UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-Q/A

(Mark One)


        X           QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
---------------
                    SECURITIES EXCHANGE ACT OF 1934

                    For quarterly period ended March 31, 1998

                    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                    SECURITIES EXCHANGE ACT OF 1934

                    For the transition period from ____ to _____

Commission file number:    0-28790
                           -------


                           MEDCARE TECHNOLOGIES, INC.
             (exact name of registrant as specified in its charter)



DELAWARE                                     87-0429962 B
--------                                     ------------
(State or other  jurisdiction                (IRS Employer
of incorporation  or  organization)          Identification No.)

Suite 1210 - 1515 West 22nd Street, Oak Brook, Illinois       605232
-------------------------------------------------------       ------
(Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code:           (630) 472-5300
                                                              --------------


Indicate  by check  mark  whether  the  registrant:  (1) has filed  all  reports
required by Section 13 or 15 (d) of the  Securities  Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required to file such reports),  and (2) has been subject to such filing for the
past 90 days.   Yes   X      No
                      
The number of shares of the Registrant's  Common Stock,  $0.001 par value, as of
March 31st, 1997: 7,225,839.
                  ----------

                                        1

<PAGE>



                           MEDCARE TECHNOLOGIES, INC.
                     FORM 10-Q, QUARTER ENDED MARCH 31, 1998

INDEX

PART I            FINANCIAL INFORMATION

Item 1            Financial Statements

Independent Auditors' Report  . . . . . . . . . . . . . . . . . . . . . . .  F-1

Consolidated Balance Sheet at March 31, 1998 and December 31, 1997 . . . F-3 F-4

Consolidated Statement of Operations For The Three Months
     Period Ended March 31, 1998 and 1997, and  For the Year To Date
     March 31, 1998 and 1997 . . . . . . . . . . . . . . . . . . . . . . .   F-5

Consolidated Statement of Stockholders' Equity at March 31, 1998
     and December 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . F-6 F-7

Consolidated Statement of Cash Flows For The Three Months
     Period Ended March 31, 1998 and 1997  . . . . . . . . . . . . . . . F-8 F-9

Notes to the Consolidated Financial Statements . . . . . . . . . . . . F-10 F-18

All  schedules  are omitted  because  they are not  applicable  or the  required
information is shown in the financial statements or notes thereto.

PART II         OTHER INFORMATION

Item 1          Legal Proceedings. . . . . . . . . . . . . .  . . . . . . . . 39

Item 2          Changes in Securities. . . . . . . . . . . . . .  . . . . . . 39

Item 3          Defaults Upon Senior Securities. . . . . . . . . . . . . .  . 39

Item 4          Submission of Matters to a Vote of Security Holders. . . . .  39

Item 5          Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . 39

                Signature Page. . . . . . . . . . . . . .  . . . . . . . . . .40




2

<PAGE>



ITEM 1            FINANCIAL STATEMENTS

                                 C O N T E N T S


Independent Auditors' Report  . . . . . . . . . . . . . . . . . . . . . . .  F-1

Consolidated Balance Sheet at March 31, 1998 and December 31, 1997 . . . F-3 F-4

Consolidated Statement of Operations For The Three Months
     Period Ended March 31, 1998 and 1997, and  For the Year To Date
     March 31, 1998 and 1997 . . . . . . . . . . . . . . . . . . . . . . .   F-5

Consolidated Statement of Stockholders' Equity at March 31, 1998
     and December 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . F-6 F-7

Consolidated Statement of Cash Flows For The Three Months
     Period Ended March 31, 1998 and 1997  . . . . . . . . . . . . . . . F-8 F-9

Notes to the Consolidated Financial Statements . . . . . . . . . . . . F-10 F-18

   All  schedules  are omitted  because they are not  applicable or the required
   information is shown in the financial statements or notes thereto.


   The accompanying notes are an integral part of these financial statements.
                                      F-1

<PAGE>








                          INDEPENDENT AUDITORS' REPORT


   Board of Directors
   MedCare Technologies, Inc. and
   Subsidiaries
   Oak Brook, Illinois 60521

   We have audited the accompanying  consolidated balance sheet and statement of
   stockholder's  equity of MedCare  Technologies,  Inc. and  Subsidiaries  (the
   Company),  as of March  31,  1998 and  December  31,  1997,  and the  related
   statement of  operations  for the three months ended March 31, 1998 and 1997,
   and for the year to date  March  31,  1998 and 1997,  and cash  flows for the
   three months period ended March 31, 1998 and 1997. 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 audit.

