety  equipment  and  supplies  to reduce the risk of
occupational illness and injuries.  Those healthcare  facilities which have good
health and safety programs will likely benefit from this rule.

               OSHA also initiated a number of  partnerships  with other federal
and  national  organizations  in an effort to reduce  the  increasing  number of
occupational  illnesses and injuries among workers. This effort was prompted, in
part,  by  OSHA's  inability  to  inspect  and  enforce  worker  safety  in  the
approximately  five million  (5,000,000)  work sites in the United States and to
collect  accurate  worker  injury and illness  data to assist in  targeting  the
approximately  8,000  annual  inspections  in the face of  continuing  shrinking
budgets.

               In August 1996, OSHA and the Joint Commission on Accreditation of
Healthcare  Organizations ("JCAHO") announced a three-year partnership to reduce
the increasing number of healthcare  worker-related  illnesses and injuries. The
announced goal of this partnership is to foster improvement in the management of
safety  and  health  issues  in  healthcare  organizations.  The  result is that
healthcare organizations face an additional authority testing OSHA compliance.

               This  partnership does not transfer any authority for enforcement
of OSHA  standards  to JCAHO.  Rather,  JCAHO  continues  to survey a healthcare
organization's  performance  against JCAHO's standards.  JCAHO surveyors monitor
how compliance with JCAHO meshes with OSHA's  expectations  related to heath and
safety of  employees.  When  deficiencies  are  identified,  the JCAHO  surveyor
provides guidance and educational materials.

               A specific  recommendation  based on a JCAHO standard can be made
only  when  an  OSHA  citation  has  already  been  issued  and  the  healthcare
organization has failed to take corrective  action to clear the citation.  If an
immediate threat to a worker's safety is found during a survey,  the facility is
cited by JCAHO  under  their  application  standards.  A  determination  is made
regarding  the  organization  receiving  conditional   accreditation  status  in
accordance with JCAHO policies and procedures.

               Most  hazards to workers in  healthcare  organizations  that have
been  identified  by both OSHA and JCAHO  resulted  from  injuries  and  illness
related to patient handling;  exposures to bloodborne  pathogens,  tuberculosis,
hazardous  drugs  and  anesthetic  gases;   workplace  violence;  and  fire  and
electrical hazards.

                                       40

<PAGE>



               Example of JCAHO  requirements  that are linked to OSHA standards
for worker  safety  include many of the  components of the  Environment  of Care
Standards (safety,  hazardous material and waste, emergency  preparedness,  life
safety, medical equipment, utility systems) and the Infection Control Standards.
The  1997  JCAHO  Accreditation  Manual  for  hospitals  includes  a  number  of
OSHA-related  examples of implementation of JCAHO standards to assist healthcare
organizations with compliance.

               Healthcare  organizations are able to demonstrate compliance with
JCAHO  standards  by advising  the  surveyors  how they meet both OSHA and JCAHO
requirements and by showing them OSHA documents and reports such as the OSHA 200
log of occupational illness and injury,  lockout/tag-out procedures,  bloodborne
pathogen  exposure  control plans and records of Hepatitis B  vaccination  among
workers exposed to blood and body fluids.

               In August 1996,  OSHA also announced a seven-state  initiative to
protect  workers in  nursing  homes and  personal  care  facilities,  one of the
nation's largest growing industries. The seven states include Florida, Illinois,
Massachusetts,  Missouri, New York, Ohio and Pennsylvania.  Nationwide there are
1.6  million  nursing  home  workers  in  more  than  21,000  facilities.  It is
anticipated that by the year 2005, the nursing home and personal care facilities
will be one of the largest  industries in the United States.  Potential  nursing
home hazards include back injuries from incorrect  and/or  strenuous  lifting of
residents,  slips  and  falls,  workplace  violence  and risks  from  bloodborne
pathogens, tuberculosis and other infectious diseases.

State and Local Licensing Requirements

               Other than the governmental  regulatory schemes listed above, the
Company is not  subject to any other state or local  regulations  which apply to
the operation and business of the Company.

Effect of Probable Governmental Regulation on the Business

               The Company is not currently  engaged in the  development  of any
product which would be categorized as therapeutic.  Under the current regulatory
scheme,  in the event any product of the Company  were  defined as  therapeutic,
then such therapeutic  product will be subject to regulation by the FDA and will
require  FDA  approval  before  it  may  be  commercially   marketed  for  human
therapeutic use in the United States.  The Company believes that any therapeutic
products to be developed by it will be regulated  either as biological  products
or as new drugs.  New drugs are subject to  regulation  under the Federal  Food,
Drug, and Cosmetic Act (the "FFDC Act"), and biological products, in addition to
being subject to certain  provisions  of the FFDC Act, are  regulated  under the
Public  Health  Service  Act.  Both  statutes  and the  regulations  promulgated
thereunder  govern,  among other  things,  the testing,  manufacturing,  safety,
efficacy,  labeling, storage,  recordkeeping,  advertising and other promotional
practices  involving  biologics or new drugs as the case may be. FDA approval or
other  clearances  must  be  obtained  before  clinical   testing,   and  before
manufacturing  and marketing,  of biologics or other  products.  At the FDA, the
Center for Biological  Evaluation and Research  ("CBER") is responsible  for the
regulation  of new  biologics  and the Center for Drug  Evaluation  and Research
("CDER") is responsible for the regulation of new drugs.

               Obtaining FDA approval for therapeutic  products has historically
been a costly and time consuming process.  Generally,  in order to gain approval
from  the FDA,  a  developer  first  must  conduct  preclinical  studies  in the
laboratory  and in animal model  systems to gain  preliminary  information  on a
product's  efficacy  and to identify any major  safety  problem.  The results of
these  studies are  submitted  as part of an  Investigational  New Drug  ("IND")
application, which the FDA must review before human clinical trials of an

                                       41

<PAGE>



investigational  drug  can  start.  The  IND  application  includes  a  detailed
description of the clinical investigations to be undertaken.

               In order to commercialize any therapeutic  products,  the Company
would be required to prepare and to file an IND application.  It must act as the
sponsor of product testing and will be responsible for planning,  initiating and
monitoring human clinical  studies which must be adequate to demonstrate  safety
and  efficacy.  The  Company  will be  responsible  for  selecting  well-trained
physicians  as  clinical  investigators  to  supervise  the  administration  and
evaluation of new products.  The Company,  however will bear the  responsibility
for monitoring the studies to ensure that they are conducted in accordance  with
the general  investigational  plan and  protocols  contained  in the IND.  Human
clinical  trials are normally  done in three phases.  Phase I trials,  which are
concerned  primarily with the safety and preliminary  effectiveness of the drug,
involve  fewer than 100  subjects,  and may take from six months to over a year.
Phase II  trials  normally  involve  a few  hundred  patients  and are  designed
primarily to demonstrate  effectiveness in treating or diagnosing the disease or
condition for which the drug is intended,  although  short-term side effects and
risks in people whose health is impaired may also be examined.  Phase III trials
are expanded  clinical trials with larger numbers of patients which are intended
to gather  the  additional  information  on safety and  effectiveness  needed to
clarify the drug's benefit-risk relationship,  discover less common side effects
and adverse reactions,  and generate  information for proper dosage and labeling
of the drug.  Human clinical  trials  generally take four to six years,  but may
take longer, to complete.

               The FDA  receives  reports on the progress of each phase of human
clinical  testing,  and  it  may  require  the  modification,   suspension,   or
termination of clinical trials if an unwarranted  risk is presented to patients.
There can be no assurance  as to the length of the clinical  trial period or the
number of patients the FDA will require to be enrolled in the clinical trials in
order to  establish  the  safety,  efficacy,  and  potency of the  products.  In
addition, it is uncertain that the clinical data generated in these studies will
be acceptable to the FDA to support marketing approval.

               After completion of clinical trials of a new therapeutic product,
FDA marketing  approval  must be obtained.  If the product is regulated as a new
biologic,  CBER will  require  the  submission  and  approval  of both a Product
License  Application  ("PLA") and an Establishment  License  Application ("ELA")
before  allowing  commercial  marketing  of  the  biologic.  If the  product  is
classified as a new drug, the Company must file a New Drug  Application  ("NDA")
with CDER and receive approval before commercial  marketing of the drug. The NDA
or PLA must  include  results of product  development,  preclinical  studies and
clinical trials. The testing and approval processes require substantial time and
effort  and there can be no  assurance  that any  approval  will be granted on a
timely  basis,  if at all.  NDA's and PLA's  submitted  to the FDA can take,  on
average, two years to receive approval. If questions arise during the FDA review
process,  approval can take longer.  Notwithstanding  the submission of relevant
data,  the FDA may  ultimately  decide  that the NDA or PLA does not satisfy its
regulatory criteria for approval and require additional  clinical studies.  Even
if FDA  regulatory  clearances  are obtained,  a marketed  product is subject to
continual review,  and later discovery of previously unknown problems or failure
to comply with the applicable regulatory requirements may result in restrictions
on the  marketing of a product or  withdrawal  of the product from the market as
well as possible civil or criminal sanctions.

               Other than the government  regulations  previously discussed with
reference to FDA and OSHA, the Company does not believe that there are any other
effects from probable government  regulation,  including state or local laws, on
the business.




                                       42

<PAGE>


Cost of Research and Development

               For fiscal years 1997 and 1998, the Company expended $113,740 and
$34,536 of its  revenues,  respectively,  on  research  and  development.  These
expenditures represented 44.5% and 81.5%, respectively, of the total revenues of
the  Company  for such  fiscal  years.  The  principal  decrease  in the cost of
research and  development  for fiscal 1998 from 1997 was the  reduction in cost,
time and  expenses  incurred  through  the use of  Ad-Vantagenet  as  opposed to
MediaWorks for the enhancement of the OASiS system and the completion of Version
2.0.

               At the current time,  none of the costs  associates with research
and  development  are  bourne  directly  by the  customer;  however  there is no
guarantee  that such costs will not be bourne by customers in the future and, at
the current time,  the Company does not know the extent to which such costs will
be bourne by the customer, if at all.

Cost and Effects of Compliance with Environmental Laws

               The Company's  business also could be subject to regulation under
the state and Federal laws  regarding  environmental  protection  and  hazardous
substances  control,  including  the  Occupational  Safety and Health  Act,  the
Environmental  Protection  Act, and Toxic  Substance  Control Act. In 1992,  the
United  States  Congress  expressed  increasing  interest in the issues of sharp
injuries.   The  House   Subcommittee  on  Regulation  held  hearings  regarding
needlestick  injuries and the  implementation  of mandated  guidelines  on safer
medical devices.  However, the Company is unaware of any bills currently pending
in  Congress  on  this  issue.  The  Company  believes  that  it is in  material
compliance  with the current and other  applicable  laws and that its  continual
compliance therewith will not have a material adverse effect on its business.

Employees and Consultants

               As of December 31, 1998, the Company  employed seven (7) persons,
under its  arrangement  with Staff,  on a full time basis,  including  personnel
added in 1998 to perform sales and marketing functions.  None of these employees
are  represented  by a labor union for purposes of  collective  bargaining.  The
Company considers its relations with its employees to be excellent.

               In October 1996, the Company entered into a staff/client  leasing
agreement  whereby  Staff leases all existing and new  employees to the Company.
The  initial  term of the  agreement  was for one (1)  year.  The  agreement  is
automatically  renewable  on a monthly  basis until  renewed for a fixed term or
terminated.  The agreement  remains open on a monthly basis.  All of the persons
described  herein to be employees of the Company are covered by this  agreement,
since Staff and the Company treat these employees as co-employees.

               Staff  is  licensed  by  the  Florida   Department   of  Business
Regulation as an Employee  Leasing  Company.  Under the Florida Employee Leasing
Licensing Act of 1991 (the "Florida  Licensing Act"), not only must the employee
leasing company be licensed but their  controlling  persons must be as well. The
Florida  Licensing  Act  mandates  reporting  requirements,   allocates  several
employer  responsibilities  and requires the payment of an annual  licensing fee
based upon gross  payroll  amounts.  The  Florida  Licensing  Act also  requires
employee leasing  companies such as Staff to: (i) reserve the right of direction
and control over leased employees, (ii) enter into written agreements with their
clients,  (iii) pay  wages to leased  employees,  (iv) pay and  collect  payroll
taxes,  (v)  maintain  authority  to hire,  terminate,  discipline  and reassign
employees,  and (vi) reserve the right to direct and control the  management  of
safety, risk and hazard control at the worksite,  including the right to perform
safety inspections, to promulgate and administer employment and safety policies,
and  to  manage  Workers'  Compensation  claims,  claims  filings,  and  related
procedures.  A recently  enacted  statutory  provision  allows employee  leasing
companies to eliminate certain liability for acts of the employees who are under

                                       43

<PAGE>



the actual  control of their  client by  assigning  such  actual  control to the
client.

               Under the terms of the written  agreement  between  Staff and the
Company,  Staff  pays  the  employees,  collects  and pays  the  payroll  taxes,
maintains the authority to hire,  terminate,  discipline and reassign  employees
and reserves the right to direct and control the employee, except for those acts
which have been  specifically  assigned  pursuant to the  amendment  executed in
September 1999.

               On  March  30,  1998,  the  Company  entered  into  a  Consulting
Agreement with Stockstowatch  whereby  Stockstowatch  agreed to provide investor
relations services as a media consultant to the Company in exchange for issuance
of 300,000 share of the Company's  Common Stock. The agreement was for a term of
six  (6)  months  which  was  renewable  at the  option  of the  Company  for an
additional six (6) months.  The services were provided on a non-exclusive  basis
since  Stockstowatch is in the business of providing such services to companies.
After an initial due diligence  period,  Stockstowatch  was  responsible for all
costs associated with providing the services  required under the agreement.  The
SEC brought an action  against  Stockstowatch  alleging  that they  violated the
anti-fraud  and  anti-touting  provisions  of the federal  securities  laws with
reference  to the shares  which it received  from the Company for  services.  No
allegations  have been made that the Company acted improperly with regard to the
alleged charges. The Company has terminated its dealing with this firm.

               On June 30,  1998,  the Company  executed a letter of intent with
Ad-vantagenet.  Under the terms of the letter of intent,  Ad-vantagenet assisted
in the creation of version 2.0 OASiS  software,  including  creating the art and
graphics.  Version  2.0 is designed  to allow for more  dynamic  features on the
system including  instant updates,  information-gathering  and editing features.
The Company chose  Ad-vantagenet  to complete  Version 2.0 after  unsatisfactory
results  were  achieved  by  Gambit,  Inc.,  d/b/a  MediaWorks.   The  functions
Ad-vantagenet is currently incorporating into Version 2.0 include features which
had been requested of MediaWorks but were not provided. The total projected cost
of the  Ad-vantagenet  project  is  one-fourth  of  the  cost  which  MediaWorks
projected. The Company was in litigation with MediaWorks over the termination of
their  agreement.  (See Part II,  Item 2. "Legal  Proceedings.")  Subject to the
successful  completion of the letter of intent project with  Ad-vantagenet,  the
Company intends to enter into a more structured, long-term agreement for further
OASiS development with Ad- vantagenet or similar company.

               In October 1998, the Company entered into an agreement with T.T.
Communications,  Inc. to provide  investor  relations  services for the Company.
T.T.  Communications,  Inc.'s function is to contact investment and media people
throughout  the  United  States  and  to  participate  in  the   preparation  of
communication  packages including annual and quarterly  reports,  news and press
releases and publicity and corporate  profiles.  The initial agreement was for a
period of three (3) months for which T.T.  Communications,  Inc. received $2,000
per month  and  reimbursement  of out of  pocket  expenses.  In  addition,  T.T.
Communications,  Inc.  was  granted  options to  purchase  25,000  shares of the
Company's  Common  Stock at an  exercise  price  of  $1.50.  In the  event T. T.
Communications, Inc. introduces the Company to a suitable financing source, they
will be  compensated  by a cash  finder's  fee  equal  to  1.5%  on the  initial
financing and .75% on any subsequent  financing.  The agreement is cancelable by
either  party with 30 days  written  notice.  The Company  continues to use T.T.
Communications, Inc. on a month to month basis.



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<PAGE>



               In April, 1999, the Company  executed a Consulting and Assistance
Agreement  with  Koritz  Group  LLC, a  Connecticut  limited  liability  company
("Koritz").  The company exercised its right to cancel the agreement on July 30,
1999. Under the terms of this agreement,  Koritz was engaged to identify sources
of capital or potential business  relationships and to assist the Company in (i)
raising equity or debt financing in the amount of $15,000,000 (ii) arranging for
trade financing for  production,  sale,  lease,  rental or other disposal of the
Company's  products;  and (iii) arranging for the sale, merger, or consolidation
of the  Company  or  for  joint  ventures  or  strategic  alliances  with  other
appropriate business. This agreement was non-exclusive.  In the event Koritz was
successful,  the Company was to pay compensation to Koritz equal to 2.5% for any
trade financing and 10% of the value of each business arrangement.  In the event
Investment  Financing was secured,  the Company was to pay compensation equal to
10%  for  any  investment  financing  to  the  person  or  entity  placing  such
investment;  provided  such  person or entity  was  qualified  to  receive  such
compensation in the state of residence of the investor.  The Company was free to
reject any offered  financing or  arrangements;  however,  in the event that the
Company entered any  arrangement  within 180 days of its written  rejection,  on
terms  less  favorable  to the  Company,  Koritz  was to  receive  a flat fee of
$100,000. In addition to the cash compensation, in the event the Company secured
investment  financing,  then the  qualified,  placing  person or  entity  was to
receive  warrants to purchase  the  Company's  Common Stock  exercisable  for 36
months after the closing at the same price as the  investment  financing  source
received,  the  number  of which  warrants  would be equal to the  amount of the
financing   divided  by  the  exercise   price.   Such  warrants  were  to  have
anti-dilution  and  piggy-back  registration  rights.  In the event the  Company
"shopped" any offer of financing  presented to it to other potential sources and
accepted such other financing,  the Koritz was entitled to a success fee. Koritz
was to be reimbursed  pre-approved  disbursements  and  expenses.  The agreement
provided for  confidentiality  and  cross-indemnification  . The  agreement  was
subject to cancellation  by either party with five (5) days written  notice.  It
was under this  provision  that the Company  terminated  this  agreement on July
30,1999.  Any  disputes  under the  agreement  were  required to be submitted to
arbitration, with costs payable by the losing party.

