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

                                 Amendment No. 2
                                       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:

      Title of each class                       Name of each exchange on
                                                which registered
         None
-----------------------------                   -------------------------

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

                          Common Stock, $.001 par value
                       -----------------------------------
                                (Title of class)
Copies of Communications Sent to:
                               Mercedes Travis, Esq.
                               Mintmire & Associates
                               265 Sunrise Avenue, Suite 204
                               Palm Beach, FL 33480
                               Tel: (561) 832-5696
                               Fax: (561) 659-5371


<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                                        46

Item 3.      Legal Proceedings                                              46

Item 4.      Submission of Matters to a Vote of Security Holders            47

PART II

Item 5.      Market for Common Equity and Related Shareholder Matters       47

Item 6.      Management's Discussion and Analysis or Plan of Operation      48

Item 7.      Financial Statements - Commencing on                           55

Item 8.      Changes and Disagreements with Accountants on Accounting
             And Financial Disclosure                                       57

PART III

Item 9.      Directors, Executive Officers, Promoters and Control Persons;
             Compliance with Section 16(a) of the Exchange Act              57

Item 10.     Executive Compensation                                         64

Item 11.     Security Ownership of Certain Beneficial Owners and            74
             Management

Item 12.     Certain Relationships and Related Transactions                 75

Item 13.     Exhibits and Reports on Form 8K                                79
</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.

                   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.

                                                         2

<PAGE>




                   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
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

                                                         3

<PAGE>



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
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


                                                         4

<PAGE>



                   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.

                   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

                                                         5

<PAGE>



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.

                   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


                                        6

<PAGE>



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
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
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, although it
has no such plans at this time..

     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


                                        7

<PAGE>


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 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


                                        8

<PAGE>



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 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


                                        9

<PAGE>



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.

     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


                                       10

<PAGE>



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 (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

                                       11

<PAGE>



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  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 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.



                                       12

<PAGE>



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


                                       13

<PAGE>



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
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.


                                       14

<PAGE>



     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.

     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

                                       15

<PAGE>



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

     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


                                       16

<PAGE>



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.

     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.

     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

                                       17

<PAGE>



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 since this is
a "best  efforts"  contract  with no  penalties  on the part of the  Company for
failure to reach a quota,  other than loss of the  ability to sell the  product.
Due to poor sales,  Morrison  discontinued  the  manufacturing  of this product;
however it has substantial inventory on hand for sale.

     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.

                                       18

<PAGE>



     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.

     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).


                                       19

<PAGE>



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.

     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


                                       20

<PAGE>



     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.

     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,  although currently it is not in negotiations nor
has it made any arrangements for such mergers or acquisitions. However should it
expand  through  acquisitions  or  mergers,   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


                                       21

<PAGE>



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.

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. Needlesticks and other sharps injuries
magnify the risk of exposure to bloodborne diseases.

     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.

     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.

     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.

     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


                                       22

<PAGE>



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
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.



                                                         23

<PAGE>



     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 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


                                       24

<PAGE>



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.

     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..

     On July 30, 1999, the Company  entered the Long Term  Agreement,  a private
partner  network  agreement,  with US Surgical.  Under the Long Term  Agreement,


                                       25

<PAGE>



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  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

                                       26

<PAGE>



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 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


                                       27

<PAGE>



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
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.

                                       28

<PAGE>



     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.

     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


                                       29

<PAGE>



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.

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.


                                       30

<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.

     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.

                                       31

<PAGE>



     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.

     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

                                       32

<PAGE>



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.

     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


                                       33

<PAGE>


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.

     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, lock- out/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

                                       34

<PAGE>



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  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.


                                       35

<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 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.

                                       36

<PAGE>




     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.

     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

                                       37

<PAGE>



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.

     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. Neither KJS nor Ten Peaks were licensed in any state to receive
commissions or other remuneration for the sale of securities.  The Company is in
the process of modifying this agreement such that only appropriate payments will


                                       38

<PAGE>


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.  In the event that the Company had made inappropriate  payments to KJS
or Ten Peaks related to the sale of securities,  the Company could have lost any
applicable  state  exemption  under  which the sale was made and could have been
subject faced material adverse consequences as a result of actions by the states
in which sales were made, including sanctions,  penalties and the requirement to
offer a rescission.

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.  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


                                       39

<PAGE>



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

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

         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
         First Quarter 1999          13/16      1/3          .57
         Second Quarter 1999        1-7/8       7/16        1.156
         Third Quarter 1999         2-7/8     1-1/4         2.0625
</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

                                       40

<PAGE>



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
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.