   We  conducted  our  audit 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 audit of the financial
   statements provides a reasonable basis for our opinion.

   In our opinion,  the financial  statements  present  fairly,  in all material
   respects,  the  financial  position  of the  Company  at March  31,  1998 and
   December  31, 1997 and the  results of its  operations  for the three  months
   ended and for the year to date  March 31,  1998 and 1997,  and cash flows for
   the three months ended March 31, 1998 and 1997, in conformity  with generally
   accepted accounting principles.

   Clancy  and Co., P.L.L.C.
   Phoenix,  Arizona
   May 6, 1998

   The accompanying notes are an integral part of these financial statements.
                                       F-2

<PAGE>



                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                      MARCH 31, 1998 AND DECEMBER 31, 1997


                                     ASSETS


<TABLE>
<CAPTION>
                                                                   MARCH        DECEMBER
                                                                   31, 1998     31, 1997
<S>                                                                <C>          <C>

   Current Assets
      Cash                                                         $ 4,225,880  $ 3,440,791


   Accounts  Receivable,  Net of Contractuals and 
     Adjustments of $114,452 and $0 at March 31, 1998 
     and December 31, 1997                                             149,439       47,286

   Prepaid Expenses                                                          0       62,313
                                                                             -       ------
   Total Current Assets                                              4,375,319    3,550,390

   Property and Equipment, Net  (Note 3)                                38,883       33,526

   Other Assets
   Intangible Assets-The MedCare Program, Net of
     Accumulated Amortization of $17 and $0 for March 31,
     1998 and December 31, 1997  (Note 4)                                  983        1,000
      Security Deposits                                                  2,150        1,500
                                                                         -----        -----
   Total Other Assets                                                    3,133        2,500
                                                                         -----        -----

   Total  Assets                                                   $ 4,417,335  $ 3,586,416
                                                                     =========    =========
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-3

<PAGE>




                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                      MARCH 31, 1998 AND DECEMBER 31, 1997

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                               MARCH          DECEMBER
                                                               31, 1998       31, 1997
<S>                                                            <C>            <C>

Current Liabilities
   Accounts Payable and Other Accrued Liabilities              $    62,748    $    15,796


   Notes Payable, Related Party (Note 5)                                 0          1,000
                                                               -----------    -----------
Total Current Liabilities                                           62,748         16,796

Commitments and Contingencies (Note 10)                                  0              0

Stockholders' Equity
  Preferred Stock: $.25 Par Value, Authorized 1,000,000;
    Issued and Outstanding, 159 and 165 Convertible Series A
    Shares at March 31, 1998 and December 31, 1997                      39             41
  Common Stock: $0.001 Par Value,  Authorized
    100,000,000; Issued and Outstanding, 7,225,839 Shares
    at March 31, 1998 and 6,992,185 at December 31, 1997             7,226          6,992
  Additional Paid In Capital                                     7,565,273      6,107,314
  Accumulated Deficit                                           (3,217,951)    (2,544,727)
                                                               -----------    -----------
Total Stockholders' Equity                                       4,354,587      3,569,620
                                                               -----------    -----------

Total Liabilities and Stockholders' Equity                     $ 4,417,335    $ 3,586,416
                                                               ===========    ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-4

<PAGE>



                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
             FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997, AND
                  FOR THE YEAR TO DATE MARCH 31, 1998 AND 1997


<TABLE>
<CAPTION>

                                         For the Three  For the Three  For the Year   For the Year
                                         Months Period  Months Period  to Date        to Date
                                         Ended March    Ended March    March          March
                                         31, 1998       31, 1997       31, 1998       31, 1997
<S>                                      <C>            <C>            <C>            <C>

Revenues                                 $   227,008    $    37,236    $   227,008    $    37,236

Expenses
   General and Administrative                765,710        197,731        765,710        197,731
                                         -----------    -----------    -----------    -----------

Operating Loss                              (538,702)      (160,495)      (538,702)      (160,495)

Other Income (Expense)
   Interest Income                            42,669          1,928         42,669          1,928
   Loss From Discontinued Operations               0              0              0              0
   Gain on Sale of Subsidiary                      0              0              0              0
                                         -----------    -----------    -----------    -----------
Total Other Income (Expense)                  42,669          1,928         42,669          1,928
                                         -----------    -----------    -----------    -----------