               In April 1999, the Company  entered into an agreement with KJS to
provide consulting  services.  The agreement is on a non-exclusive basis and has
no defined term. The agreement provides for such services to be performed in two
phases.  Under phase one, KJS is to assist in the development of a comprehensive
business plan and assist the Company in  positioning  such plan with the capital
markets with a view towards finding potential business combinations, mergers and
compressed time tables for the Company's business  strategy.  The estimated cost
of this  phase is  $5,000.  Under  phase  two,  KJS is to  identify  appropriate
financial  institutions and distribute the plan,  analyze the initial  feedback,
arrange meetings, evaluate all proposals,  provide management with each proposal
and assist in the  negotiations.  Upon  execution,  the Company was  required to
commit to pay a $5,000  retainer  to cover the  estimated  phase one costs.  KJS
agreed to  accept  7,000  shares of the  Company's  common  stock  valued at the
current  bid  price of $.50 as part of such  retainer  and with the  balance  of
$1,500 to be paid in cash at such time as KJS  introduces  the  Company  to five
institutional  funding sources.  Phase two compensation will be paid in the form
of common  stock equal to 1.5% of the funds  raised from the capital  markets in
the form of a spin-off of the OASiS division and 10% of any mezzanine  financing
from any source introduced by KJS.

               In April 1999,  the Company issued 2,000 shares each to David Utz
and  Robert  Wingate,  two  consultants  of the  Company,  in lieu of cash,  for
services  relating to their production of a CD-Rom disc to be used promote OASiS
in lieu of cash. Such 4000 shares were valued at $2,250 which was based upon the
closing price for the shares on the dates the services were dut to be paid. Such
offering was made in reliance to Section 4(2) of the Act and Rule 506.


                                       45

<PAGE>



               In May 1999, the Company entered into an agreement with Ten Peaks
to pay a finder's fee for successfully  securing  specifically defined financing
for the Company.  Such  financing  included  finding a strategic  partner and/or
financial  partner  who  secures  equity  in the  Company  or a stake in  future
revenues.  Ten Peaks was to provide advice on long-term business,  financial and
strategic decisions. The term of the agreement was for three (3) months from the
execution  date and it  expired  on  August  13,  1999.  Upon  execution  of the
agreement,  the  Company  was  required to commit to pay a retainer of $4,000 to
cover all  anticipated  out of pocket expenses during the term. Ten Peaks agreed
to accept 6,000 shares of the  Company's  common stock in lieu of such  retainer
provided such stock had a fair market value as reported on Bloomberg, LLP on the
date of execution of not less than $.66. In the event the Company's  shares were
trading for less, the difference  between $4,000 and the value of the shares was
to be paid in cash. In the event the Company  receives  gross  proceeds of up to
$2,000,000, Although obligated to issue such shares, the Company does not intend
to deliver them to Ten Peaks since the Company believes that Ten Peaks failed to
perform  as  agreed.  Ten Peaks  was to  receive  an amount  equal to 5% of such
proceeds in the form of cash,  equity or some combination  thereof.  Thereafter,
Ten Peaks was to receive a sliding scale equal to 4% of the next million,  3% of
the fourth million,  2% of the fifth million and 1% for each additional million.
In the  event  the  Company  entered  into a  transaction  as a  result  of this
agreement, it was to enter into a consulting agreement with Ten Peaks for a term
of six months under which Ten Peaks was receive $5,000 in cash or equity.

               Other than the commitments relative to the initial retainers,  no
other payments have been made to either KJS or Ten Peaks. Since execution of the
KJS agreement the Company has been advised that fees and commissions  related to
transactions  in  securities  may only be paid to  those  legally  qualified  to
receive such payments in  accordance  with  regulations  under Federal and state
securities  laws. The Company is in the process of modifying this agreement such
that only  appropriate  payments  will be made in the event of  placement of any
equity in the Company from sources  identified  by KJS. The Ten Peaks  agreement
expired without any additional payments.

Item 2.  Description of Property

        The  Company's  executive  offices  are  located  at 2018  Oak  Terrace,
Sarasota,  Florida  34231.  Its  telephone  number  is  (941)  927-7874  and its
facsimile number is (941) 925-0515.

        The Company pays rent in the amount of $3500 per month which consists of
3,500 square feet of office space.  The lease is for a term of two (2) years and
is automatically renewable for an additional year. The initial term of the lease
expires in May 2000. The property is owned by Savannah Leasing which is owned by
Dr. and Mrs. Swor. The Company first rights of refusal on surrounding properties
owned by Savannah  Leasing and therefore  believes that the leased space and the
property  under the first rights of refusal will be sufficient for its corporate
offices for the next ten (10) years.

        The Company owns no real property and its personal  property consists of
furniture,  fixtures and equipment,  prototype molds and leasehold  improvements
with an original cost of $155,930 on December 31, 1998.

        The Company  currently  employs its capital  reserves in a money  market
sweep account. Activity is monitored on a daily basis and for a month commencing
on  August  1,  1999,   had  returned  on  average  4.1%  on  assets   employed.
Additionally,  Surgical has acquired stock in two (2) privately owned companies,
25,000 shares in ParView Inc. as part of its acquisition of Endex Systems Inc.,

                                       46

<PAGE>



and 3,750 shares in Linters Inc. which was received as partial  compensation for
clinical products research completed by the Medical Consultants  Division. It is
the Company's  strategy to engage in transactions which minimize dilution of the
Company's equity.

Item 3.  Legal Proceedings

               In August 5, 1997,  the Company  entered into an  agreement  with
Gambit,  Inc.,  d/b/a MediaWorks  ("MediaWorks")  as a producer of record of the
Surgical  Safety  Network,  now  known  as  OASiS.  Pursuant  to the  agreement,
MediaWorks  estimated  the  cost of its  work  on the  project  at no more  than
$217,000,  a portion  of which  was to be paid  over a three  (3)  month  period
against  billable  hours,  with the balance less $60,000 payable after the third
payment at an amount equal to not less than fifty  percent  (50%) of  Surgical's
revenue stream after operating expenses, sales, marketing and hardware equipment
costs for all installations after the SMH contract.  Subject to on-time delivery
of the work to be performed,  Surgical  agreed to pay, as a  performance  bonus,
unrestricted  Common Stock equal to twenty five percent  (25%) of the total cost
of the SMH  project,  with the number of shares  determined  by the value of the
Company's Common Stock at the time of issuance.  Further, it was understood that
all  material  and  production  rights,   including  source  codes  and  related
documentation,   upon  completion  of  the   presentation  and  payment  of  the
outstanding balance, would become the property of Surgical.

               On July 13,  1998,  the  Company  was served  with a Summons  and
Complaint for an action brought  against it by MediaWorks.  (Gambit,  Inc. d/b/a
MediaWorks  v.  Surgical  Safety  Products,  Inc.,  Circuit Court of the Twelfth
Judicial  Circuit,   Sarasota  County,  Florida,  Case  No.  98-4022-CA-01)  The
Complaint  sets  forth  three (3)  causes of  action:  an  action  for  specific
performance  demanding that Surgical issue 289,720  shares  unrestricted  shares
based upon the twenty  five  percent  (25%) of the cost of the SMH  installation
divided by the share price on February 20, 1998 of the  Company's  Common Stock;
in the  alternative  seeking  damages  in the amount of  $732,993  which was the
number of shares determined by the formula multiplied by the share price on July
1, 1998 of the Company's  Common Stock;  and seeking an accounting  based upon a
dissolution  of  the  partnership  which  MediaWorks  alleges  was  formed  with
Surgical.

               On or about July 31, 1998,  the Company  filed Motions to Dismiss
and for a More Definite Statement of Count II of the Company. The purpose of the
Motion for a More Definite  Statement was so that the plaintiff will clarify how
they contended they are entitled to the stock bonus so that Surgical could frame
its defense and show defects,  delays and  deficiencies  in the  performance  by
MediaWorks.  Surgical believed that MediaWorks failed to perform on the contract
since the OASiS  version 1 software had problems and that  MediaWorks  failed to
meet  performance and delivery  requirements as agreed.  Therefore,  the Company
believed that it had just and  meritorious  defenses and  counterclaims  to this
action.  Pursuant to a settlement  agreement dated December 1, 1998, the Company
agreed to make two types of  payments in exchange  for  dismissal  of the action
with prejudice:  (1) to pay MediaWorks $50,000 and (2) to issue 40,000 shares of
Rule 144 stock. See Part II, Item 4. "Recent Sales of Unregistered  Securities."
MediaWorks  was permitted to remove its software from SMH and agreed to return a
computer to the Company.  The suit was dismissed  with  prejudice and each party
paid their own costs of the case.

               The Company knows of no other legal  proceedings to which it is a
party  or to  which  any of its  property  is the  subject  which  are  pending,
threatened or contemplated or any unsatisfied judgments against the Company.

Item 4.  Submission of Matters to a Vote of Security Holders

                                       47

<PAGE>



        There  were no matters  submitted  to the vote of the  security  holders
during the fourth quarter 1998.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

        (a)    Market Information.

        The  Common  Stock of the  Company is quoted on the OTC  Bulletin  Board
under the symbol "SURG".  The high and low bid  information for each quarter for
the years ending December 31, 1996,  December 31, 1997 and December 31, 1998 and
for the first two quarters of 1999 are as follows:

<TABLE>
<CAPTION>
Quarter                  High Bid            Low Bid        Average Bid
<S>                      <C>                 <C>            <C>

First Quarter 1996              1/4            3/16            .218
Second Quarter 1996             3/4            1/8             .445
Third Quarter 1996              1/4            1/8             .177
Fourth Quarter 1996             1/4            1/8             .176
First Quarter 1997              1/4            3/32            .135
Second Quarter 1997             1/4            3/32            .106
Third Quarter 1997              3/8            1/8             .183
Fourth Quarter 1997             9/64           1/8             .132
First Quarter 1998             29/32           9/64            .215
Second Quarter 1998            3-1/8          11/16           2.299
Third Quarter 1998             2-9/64        1-9/64           1.646
Fourth Quarter 1998            31/32          17/32            .750
</TABLE>

               The quotations may reflect  inter-dealer  prices,  without retail
mark-up, mark-down or commissions and may not reflect actual transactions.


        (b)    Holders.

               As of December 31, 1998,  the Company has 1,080  shareholders  of
record of its 10,786,973  outstanding shares of Common Stock, 6,244,290 of which
are restricted  Rule 144 shares and 4,542,683 of which are  free-trading.  As of
the date  hereof,  the Company  has  outstanding  options to purchase  5,557,764
shares of Common Stock  (without  regard to the  additional  options to Dr. Saye
which accrue at the rate of 8,333 per month). Of the Rule 144 shares,  5,177,386
shares have been held by affiliates of the Company for more than one (1) year.

        (c)    Dividends.

               The  Company  has never paid or  declared  any  dividends  on its
Common Stock and does not anticipate  paying cash  dividends in the  foreseeable
future.

               There are no limitations on the ability of the Company to declare
dividends;  except  those set  forth in New York  Statute  510  which  prohibits
dividends if the Company is insolvent or would be made  insolvent  by the

                                       48

<PAGE>



declaration of a dividend and all dividends must be made out of surplus only.

Item 6.  Management's Discussion and Analysis or Plan of Operation

Discussion and Analysis

               The Company was founded in 1992 to combat the potential spread of
bloodborne pathogenic infections such as HIV and hepatitis. It has broadened its
mission to  research,  develop,  manufacturing,  marketing  and selling  medical
products and services to the healthcare community.

               The Company was in the development stage until 1993 when it began
commercial  shipments of  SutureMate(R),  its first  product.  From inception in
June,  1992  through  December  31,  1998,  the  Company  generated  revenues of
approximately  $1,100,000  from a limited number of customers.  Since  inception
through  December  31,  1998,  the Company has  generated  cumulative  losses of
approximately  $1,690,000.  Although the Company has  experienced  a significant
percentage  growth in revenues from fiscal 1992 to fiscal 1998, the Company does
not believe  prior  growth rates are  indicative  of future  operating  results,
especially  in  light  of  the  contract  with  US  Surgical  to  assist  in the
introduction  of OASiS.  Due to the  Company's  operating  history  and  limited
resources,  among other factors, there can be no assurance that profitability or
significant  revenues on a quarterly  or annual  basis will occur in the future.
Moreover,  the Company expects to continue to incur operating  losses through at
least the first half of 2000, and there can be no assurance that losses will not
continue after such date. The Company had  commitments  for  installations  in a
total of 12 hospitals on or before June 30,  1999,  ten of which  related to the
agreement  with  US  Surgical  and  two  are a  result  of the  Company's  sales
department.  As of the date hereof the Company has  completed  installations  of
fourteen  (14)  units in seven  (7)  hospitals,  five (5) of which are under the
Short Term Agreement.  Installation of the remaining units under the US Surgical
Short Term Agreement have been merged into the Long Term Agreement.

               With the  implementation of its agreement with US Surgical and in
the event of the reactivation of its various distribution agreements and/or with
the establishment of one or more strategic alliances in addition to US Surgical,
the  Company  expects to  experience  a period of growth,  which  requires it to
significantly  increase the scale of its operations.  This increase will include
the  hiring of  additional  personnel  in the areas of (i)  customer  service to
provide technical support for the hospitals where  installations are located and
(ii) technical  staff to make changes  requested by those  hospitals.  This will
result in  significantly  higher operating  expenses.  The increase in operating
expenses is expected to be partially funded by an increase in revenues. However,
the  Company's  net loss may  continue to increase.  Expansion of the  Company's
operations may cause a significant strain on the Company's management, financial
and other  resources.  The  Company's  ability to manage recent and any possible
future growth,  should it occur, will depend upon a significant expansion of its
sales and  marketing,  research and  development,  accounting and other internal
management  systems  and the  implementation  and  subsequent  improvement  of a
variety of systems,  procedures  and  controls.  There can be no assurance  that
significant  problems in these areas will not occur. Any failure to expand these
areas and  implement  and improve such  systems,  procedures  and controls in an
efficient  manner at a pace consistent with the Company's  business could have a
material  adverse  effect on the  Company's  business,  financial  condition and
results  of  operations.  As  a  result  of  such  expected  expansion  and  the
anticipated  increase in its operating  expenses,  as well as the  difficulty in
forecasting  revenue  levels,  the Company  expects to  continue  to  experience
significant fluctuations in its revenues, costs and gross margins, and therefore
its results of operations.

                                       49

<PAGE>




               The Company's plan of operations for the next twelve months is to
focus on  building  revenue  from the  installation  of the OASiS  system in the
hospitals  designated  by US  Surgical  under the Short  Term  Agreement  and to
install  additional  OASiS  systems  in  hospitals  not  under  the US  Surgical
agreement  but with whom the  Company has begun  negotiations  and in some cases
reached a commitment. Additionally, the Company intends to install the inservice
modules from US Surgical and other medical product  manufacturers at both the US
Surgical  and the other  hospitals.  The Company  also is  aggressively  seeking
strategic  alliances with targeted  industry  partners such as  manufacturers of
devices,  manufacturers of pharmaceuticals,  professional  organizations such as
nursing associations and hospital group purchasing  organizations and integrated
health networks.

               The Company  estimates  that if it is successful in  consummating
new strategic alliances,  the agreements will provide for infusion of sufficient
capital to fund  ongoing  operations  for the  balance of the year.  The Company
estimates  revenues  from an expanded base of content  providers and  individual
installations may grow to the level where they can support ongoing operations.

               The Company  estimates  that  revenues will be sufficient to fund
ongoing  operations at the current level when the number of OASiS  installations
reaches  approximately  100 to 125 and the  total  number of  inservice  modules
reaches  approximately  150. The Company has purchased 20 OASiS units from Kiosk
Information Systems, Inc., which were installed under the US Surgical agreements
and at St. Francis Hospital.  Based upon potential additional  commitments,  the
Company  believes  that if it were to order 20 more  units,  that all such units
would be placed by the end of 1999. The Company already has 32 inservice modules
under the US Surgical agreement and is in discussion with various  manufacturers
interested  in using  OASiS to  inservice  more than 50 of their  products.  The
Company believes that each of the initial  installations  should have a position
as to long term  acceptance  within  three (3) to six (6)  months  and that this
initial time is the test period to determine the potential for market acceptance
at that  hospital.  In the case of US  Surgical  hospitals  under the Short Term
Agreement,  this period will be for nine (9) months by  contract.  At the end of
such test period, the Company believes it will be in a position to execute three
(3) year leases and finance such leases through a leveraged leasing  arrangement
with Rockford or a similar funding source.

               In the short term, to fund operations through the fourth quarter,
1999,  the  Company  will be required to seek  additional  funds from  strategic
alliances  with  potential  clients its  shareholders,  from a limited number of
accredited investors in a private placement of its restricted  securities,  from
additional  third party  financing or seek third party debt or equity  financing
other than those planned by the current  anticipated  private placement.  In the
event no such funding is available or only  partial  funding is  available,  the
Company will be required to scale back  operations  and to reduce its  breakeven
point by such measures as salary reductions,  staffing cuts, or the licensing or
sale of some of the Company's assets or product lines to third parties. Provided
such funding or scale back is successful,  the Company believes that it can meet
its capital needs through the testing  period and until such time as the Company
has sufficient additional long-term capital to expand. There can be no assurance
that the Company will be successful in these efforts.

               Once the testing period is over, the Company will require between
$2 and $5  million in  additional  capital in the form of debt or equity to fund
the  continued  expansion  of the  OASiS  system  and  its  development  to meet
increased  demand and to  implement  its plans for  increased  marketing  of its
medical device products. The Company has met with several venture capital firms,
investment bankers, factoring companies and traditional lending sources, each of
whom have expressed  early interest and many of whom are awaiting the conclusion
of the testing period. The Company has  accepted no definite  offer.  There can

                                       50

<PAGE>



be no assurance that such  long-term  financing will be available to the Company
or that it will be on terms that the Company may seek.