     As discussed in the  independent  auditors'  report,  the operating  losses
incurred  by the  Company  raise  doubt about its ability to continue as a going
concern. In addition,  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

                                       41

<PAGE>



continue to experience significant fluctuations in its revenues, costs and gross
margins, and therefore its results of operations.

     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.

     As  discussed  in Note 10 to the  Financial  Statements,  if the  financing
referred to above is not  secured,  the  recoverability  of the  recorded  asset
amounts may be impaired.

     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 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.



                                       42

<PAGE>


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
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


                                       43

<PAGE>



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).

     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


                                       44

<PAGE>



& 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

     The financial  condition,  liquidity  and capital  resources of the Company
should be assessed  in context  with the ability of the Company to continue as a
going concern as discussed in the independent auditors' report.

     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  in1997 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.

     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.


                                       45

<PAGE>



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

     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



                                       46

<PAGE>



                                    CONTENTS


<TABLE>
                                                                      Page
<S>                                                                   <C>
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
</TABLE>

                                       47

<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-5

<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-6

<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-7

<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
$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

                                       F-8

<PAGE>




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-9

<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:

<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>
                                      F-10

<PAGE>


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.

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.

                                      F-11

<PAGE>



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.

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:


                                      F-12

<PAGE>



                     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.

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-13

<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-15

<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-16

<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 President and
716 Edgemer Lane                                   Secretary
Sarasota, FL 34242

David Collins     (1)              58              Director and Acting Chief Financial Officer
6210 Sun Boulevard                                 (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

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


                                                 57

<PAGE>



<TABLE>
<S>                                <C>             <C>
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 and Medical Director of
4614 Chattahoochee Crossing                        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.

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

                                       58

<PAGE>




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
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

                                       59

<PAGE>




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
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


                                       60

<PAGE>




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 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



                                       61

<PAGE>



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

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

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

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

                                       62

<PAGE>




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



                                       63

<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.

(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.

                                       64

<PAGE>



Year End Option Values for Executive Officers

<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.

     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.

                                       65

<PAGE>




     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.

     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


                                       66

<PAGE>




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>

                                       67

<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,  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


                                       68

<PAGE>




     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

1998 Revised CSOP (2)

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
</TABLE>


<PAGE>


<TABLE>
1999 Revised ESOP (2)
<S>                        <C>            <C>             <C>               <C>
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
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.

                                       70

<PAGE>



(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.

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>

                                       71

<PAGE>




(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. 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.
During 1999, Dr. Swor advanced  additional funds to the Company.  As of June 30,
1999,  those advances  totaled  $77,500.  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.


                                       72

<PAGE>




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

     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


                                       73

<PAGE>




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
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


                                       74

<PAGE>





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.

     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

<TABLE>
<S>            <C>
Item No.       Description

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

3.(I).2        Articles of Amendment filed December 9, 1992 [1]

3.(I).3        Articles of Amendment filed July 19, 1994 [1]

3.(I).4        Articles of Amendment filed October 11, 1994 [1]

3.(I).5        Articles of Incorporation of Sheffeld Acres, Inc., a New York Corporation filed May
               7, 1993 [1]

3.(I).6        Articles of Merger filed in the State of Florida October 12, 1994 [1]

3.(I).7        Certificate of Merger filed in the State of New York February 8, 1995 [1]

3.(I).8        Certificate to Do Business in the State of Florida filed April 11, 1995 [1]
</TABLE>


                                       75

<PAGE>



<TABLE>
<S>            <C>
3.(I).9        Certificate of Amendment filed May 1, 1998 [1]

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


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

10.1           Acquisition of Endex Systems, Inc. d/b/a/ InterActive PIE dated December 8, 1997
               [1]

10.2           Prepaid Capital Lease Agreement with Community Health Corporation relative to
               Sarasota Medical Hospital OASiS Installation dated January 30, 1998 [1]

10.3           Letter of Intent with United States Surgical Corporation dated February 12, 1998 [1]

10.4           Form of Rockford Industries, Inc. Rental Agreement and Equipment Schedule to
               Master Lease Agreement [1]

10.5           Ad-Vantagenet Letter of Intent dated June 19, 1998 [1]

10.6           Distribution Agreement with Morrison International Inc. dated September 30, 1996
               [1]

10.7           Distribution Agreement with Hospital News dated August 1, 1997 [1]

10.8           Clinical Products Testing Agreement with Sarasota Memorial Hospital dated January
               30, 1998 [1]