Net Loss Available to Common
Stockholders                             $  (496,033)   $  (158,567    $  (496,033)   $  (158,567)
                                         ===========    ===========    ===========    ===========

Primary and Fully Diluted Earnings Per
   Common Share and Common Share
   Equivalents:                          $     (0.06)   $      (.02)   $     (0.06)   $      (.02)
                                         ===========    ===========    ===========    ===========
Weighted Number of Common Shares
    Outstanding                            7,734,915      6,530,352      7,734,915      6,530,352
                                         ===========    ===========    ===========    ===========
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-5

<PAGE>



                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                      MARCH 31, 1998 AND DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                                                                                        Retained
                                                                                          Additional    Earnings
                                               Preferred Stock        Common Stock        Paid In       (Accumulated     
                                               Shares    Amount   Shares      Amount      Capital       Deficit)       Total
                                               ------    ------   ------      ------      -------       -------        -----
<S>                                            <C>       <C>      <C>         <C>         <C>           <C>            <C>

Balance, December 31, 1996                         0          0   6,445,185   $    6,445  $ 1,372,631   $ (1,169,693)  $   209,383

Recovery of Write Off of
  Excess of Liabilities over Assets
   on Sale of Manon Consulting, Ltd.                                                                     (11,283)          (11,283)

Issuance of Common Stock Under
  1996 Stock Option Plan at $4.50
  Per Share through December 31, 1997                                17,000           17       76,483                       76,500

Issuance of Common Stock Under
   1995 Stock Option Plan at $3.00
   Per Share Through December 31, 1997                               54,000           54      161,946                      162,000

Issuance of Common Stock Under a
   Private Placement Dated March
   25, 1997, at $6.25 Per Share                                     176,000          176    1,099,824                    1,100,000

Issuance of Common Stock Under a
   Private Placement Dated July 7,
   1997, at $6.00 Per Share                                         300,000          300    1,799,700                    1,800,000

Issuance of Preferred Stock
   Under a Private Placement
   Dated July 8, 1997, at $10,000 Per Share      165         41           0            0   1,649,959             0      1,650,000
</TABLE>

<PAGE>

                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                      MARCH 31, 1998 AND DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                                                                                          Retained
                                                                                            Additional    Earnings
                                           Preferred Stock                 Common Stock     Paid In       (Accumulated     
                                        Shares         Amount           Shares     Amount   Capital       Deficit)       Total
                                        ------         ------           ------     ------   -------       -------        -----
<S>                                     <C>            <C>              <C>        <C>      <C>           <C>            <C>

Less cost of Private Placement                    0    $         0              0  $    0   $  (123,750)   $         0     (123,750)

Periodic Imputed Cost of Preferred
  Stock at Date of the Closing of the
  Offering                                                                                      247,712                     247,712

Net Loss Available to Common
  Stockholders for the Year
  Ended December 31, 1997                                                                                    (1,540,942) (1,540,942)
                                                                                                             -----------  ----------
Balance, December 31, 1997                      165             41      6,992,185    6,992     6,284,505     (2,721,918)  3,569,620

Issuance of Common Stock Under
  1996 Stock Option Plan at $4.50
  Per Share Through March 31, 1998                                          6,000        6        26,994                     27,000

Issuance of Common Stock Under
  1995 Stock Option Plan at $3.00
  Per Share Through March 31, 1998                0              0         18,000       18        53,982              0      54,000

Issuance of Common Stock For
  Warrants Exercised on March 31,
  1998, at $6.00 Per Share                                                200,000      200     1,199,800                  1,200,000

</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                       F-6

<PAGE>



                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                      MARCH 31, 1998 AND DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                                                                                          Retained
                                                                                            Additional    Earnings
                                           Preferred Stock                 Common Stock     Paid In       (Accumulated     
                                        Shares         Amount           Shares     Amount   Capital       Deficit)       Total
                                        ------         ------           ------     ------   -------       -------        -----
<S>                                     <C>            <C>              <C>        <C>      <C>           <C>            <C>


Converted Preferred Stock to
   Common Stock at $6.45131 Per
   Share on January 5, 1998             (3)            $  (1)           4,851      $    5   $    (4)      $          0   $        0