Results of Operations - Full Fiscal Years

Revenues

               To date, a limited  number of  customers  and  distributors  have
accounted  for  substantially  all of the  Company's  revenues  with  respect to
product sales. For the fiscal year ending December 31, 1997, the Company derived
approximately 99% of its revenue from sales of its OASiS to SMH. For fiscal year
ending December 31, 1998, the Company derived  approximately  93% of its revenue
for product sales from  technical  services it provided to US Surgical  during a
medical products convention.

               The  Company  anticipates  that  the main  focus  of its  selling
efforts will be to focus on the US Surgical  arrangement and to continue to sell
its products to a relatively small group of medical products  distributors  with
the  objective  of having  its  products  distributed  on a large  national  and
international  scale.  Although  the  Company  had  entered  into  an  exclusive
distributorship  agreement  with Johnson & Johnson  Medical Pty Ltd. to sell its
SutureMate(R) product (in the territories of Australia,  New Zealand, Papua, New
Guinea and Fiji), Noesis for sales in Europe, and with two other distributors to
sell  such  product  in  Saudi  Arabia  and  the  Netherlands,   none  of  these
arrangements  are  currently  active.  And,  although  the Company is  currently
engaged in a joint marketing  agreement with US Surgical,  there is no assurance
that the Company will be able to obtain adequate distribution of its products to
the intended end user. Most medical product distributors carry an extensive line
of  products  (some  of which  they  manufacture  themselves)  which  they  make
available to end users (hospitals,  surgeons, healthcare workers) and various of
these  products  may  compete  with each  other as to  function,  price or other
factors. In addition,  numerous medical product  distributors are not themselves
well  capitalized  and their  financial  condition  may impact their  ability to
properly distribute the Company's products.

               The  Company's  ability to achieve  revenues  in the future  will
depend in  significant  part upon its ability to obtain  orders  from,  maintain
relationships  with and provide support to, existing and new customers,  as well
as the condition of its customers.  As a result, any cancellation,  reduction or
delay in orders by or shipments to any customer or the inability of any customer
to finance its  purchases of the  Company's  products may  materially  adversely
affect the Company's  business,  financial  condition and results of operations.
There can be no  assurance  that the  Company's  revenues  will  increase in the
future.  In addition,  the Company  expects that the average  selling price of a
particular  product  line will also  decline  as such  products  mature,  and as
competition  increases  in the future.  Accordingly,  the  Company's  ability to
maintain or increase  revenues  will depend in part upon its ability to increase
unit sales  volumes of its products and to introduce and sell products at prices
sufficient to compensate  for reduced  revenues  resulting  from declines in the
average selling price of the Company's more mature products.

Net Sales

               For the year ended December 31, 1997, net sales and cost of sales
of $248,760 and $22,002 respectively,  related primarily to the sale of four (4)
units of the OASiS system to one customer. Net sales for the year ended December
31,  1998 of  $16,545  are  comprised  of  sales  of the  Company's  proprietary
SutureMate(R) products, MediSpecs Rx(TM) eyewear and technical services provided
to US Surgical.  Product sales and related cost of sales  amounted to $1,203 and
$5,560,  respectively  for the  year  ended  December  31,  1998.  Cost of sales
includes a write-down of approximately $4,500 for defective units of the

                                       51

<PAGE>



re-designed  SutureMate(R).  There were no sales of the OASiS system during 1998
due to the Company's focus on enhancements to the product design and development
of a new version of the product.

               The  Company  has an  ongoing  program  to  reduce  the  costs of
manufacturing  its  products.  As part of this  program,  the  Company  has been
attempting  to achieve  cost  reductions  principally  through  engineering  and
manufacturing  improvements,  product  economies and  utilization of third party
subcontractors for the manufacture of the Company's products.  Notwithstanding a
delivery of defective  units, to date, it has been  successful in  substantially
reducing  such costs by  redesigning  SutureMate(R).  The  success of these cost
reduction  programs  will not be known until  production  volumes are scaled up.
There can be no assurance that the Company's  ongoing or future  programs can be
accomplished or that they will increase gross profits.

               To the  extent the  Company  is unable to reduce  its  production
costs or introduce new products with higher  margins,  the Company's  results of
operations could be materially  adversely  affected.  The Company's  results may
also be affected by a variety of other  factors,  including  mix of products and
services sold; production,  reliability or quality problems;  price competition;
and warranty expenses and discounts.

Operating Expenses

               Sales and  Marketing:  These  expenses  consist  of  advertising,
meetings and conventions and  entertainment  related to product  exhibitions and
the  related  travel   expenses.   Since   inception,   the  Company  has  spent
approximately  $359,000  on sales and  marketing  expenses.  For the years ended
December  31, 1997 and  December 31, 1998,  sales and  marketing  expenses  were
$62,028  and  $265,261,   respectively.  In  1998,  the  Company  increased  its
advertising  particularly with reference to OASiS and hired additional sales and
marketing personnel during 1998. The Company has invested significant  resources
to expand its sales and  marketing  effort,  including  the hiring of additional
personnel  and  establishing  the  infrastructure  necessary  to support  future
operations.  The Company  expects  that such  expenses in 1999 will  increase in
absolute dollars as compared to 1998.

               General and  Administrative.  These expenses consist primarily of
the general and administrative  expenses for salaries,  contract labor and other
expenses for management and finance and accounting, legal and other professional
services  including  ongoing  expenses as a publicly  owned  Company  related to
legal,  accounting  and  other  administrative  services  and  expenses.   Since
inception,  the  Company  has spent  approximately  $1,562,000  on  general  and
administrative  expenses. For the years ended December 31, 1997 and December 31,
1998,   general  and   administrative   expenses  were  $182,787  and  $517,189,
respectively.  The  increase of $334,402 is due  primarily  to higher  executive
compensation,  legal and  accounting  fees  associated  with the  Company's  SEC
filings,  higher  depreciation  and  amortization  and  additional  rent for the
Company's headquarters.  The Company expects general and administrative expenses
to  increase in  absolute  dollars in 1999 as  compared to 1998,  as the Company
continues to expand its operations.

Research and Development

               These  expenses  consist   primarily  of  costs  associated  with
personnel and equipment costs and field/clinical  trials. The Company's research
and development  activities include the development of the OASiS system and more
than six (6) operating room,  OB/GYN,  advanced surgical and protective  related
products including SutureMate(R) and MediSpecs Rx(TM).


                                       52

<PAGE>



               Since inception,  the Company has spent approximately $156,000 on
research and development. For the years ended December 31, 1997 and December 31,
1998, research and development expenses were approximately $113,740 and $34,536,
respectively. During 1997, research and development expenses were significant as
the Company  concentrated on the OASiS System.  The Company made enhancements to
the  software for the OASiS  system in 1998,  and the majority of these  related
costs were  capitalized  and will be amortized  over a period not to exceed five
(5) years.  The Company intends to continue to invest  significant  resources to
continue  the  development  of  new  products  and  expects  that  research  and
development  expenses in 1999 will  increase in absolute  dollars as compared to
1998.

Interest and Other Income (Expense), Net

               Interest and other income  (expense),  net consists  primarily of
interest  expenses  accrued on the direct  loan to the  Company  under a line of
credit  agreement  for  $100,000,  interest  related to loans from the  majority
stockholder,  miscellaneous  income and  underwriting  costs.  In May 1997,  the
Company  established a line of credit in the amount of $100,000 with a financial
institution at 1.5% above the prime rate, interest only payments are due monthly
with an expiration date of May 2, 2017. The line is due on demand and is secured
by  inventory,  accounts  receivable  and  equipment.  There was no  outstanding
balance as of December 31, 1998. The outstanding balance as of December 31, 1997
was $100,000. The interest rate at December 31, 1997 was 10.0%.
The line of credit is personally guaranteed by Dr. Swor.

               The Company did not report any foreign  currency  gains or losses
for the years ended  December  31,  1997 and 1998 since there were no  contracts
negotiated in foreign  currencies for those  periods.  In the event its contract
with Johnson & Johnson Medical Pty. Ltd., Noesis and the Company's  distribution
arrangements in the Netherlands and in Saudi Arabia are reactivated, the Company
may in the future be exposed  to the risk of  foreign  currency  gains or losses
depending  upon the magnitude of a change in the value of a local currency in an
international  market. The Company does not currently engage in foreign currency
hedging transactions, although it may implement such transactions in the future.

Financial Condition, Liquidity and Capital Resources

               At December 31, 1998,  the Company had assets  totaling  $373,514
and  liabilities  totaling  $55,331.  Since its  inception in June of 1992,  the
Company has financed its  operations  and met its capital  requirements  through
sales of its  products,  fees from OASiS,  proceeds from the sale of or exchange
for common stock aggregating  approximately  $1,405,000,  through borrowing from
current  shareholders and through the $100,000 line of credit with the financial
institution which is guaranteed by Dr. Swor.

               Operating activities  used net cash of  $216,991 and  $441,458 in
1997 and 1998, respectively.

               At  December  31,  1998,  the  Company  had a working  capital of
approximately  $73,000,  including  $41,000  of cash,  $58,700 of  deposits  and
$26,898 of inventory. This represents an increase of approximately $315,000 over
a working capital deficiency of $242,411 at December 31, 1997.

               At December  31, 1998,  the  Company's  outstanding  indebtedness
consisted of accounts  payable in the amount of $35,262 and accrued  expenses of
$20,069.


                                       53

<PAGE>



               The Company's principal  commitments for capital expenditures are
(1) those  associated  with the  arrangement  with US  Surgical  under which the
Company will provide an additional number of units; (2) the Company's obligation
to pay SMH $25,000 for each of ten (10) studies or $250,000 over the term of the
clinical  testing  agreement if the Company  determines  not to have SMH perform
clinical  testing;  and (3) the Company's  obligations to pay the balance due on
the order of twenty (20) OASiS units from Kiosk Information Systems,  Inc. Since
December  31,  1998,  the Company paid all but $3,000 of the amount due to Kiosk
Information  Systems,  Inc. The sources of funds to meet these  commitments  has
been partially made through cash on hand from the prior year, use of the line of
credit, a loan from Dr. Swor, revenues generated by the Long Term Agreement with
US  Surgical,  private  placement  funds and other  revenues  which the  Company
believes it will generate over the five (5) year term.

               The Company's future capital  requirements  will depend upon many
factors,  including the continued development of OASiS, its current products and
new products and services,  the extent and timing of acceptance of the Company's
products  and  services  in  the  market,   requirements  to  maintain  adequate
manufacturing   arrangements,   the  progress  of  the  Company's  research  and
development efforts, expansion of the Company's marketing and sales efforts, the
Company's  results of  operations  and the status of  competitive  products  and
services.  In the  short  term,  it is  likely  that the  Company  will  require
additional financing.  In addition, the Company may require additional financing
after  such  date to fund its  operations.  There can be no  assurance  that any
additional financing will be available to the Company on acceptable terms, or at
all,  when required by the Company.  If  additional  funds are raised by issuing
equity securities, further dilution to the existing stockholders will result. If
additional  funds are raised by issuing debt securities  future interest expense
will be  incurred.  If  adequate  funds are not  available,  the  Company may be
required  to  delay,  scale  back the  development  of  OASiS  or scale  back or
eliminate one or more of its research and development or manufacturing  programs
or obtain funds  through  arrangements  with partners or others that may require
the  Company  to  relinquish  rights to  certain of its  products  or  potential
products  or other  assets  that the  Company  would not  otherwise  relinquish.
Accordingly,  the  inability  to obtain  such  financing  could  have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.

Impact of the Year 2000 Issue

               The Year 2000  Issue is the  result of  potential  problems  with
computer  systems or any equipment  with computer chips that use dates where the
date has been stored as just two digits (e.g. 98 for 1998).  On January 1, 2000,
any clock or date recording  mechanism  including date sensitive  software which
uses only two digits to represent  the year,  may recognize the date using 00 as
the year 1900 rather than the year 2000.  This could result in a system  failure
or  miscalculations  causing  disruption of  operations,  including  among other
things, a temporary inability to process transactions,  send invoices, or engage
in similar activities.

               Management  has reviewed its current  internal  systems and is in
the process of upgrading its accounting  system to be Year 2000  compliant.  The
Company purchased new hardware in 1998 that is Year 2000 compliant. Its internal
systems  are Year 200  compliant  and the  Company  expects  the testing of such
systems to be  completed  in the fourth  quarter  of 1999.  Management  does not
anticipate any significant  additional  costs that would relate to upgrading its
systems to support the Year 2000.

               Further,  management  does not  believe the Year 2000 will impact
the  operation  of the OASiS  system since the software for this system does not
rely on legacy applications or subsystems.  OASiS is designed to handle dates in
the form of a two digit month and day and a four digit year,  thus  avoiding the
Year 2000 problem

                                       54

<PAGE>





               The  Company   believes   that  it  has  disclosed  all  required
information   relative  to  Year  2000  issues  relating  to  its  business  and
operations.  However,  there  can be no  assurance  that  the  systems  of other
companies on which the Company's systems rely also will be converted in a timely
manner or that any such failure to convert by another  company would not have an
adverse affect on the Company's business, operations or financial condition.

Item 7.  Financial Statements







                                  SURGICAL SAFETY PRODUCTS, INC.

                                  INDEPENDENT AUDITORS' REPORT,
                                     FINANCIAL STATEMENTS AND
                                    SUPPLEMENTARY INFORMATION

                                    DECEMBER 31, 1998 AND 1997






                                       55

<PAGE>





                                    CONTENTS



                                                                 Page

INDEPENDENT AUDITORS' REPORT                                      F-1

FINANCIAL STATEMENTS
  Balance Sheets                                                  F-2
  Statements of Operations                                        F-3
  Statements of Changes in Stockholders' Equity (Deficit)         F-4
  Statements of Cash Flows                                        F-5
  Notes to Financial Statements                                   F-6


SUPPLEMENTARY INFORMATION
  Independent Auditors' Report on Supplementary Information      F-15
  Schedules of Operating Expenses                                F-16

                                       56

<PAGE>



INDEPENDENT AUDITORS' REPORT



The Board of Directors
Surgical Safety Products, Inc.

We have audited the  accompanying  balance sheets of Surgical  Safety  Products,
Inc. as of December 31, 1998 and 1997, and the related statements of operations,
changes  in  stockholders'  equity  (deficit)  and cash flows for the years then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Surgical Safety Products,  Inc.
as of December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted  accounting
principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in Note 10 to the
financial   statements,   the  Company's   significant  operating  losses  raise
substantial doubt about its ability to continue as a going concern. Management's
plans  regarding  those matters are also  described in Note 10. These  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.


/s/ Kerkering, Barberio & Co.
-------------------------------
KERKERING, BARBERIO & CO., PA
Sarasota, Florida
March 12, 1999



                                       F-1

<PAGE>


<TABLE>

<CAPTION>

                         SURGICAL SAFETY PRODUCTS, INC.
                                 BALANCE SHEETS
                           DECEMBER 31, 1998 AND 1997




      Assets                                    1998             1997
      ------                                    -------          --------
<S>                                             <C>              <C>
Current Assets
  Cash                                           $   41,191      $
  Trade receivables                                                250,125
  Other receivables                                   1,941
  Deposits                                           58,700
  Inventory                                          26,898         11,742
                                                     ------         ------
    Total current assets                            128,730        261,867
                                                    -------        -------

Furniture and equipment, net                         92,429         71,368
                                                     ------         ------

Other Assets
  Deferred loan costs, net                              317            412
  Intangible assets, net                             48,915         45,102
  Software development costs, net                    92,873         52,486
  Investments                                         9,750         13,500
  Deposits                                              500            500
                                                        ---            ---
    Total other assets                              152,355        112,000
                                                    -------        -------

Total Assets                                     $  373,514    $   445,235
                                                 =  =======    =   =======
</TABLE>


                                               -1-

<PAGE>




<TABLE>

<CAPTION>

Liabilities and Stockholders' Equity (Deficit)                  1998           1997
----------------------------------------------                  --------       --------
<S>                                                           <C>           <C>
Current Liabilities
  Bank overdraft                                              $             $    13,984
  Line of credit                                                                100,000
  Notes payable - related parties                                               233,720
  Accounts payable                                                35,262        117,776
  Accrued expenses                                                20,069         21,131
  Accrued interest                                                               17,667
                                                                                 ------
    Total current liabilities                                     55,331        504,278
                                                                  ------        -------

Stockholders' Equity (Deficit)
  Common stock, $.001 par value,
    20,0000,000 shares authorized;
    10,786,973 and 9,774,473 shares
    issued and outstanding in 1998
    and 1997, respectively                                        10,787          9,775
  Additional paid-in capital                                   1,998,242        824,366
  Accumulated deficit                                         (1,690,846)      (893,184)
                                                              ----------       --------
    Total stockholders' equity (deficit)                         318,183        (59,043)
                                                                 -------        -------


Total Liabilities and Stockholders' Equity (Deficit)          $  373,514    $   445,235
                                                                 =======        =======
</TABLE>















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

                                       F-2

<PAGE>


<TABLE>

<CAPTION>

                         SURGICAL SAFETY PRODUCTS, INC.
                            STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 1998 AND 1997

                                                     1998           1997
                                                     --------       --------
<S>                                                <C>            <C>
Revenue
  Net sales                                        $   16,545     $  248,760
  Other income                                         16,564          6,626
  Interest income                                       9,284
                                                        -----
    Total revenue                                      42,393        255,386
                                                       ------        -------

Costs and expenses
  Cost of medical products sold                         5,560         22,002
  Operating expenses                                  782,450        244,815
  Research and development expenses                    34,536        113,740
  Interest expense                                     13,759         15,651
  Other                                                 3,750
  Underwriting costs                                                   7,600
                                                                       -----
    Total costs                                       840,055        403,808
                                                      -------        -------

Net loss before income taxes                         (797,662)      (148,422)
                                                     --------       ---------

Provision for income taxes                             -              -
                                                       ------         ------

Net loss                                           $ (797,662)   $  (148,422)
                                                     =========      ========

Net loss per share                                 $   (0.076)   $  (0.016)
                                                       =======      =======
</TABLE>
