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

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

10.11          Employment Agreement with G. Michael Swor dated June 15, 1998 [1]

10.12          Employment Agreement with Frank M. Clark dated June 15, 1998 [1]

10.13          Agreement for Consulting Services with Stockstowatch.com Inc. dated March 30,
               1988 [1]

10.14          Form of Employee Option Agreement dated July 1994 [1]

10.15          Form of Employee Option Agreement dated 1998 [1]

10.16          Form of Consultants Option Agreement dated July 1994 [1]

10.17          Form of Consultants Option Agreement dated 1998 [1]

10.18          Confidential Private Offering Memorandum dated May 30, 1995 [1]

10.19          Supplement to Private Offering Memorandum dated October 30, 1995 [1]

10.20          Stock Option Agreement with Bay Breeze Enterprises LLC dated April 9, 1998 [1]

10.21          Revolving Loan Agreement, Revolving Note, Security Agreement with SouthTrust
               Bank dated May 2, 1997 [1]

10.22          Agreement between the Company and T. T. Communications, Inc. dated October 15,
               1998 [2]
</TABLE>


                                       76

<PAGE>



<TABLE>
<S>            <C>
10.23          Agreement between the Company and U.S. Surgical Corporation dated October 28,
               1998. [2]

10.24          Collaborative Agreement between the Company and Dr. William B. Saye dated
               November 16, 1998. [2]

10.25          Kiosk Information System, Inc. Purchase Order dated November 3, 1998 [2]

10.26          Surgical Safety Products 1999 Stock Option Plan adopted January 1999 [2]

10.27          Form of the Employee Option Agreement under the Surgical Safety Products 1999
               Stock Option Plan dated January 1999 [2]

10.28          Form of the Director, Consultant and Advisor Option Agreement under the Surgical
               Safety Products 1999 Stock Option Plan dated January 1999 [2]

10.29          Verio, Inc. Access Service Agreement dated February 16, 1999. [2]

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. [3]

10.31          Form of the Warrant issued pursuant to the April 1999 Self Directed Private
               Placement Offering under Rule 506 of Regulation D. [3]

10.32          Consulting Agreement dated April 1999 with Koritz Group, LLC. [3]

10.33          Agreement dated April 1999 with KJS Investment Corporation. [4]

10.34          Agreement dated May 1999 with Ten Peaks Capital Corp. [4]

10.35          Private Partner Network Agreement dated July 30, 1999 with US Surgical [5]

10.36          Staff/Client Leasing Agreement dated October 16, 1999, as amended September 15,
               1999 [5]

27.1     *     Financial Data Sheet
----------------
</TABLE>

[1]  Previously filed with the Company's Form 10SB
[2]  Previously filed with the Company's Amendment No. 1 to the Form 10SB
[3]  Previously  filed with the Company's Form 10QSB for the Quarter ended March
     30, 1999
[4]  Previously  filed with the Company's  Form 10QSB for the Quarter ended June
     30, 1999
[5]  Previously filed with the Company's Amendment No. 2 to the Form 10SB

     *   Filed herewith

         (b)      Reports on Form 8K

     There  were no  reports  of Form 8K for the last  quarter  covered  by this
report.







                                       77

<PAGE>




                                    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: December 27, 1999     By:/s/ Frank M. Clark
                           ------------------------
                              Frank M. Clark, President and CEO

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

                            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.

<TABLE>
<S>                                 <C>                                <C>
Signature                           Title                              Date
- ---------                         -----                              ----

/s/ G.  Michael Swor                Chairman of the Board              December 27, 1999
- ---------------------------       and Treasurer
 G. Michael Swor

/s/ Frank M.  Clark        .        President and Chief Executive      December 27, 1999
- ---------------------------       Officer and Director
 Frank M. Clark

/s/ David Collins                   Acting Chief Financial Officer     December 27, 1999
- ---------------------------       and Director
 David Collins                      (principal financial
                                    or accounting officer)

/s/ Donald K.  Lawrence             Secretary, Vice President and      December 27, 1999
- ---------------------------       Director
 Donald K. Lawrence


/s/ James D. Stuart                 Director                           December 27, 1999
- ---------------------------
 James D. Stuart

 /s/ Sam Norton                     Director                           December 27, 1999
------------------------------
 Sam Norton

 /s/ David Swor                     Director                           December 27, 1999
------------------------------
 David Swor

 /s/ William B. Saye                Director                           December 27, 1999
------------------------------
 William B. Saye
</TABLE>

[SIGNATURE PAGE 10-KSB/A2 12/31/98]

                                       78