Converted Preferred Stock to
   Common Stock at $6.51875 Per
   Share on January 6, 1998             (3)               (1)           4,803           5        (4)                              0

Net Loss Available to Common
   Stockholders for the Quarter
   Ended March 31, 1998                                                                                       (496,033)    (496,033)
                                                                                                             ---------     ---------
Balance, March 31, 1998                 159            $  39            7,225,839  $7,226   $  7,565,273  $ (3,217,951)  $4,354,587
                                        ===               ==            =========   =====      =========    ===========   =========
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-7

<PAGE>



                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997

<TABLE>
<CAPTION>
                                                         For the Year   For the Year
                                                         To Date        to Dated
                                                         March 31,      March 31,
                                                         1998           1997
<S>                                                      <C>            <C>
Cash Flows from Operating Activities
   Net Loss                                              $  (496,033)   $  (158,567)
Adjustments to Reconcile Net Loss to Net
 Cash Provided by Operating Activities
   Depreciation and Amortization                               3,385            861
   Contractuals and Adjustments of Accounts Receivable       114,452              0
   Changes in Assets and Liabilities
     (Increase) Decrease in Accounts Receivable             (216,605)       (24,31)
     (Increase) Decrease in Prepaid Expenses                  62,313         (5,366)
     (Increase) Decrease in Organizational Costs                   0             64
     (Increase) Decrease in Security Deposits                   (650)             0
     Increase (Decrease) in Accounts Payable                  46,952         (5,529)
                                                         -----------    -----------
     Total Adjustments                                         9,847        (34,361)
                                                         -----------    -----------
Net Cash Used by Operating Activities                       (486,186)      (192,928)

Cash Flows from Investing Activities
   Purchase of Property and Equipment                         (8,725)             0
                                                         -----------    -----------
Net Cash Flows from Investing Activities                      (8,725)             0

Cash Flows from Financing Activities
  Proceeds from Sale of Common Stock                       1,281,000      1,187,000
  Net Reduction in Office & Med Equipment                          0         11,132
  Advances (Repayments) Notes Payable                              0        (23,135)
  Advances (Repayements) To Officers                          (1,000)             0
                                                         -----------    -----------

Net Cash Provided by Financing Activities                  1,280,000      1,174,997
                                                         -----------    -----------
Increase (decrease) in Cash and Cash Equivalents             785,089        982,069
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-8

<PAGE>



                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997


<TABLE>
<CAPTION>
                                               For the Year   For the Year
                                               To Date        to Dated
                                               March 31,      March 31,
                                               1998           1997
<S>                                            <C>            <C>
Cash and Cash Equivalents, Beginning of Year    3,440,791        220,562
                                               ----------     ----------

Cash and Cash Equivalents, End of Year         $4,225,880     $1,202,631
                                               ==========     ==========

Supplemental Information:
   Cash paid for:
     Interest                                  $        0     $        0
                                               ==========     ==========
     Income taxes                              $        0     $        0
                                               ==========     ==========
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-9

<PAGE>


                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      MARCH 31, 1998 AND DECEMBER 31, 1997


NOTE 1 - ORGANIZATION
---------------------

     MedCare Technologies,  Inc. (The Company), formerly known as Multi-Spectrum
     Group,  Inc., was  incorporated  under the name Santa Lucia Funding,  Inc.,
     under the laws of the State of Utah on January 17, 1986, with an authorized
     capital of 50,000,000  common shares with a par value of $.001. On February
     8, 1990, the Company  adopted a plan of merger with  Multi-Spectrum  Group,
     Inc., a Delaware Corporation, in which Multi-Spectrum Group, Inc., would be
     dissolved and the name of Santa Lucia  Funding,  Inc.,  would be changed to
     Multi-Spectrum Group, Inc. The Company authorized a reverse split of 1200:1
     to be effective  August 11, 1995. On August 29, 1995, the Company  approved
     an increase in the authorized  capital to 101,000,000 of which  100,000,000
     shares shall be Common Stock with a par value of $.001 and 1,000,000 shares
     shall be  Preferred  Stock with a par value of $.25 per  share,  and a name
     change to MedCare  Technologies,  Inc. On August 1, 1996,  an agreement and
     plan  of  merger  was  entered   into   between  the  Company  and  MedCare
     Technologies,   Inc.  (A  Delaware   Corporation)   whereby  the  state  of
     incorporation was changed to Delaware from the state of Utah. The effective
     date of the agreement is August 27, 1996, the date accepted by the state of
     Delaware.  The Company was inactive during the year 1991,  issued stock for
     prior years services  during 1992,  and was inactive  during 1993 and 1994.
     The Company had no revenues  nor  incurred any  operating  expenses  during
     these inactive periods, other than the transaction during 1992.