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

                                       F-3

<PAGE>



<TABLE>
<CAPTION>

                         SURGICAL SAFETY PRODUCTS, INC.
             STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                       YEARS ENDED DECEMBER 1998 AND 1997


                                                                     Common Stock
                                                        Shares       Amount
<S>                                                     <C>          <C>
Balances - December 31, 1996                            9,524,473    $   9,525

Issuance of common stock for acquisition of assets        250,000          250

Net loss

Balances - December 31, 1997                            9,774,473        9,775

Issuance of common stock for cash                         520,000          520

Issuance of common stock for services                     492,500          492

Stock options granted to employees

Net loss

Balances - December 31, 1998                           10,786,973    $  10,787
                                                       ==========    =  ======
</TABLE>



                                               F-4

<PAGE>








<TABLE>

<CAPTION>

                                    Total
     Additional                     Stockholders'
     Paid-in       Accumulated      Equity
     Capital       Deficit          (Deficit)
<S>                <C>              <C>
    $   810,959    $   (744,762)    $    75,722

         13,407                          13,657

                       (148,422)       (148,422)

        824,366        (893,184)        (59,043)

        938,476                         938,996

        144,287                         144,779

         91,113                          91,113

                       (797,662)       (797,662)

    $ 1,998,242   $  (1,690,846)   $    318,183
    = =========   =  ===========   =    =======
</TABLE>



















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

                                       F-4

<PAGE>


<TABLE>

<CAPTION>

                         SURGICAL SAFETY PRODUCTS, INC.
                            STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 1998 AND 1997

                                                        1998           1997
                                                        --------       --------
<S>                                                   <C>           <C>
Cash Flows From Operating Activities
  Net loss                                            $ (797,662)   $  (148,422)
                                                        --------       --------
  Adjustments to reconcile net loss to cash
    used in operating activities
    Depreciation and amortization                         57,461         20,557
    Common stock issued for services                     144,779
    Stock option compensation expense                     91,113
    Write-down of investments                              3,750
    Gain on disposal of assets                                             (396)
    Decrease (increase) in operating assets
      Receivables                                        250,125       (220,553)
      Other receivables                                   (1,941)
      Inventory                                          (15,156)        (6,658)
      Deposits                                           (58,700)
    Increase (decrease) in operating liabilities
      Bank overdraft                                     (13,984)        13,984
      Accounts payable                                   (82,514)       103,747
      Accrued expenses                                    (1,062)        15,131
      Accrued interest                                   (17,667)        10,619
      Stock subscription proceeds                                        (5,000)
                                                                         ------
        Total Adjustments                                356,204        (68,569)
                                                         -------        -------
          Net cash used in operating activities         (441,458)      (216,991)
                                                        --------       --------

Cash Flows From Investing Activities
  Proceeds from disposal of assets                                        1,100
  Furniture and equipment purchased                      (57,294)       (65,958)
  Software development additions                         (56,256)       (55,248)
  Patent and trademark costs                              (9,077)        (2,386)
                                                          ------         ------
    Net cash used in investing activities               (122,627)      (122,492)
                                                        --------       --------

Cash Flow From Financing Activities
  Proceeds from related party loans                       23,000        233,720
  Advances/(repayments) on line of credit, net          (100,000)       100,000
  Repayment of stockholder loans                        (256,720)
  Proceeds from issuance of common stock                 938,996
                                                         -------
      Net cash provided by financing activities          605,276        333,720
                                                         -------        -------

Net increase (decrease) in cash                           41,191         (5,763)
Cash at beginning of year                                 -               5,763
                                                          ------          -----
Cash at end of year                                   $   41,191    $    -
                                                      =   ======    =    ======
</TABLE>







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

                                       F-5

<PAGE>



<TABLE>

<S>                                                   <C>           <C>
                                                        1998           1997
                                                        --------       --------
Supplemental Cash flow Information:
  Cash paid for interest                              $   31,426    $     5,032
                                                      =   ======    =     =====
</TABLE>

For purposes of the statement of cash flows,  management  considers all deposits
and financial  instruments with original maturities of less than three months to
be cash and cash equivalents.

Material  non-cash  transactions  not  reflected in the  statement of cash flows
include:

Year Ended December 31, 1998
  There were no material  non-cash  transactions not reflected in the statements
  of cash flows during the fiscal year ending December 31, 1998.

Year Ended December 31, 1997
  Purchase of assets of  Endex Systems, Inc. through issuance of stock valued at
  $13,657.

























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

                                       F-6

<PAGE>




                         SURGICAL SAFETY PRODUCTS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1998 AND 1997

Note 1 - Summary of Significant Accounting Policies
Business Activities
Surgical  Safety  Products,  Inc.  (Company) is engaged in product  development,
sales and services for the medical industry. The Company is primarily focused on
medical  research and product  development.  It has developed a product,  OASiS,
designed  to  reduce  the  occupational  risks  of  bloodborne  diseases  in the
operating room and other related areas. In 1997, the Company  enhanced its OASiS
system  for  multiple   applications  within  health  care,  including  exposure
management,  health care training, and health care risk management.  Its medical
products are sold to health care providers within the United States.

Financial Statements
The  financial  statements  and  notes  are  representations  of  the  Company's
management  who  is  responsible  for  their  integrity  and  objectivity.   The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.

Preparation  of financial  statements  in  accordance  with  generally  accepted
accounting principles requires the use of management's estimates. Actual results
could differ from those estimates.

Accounts Receivable
Accounts  receivable  consist  of  amounts  due from  customers.  There  were no
outstanding accounts receivable from customers at December 31, 1998. The balance
of $250,125 at December  31,  1997 was due  primarily  from one  customer in the
amount of $250,000.

Inventory
Inventory is stated at the lower of cost  (first-in,  first-out)  or market (net
realizable value) and consists of finished goods.

Investments
Investments  are  valued  at cost  and  represent  shares  of  common  stock  in
privately-held  companies.  Management believes the value of the investments are
not below cost. Fair market value is not determinable.

Property and Equipment
Purchases  of property and  equipment  are  recorded at cost.  Expenditures  for
maintenance  and repairs  which extend the useful life are charged to operations
as incurred.  Depreciation is provided on an accelerated method over the assets'
useful lives which range from three to seven years.  Leasehold  improvements are
being amortized over the life of the lease term which is two years.


                                       F-7

<PAGE>





Note 1 - Summary of Significant Accounting Policies (Continued)
Intangible Assets
Intangible assets subject to amortization include goodwill,  organization costs,
trade names and patent  costs.  Organization  costs are being  amortized  on the
straight-line  method over five years.  Patent costs are being  amortized on the
straight-line  method over seventeen years from the granting of the patent.  The
other assets are being amortized on the straight-line method over fifteen years.


Software Development Costs
Certain software development costs are capitalized when incurred. Capitalization
of software  development  costs begins upon the  establishment  of technological
feasibility.  The  establishment  of  technological  feasibility and the ongoing
assessment of recoverability of capitalized  software  development costs require
considerable  judgement by management with respect to certain external  factors,
including,  but not limited to, anticipated future revenues,  estimated economic
life, and changes in software and hardware technologies.

Amortization of capitalized  software  development costs is calculated using the
straight-line  method  over a period  of five  years.  All  other  research  and
development costs are charged to expense in the period incurred.

Income Taxes
The Company  accounts for income taxes using the asset and  liability  method in
accordance  with  Statement of Financial  Accounting  Standards  (SFAS) No. 109,
"Accounting for Income Taxes."

Long-Lived Assets
Statement  of  Financial  Accounting  Standards  No.  121,  "Accounting  for the
Impairment  of LongLived  Assets and for  Long-Lived  Assets to Be Disposed Of,"
requires that long-lived assets, including certain identifiable intangibles, and
the goodwill related to those assets, be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying value amount of the asset
in question  may not be  recoverable.  Management  has  reviewed  the  Company's
long-lived  assets  and  has  determined  that  there  are no  events  requiring
impairment loss recognition.

Revenue Recognition
The Company  recognizes  revenue at the point of passage of title of  inventory,
which is generally at the time of shipment to the customer.  Revenue  related to
services is recognized at the point the service has been rendered.


                                       F-8

<PAGE>




Note 1 - Summary of Significant Accounting Policies (Continued)
Net Loss Per Share
Net loss per share has been computed in accordance  with  Statement of Financial
Accounting  Standards (FASB) No. 128, "Earnings Per Share," by dividing net loss
by the weighted average number of shares outstanding  during the period.  Common
stock  equivalents have not been included in the computation of weighted average
number of shares outstanding since the effect would have been anti-dilutive.

Stock Based Compensation
The Company  grants stock  options for a fixed number of shares to employees and
consultants. The Company accounts for stock option grants in accordance with APB
Opinion No. 25,  "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations   because  the  company  believes  the  alternative  fair  value
accounting  provided under FASB Statement No. 123,  "Accounting  for Stock Based
Compensation,"  requires  the use of  option  valuation  models  that  were  not
developed for use in valuing  employee stock options.  Under APB 25, the Company
only  recognized  compensation  expense to the extent that the fair value of the
shares exceeds the exercise price of the stock option at the date of grant.

The  Company  recorded  compensation  expense  related to the  issuance of stock
options in the amount of $91,113 for the year ended  December  31,  1998.  There
were no stock options issued during the year ended December 31, 1997.

Impact of Recently Issued Accounting Standards
In June 1998,  the FASB issued  Statement No. 133,  "Accounting  for  Derivative
Instruments  and  Hedging  Activities."  The  Company  expects  to adopt the new
Statement  effective  January 1, 2000. The Statement will require the Company to
recognize all derivatives on the balance sheet at fair value.  This Statement is
not applicable to the Company as of December 31, 1998.


Note 2 - Property and Equipment
Property and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>

                                                      1998           1997
                                                      --------       --------
<S>                                                   <C>           <C>
Property and equipment                                $   90,703    $    38,982
Prototype molds                                           59,652         82,778
Leasehold improvements                                     5,575
                                                           -----
                                                         155,930        121,760
Less accumulated depreciation                             63,501         50,392
                                                          ------         ------
  Furniture and equipment, net                        $   92,429    $    71,368
                                                      =   ======    =    ======
</TABLE>

Total depreciation and amortization  expense amounted to $36,234 and $14,014 for
1998 and 1997, respectively.


Note 3 - Line-of-Credit
Effective May 1997, the Company had established a  line-of-credit  in the amount
of $100,000 with a financial  institution at 1.5% above the prime rate, interest
only payments are due monthly with an expiration  date of May 2, 2017.  The line
is  due  on  demand  and is  secured  by  inventory,  accounts  receivable,  and
equipment. The outstanding balance at December 31, 1998 and 1997 was $0 and

                                       F-9

<PAGE>




$100,000,  respectively.  The interest rate at December 31, 1997 was 10.00%. The
line-of-credit is personally guaranteed by the major stockholder.

Note 4 - Related Party Transactions
At December 31, 1997,  the Company was indebted to the major  stockholder in the
amount of  $197,720.  In  addition,  the Company was  indebted to an  affiliated
company owned by the major stockholder. The amount owed at December 31, 1997 was
$36,000.  Interest  on the notes was  10.00%.  At December  31,  1997,  interest
payable on these loans  totaled  $17,667.  During  fiscal  1998,  an  additional
$23,000 was loaned to the Company by the major  stockholder.  The balance of the
notes payable was repaid during fiscal 1998,  and at December 31, 1998 there are
no amounts  due to related  parties.  Interest  expense  relating to these notes
amounted to $9,882 and $15,314 for the years ended  December  31, 1998 and 1997,
respectively.

The Company leases office space from an entity owned by a major stockholder. See
Note 13.

Note 5 - Software Development Costs
During the fiscal year ended December 31, 1997, the Company  focused its efforts
in developing the software for its major product, OASiS. The company engaged the
services of a software  development  company,  and  incurred  significant  costs
related to the design and  development  of the  software.  The Company  achieved
technological feasibility in its development of the software in fiscal 1997.

For the year ended  December 31,  1998,  the Company  incurred  and  capitalized
expenditures  relating  to the  enhancement  of the  software  in the  amount of
$56,256. For the year ended December 31, 1997, the Company incurred expenditures
related to software  development of $162,409,  of which $54,653 was capitalized,
and the  remainder of $107,756 was  expensed.  Amortization  expense of software
development  costs  amounted to $21,227 and $6,543 for the years ended  December
31, 1998 and 1997, respectively.



                                      F-10

<PAGE>




Note 6 - Intangible Assets
Intangible assets consisted of the following at December 31:

<TABLE>
                                                      1998           1997
                                                      --------       --------
<S>                                                   <C>           <C>
  Goodwill                                            $   32,762    $    32,762
  Organization costs                                      11,502         11,502
  Trademarks                                              11,658          6,917
  Patents                                                 16,328         11,995
                                                          ------         ------
                                                          72,250         63,176
  Less:  Accumulated amortization                         23,335         18,074
                                                          ------         ------
  Intangible assets, net                              $   48,915    $    45,102
                                                      =   ======    =    ======
</TABLE>

Note 7 - Stock Option Plans
Options granted under the 1994 and 1998 stock option plans are exercisable  only
after the  respective  vesting  period which is two years from the date of grant
under the 1994 plan,  and  determined  by the Company's  stock option  committee
under the 1998 plan. Options expire seven years from the date of grant.

Pro forma information regarding net income and earnings per share is required by
Statement  123, and has been  determined as if the Company had accounted for its
stock options under the fair value method of that Statement.  The fair value for
these  options was estimated at the date of grant using a  Black-Scholes  option
pricing model with the following  assumptions for 1998:  risk-free interest rate
of 5.0%; dividend yield of 0%; volatility factor of the expected market price of
the Company's common stock of .20; and a  weighted-average  expected life of the
option of three  years.  There were no options  granted  during the fiscal  year
ended December 31, 1997.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the Company's stock options have  characteristics  significantly  different from
those of traded options, and because changes in the subjective input assumptions
can materially  affect the fair value  estimate,  in management's  opinion,  the
existing models do not necessarily provide a reliable single measure of the fair
value of its stock options.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is charged to expense over the options' vesting period.  The Company's pro forma
information for the fiscal year ended December 31, 1998 is as follows:

  Proforma net loss                               $ (827,315)
                                                  - ---------
  Pro forma earnings per common share:
    Basic                                         $   (0.079)
                                                  -   -------



Note 7 - Stock Option Plans (Continued)
A summary of the Company's stock option activity and related information for the
years ended December 31 follows:


                                      F-11

<PAGE>

<TABLE>
<CAPTION>
                                    1998                         1997
                                    --------------------         --------------------

                                               Weighted                     Weighted
                                               Average                      Average
                                               Exercise                     Exercise
                                   Options     Price          Options       Price
<S>                                <C>         <C>            <C>           <C>
Outstanding at the beginning
  of the year                      4,512,431   $      0.38     4,512,431    $      0.38
Granted                            1,129,000          1.49
Exercised                            400,000          1.75
                                     -------          ----
Outstanding at the end
  of the year                      5,241,431   $      0.57     4,512,431    $      0.38
                                   =========   =      ====     =========    =      ====
Exercisable at the end of
  the year                         4,512,431   $      0.38     4,512,431    $      0.38
                                   =========   =      ====     =========    =      ====

Weighted-average fair value of
  options granted during the
  year                                         $      1.51                  $    -
                                               =      ====                  =    ======
</TABLE>

The weighted-average  exercise price and weighted-average  fair value of options
granted  during  1998 was $1.37  and  $0.85,  respectively,  for  options  whose
exercise  price  exceeded the market  price of the stock on the grant date.  The
weighted  average  exercise  price and  weighted-average  fair  value of options
granted  during  1998 was $1.75  and  $2.33,  respectively,  for  options  whose
exercise price was less than the market price of the stock on the grant date.

The following  table  summarizes  information  about the options  outstanding at
December 31, 1998:

<TABLE>
<CAPTION>
                                             Weighted
                                             Average
                                             Remaining           Weighted
                         Number              Contractual         Average
 Exercise Price          Outstanding         Life                Exercise Price
<S>                      <C>                 <C>                 <C>
 $ 0.32 to 0.48             4,511,931        2.50 years          $          0.32
           0.50                54,000        6.00 years                     0.50
   0.90 to 1.00               300,500        6.87 years                     1.00
   1.50 to 1.75               375,000        6.53 years                     1.73
                              -------                                       ----
   0.32 to 1.75             5,241,431        3.07 years          $         0.57
                            =========                            =         =====
</TABLE>



Note 8 - Common Stock Issuance
During the fiscal year ended  December  31,  1998,  the Company  issued  492,500
shares of common  stock in exchange  for legal,  computer  hardware and software
consulting services,  and public relations services. Of the total issued, 90,000
shares were restricted stock. The value of the shares issued ranged from $0.15 -
$1.75 per share based on either the fair market  value of the shares at the time
the agreement for services was executed,  or the value of the services received,
whichever was more estimable.

The Company also issued 520,000 shares of common stock in exchange for cash. The
value of the shares issued ranged from $1.75 - $2.19 per share based on the fair
market value of the shares at the time of issuance.

                                      F-12

<PAGE>




During the year ended  December 31, 1997,  the Company  issued 250,000 shares of
restricted  common stock in exchange for the  acquisition of the assets of Endex
Systems,  Inc.  (See Note 9). The  shares  could not be sold for a period of two
years;  therefore  the shares  issued were valued at $.06 per share based on the
value of the assets received.


Note 9 - Income Taxes
At December  31,  1998,  the Company has net  operating  loss  carryforwards  of
approximately  $1,300,000  which expire during the years 2008 through 2012.  The
1998 and 1997 tax benefits relating to the losses incurred in each year amounted
to  approximately  $158,000 and $29,800,  respectively.  Based on the  Company's
financial  history,  there is no basis to conclude that the tax benefits will be
realized.  Therefore, the tax benefit that has been recorded in the accompanying
financial  statements  for the years ended  December  31, 1998 and 1997 has been
offset by an allowance equal to the benefit.

Note 10 - Asset Purchase
On December 8, 1997, the Company purchased the assets of Endex Systems, Inc. for
which it issued  250,000  shares of  restricted  common  stock based on the fair
value of the assets received.  The Company  purchased  furniture,  equipment and
investments valued at approximately $14,000.