     On October 1, 1995, the Company purchased 100% of the outstanding shares of
     Manon Consulting, Ltd. Manon Consulting, Ltd., is a wholly owned subsidiary
     of the  Company.  Manon  Consulting,  Ltd.,  operates a clinic in  Calgary,
     Canada.

     The  following is a condensed  balance sheet of Manon  Consulting,  Ltd. at
     October 31, 1995:

<TABLE>
<CAPTION>
                  <S>                                  <C>

                  Total Assets                         $ 12,558
                                                         ======

                  Total Liabilities                      23,841
                  Total Capital
                      Common Stock                            7
                      Retained Earnings-A Deficit       (11,290)
                                                         ------
                     Total Liabilities and Capital     $ 12,558
                                                         ======
</TABLE>

     The  Company  paid  $7  for  the  outstanding   common  stock  and  assumed
     liabilities  in excess of assets of  $11,290.  The  excess  was  charged to
     operations  during  1995.  On  January  1,  1997,  the  Company  sold Manon
     Consulting,  Ltd. and recorded a gain on the sale of $15,770.  See Note 8 -
     Discontinued Operations.




   The accompanying notes are an integral part of these financial statements.
                                      F-10

<PAGE>


                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      MARCH 31, 1998 AND DECEMBER 31, 1997


NOTE 1 - ORGANIZATION (CONTINUED)
---------------------------------

     During 1997,  the Company issued 17,000 shares of common stock at $4.50 per
     share under the 1996 Stock Option Plan or $76,500.

     During 1997,  the Company issued 54,000 shares of common stock at $3.00 per
     share under the 1995 Stock Option Plan or $162,000.

     On February 4, 1997,  the Company  issued 176,000 shares of common stock at
     $6.25 per share under a private placement memorandum or $1,100,000.

     On July 7, 1997, the Company issued 300,000 shares of common stock at $6.00
     per share  under a private  placement  memorandum  dated  June 20,  1997 or
     $1,800,000.

     On July 8, 1997, the Company issued 165 shares of Preferred  Stock - Series
     A at $10,000 per share or $1,650,000,  less offering costs of $123,750. The
     Preferred Stock has conversion  features that allow for the conversion into
     266,747 common shares, at a discount range of 10% to 20% from June 20, 1997
     through  June 20,  1998.  Additionally,  the Company  recorded the periodic
     imputed  cost of the  Preferred  Stock - Series A at the date of closing of
     the offering at 8% per annum in the amount of $247,712.

     Though March 31, 1998,  the Company  issued 6,000 shares of common stock at
     $4.50 per share under the 1996 Stock Option Plan or $27,000.

     Through March 31, 1998, the Company issued 18,000 shares of common stock at
     $3.00 per share under the 1995 Stock Option Plan or $54,000.

     On March 30, 1998,  the Company  issued  200,000  shares of common stock at
     $6.00 per share under a private placement memorandum, or $1,200,000.

     On January  5, 1998,  the  Company  converted  three (3) shares of $.25 per
     share preferred stock to 4,851 shares of $.001 common stock at $6.45131 per
     share.

     On January  6, 1998,  the  Company  converted  three (3) shares of $.25 per
     share preferred stock to 4,803 shares of $.001 common stock at $6.51875 per
     share.

     The  Company  was formed on January 17,  1986,  and was in the  development
     stage  through  December 31, 1997.  The three months period ended March 31,
     1998,  is the first  period  during  which it is  considered  an  operating
     company.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------

     A. Method of Accounting
     -----------------------

   The accompanying notes are an integral part of these financial statements.
                                      F-11

<PAGE>


                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      MARCH 31, 1998 AND DECEMBER 31, 1997


NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
----------------------------------------------------

          The  Company's  financial  statements  are prepared  using the accrual
          method of accounting.

     B. Cash and Cash Equivalents
     ----------------------------

          The  Company  considers  all highly  liquid  debt  instruments  with a
          maturity of three months or less to be cash and cash equivalents.