Note 11 - Realization of Assets
The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles,  which contemplate the continuation of
the Company as a going concern. The Company has sustained substantial losses and
has minimal revenues for the current fiscal year.

In view of the matters described in the preceding paragraph, recoverability of a
major portion of the recorded  asset amounts shown in the  accompanying  balance
sheet is dependent upon the Company's ability to achieve  profitable  operations
and to obtain  additional  sources of funds.  Management  believes the Company's
prospects for profitability are significant,  based on the development of OASiS,
a proprietary product. The Company has aggressively promoted this

Note 11 - Realization of Assets (Continued)
product during fiscal year 1998 and anticipates  revenues in fiscal 1999 related
to the leasing of these units to medical  facilities.  Management is considering
both  equity and debt  financing  in the range of $2 to $5  million.  Management
believes  these  factors  will  provide  the basis for  significant  growth  and
profitability in the near term.


Note 12 - Commitments
On January 30, 1998,  the Company  entered into an agreement  with a health care
provider in which the provider will perform  clinical testing of ten surgical or
medical  products  submitted by the Company.  The agreement is for a term not to
exceed five years and  requires  the  Company to pay the health care  provider a
fixed  amount of $25,000  for each of the ten  studies.  The  agreement  further
provides  that the Company is obligated to pay the  provider  $250,000  over the
term of the  agreement  in the  event  the  Company  determines  not to have the
provider perform the clinical  testing.  The Company did not submit any products
for clinical testing during the fiscal year ended December 31, 1998.


                                      F-13

<PAGE>




In  November  1998,  the  Company  entered  into an  agreement  with a vendor to
manufacture 20 units of it OASiS system for a total of $133,000. At December 31,
1998,  the Company had paid 50% or $66,500 to the vendor and  received a partial
shipment of units.  The remaining  balance of $66,500 is payable upon receipt of
the remaining units.


Note 13 - Concentrations
During the year ended December 31, 1998, the company  derived 93% of its revenue
from technical services provided to one customer. The Company derived 99% of its
revenues from the sale of medical  products sold to one customer during the year
ended December 31, 1997.


Note 14 - Lease Commitments
On June 1, 1998,  the Company  entered  into an  agreement to lease office space
from an affiliated entity. The lease term expires on May 21, 2000 with automatic
one year  renewals.  Minimum lease  payments are as follows for the fiscal years
ending:

                  1999                             $    42,000
                  2000                             $    17,500

Rent expense for the fiscal years ending  December 31, 1998 and 1997 amounted to
$30,750 and $6,912, respectively.

The Company also leases  office  equipment.  The lease term is for 60 months and
expires October 2003. Monthly payments are $344.


Note 14 - Lease Commitments (Continued)
Minimum lease payments are as follows for the fiscal years ending:

                  1999                             $     4,128
                  2000                                   4,128
                  2001                                   4,128
                  2002                                   4,128
                  2003                                   3,440


Note 15 - Year 2000 Issue
The Year 2000 Issue is the result of potential problems with computer systems or
any equipment  with computer chips that use dates where the date has been stored
as just two digits  (e.g.  98 for 1998).  On January 1, 2000,  any clock or date
recording  mechanism,  including  date  sensitive  software  which uses only two
digits to represent the year, may recognize the date, using 00, as the year 1900
rather  than  the  year  2000.   This  could  result  in  a  system  failure  or
miscalculations causing disruption of operations,  including among other things,
a temporary  inability  to process  transactions,  send  invoices,  or engage in
similar activities.

Management  has reviewed its current  internal  systems and is in the process of
upgrading its accounting system to be Year 2000 compliant. The Company purchased
new hardware in 1998 that is Year 2000 compliant. Management does not anticipate
any significant  additional  costs that would relate to upgrading its systems to
support the Year 2000.

                                               F-14

<PAGE>




Further,  management does not believe the Year 2000 will impact the operation of
the OASiS  system  since the  software  for this  system does not rely on legacy
applications  or subsystems.  OASiS is designed to handle dates in the form of a
two digit  month and day and a four  digit  year,  thus  avoiding  the Year 2000
problem.

The Company believes it has disclosed all required  information relative to Year
2000 issues  relating to its business and operations.  However,  there can be no
assurance  that the systems of other  companies on which the  Company's  systems
rely  also will be timely  converted  or that any such  failure  to  convert  by
another company would not have an adverse affect on the Company's  operations or
financial condition.

                                      F-15

<PAGE>





                            SUPPLEMENTARY INFORMATION




<PAGE>



            INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION



The Board of Directors
Surgical Safety Products, Inc.


We have  audited  the  accompanying  financial  statements  of  Surgical  Safety
Products,  Inc. as of and for the years ended  December  31, 1998 and 1997,  and
have issued our report  thereon  dated March 12, 1999.  Our audits were made for
the purpose of forming an opinion on the financial  statements taken as a whole.
The supplementary  schedules of operating expenses are presented for purposes of
additional  information and are not a required part of the financial statements.
Such  information has been subjected to the auditing  procedures  applied in the
examination of the financial statements and, in our opinion, is fairly stated in
all material respects in relation to the financial statements taken as a whole.


/s/ Kerkering Barberio & Co.
-------------------------------
KERKERING, BARBERIO & CO., PA
Sarasota, Florida
March 12, 1999



                                      F-16

<PAGE>



<TABLE>
<CAPTION>
                         SURGICAL SAFETY PRODUCTS, INC.
                         SCHEDULES OF OPERATING EXPENSES
                     YEARS ENDED DECEMBER 31, 1998 AND 1997


                                                  1998          1997
                                                  --------      ---------
<S>                                            <C>            <C>
Accounting and legal                           $    58,260    $    16,761
Advertising                                        103,281         12,507
Contract labor                                      28,950          2,137
Meetings/conventions                                27,694          9,749
Depreciation and amortization                       57,461         20,557
Salaries and related expenses                      368,417        115,193
Travel and entertainment                            18,087          8,426
Postage                                              4,953          5,772
Insurance                                           11,542          9,479
Equipment rental                                     7,724          3,778
General and administrative                          18,201         11,428
Rent                                                30,750          6,912
Repairs and maintenance                              4,188          5,467
Samples and supplies                                 3,195
Supplies                                            22,606          8,416
Taxes                                                1,615            998
Telephone                                           15,526          6,397
Utilities                                                             838
                                                                      ---
                                               $   782,450    $   244,815
                                               =   =======    =   =======
</TABLE>


                                      F-17

<PAGE>



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

        The Company has used the accounting  firm of Kerkering,  Barberio & Co.,
P.A. since 1993.  There address is 1858 Ringling  Boulevard,  Sarasota,  Florida
34236. This firm began providing audited financial statements for the Company in
1994. There has been no change in the Company's  independent  accountant  during
the period commencing with the Company's retention of Kerkering, Barberio & Co.,
P.A. through the date hereof.

                                    PART III

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

        (a) Set forth below are the names, ages, positions, with the Company and
business experiences of the executive officers and directors of the Company.

<TABLE>
<S>                                <C>             <C>
Name                                Age            Position(s) with Company

Dr. G. Michael Swor                 41             Chairman and Treasurer
4485 S. Shade Avenue
Sarasota, FL 34237

Frank M. Clark (1)                  67             Director, CEO and President
7313 Oak Leaf Way
Sarasota, FL 34241

Donald K. Lawrence (1)              37             Director, Executive Vice
716 Edgemer Lane                                   President and Secretary
Sarasota, FL 34242

David Collins  (1)                  58             Director and Acting Chief
6210 Sun Boulevard                                 Financial Officer (2)
St. Petersburg, FL 33715

James D. Stuart                     42             Director
880 Jupiter Park Drive
Suite 14
Jupiter, FL 33458

Irwin Newman                        51             Director
1515 SW 22nd Avenue Circle
Boca Raton, FL 33486
</TABLE>



                                       58

<PAGE>


<TABLE>
<S>                                <C>             <C>
Sam Norton                          39             Director
1819 Main Street
Suite 610
Sarasota, FL 34236



David Swor                          67             Director
6385 Presidential Court
Suite 104
Fort Meyers, FL 33919

Tom DeCesare (3)                    66             Director
15316 Gulf Boulevard
#802
Madiera Beach, FL 33708

Dr. William B.Saye (1)              60             Director & Medical Director
4614 Chattahoochee Crossing                        of ALTC VirtualLabs
Marietta, GA 30067
</TABLE>


(1)  Except for Mr. Clark,  Mr. Lawrence,  Dr. Saye and Mr. Collins,  who had no
     role in founding or organizing the Company,  the above-named persons may be
     deemed to be "promoters"  and "parents" of the Company,  as those terms are
     defined under the Rules and Regulations promulgated under the Act.

(2)  Mr.  Collins is not engaged as a full time  employee of the Company.  He is
     devoting  and will  continue to devote such time as required to fulfill the
     obligations as the Company's Acting Chief Financial  Officer.  At such time
     as the  Company  has  sufficient  additional  revenue or is  successful  in
     securing  additional funding from outside sources,  it is intended that Mr.
     Collins will be employed by the Company as the Chief Financial  Officer and
     that he will devote his full time to the business of the Company.

(3)  Mr.  DeCesare  resigned  as a  Director  on May  4,  1999  due to  personal
     considerations.

     All  directors  hold office until the next annual  meeting of the Company's
shareholders and until their successors have been elected and qualify.  Officers
serve at the pleasure of the Board of Director.  The officers and directors will
devote such time and effort to the business and affairs of the Company as may be
necessary  to  perform  their  responsibilities  as  executive  officers  and/or
directors of the Company.

Family Relationships

     There are no family  relationships  between or among the executive officers
and  directors of the Company  except that David Swor is Dr. G.  Michael  Swor's
father and Tom DeCesare is Dr. Swor's father-in-law.




                                                59

<PAGE>


Business Experience

     G. Michael Swor,  M.D.,  M.B.A, age 41, has served as Chairman of the Board
and Medical/Technical Advisor of the Company since its inception in 1992 and has
served as Treasurer to the Company since June, 1998.

     Dr.  Swor,  a board  certified,  practicing  physician  with a specialty in
OB/GYN, is the founder of Surgical. From 1992 until June 12, 1998, Dr. Swor also
served as  President  and CEO.  With a Masters in Business  Administration,  Dr.
Swor's duties for the Company include investor relations,  corporate  financing,
and  overall  corporate  policy  and  management.  He  is a  clinical  assistant
professor in the OB/GYN department at University of South Florida.  Dr. Swor was
the inventor of SutureMate(R) and  Prostasert(TM) and the original holder of the
patents  issued  to each of  these  products.  Dr.  Swor  has  written  numerous
articles,  published the "Surgical Safety Handbook," and given numerous lectures
on  safety  and  efficiency  in  the  surgical  environment.   His  professional
affiliations   include  American  College  of  Surgeons,   American  College  of
Obstetrics and Gynecology and the Florida Medical  Association.  From 1996 until
the present, Dr. Swor has acted as an independent  consultant for Concise Advise
which  provides  consulting  services  related to product  development,  patent,
research,  distribution,  joint venture, mergers and other business issues. From
1994  through  1996,  Dr. Swor oversaw the  operation of WDC.  From 1987 through
1995,Dr.  Swor was the managing  partner of Women's Care  Specialists/Physicians
Services Inc. where he oversaw four (4) physicians,  two (2) practitioners and a
staff of over twenty five (25).  From 1987 through 1992,  Dr. Swor was a partner
and board member of Women's  Ambulatory  Services,  Inc.,  a diagnostic  testing
facility.  From 1982 through  1985,  Dr. Swor was the President of University of
Florida at Jacksonville,  Health Sciences Center resident staff association with
over 200 members.  Dr. Swor received a B.A degree in 1978 from the University of
South Florida,  a M.D.  degree from the  University of South Florida  College of
Medicine in 1981,  and an M.B.A.  degree from the University of South Florida in
1998.  From 1981  through  1985 he  received  his  training  in OB/GYN  from the
University of Florida  Department of Obstetrics and Gynecology in  Jacksonville,
Florida.  He has received  several special  achievement  awards  including being
honored by the  University  of South  Florida in May, 1998 with the Alumni Award
for Professional Achievement.

     Frank M. Clark,  age 67, has served as a Director,  CEO and President since
June, 1998.

     Mr. Clark is  responsible  for the day to day operations of the Company and
is responsible  for new product  development and  manufacturing  and manages new
business ventures,  including mergers,  acquisitions,  joint ventures, strategic
alliances and licensing/distribution  agreements for the Company. Mr. Clark also
serves on the Board of GenSci Regeneration Sciences, Inc. From 1991 to 1997, Mr.
Clark was  Chairman  and CEO of Corporate  Consulting  Services  Group where his
primary  activities were providing  consulting  services to start-up  companies,
under- performing companies and training people in career transitions. From 1984
to 1991, Mr. Clark was COO and Executive Vice President of Right  Associates,  a
consulting firm with  responsibilities for business development with Fortune 100
corporations for which he acted. He acquired a Los Angeles based consulting firm
and became  the  Managing  Principal.  From 1981 to 1984,  Mr.  Clark was a Vice
President of National  Medical Care, a subsidiary of W.R. Grace,  Inc. where his
innovative marketing leadership helped the company recapture a dominant share of
the dialysis market. From 1978 to 1981, Mr. Clark served as President, Corporate
Vice  President  and a Director  of R.P.  Scherer,  Inc.,  the  world's  leading
producer  of  soft  gelatin  capsules  where  he  was  in  charge  of  worldwide
businesses.  From 1959 to 1978,  Mr.  Clark was  employed  by Johnson & Johnson,
Inc., first with Ethicon, Inc. where he served as a Vice President and Director,
then with Ethnor Medical Products where he was a Vice President, General Manager
and a  Director  and  then  with  Stimulation  Technology,  where he  served  as


                                       60

<PAGE>




Executive  Vice  President  and a  Director.  From 1956 to 1958,  Mr.  Clark was
employed by Federated  Department  stores in the executive  training  program at
Bloomingdales  in New York City. Mr. Clark received a certificate  from Teachers
College in Connecticut in 1955.

     Donald K. Lawrence, age 37, has served as a Director, Vice President, Sales
& Marketing and Secretary  since May, 1997 and Executive  Vice  President  since
January, 1998.

     Mr. Lawrence's responsibilities include sales management,  market planning,
advertising,  and management for Compliance PlusTM products and most recently he
has become the  Executive  Director  of OASiS.  His  arrival to the  Company was
facilitated by the Company's  acquisition in 1997 of InterActive PIE Multimedia,
Inc.,  of which Mr.  Lawrence  was founder  and Chief  Executive  Officer.  From
February 1996 until February 1997, Mr. Lawrence was the CEO of InterActive  PIE.
From December 1991 until  February  1996,  Mr.  Lawrence was employed by Ethicon
Endo-Surgery/Johnson  & Johnson as a surgical  sales  representative.  From July
1989 until December 1991, Mr. Lawrence acted as a surgical sales  representative
for Davis and Geck.  Prior to entering the area of medical  device  sales,  from
February 1985 until July 1989,  Mr.  Lawrence was an account  executive with DHL
Worldwide  Express.  During college,  Mr. Lawrence was an independent dealer for
Southwestern  Publishing Co. Mr Lawrence  received a B.S degree in Marketing and
Communications in 1984 from Appalachian State University.

     David Collins,  age 58, has served as a Director since January 1999 and its
Acting Chief Financial Officer since March 1999.

     Mr. Collins  responsibilities  include  overseeing the financial affairs of
the Company on a part time basis and he is currently  engaged as a consultant to
the Company. Mr. Collins devotes such time as is necessary to fulfill his duties
to the Company.  During 1997 and 1998,  Mr. Collins was Controller for the Sales
and Marketing  Division for GES  Exposition  Services,  a subsidiary of the NYSE
listed Viad Corporation.  From 1993 to 1996, Mr. Collins was General Manager and
Chief Financial Officer of Spectra Services Corporation.  From 1989 to 1992, Mr.
Collins was a Partner and Consultant to Quantum  Corporation,  a venture capital
firm.  From 1977 to 1988, Mr. Collins rose from  Controller to Vice President of
Finance (1982) and then to Vice President of Finance and Chief Financial Officer
(1984) of R.P. Scherer  Corporation,  a NYSE listed company.  From 1975 to 1977,
Mr.  Collins  was Vice  President  and  Controller  of  Wheelhorse  Products,  a
subsidiary of American Motors/Chrysler. From 1971 to 1975, Mr. Collins rose from
Controller of the Midwest  Dental  Division to Vice  President and Controller of
the American Hospital Division of American Hospital Supply  Corporation  (1974).
From 1969 to 1971,  Mr.  Collins was a Senior  Auditor and  Consultant in Public
Accounting with Deloitte & Touche. Mr. Collins received a BSBA from Northwestern
University in 1964 and a MBA from the Kellogg  Graduate  School of Management at
Northwestern  University in 1967. He became a Certified Public Accountant in the
State of Illinois in 1971.

     James D.  Stuart,  age 42, has served as a Director  since 1993,  initially
acting as Director of Marketing and Sales.

     Mr. Stuart served as Executive Vice  President  from 1993 until June,  1998
and initially  acted as the Director of Marketing and Sales.  During his time as
an  officer  of  the  Company,  Mr.  Stuart  was  responsible  for  new  product
development  and  manufacturing  and manages new  business  ventures,  including
mergers,    acquisitions,    joint    ventures,    strategic    alliances    and


                                       61

<PAGE>




licensing/distribution agreements for the Company. From November 1994 until July
1996,  Mr.  Stuart acted as  President  and CEO of WDC and was  responsible  for
managing and operating the facility.  From March 1986 until May 1993, Mr. Stuart
was employed by Liquid Air Corporation,  Buld Gases Division first as a Business
Manager for South Florida and then as a Program Manager for Food Freezing.  From
February 1981 until February 1986, Mr. Stuart was employed by NCR Corporation in
the Systemedia  Division  initially as a Territory  Manager and then as a Senior
Account Manager. Mr. Stuart received a B.A. degree in marketing in 1980 from the
University of South Florida.

     Irwin Newman, age 51, has served as a Director since 1993

     Currently,  Mr. Newman provides financial advisory services to the Board of
Directors.  From 1993 until the present,  Mr.  Newman  served as the Senior Vice
President of Finance for Falcon  Marketing &  Management,  Inc. From 1993 to the
present,  Mr.  Newman has served as the President of Jenex  Financial  Services,
Inc. ("Jenex"), an affiliate of Falcon Marketing & Management Inc. Mr. Newman is
the principal of Jenex.  Mr. Newman is and has been a practicing  attorney since
1973. From 1993 to 1998, Mr. Newman served as Vice President and General Counsel
for Boca Raton Capital  Corporation,  a publicly owned, NASDAQ listed investment
holding  company where he completed an Initial Public  Offering for a $4 million
subsidiary,  completed a $3.5 million secondary offering and was responsible for
shareholder  and investor  relations.  From 1983 to 1988, Mr. Newman served with
the New York  Stock  Exchange  firms of Gruntal & Co. and  Butcher  and  Signer,
specializing in common and preferred  stocks,  options,  municipal and corporate
bonds and GNMA's.  During this period,  he broadcast a daily  television  market
comments  program over the Financial  News Network.  Mr. Newman  received a B.S.
degree in Business  Administration  from Syracuse  University in 1970 and a J.D.
degree from the University of Florida in 1973.

     Sam Norton, age 39, has served as a Director since 1992.

     Mr. Norton  provides  business and legal advisory  services to the Board of
Directors. Mr. Norton is an attorney with the firm Norton, Gurley,  Hammersley &
Lopez, P.A. in Sarasota, Florida. Mr. Norton practices primarily in the areas of
real estate,  banking,  corporate and business transactions and is a Florida Bar
board  certified real estate  specialist,  having earned such  certification  in
1991. He has  practiced  law in Sarasota  since 1985 and is the past Chairman of
the Joint  Committee  of the  Sarasota  Board of  Realtors/Sarasota  County  Bar
Association.  Mr. Norton is active in Sarasota civic organizations and currently
serves  as a member of the Board of  Directors  of  Sarasota  Bank.  Mr.  Norton
graduated from the  University of Florida in 1981 and earned a J.D.  degree from
Stetson  University School of Law in 1984 where he graduated Cum Laude. While in
law school, Mr. Norton was chosen to serve on the Law Review. He was admitted to
the Florida Bar in 1985.

     David Swor, age 67, has served as a Director since 1992.

     Mr.  Swor,  who is the  father  of Dr.  Swor,  provides  business  advisory
services for the Board of Directors.  From 1985 until the present,  Mr. Swor had
been engaged in the real estate  brokerage  business as the owner of Swor,  Inc.
The firm  specializes in the  development of commercial  real estate  properties
along with operating other related  business  interest,  holdings and investment
properties. From 1992 to the present, Mr. Swor has been a member of the Board of
Directors of SunTrust Bank in Sarasota,  Florida. From 1974 until 1985, Mr. Swor
was a co-owner of the real estate firm of Swor & Santini, Inc. which specialized
in commercial real estate and investments.  From 1973 until 1975, Mr. Swor was

                                       62

<PAGE>




a realtor  with Russ  Gorgone,  Inc..  From 1971 until  1973,  Mr. Swor was Vice
President  and  co-owner  of  Carroll  Oil  Company,  which  operated  a  Texaco
distributorship  in Fort Myers,  Florida.  From 1959 until 1971,  Mr. Swor was a
salesman for Texaco and from 1958 until 1959, Mr. Swor was in advertising  sales
for the  Orlando  Sentinel  Star.  Mr.  Swor  received  a B.A.  degree  from the
University of Kentucky in 1955 and holds teaching  certificates  from the states
of Kentucky and Florida.

     Tom DeCesare, age 66, served as a Director from 1992 until May 1999.

     Mr.  DeCesare,  who is the  father in law of Dr.  Swor,  provides  business
advisory services for the Board of Directors. Mr. DeCesare has been the Mayor of
Madeira Beach,  Florida since August 1993. Prior to that time, he served as Vice
Mayor from April 1993 and as a  Commissioner  from April 1991 until  April 1993.
From 1967 until 1987, was employed by Metropolitan  Life Insurance Company where
he ended his career as a Vice  President.  Mr.  DeCesare  received a Bachelor of
Arts degree from the University of Minnesota in 1959.

               William B. Saye,  MD, FACOG,  FACS, age 60, has served as Medical
Director  of ALTC  VirtualLabs  since  November  1998  and as a  Director  since
January, 1999.

     Dr. Saye is the founder, CEO and Medical Director of ALTC. ALTC was started
in 1990. Dr. Saye is also the Clinical  Assistant  Professor of OB/GYN for Emory
University  School of Medicine in  Atlanta,  Georgia.  Dr.  Saye,  with  another
pioneering   surgeon,   made  medical   history  when  he  performed  the  first
laparoscopic cholecystectomy (removal of the gall bladder) in the United States.
In the past nine (9) years, Dr. Saye has been instrumental in training more than
15,000  surgeons  in  various   laparoscopic   techniques  and  spearheaded  the
development  of  a  new  minimally  invasive  therapy,   laparoscopic  Doderlien
hysterectomy.  Dr. Saye  received a BS from Georgia  Institute of  Technology in
1962 and his MD degree from Tulane  University  Medical School in 1965. Dr. Saye
is board  certified  in  Obstetrics  and  Gynecology  and in  Advance  Operative
Paparoscopy. Dr. Saye is the author of numerous articles on laparoscopic surgery
and techniques.

Scientific Advisory Board

               In  addition  to the  officers  and  directors  of  the  Company,
Surgical has a scientific  advisory  board which has provided  advisory input on
products, research and educational projects for the Company. Inactive members of
this board can be called on to address  issues  which arise in ongoing  research
and  development  projects.  Active/Inactive  status  depends  upon the level of
participation in the Company's  current  activities.  Scientific  Advisory Board
members  receive no salaries  for their  services  but are  compensated  for any
reasonable out of pocket expenses incurred on behalf of the Company. Included on
such board are the following:

Mark Davis, M.D.
OB/GYN Physician & Safety Consultant
DeKalb Medical Center
Atlanta, Georgia

Donna Haiduven, RN/C.I.C.
Infection Control Specialist
Santa Clara Valley Medical Center
San Jose, California

                                       63

<PAGE>




Robert Morrison, M.D.
Optometrist/Chairman, Morrison International
New York, New York

Gail Lebovic, M.D. (Inactive)
Breast Surgeon
Co-Founder, Bay Area Breast Center
Palo Alto, California

Sharon Tolhurst, RN, MBA
Director, Cape Surgery Center
Sarasota, Florida

John Nora, M.D.
General Surgeon
Sarasota, Florida

George Maroulis, M.D. (Inactive)
Professor, University of South Florida
College of Medicine, Department of OB/GYN

Marguerite Barnett, M.D. (Inactive)
Plastic Surgeon
Venice, Florida

Ruth Dyal, M.D. (Inactive)
OB/GYN, Women's Care Specialists
Sarasota, Florida

Neil Pollack, M.D.
OB/GYN, Women's Care Specialists
Sarasota, Florida

Michael Shroder, M.D.
OB/GYN, Women's Care Specialists
Sarasota, Florida

Galen Swartzendruber, M.D.
OB/GYN, Women's Care Specialists
Sarasota, Florida

Phyliss Barber
FDA Compliance Consultant
Sarasota, Florida

Anne Johnson, O.R.T.
Surgical Technician
Columbus, Ohio


                                       64

<PAGE>




Andrew Garlisi, M.D.
Emergency Medicine
LaPorte, Indiana

Dr. Nathan Belkin
Former Researcher and Author in the infection control field

Scott Silverstein, M.D.
Occupational Health and Information Systems Specialist
Wilmington, Delaware

Gail Vallone
Operating Room Technologist
Las Vegas, Nevada

OASiS Medical Advisory Panel

               In  addition  to the  officers  and  directors  of  the  Company,
Surgical has a medical  advisory panel which approves,  edits and contributes to
content information for the OASiS system. Medical Advisory Panel members receive
no salaries for their  services but are  compensated  for any  reasonable out of
pocket  expenses  incurred on behalf of the Company.  Included on such panel are
the following:

Michael Abidin, MD
Nathan Belkin, PhD
Trish  Carlson,  RN,  CEN,  CFRRN  Dorothy  Corrigan,  RN Mark  Davis,  MD Donna
Haiduven,  BSN, MSN, CIC Pamela Hart, CLS Richard  Howard,  MD James Li, MD Mark
Lipman, MD James A. McGregor,  MD CM Trista Negele, MD Heidi M. Stephens, MD Pam
Tenaerts, MD Steven Weinstein, MT

        (b)    Section 16(a) Beneficial Ownership Reporting Compliance

               No Director,  Officer,  Beneficial Owner of more than ten percent
(10%) of any  class of  equity  securities  of the  Company  failed to file on a
timely basis  reports  required by Section  16(a) of the Exchange Act during the
most recent fiscal year or prior fiscal years.

Item 10.  Executive Compensation




                                                65

<PAGE>


<TABLE>
<CAPTION>

                                                                      Long Term Compensation
                                                                  ------------------------------
                          Annual Compensation                        Awards         Payouts
                    ---------------------------------            ---------------    ----------
(a)         (b)        (c)        (d)         (e)         (f)          (g)          (h)        (i)
                                              Other       Restricted   Securities
Name and                                      Annual      Stock        Underlying              All Other
Principal                                     Compen-     Award(s)     Options/     LTIP       Compen-
Position    Year       Salary ($) Bonus ($)   sation ($)  ($)          SARs  (f)    Payouts    sation ($)
                                                                                               (1)
----------------------------------------------------------------------------------------------------------
<S>         <C>        <C>        <C>         <C>         <C>          <C>          <C>        <C>
G.          1996            -                                                                  5,280
Michael     1997            -                                                                  4,877
Swor,       1998       32,500                                                                  5,400
Chairman
of the
Board
and
Treasurer
(2)
----------------------------------------------------------------------------------------------------------
Frank M.    1996            -
Clark       1997            -
President   1998       32,731                             50,000       70,417
and CEO
(3)
----------------------------------------------------------------------------------------------------------
Donald      1996            -
K.          1997       16,675                             13,657
Lawrence    1998       57,278                                          17,604
Executive
Vice
President
(4)
----------------------------------------------------------------------------------------------------------
James D.    1996       49,536                                                                  8,944
Stuart      1997       47,166                                                                  5,676
Former      1998         6,000                                                                 4,020
Executive
Vice
President
(5)
-----------------------------------------------------------------------------------------------------------
</TABLE>

(1)     All  other  compensation  includes  certain  health  and life  insurance
        benefits paid by the Company on behalf of its employee.

(2)     Dr. Swor did not receive any salary prior to June 1998 at which time the
        Company and he executed an Employment  Agreement for a salary of $60,000
        per  year.  Other  compensation  includes  life  insurance  paid  by the
        Company.


                                       66

<PAGE>




(3)     Mr. Clark executed an Employment Agreement with the Company in June 1998
        for an annual salary of $60,000.  As a signing bonus, Mr. Clark received
        50,000  shares of  restricted  stock in the  Company  which is valued at
        $50,000 and options to purchase  200,000 shares of the Company's  Common
        Stock at an exercise  price of $1.75 per share.  The  Company's  options
        have no current trading value.

(4)     Mr.  Lawrence  executed an Employment  Agreement with the Company in May
        1997 for an annual  salary of $50,000.  Effective in January  1998,  the
        salary of Mr. Lawrence was increased to $100,000 per year;  however,  he
        agreed to defer  receipt  of the  additional  amounts  until a  mutually
        agreed  date.  The Company  began  installment  payments of the deferred
        amount on September 1, 1999. As consideration for the acquisition of the
        assets of Endex,  Mr.  Lawrence  received  250,000  shares of restricted
        stock in the  Company.  Such  shares  were  valued at the asset value of
        $13,657.  In June 1998,  the  Company  granted Mr.  Lawrence  options to
        purchase  100,000  shares of the  Company's  Common Stock at an exercise
        price of $1.75 per share. The Company's  options have no current trading
        value.

(5)     Mr.  Stuart acted as the Executive  Vice  President of the Company until
        June,  1998.  Other  compensation  includes  a  portion  of  his  health
        insurance premiums which were paid by the Company and life insurance.



<TABLE>
<CAPTION>

Name              Exercised      Value Realized    No. of          Value of
                                                   Unexercised     Unexercised
                                                   Exercisable/    Exercisable/
                                                   Unexercisable   Unexercisable
--------------------------------------------------------------------------------
<S>               <C>            <C>               <C>             <C>
G. Michael        0              0                 3,850,686/      473,634/
Swor                                                0               0

Frank M. Clark    0              0                 200,000/         0/
                                                    0               0

Donald K.         0              0                 100,000/         0/
Lawrence                                            0               0

James D. Stuart   0              0                  (1)            (1)
</TABLE>

(1)  Mr. Stuart was not an executive officer at the year end 1998 and the number
     of  unexercised   exercisable/unexercised  and  the  value  of  unexercised
     exercisable/unexercised options were not included in this table.

                                       67

<PAGE>





     In November 1998, the Company  entered into a seven (7) year  collaborative
agreement with Dr. William B. Saye, the Medical Director and CEO of the Advanced
Laparoscopy  Training  Center in  Marietta,  Georgia  ("ALTC")  under  which the
Company  acquired the "digital  rights" of ALTC and the resulting  amalgam as it
relates to surgical  education and marketing rights to the ALTC database.  Under
this agreement, Dr. Saye became a member of the Company's Board of Directors and
agreed to act as the  Medical  Director of ALTC  VirtualLabs.  Dr. Saye is to be
compensated for travel expenses and will be paid an honorarium of $2,500 per day
when his services are requested by Surgical.  In addition,  Dr. Saye was awarded
stock options to purchase up to 1,000,000  shares of the Company's  Common Stock
over the  period,  300,000  of which  were  issued  upon  the  execution  of the
agreement,  and the balance of which are issuable monthly.  The intention of the
agreement is that any  educational  activity  involving  ALTC or Dr. Saye on the
Internet  or other  digital  presence  would be the  property  of and  under the
control of Surgical.

     Except for certain shares of the Company's Common Stock issued and sold and
options  granted to the ten (10)  executive  officers  and/or  directors  of the
Company in consideration for various cash, loans and services  performed for the
Company by each of them,  and rent paid to a company  controlled by Dr. Swor for
the Company's facility,  cash or non-cash compensation in the amount of $276,083
was awarded to,  earned by or paid to  executive  officers or  directors  of the
Company for all services rendered in all capacities to the Company since January
1, 1996.

     The  Company has adopted an  Employee  Stock  Option Plan and a  Consultant
Stock Option Plan.

Employee Contracts and Agreement

     The Company has entered into Employee  Agreements  with Dr. Swor, Mr. Clark
and Mr. Lawrence.

     The agreement  with Dr. Swor was entered into on June 15, 1998. Dr. Swor is
employed  as the  Treasurer  and  Medical  Director  of the Company at an annual
salary of $60,000.  The  agreement is for a term of one (1) year,  which term is
renewable year to year unless either party  provides  notice to the other within
fourteen  (14)  days  prior to the  expiration  that it seeks to  terminate  the
agreement.  Dr.  Swor is  required to devote such time as is required to fulfill
his duties to the  Company.  Dr. Swor is  reimbursed  reasonable  and  necessary
expenses  incurred  on behalf of the  Company.  Prior to the  execution  of this
agreement, Dr. Swor received no salary for his services to the Company since its
inception.

     The agreement  with Mr. Clark was entered into on June 15, 1998.  Mr. Clark
is employed as the  President  and CEO of the Company for a term of one (1) year
at a salary of $60,000, which term is renewable year to year unless either party
provides  notice to the other within  fourteen (14) days prior to the expiration
that it seeks to terminate the  agreement.  Mr. Clark is required to devote such
time as is  required  to  fulfill  his  duties  to the  Company.  Mr.  Clark  is
reimbursed  reasonable and necessary expenses incurred on behalf of the Company.
Mr. Clark  received a signing bonus of 50,000 shares of restricted  stock in the
Company and was  granted  options to purchase  200,000  shares of the  Company's
Common Stock at an exercise price of $1.75 per share.


                                       68

<PAGE>




     The  agreement  with Mr.  Lawrence was entered  into on April 1, 1997.  Mr.
Lawrence is employed as the Marketing  Director of the Company for a term of one
(1) year at a salary of  $50,000,  which term is  renewable  year to year unless
either party provides notice to the other within fourteen (14) days prior to the
expiration that it seeks to terminate the agreement.  Effective in January 1998,
the salary of Mr.  Lawrence  was  increased to $100,000  per year;  however,  he
agreed to defer receipt of the additional  amounts until a mutually agreed date.
The Company began  installment  payments of the deferred  amount on September 1,
1999.  Commencing  January 1, 1998,  Mr.  Lawrence  became  the  Executive  Vice
President  of the  Company.  Mr.  Lawrence is required to devote such time as is
required  to fulfill  his duties to the  Company.  Mr.  Lawrence  is  reimbursed
reasonable and necessary expenses incurred on behalf of the Company.

Key Man Life Insurance

     The Company currently does not maintain key-man life insurance  coverage on
any of its officers or directors.  However, the Company is the named beneficiary
of a key-man life insurance policy currently owned by Dr. Swor.

Employee and Consultants Stock Option Plans

Employee Stock Option Plans

     On July 21, 1994,  the Board of Directors  adopted an Employee Stock Option
Plan which is  available  to employees  and  Directors of the Company  ("ESOP").
Pursuant  to the ESOP,  employees  are  given  the  opportunity  to  purchase  a
designated  number of shares of the  Company's  common  stock at a pre-set  flat
rate.  The  options  are  granted  for a period  of seven  (7) years and are not
transferable except by will or laws of descent and distribution. The options may
not be  exercised  unless  the  Company  has  filed  an  effective  registration
statement  on Form S-8  relating  to the shares  underlying  the  option.  As to
employees who are not also  directors,  such employees must agree to remain with
the  Company  for a period of two (2) years from the date the option is granted.
In the event that such  employee is  terminated  during such two (2) year period
for cause or at the request of the employee,  to the extent any options have not
been exercised,  the options  terminate  immediately upon the termination of the
employee.  If  termination  is for any other  reason,  the  employee has two (2)
months  from the date of  termination  to  exercise.  In the case of death,  the
options must be exercised within the lesser of (i) three (3) years from the date
of death or (ii) five (5) years from the option  issuance  date.  In the case of
the  capital  restructure  of the  Company,  the  options  are  effective  as if
exercised prior to the capital  restructuring  event. The employee is limited to
exercise  the  equivalent  of  $100,000  of Common  Stock in the  Company in any
calendar year.