     C. Principles of Consolidation
     ------------------------------

          The  accompanying   consolidated   financial  statements  include  the
          accounts  of the  Company  and its wholly  owned  subsidiary,  Medcare
          Technologies,   Corporation.   Intercompany   transactions  have  been
          eliminated in consolidation.

     D. Purchase Method
     ------------------

          Investments  in companies  have been included in the financial  report
          using the equity  method of  accounting.  The  Company's  wholly owned
          subsidiary,  MedCare  Technologies,  Corporation  is  engaged  in  the
          business of medical consulting and management in the United States.

     E. Property and Equipment
     -------------------------

          Property  and  equipment,  stated at cost,  is  depreciated  under the
          straight-line method over their estimated useful lives as follows:

<TABLE>
<CAPTION>
                           <S>                             <C>
                           Office Equipment                3 to 5 years
                           Medical Equipment               3 to 5 years
                           Furniture                       7 years
</TABLE>

     F. Income Taxes
     ---------------

          There has been no provision  for income  taxes,  because of the losses
          that the Company has incurred to date.  The Company has net  operating
          losses that will expire,  beginning  with the years 2002 through 2012,
          in the amount of $1,293,230,  $449,236,  $689,713 and $42,027 in 1997,
          1996,  1995 and prior  years,  respectively,  unless  utilized  by the
          Company.

     G. Earnings or (Loss) Per Share
     -------------------------------

          Earnings or loss per share is computed  based on the weighted  average
          number of



   The accompanying notes are an integral part of these financial statements.
                                      F-12

<PAGE>


                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      MARCH 31, 1998 AND DECEMBER 31, 1997


NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
----------------------------------------------------

          common shares and common share equivalents outstanding.  Stock options
          are included as common  share  equivalents  using the  treasury  stock
          method.  The number of shares used in  computing  earnings  (loss) per
          common  share at March 31,  1998 and 1997,  6,805,661  and  6,530,352,
          respectively.

     H. Leases
     ---------

          The  Company's  corporate  offices are located at 1515 W. 22nd Street,
          Suite 1210, Oak Brook,  Illinois 60521. The office space  approximates
          2,400 square feet and is  subleased  for a period of one year with the
          option to renew for four additional years, at a monthly rate of $4,800
          per month plus a common area monthly charge of $400.

          The Company  currently has the use of a second office of approximately
          1,500 square feet of office  space,  the use of one board room and all
          office  equipment,  including  a network  computer  system,  a postage
          machine,  filing cabinets, a photocopier and telephone equipment.  The
          office  space  is  owned  by one of the  Company's  directors  and the
          Chairman's  wife. The offices are located at Suite 216 - 1628 West 1st
          Avenue,  Vancouver,  British  Columbia,  Canada.  The monthly  rent is
          $2,000 per month,  plus a common area monthly charge of $200. There is
          an option to renew for an additional year.

     I. Medcare Program Sites
     ------------------------

          The following  program site locations and the date of openings area as
          follows:

<TABLE>
<CAPTION>

         City, State                        Open Date         City, State                        Open Date
         ----- -----                        ---- ----         ----- -----                        ---- ----
         <S>                                <C>               <C>                                <C>

         Norman, Oklahoma                   11/04/96          Toledo, Ohio                       02/09/98
         Winter Park, Florida               03/10/97          Lake Worth, Florida                03/02/98
         Denver, Colorado                   06/02/97          Coral Springs, Florida             03/09/98
         Raleigh, North Carolina            09/30/97          Phoenix, Arizona                   03/09/98
         Kankakee, Illinois                 11/17/97          Fremont, California                03/09/98
         Cleveland, Texas                   01/05/98          New York, New York                 03/30/98
</TABLE>

          New locations to be opened subsequent to March 31, 1998, are Stamford,
          Connecticut;  Roswell,  Georgia;  Fayetteville,  North  Carolina;  New
          Rochelle,   New  York;  Dallas,   Texas;  West  Palm  Beach,  Florida;
          Baltimore,  Maryland;  Clackamas,  Oregon;  Amherst,  Ohio; St. Louis,
          Missouri;  Columbus,  Ohio;  Alexandria,   Virginia;  Silver  Springs,
          Maryland; Mine Hill, New Jersey; and Peekskill, New Jersey.