     In  January,  1998,  the Board of  Directors  revised  the term of the ESOP
("1998 Revised  ESOP").  Under the revised plan, the term is now determined by a
Committee   consisting  of  Frank  Clark  and  Sam  Norton  (the  "Stock  Option
Committee").  The Stock  Option  Committee  is  evaluating  recommendations  for
adjusting stock compensation for the Company employees and consultants.

     In January,  1999, the Board of Directors  further  revised the ESOP ("1999
Revised ESOP"). Under the further revised plan which is designated the "Surgical
Safety  Products  1999 Stock  Option  Plan",  employees  qualify for issuance of
Incentive  Stock  Options  under  Section 422 of the Internal  Revenue  Code, as
amended, Non-incentive Stock Options and Reload Options. Directors,  consultants
and  advisors  who are  issued  options  under  the plan only  qualify  for Non-
incentive Stock Options and Reload  Options.  All of the options under this plan
terminate ten (10) years (except  those issued to 10% or more  shareholders,  in
which  case  they  terminate  in five  (5)  years)  from  issuance  and vest for
employees  at the rate of  one-third  each  year for three (3) years and vest as
established  by the  Stock  Option  Committee  for  Directors,  Consultants  and
Advisors.  The plan is overseen by the Board of  Directors  or the Stock  Option
Committee and all issuances are at fair market value as defined in the plan (and
110% of fair market  value in the case of a 10% or more  shareholder).  The plan
provides the exercise rights on death,  disability or termination of employment.
The Company may, at its option,  provide  change of control rights to designated
persons and if granted,  the option  holder is entitled to certain cash payments
on all options granted whether or not vested if the Company changes control.

     Pursuant to the ESOP, the Company has granted options to purchase 4,166,316
shares of the  Company's  Common  Stock  representing  proceeds  on  exercise of
$1,320,000  under the 1994 ESOP,  683,330  shares of the Company's  Common Stock
representing  proceeds  on  exercise of  $683,330  under the 1998  Revised  ESOP
(without  regard to the additional  options to Dr. Saye which accrue at the rate
of 8,333 per month) and 30,000 shares of the Company's Common Stock representing
proceeds on exercise of $30,000 under the 1999 Revised ESOP to date as follows:

<TABLE>
<CAPTION>
Employee                Date Option    No. of Shares   Exercise Price    Term
                        Granted        subject to                        Years
                                       Exercise
1994 ESOP (1)(2)
<S>                     <C>            <C>             <C>               <C>
G. Michael Swor (3)     07/21/94       3,850,686       $.317               7

Irwin Newman (4)        07/21/94          63,126       $.317               7

James D. Stuart         07/21/94          63,126       $.317               7

Samuel Norton           07/21/94          63,126       $.317               7

David Swor              07/21/94          63,126       $.317               7

Thomas DeCesare (5)     07/21/94          63,126       $.317               7


1998 Revised ESOP(2)

Frank M. Clark (6)      06/15/98          200,000      $1.00               7

Donald L. Lawrence (6)  06/15/98          100,000      $1.00               7

William B. Saye (7)     11/20/98          383,330      $1.00               7

1999 Revised ESOP (2)

G. Michael Swor (3)     01/01/99           10,000      $1.00               10

Frank M. Clark          01/01/99           10,000      $1.00               10
</TABLE>

                                       69

<PAGE>




Donald L. Lawrence      01/01/99           10,000      $1.00               10

--------------------------------------------------------------------------------


(1)  The options  granted  under the 1994 ESOP have been adjusted to reflect the
     new conversion rate in accordance with the capital restructuring  provision
     which came into  effect  when  Surgical  Safety  Products,  Inc. of Florida
     merged into Sheffeld Acres, Inc., the surviving New York corporation.

(2)  The Company relied upon Section 4(2) of the Act, Section 517.061(11) of the
     Florida  Code and Section  10-5-9 (13) of the Georgia Code for the grant of
     these options.

(3)  Dr. Swor received  options for 63,126 shares of the Company's  Common Stock
     as a Director  and options for  3,787,560  shares of the  Company's  Common
     Stock in exchange  for  transfer  of patents and rights to existing  patent
     concepts.  Dr. Swor was granted Non Incentive  Stock Options under the 1999
     Revised ESOP.

(4)  In addition to the options  granted to Mr. Newman for 63, 126 shares of the
     Company's Common Stock as a Director of the Company, options to purchase up
     to 315,630  shares of the  Company's  Common  Stock  were  granted to Jenex
     Financial  Services,  Inc., a company of which Mr. Newman is the principal.
     Jenex is a financial service company which was issued the options under the
     Company's 1994 CSOP.

(5)  Mr.  DeCesare  resigned  as  director  on  May  4,  1999  due  to  personal
     considerations.

(6)  Each of these persons  received their options as a bonus; Mr. Clark's as an
     additional  incentive  to join the  Company as its CEO and Mr.  Lawrence in
     consideration  of  outstanding  services to the Company for the prior year.
     Although  the  options   granted  to  Mr.  Clark  Aand  Mr.  Lawrence  were
     exercisable at $1.75 per share,  the Board of Directors on January 20, 1999
     voted to reduce  the  exercise  price to $1.00.  Since the  change was made
     after  December  31,  1998,  the  original  exercise  price was used in the
     financial  statements for purposes of  determining  weighted  averages.  In
     addition,  the Board of Director at the January 1999 meeting  increased the
     term of Mr. Clark's options from one (1) to seven (7) years.

(7)  Dr. Saye received  300,000  issued on November 20, 1998.  Dr. Saye receives
     additional 100,000 options per year on a monthly basis. Accordingly,  8,333
     options are  attributable  for the each month from  December  1998  through
     September  1999.  The exercise price for the options is $1.00 for year one,
     $1.50 for year two, $2.00 for year three and $2.50 for years 4 through 7.

Consultant Stock Option Plans

        On July 21, 1994, the Board of Directors also adopted a Consultant Stock
Option Plan which is available to certain  consultants  who provide  services to
the  Company  ("CSOP").   Pursuant  to  the  CSOP,  consultants  are  given  the
opportunity  to purchase a designated  number of shares of the Company's  common
stock at a pre-set flat rate.  The options are granted for a period of seven (7)
years  and  are  not  transferable  except  by  will  or  laws  of  descent  and
distribution.  The options may not be exercised  unless the Company has filed an
effective  registration  statement on Form S-8 relating to the shares underlying
the option. In the event the consultant's services are terminated,

                                       70

<PAGE>




such  consultant  has two (2) months  from the date of  termination  in which to
exercise  and in the case of death,  the  estate has the lesser of (i) three (3)
years  from the date of death or (ii) five (5) years  from the  option  issuance
date in  which  to  exercise.  In the  case of the  capital  restructure  of the
Company,  the  options  are  effective  as if  exercised  prior  to the  capital
restructuring  event.  There are no yearly  limitation  on the amount of options
which may be exercised by consultants.

        In January,  1998,  the Board of Directors  revised the term of the CSOP
("1998 Revised CSOP"). Under the revised plan, the term is now determined by the
Stock  Option  Committee.  The  1998  CSOP  requires  that the  options  are not
exercisable for a period of two (2) years from issuance

        In January,  1999, the Board of Directors  adopted the 1999 Revised ESOP
which covers consultants and advisors to the Company.

        Pursuant  to the CSOP,  the  Company  has  granted  options to  purchase
346,115 shares of the Company's Common Stock  representing  proceeds of $110,700
to the Company under the 1994 CSOP,  options to purchase  129,000  shares of the
Company's  Common Stock  representing  proceeds of $114,500 to the Company under
the  1998  Revised  CSOP  and  278,000  shares  of the  Company's  Common  Stock
representing  proceeds  of  $278,000  under  the  1999  Revised  ESOP to date as
follows:

<TABLE>
<CAPTION>
Employee                   Date Option    No. of Shares   Exercise Price    Term
                           Granted        subject to                        Years
                                          Exercise
1994 ESOP (1)(2)
<S>                        <C>            <C>             <C>               <C>
Danielle Chevalier         07/21/94         3,156         $.317               7
For marketing assistance
 at conventions

Donna Haiduven             07/21/94        15,782         $.317               7
 For medical advisory
 and clinical studies

Jenex Financial Services
Inc. (3)                   07/21/94       315,630         $.317               7
 For financial advisory
 and corporate financing
 consulting services

Leann Swor                 07/21/94         6,313         $.317               7
 For marketing assistance
 at conventions

Loren Schuman              07/21/94         4,734         $.480               7
 For marketing consulting
 services

Bruce Cohen                01/24/95           500         $0.90               7
 Performed business
 valuations of acquisition
 candidates
</TABLE>

                                       71

<PAGE>



<TABLE>

1998 Revised CSOP (2)
<S>                        <C>            <C>             <C>               <C>
Danielle Chevalier         01/01/98         2,000         $0.50               7
 For marketing assistance
 at conventions

Leann Swor                 01/01/98         2,000         $.050               7
 For marketing assistance
 at conventions

Stacy Quaid (4)            01/01/98        50,000         $0.50               7
 For assistance in
 becoming a reporting
 company

Mike Williams (4)          08/03/98        50,000         $1.00               7
 As a signing bonus

T.T. Communications        10/15/98        25,000         $1.50               7
 For investor relations
 services

1999 Revised ESOP (2)

David Collins (5)          01/01/99        10,000         $1.00              10
 For financial consulting
 services

Mike Williams (6)          01/01/99         5,000         $1.00              10
 As a performance bonus

Mike Williams (6)          01/08/99        50,000         $1.00              10
 As a performance bonus

Leann Lafko-Spofford (6)   01/01/99         5,000         $1.00              10
 As a performance bonus

Leann Lafko-Spofford (6)   01/08/99        50,000         $1.00              10
 As a performance bonus

Stacy Quaid (6)            01/01/99         3,500         $1.00              10
 As a performance bonus

Stacy Quaid (6)            01/08/99        21,500         $1.00              10
 As a performance bonus

Eric Hill (6)              01/01/99         3,000         $1.00              10
 As a performance bonus
</TABLE>

                                                72

<PAGE>



<TABLE>

<S>                        <C>            <C>             <C>               <C>
Eric Hill (6)              01/08/99        25,000         $1.00              10
 As a performance bonus

Scott Heap, Ad-Vantagenet  01/8/99         20,000         $1.00              10
 For OASiS development
 services

Ray Villares,              01/8/99         20,000         $1.00              10
 Ad-Vantagenet
 For OASiS development
 services

David Collins (5)          01/19/99        65,000         $1.00              10
 For financial consulting
 services

-------------------------------------------------------------------------------
</TABLE>

(1)  The options  granted  under the 1994 CSOP have been adjusted to reflect the
     new conversion rate in accordance with the capital restructuring  provision
     which came into  effect  when  Surgical  Safety  Products,  Inc. of Florida
     merged into Sheffeld Acres, Inc., the surviving New York corporation.

(2)  The Company relied upon Section 4(2) of the Act and Section  517.061(11) of
     the Florida Code for the grant of these options.

(3)  These  options  were  granted to Jenex in exchange  for  certain  financial
     services provided to the Company. Mr. Newman, a Director of the Company, is
     the principal of Jenex.  Mr. Newman is deemed the beneficial owner of these
     options.

(4)  Each of these  persons  received  their  options as a bonus;  Ms.  Quaid in
     consideration of outstanding  services to the Company for the prior year in
     assisting with the Company's  registration  as a reporting  company and Mr.
     Williams  as an  additional  incentive  to join the  Company  as the  Sales
     Manager.  Although the options granted to Mr. Williams were  exercisable at
     $1.75 per share, the Board of Directors on January 20, 1999 voted to reduce
     the exercise  price to $1.00.  Since the change was made after December 31,
     1998, the original exercise price was used in the financial  statements for
     purposes of determining weighted averages.

(5)  David Collins  received  these options as a consultant to the Company prior
     to his election to the Board of Directors on January 20, 1999.

(6)  Each of these persons is covered by the Staff agreement and is treated as a
     co-employee;  however, for purposes of qualification under the 1999 Revised
     ESOP,  such  person has been  treated as a  consultant  and  advisor to the
     Company who qualifies for non-incentive stock options.



                                       73

<PAGE>



Compensation of Directors

     The Company has no standard  arrangements for compensating the directors of
the Company for their attendance at meetings of the Board of Directors.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

     The  following  table sets  forth  information  as of  December  31,  1998,
regarding the ownership of the Company's Common Stock by each shareholder  known
by the Company to be the beneficial  owner of more than five percent (5%) of its
outstanding shares of Common Stock, each director and all executive officers and
directors as a group.  Except as otherwise  indicated,  each of the shareholders
has sole voting and  investment  power with respect to the share of Common Stock
beneficially owned.

<TABLE>
<CAPTION>
Name and Address of          Title of          Amount and Nature of   Percent of
Beneficial Owner             Class             Beneficial Owner       Class
--------------------------------------------------------------------------------
<S>                          <C>               <C>                    <C>
Dr. G. Michael Swor          Common            3,792,890 (1)          35.16

Frank M. Clark               Common               50,000                .47

Donald K. Lawrence           Common              250,000               2.32

James D. Stuart              Common              848,182 (2)           7.86

Irwin Newman                 Common                -0-                  -0-

Sam Norton                   Common               53,400                .50

David Swor                   Common              473,445               4.39

Tom DeCesare                 Common                9,469                .09

Dr. William B. Saye               -                    -                  -

David Collins                     -                    -                  -

All Executive Officers and Directors
as a Group (ten (10) persons)                  5,477,386 (3)          50.78 (3)
----------
</TABLE>

(1)  This  includes  631,260  owned by Dr. Swor's wife of which he is deemed the
     beneficial owner

(2)  This  include  31,563  which Mr.  Stuart owns  jointly with his brother and
     816,619 which Mr. Stuart received as a gift from Dr. Swor in 1996.

(3)  In addition to the shares owned by the Executive  Officers and Directors as
     a group,  said  officers and directors own  (including  those  beneficially
     held) options to purchase  5,278,094  shares of the Company's  Common Stock
     (without regard to the additional options to Dr.

                                       74

<PAGE>




     Saye which accrue at the rate of 8,333 per month)  pursuant to Employee and
     Consultant  Stock Option Plans adopted in 1994, 1998 and 1999. In the event
     all such options to purchase were  exercised,  this group would own a total
     of 10,755,480  shares of the Company's  Common Stock which would  represent
     66.95% of the total shares of Common Stock outstanding.

     There are no arrangements  which may result in the change of control of the
Company.

Item 12.  Certain Relationships and Related Transactions

     On  June 1,  1992,  the  Company  issued  11,300  shares  of the  Company's
restricted stock to Dr. Swor and 2,000 shares to Mrs. Swor (of which Dr. Swor is
deemed the beneficial  owner) each in exchange for services rendered to Surgical
valued at a total of $1,400.  Following  the merger with Sheffeld  Acres,  Inc.,
these shares were converted into 4,197,879 shares in the  restructured  company.
In July 1996,  Dr. Swor  received  options to purchase  63,126 of the  Company's
Common  Stock as a Director  and  options to  purchase  3,787,560  shares of the
Company's  Common  Stock in  exchange  for  transfer  of  patents  and rights to
existing  patent  concepts.  In  1996,  Dr.  Swor  received  478,630  shares  of
restricted stock as payment of debt and related interest on loans which Dr. Swor
made to the Company totaling  $239,315.  In 1996, Dr. Swor gifted 816,619 of his
shares to James D. Stuart.  In September,  1996 Savannah  Leasing  purchased the
Company's  executive office building at 2018 Oak Terrace with cash from Dr. Swor
and  50,000  shares of his stock  which were  valued at $0.50 per  share.  These
shares were  transferred  to the third party seller.  At December 31, 1997,  the
Company was  indebted to Dr. Swor in the amount of $197,720.  In  addition,  the
Company was indebted to Savannah Leasing,  a company owned by Dr. and Mrs. Swor.
The amount owed at  December  31,  1997 was  $36,000.  Interest on the notes was
10.0%. At December 31, 1997,  interest  payable on these loans totaled  $17,667.
Out of the proceeds of the sale of the Company's  Common Stock during the period
of March 1998 through June 1998,  the Company  made  repayment of principal  and
interest  on the 1997  indebtedness.  During  fiscal  1998,  Dr. Swor loaned the
Company an  additional  $23,000.  The balance of these notes  payable was repaid
during  fiscal 1998 and at December 31,  1998,  there were no amounts due to Dr.
Swor.  Interest expense relating to these notes amount to $9,882 and $15,314 for
the years ended December 31, 1998 and 1997 respectively.  The Company has a line
of credit in the amount of $100,000  which expires in May 2017 and is guaranteed
by Dr. Swor and his wife.  In fiscal  1999,  the line of credit has been used to
fund operations on a short term basis and $20,000 is currently outstanding.  Dr.
Swor has a year to year employment contract with the Company.

     On June 1, 1992,  the Company  issued 1,500 shares of  restricted  stock to
David Swor for which it received  $15,000.  Following  the merger with  Sheffeld
Acres, Inc., these shares were converted into 473,445 shares in the restructured
company.

     On  November  5, 1992,  the  Company  issued  120  shares of the  Company's
restricted stock to Sam Norton for which it received  $6,000.  On March 1, 1993,
the Company issued 34 shares of the Company's restricted stock to Sam Norton for
which it received $2,000.  Following the merger with Sheffeld Acres, Inc., these
shares were converted  into 48,607.  In 1996, the Company issued 4,793 shares of
the  Company's  restricted  stock to Mr.  Norton as payment  for legal  services
valued at $4,793.

     On March 1, 1993, the Company issued 100 shares of the Company's restricted

                                       75

<PAGE>




stock to James D. Stuart and David Stuart jointly for which it received  $6,000.
On May 9, 1993, the Company issued 100 shares of the Company's  restricted stock
to Mr.  Stuart in exchange for services  rendered  valued at par.  Following the
merger with Sheffeld Acres,  Inc., each 100 shares was converted to 31,563 for a
total  of  63,126  shares.  In 1996,  Mr.  Stuart  received  816,619  shares  of
restricted stock from Dr. Swor as a gift.

     On March 1, 1993, the Company issued 30 shares of the Company's  restricted
stock to Tom  DeCesare  (then a Director),  in exchange  for  services  rendered
valued at par. Following the merger with Sheffeld Acres, Inc., these shares were
converted into 9,469.

     On July 21, 1994, the Board of Directors  adopted the 1994 ESOP and awarded
options to purchase the post-merger equivalent of 63,126 shares of the Company's
Common Stock to each of the Company's six (6) directors at an exercise  price of
$.317.  There was no value  attached to the grant of such  options.  At the same
time, the Company awarded Dr. Swor options to purchase  3,787,560  shares of the
Company's  Common  Stock at an  exercise  price of  $.317  in  exchange  for the
transfer of certain  patents and rights to previously  patented  concepts to the
Company, which patents and rights were valued at approximately $1,200,000.

     On July 21, 1994,  the Board of Directors  also adopted the 1994 CSOP under
which it awarded  options to purchase the  post-merger  equivalent of a total of
346,115  shares of the  Company's  Common  Stock.  These options were granted to
consultants in  consideration of services  valued;  however,  there was no value
attached to the grant of such options.

     On  December  8,  1997,  the  Company  acquired  all of the assets of Endex
Systems,  Inc.,  d/b/a  InterActive PIE ("Endex"),  a Florida  corporation.  The
assets of Endex  were  valued at  approximately  $14,000  for which the  Company
issued 250,000 shares of restricted common stock. Endex was a medical multimedia
software  company,  experienced  in  computer  graphics  related to the  medical
industry.  The  acquisition  was made to implement  the  Company's  Data Systems
Division's  development of its surgical  safety,  touch-screen  network known as
OASiS.  The  President  and Chief  Executive  Officer  ("CEO") of Endex,  Donald
Lawrence,  became the Vice President of Sales and Marketing of the Company.  Mr.
Lawrence has a year to year employment  contract with the Company.  (See Part I,
Item 6.  "Executive  Compensation - Employee  Contracts".) In  consideration  of
outstanding  service to the Company in 1997, Mr.  Lawrence was granted an option
to purchase  100,000  shares of the  Company's  Common Stock at a price of $1.75
under the 1998  Revised  ESOP.  In January  1999,  the Board voted to reduce the
exercise price on the option to $1.00 per share.  There was no value attached to
the grant of such options.

     In March 1998, the Company  entered into an agreement  with  Stockstowatch,
whereby  Stockstowatch  agreed to provide investor relations services as a media
consultant  to the Company in  exchange  for  issuance of 300,000  shares of the
Company's  Common Stock valued at $45,000.  On October 27, 1998, the SEC brought
an  action  against  Stockstowatch  and  its  principal,  Steven  A.  King,  for
injunctive and other relief to enjoin the defendants from touting and "scalping"
securities in violation of the  anti-fraud  and  anti-touting  provisions of the
federal securities laws (Securities and Exchange Commission v. Stockstowatch.com
and Steven A. King,  United States District  Court,  Middle District of Florida,
Tampa Division, Case No. 98-2198-CIV-T-26B).  The SEC alleges that since October
1997,  the  defendants  touted  the  securities  of  at  least  five  "microcap"
companies,  one of which is Surgical,  over the Internet  through e-mail sent to
over 200,000  subscribers and on the defendant's  website.  The SEC has taken no
action  against  Surgical  nor has it made  any  allegations  that  the  Company
directly  or  indirectly  acted  improperly  in  this  matter  or was in any way
involved in the alleged violations.

                                       76

<PAGE>




     In the Stockstowatch  complaint,  the SEC further alleges that almost every
stock touted by the  defendants (1) the volume and/or price  increased  sharply,
sometimes as much as 200% shortly after the defendants' buy recommendations; and
(2) the defendants took advantage of the market interest they created by selling
into  the  inflated   market  large  amounts  of  the  stock  they  received  in
consideration of their  promotional  services.  Further the SEC alleges that the
defendants  realized  profits  in  excess  of $1  million  from  sales  of these
securities. The SEC alleges that the defendants failed to disclose that they had
received stock as  compensation  from the issuers of the securities  they touted
and did not disclose  that they intended to sell the stock in  contravention  of
their buy  recommendations  which is a fraudulent  practice known as "scalping".
The SEC is seeking  permanent  injunctive  and  equitable  relief,  including an
accounting,  disgorgement  of gains  with  pre-  judgement  interest  and  civil
penalties against each defendant.  The SEC alleges,  with reference to Surgical,
that Surgical  entered into a consulting  agreement with  Stockstowatch on March
19, 1998 in which  Stockstowatch  agreed to profile  Surgical  in  exchange  for
300,000  free-trading  shares of its Common Stock.  On the date the contract was
executed, Surgical's Common Stock was trading at $.145. The shares were received
by Stockstowatch on April 9, 1998, on which date Surgical's  Common Stock closed
at $.87. According to the Complaint, on April 21, 1998,  Stockstowatch e- mailed
the Surgical Profile to its subscribers.  In the profile,  Stockstowatch  stated
that Surgical  "represents the most positive upside  potential of any company we
have  profiled." This profile  continued:  "[a]s a result of our own independent
due diligence,  our industry  insiders believe this stock will be a $20.00 stock
within 18 months." The SEC states in its complaint  that there was a small print
disclaimer  which  accompanied the profile which stated that  Stockstowatch  had
entered  into  a  compensation  agreement  valued  at  $43,500,  but  that  such
disclaimer did not disclose that Stockstowatch  received Surgical's Common Stock
and that it intended to sell the stock after the profile.

     In March 1998, the Company  issued  100,000 shares of the Company's  Common
Stock valued at $15,000 to Mintmire & Associates in exchange for legal services.

     In April 1998,  the Company  issued  2,500  shares of  restricted  stock to
Xavier Calderon in exchange for computer consulting services valued at $4,375.

     On June  15,  1998,  the  Company  engaged  Frank  M.  Clark  to act as the
President of the Company.  As such he received  50,000  shares of the  Company's
Common Stock as a signing  bonus valued at $50,000 and options to purchase up to
200,000 shares of the Company's Common Stock at a price of $1.75 per share under
the 1998 Revised ESOP.  In January 1999,  the Board voted to reduce the exercise
price on the option to $1.00 per share and to increase  the exercise  term.  Mr.
Clark's  shares were  valued at $50,000  and there was no value  attached to the
grant of his options.  Mr. Clark has a year to year employment contract with the
Company.

     In  October  1998,  the  Company   entered  into  an  agreement  with  T.T.
Communications,  Inc. to provide  investor  relations  services for the Company.
T.T.  Communications,  Inc.'s function is to contact investment and media people
throughout  the  United  States  and  to  participate  in  the   preparation  of
communication  packages including annual and quarterly  reports,  news and press
releases and publicity and corporate  profiles.  The initial agreement was for a
period of three (3) months for which T.T.  Communications,  Inc. receives $2,000
per month  and  reimbursement  of out of  pocket  expenses.  In  addition,  T.T.
Communications,  Inc.  was  granted  options to  purchase  25,000  shares of the


                                       77

<PAGE>




Company's  Common  Stock at an  exercise  price  of  $1.50.  In the  event T. T.
Communications, Inc. introduces the Company to a suitable financing source, they
will be  compensated  by a cash  finder's  fee  equal  to  1.5%  on the  initial
financing and .75% on any subsequent  financing.  The agreement is cancelable by
either party with 30 days written notice. The agreement  continues on a month to
month basis.

     In November 1998, the Company  entered into a seven (7) year  collaborative
agreement with Dr. William B. Saye, the Medical Director and CEO of the Advanced
Laparoscopy  Training  Center in  Marietta,  Georgia  ("ALTC")  under  which the
Company  acquired the "digital  rights" of ALTC and the resulting  amalgam as it
relates to surgical  education and marketing rights to the ALTC database.  Under
this agreement, Dr. Saye became a member of the Company's Board of Directors and
agreed to act as the  Medical  Director of ALTC  VirtualLabs.  Dr. Saye is to be
compensated for travel expenses and will be paid an honorarium of $2,500 per day
when his services are requested by Surgical.  In addition,  Dr. Saye was awarded
stock options to purchase up to 1,000,000  shares of the Company's  Common Stock
over the  period,  300,000  of which  were  issued  upon  the  execution  of the
agreement,  and the balance of which are issuable monthly.  The intention of the
agreement is that any  educational  activity  involving  ALTC or Dr. Saye on the
Internet  or other  digital  presence  would be the  property  of and  under the
control of Surgical.

     Pursuant to a settlement  agreement dated December 1, 1998 with MediaWorks,
a former  consultant  to the  Company,  relative to the  litigation  between the
parties,  the Company  agreed to make two types of payments in exchange  for the
dismissal of the action with prejudice: (1) to pay MediaWorks $50,000 and (2) to
issue 40,000 shares of Rule 144 stock.

     In April 1999 the  Company  commenced  a  self-directed  private  placement
offering of its restricted Common Stock and warrants for which it received gross
proceeds of $475,000,  for which  Directors Sam Norton,  David Swor and Dr. Saye
each  purchased  50,000  shares and were  granted  warrants to purchase  25, 000
shares on the same terms as outside  investors.  Pursuant  to such  offering,  a
total of 950,000  shares of restricted  Common Stock were issued and warrants to
purchase 475,000 shares of the Company's  restricted Common Stock at an exercise
price of $1.00 exercisable within five (5) years were granted.

     In April 1999,  the Company  entered into an agreement  with KJS to provide
consulting  services.  KJS agreed to accept 7,000 shares of the Company's common
stock  valued at the  current  bid price of $.50 as part of an initial  retainer
with the balance of $1,500 to be paid in cash at such time as KJS introduces the
Company to five institutional funding sources.

     In April 1999, the Company issued 2,000 shares each to David Utz and Robert
Wingate, two consultants of the Company in lieu of cash for services relating to
their production of a CD-Rom disc to be used to promote OASiS.  Such 4000 shares
were valued at $2,250  which was based upon the closing  price for the shares on
the dates the services were due to be paid.

     In May 1999, the Company  entered into an agreement with Ten Peaks to pay a
finder's fee for successfully  securing  specifically  defined financing for the
Company.  Ten Peaks agreed to accept 6,000 shares of the Company's  common stock
in lieu of a retainer provided such stock had a fair market value as reported on
Bloomberg,  LLP on the  date  of  execution  of not  less  than  $.66.  Although
obligated  to issue such  shares,  the Company  has decided not to deliver  such
shares since it believes that Ten Peaks did not perform as required.



                                       78

<PAGE>



     In May 1999,  the Company issued a total of 46,000 shares of its restricted
Common  Stock  to Frank  Clark  and  David  Collins  and  11,400  shares  of its
restricted  Common  Stock to three (3)  other  employees  in lieu of salary  and
consulting  fees  due  from  the  Company  to each of  them,  which  salary  and
consulting  fees were valued at $31,222 in the case of Mr. Clark and Mr. Collins
and at $7,832 in the case of the three (3) employees.

Item 13.  Exhibits and Reports on Form 8-K

        (a)    Exhibits

Item No.       Description
---------------------------------

3.(I).1        Articles of Incorporation  of Surgical Safety  Products,  Inc., a
               Florida corporation filed May 15, 1992

3.(I).2        Articles of Amendment filed December 9, 1992

3.(I).3        Articles of Amendment filed July 19, 1994

3.(I).4        Articles of Amendment filed October 11, 1994

3.(I).5        Articles of Incorporation of Sheffeld Acres, Inc., a New York
               Corporation filed May 7, 1993

3.(I).6        Articles of Merger filed in the State of Florida October 12, 1994

3.(I).7        Certificate of Merger filed in the State of New York
               February 8, 1995

3.(I).8        Certificate to Do Business in the State of Florida
               filed April 11, 1995

3.(I).9        Certificate of Amendment filed May 1, 1998

3.(II).1       Bylaws of Sheffeld Acres, Inc., now known as Surgical Safety
               Products, Inc.


3.(II).2       Amended Bylaws of Surgical Safety Products, Inc.

10.1           Acquisition of Endex Systems, Inc. d/b/a/ InterActive PIE
               dated December 8, 1997

10.2           Prepaid Capital Lease Agreement with Community Health Corporation
               relative to Sarasota Medical Hospital OASiS Installation
               dated January 30, 1998

10.3           Letter of Intent with United States Surgical Corporation
               dated February 12, 1998

10.4           Form of Rockford Industries, Inc. Rental Agreement and Equipment
               Schedule to Master Lease Agreement

10.5           Ad-Vantagenet Letter of Intent dated June 19, 1998

10.6           Distribution Agreement with Morrison International Inc.,
               dated September 30, 1996

                                               79

<PAGE>




10.7           Distribution Agreement with Hospital News dated August 1, 1997

10.8           Clinical Products Testing Agreement with Sarasota Memorial
               Hospital dated January 30, 1998

10.9           Real Estate Lease for Executive Offices effective June 1, 1998

10.10          Employment Agreement with Donald K. Lawrence dated April 1, 1997

10.11          Employment Agreement with G. Michael Swor dated June 15, 1998

10.12          Employment Agreement with Frank M. Clark dated June 15, 1998

10.13          Agreement for Consulting Services with Stockstowatch.com Inc.,
               dated March 30, 1988

10.14          Form of Employee Option Agreement dated July 1994

10.15          Form of Employee Option Agreement dated 1998

10.16          Form of Consultants Option Agreement dated July 1994

10.17          Form of Consultants Option Agreement dated 1998

10.18          Confidential Private Offering Memorandum dated May 30, 1995

10.19          Supplement to Private Offering Memorandum dated October 30, 1995

10.20          Stock Option Agreement with Bay Breeze Enterprises LLC
               dated April 9, 1998

10.21          Revolving Loan Agreement, Revolving Note, Security Agreement
               with SouthTrust Bank dated May 2, 1997

10.22          Agreement between the Company and T. T. Communications, Inc.,
               dated October 15, 1998

10.23          Agreement between the Company and U.S. Surgical Corporation
               dated October 28, 1998.

10.24          Collaborative Agreement between the Company and
               Dr. William B. Saye dated November 16, 1998.

10.25          Kiosk Information System, Inc. Purchase Order
               dated November 3, 1998

10.26          Surgical Safety Products 1999 Stock Option Plan
               adopted January 1999

10.27          Form of the Employee Option Agreement under the Surgical Safety
               Products 1999 Stock Option Plan dated January 1999


                                       80

<PAGE>




10.28          Form of the Director, Consultant and Advisor Option Agreement
               under the Surgical Safety Products 1999 Stock Option Plan
               dated January 1999

10.29          Verio, Inc. Access Service Agreement dated February 16, 1999.

10.30          Form of Investor Subscription Documents and Agreements relative
               to the April 1999 Self Directed Private Placement Offering
               under Rule 506 of Regulation D.

10.31          Form of the  Warrant  issued  pursuant  to the  April  1999  Self
               Directed Private Placement  Offering under Rule 506 of Regulation
               D.

10.32          Consulting Agreement dated April 1999 with Koritz Group, LLC.

10.33          Agreement dated April 1999 with KJS Investment Corporation.

10.34          Agreement dated May 1999 with Ten Peaks Capital Corp.

10.35          Private Partner Network Agreement dated July 30, 1999
               with US Surgical

10.36          Staff/Client Leasing Agreement dated October 16, 1999,
               as amended September 15, 1999

27.1           Financial Data Sheet
----------------

( All of the above Exhibits  previously  have been filed with the Company's Form
10-SB, Amendment No. 1 to the Form 10-SB or Amendment No. 2 to the Form 10-SB)

        (b)    Reports on Form 8-K

     The Company  did not file any  reports on Form 8-K during the last  quarter
covered by this report.

                                    SIGNATURE

     In accordance with Section 13 and 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                    Surgical Safety Products, Inc.
                                    (Registrant)


Date: October 13, 1999              By:/s/ Frank M. Clark
                                       --------------------
                                    Frank M. Clark, President and CEO

                                    By:/s/ Donald K. Lawrence
                                       ----------------------
                                     Donald K. Lawrence
                                     Vice President and Secretary

                                       81

<PAGE>



                                    By:/s/ G. Michael Swor
                                       ----------------------
                                     G. Michael Swor
                                     Treasurer

                                    By:/s/ David Collins
                                       ----------------------
                                     David Collins
                                     Acting Chief Financial Officer

        Pursuant to the  requirements  of the Exchange Act, this report has been
signed by the following persons in the capacities and on the dates indicated.

Signature                     Title                              Date
- ---------                   -----                              ----

/s/ G.  Michael Swor          Chairman of the Board             October 13, 1999
- ------------------          and Treasurer
 G. Michael Swor

/s/ Frank M.  Clark   .       President and Chief Executive     October 13, 1999
- ------------------          Officer and Director
 Frank M. Clark

/s/ David Collins             Acting Chief Financial Officer    October 13, 1999
- -----------------           and Director
 David Collins                (principal financial
                              or accounting officer)

/s/ Donald K.  Lawrence       Secretary, Vice President and     October 13, 1999
- ---------------------       Director
 Donald K. Lawrence

/s/ James D. Stuart           Director                          October 13, 1999
- -------------------
 James D. Stuart

 /s/ Sam Norton               Director                          October 13, 1999
---------------------
 Sam Norton

 /s/ David Swor               Director                          October 13, 1999
---------------------
 David Swor

 /s/ William B. Saye          Director                          October 13, 1999
---------------------
 William B. Saye


[SIGNATURE PAGE 10-KSB/A 12/31/98]

                                       82