     J. Revenue Recognition
     ----------------------


   The accompanying notes are an integral part of these financial statements.
                                      F-13

<PAGE>


                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      MARCH 31, 1998 AND DECEMBER 31, 1997


NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
----------------------------------------------------

          Revenue are  recognized at the time of  performance  of services.  The
          Company engages in a Program Management  Agreement with each Practice,
          which is defined as a physician or group of physicians,  involved on a
          regular basis in the  diagnosis,  evaluation  and treatment of urinary
          and  rectal  incontinence  as well as other  pelvic  dysfunction.  The
          agreements have various  expiration dates,  typically run for a period
          of five (5) years,  and may be  terminated  by either party a) without
          cause upon ninety (90) days prior written notice by either party or b)
          with cause upon various conditions as set forth in the Agreement.

          Each Practice is  responsible  for the cost of performing or arranging
          for the performance of all billing and collections  functions  related
          to the Program.  Each practice  agrees to pay,  during the term of its
          Agreement,  a  percentage  of the  gross  billings,  less  contractual
          adjustments, for the procedures and services performed. The percentage
          varies from eighty (80%) to ninety  (90%)  percent.  In addition,  the
          Practice  agrees  to pay the  cost of any  supplies  purchased  by the
          Practice  from  Medcare.   Medcare's  program  is  a  cost  effective,
          non-drug,  non-surgical  and  non-invasive  system  for the  care  and
          treatment  of patients  suffering  from  bladder  control  problems or
          urinary  incontinence.  The  treatment is covered by Medicare and most
          insurance carriers.

     K. Use of Estimates
     -------------------

          Management  uses  estimates  and  assumptions  in preparing  financial
          statements   in  accordance   with   generally   accepted   accounting
          principles.  Those  estimates  and  assumptions  affect  the  reported
          amounts of assets and liabilities, the disclosure of contingent assets
          and  liabilities,  and the  reported  revenues  and  expenses.  Actual
          results could vary from the  estimates  that were assumed in preparing
          the financial statements.

     L. Presentation
     ---------------

          Certain  accounts from prior years have been  reclassified  to conform
          with the current year's presentation.

     M. Pending Accounting Pronouncements
     ------------------------------------

          It is anticipated that current pending accounting  pronouncements will
          not have an adverse impact on the financial statements of the Company.


NOTE 3 - PROPERTY, EQUIPMENT, AND DEPRECIATION
----------------------------------------------



   The accompanying notes are an integral part of these financial statements.
                                      F-14

<PAGE>


                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      MARCH 31, 1998 AND DECEMBER 31, 1997


          Property and equipment consists of the following:

<TABLE>
<CAPTION>

                                                                 March 31,             December
                                                                 1998                  31, 1997
<S>                                                              <C>                   <C>

  Office Equipment                                               $         11,931      $          9,541
  Computer Equipment                                                       16,363                11,528
  Medical Equipment                                                        29,799                29,799
  Furniture                                                                 1,500                     0
                                                                            -----                     -
  Total                                                                    59,593                50,868
  Less Accumulated Depreciation                                          (20,710)              (17,342)
                                                                         -------               -------
  Net Book Value                                                 $         38,883      $         33,526
                                                                           ======                ======
</TABLE>

          Depreciation  charged to expense  during the three  months ended March
          31, 1998 and 1997, was $3,368 and $861, respectively.

NOTE 4 - LONG-LIVED ASSETS - THE MEDCARE PROGRAM
------------------------------------------------

          On August 14,  1995,  the Company  acquired  the rights to The MedCare
          Program,  a urinary  incontinence  procedure in exchange for 2,000,000
          shares of its common  stock.  The  transaction  was  accounted  for in
          accordance  with the process for  valuation  of  intangible  assets as
          described in Statement No. 17 of the Accounting  Principles Board. The
          Company has continued to further  enhance The MedCare  Program for the
          treatment  of  urinary  incontinence  that  significantly  reduces  or
          completely  eliminates  the  majority  of UI  cases  using a  nondrug,
          nonsurgical protocol that takes into account the clinical,  cognitive,
          functional, and residential status of the patient. The Company intends
          to  amortize  the  cost  of  the  system  over  15  years,   based  on
          Management's estimated useful life of the protocol, beginning with the
          first year in which  commercial  sales  occur.  Management  reassesses
          annually the estimated useful life. Such  amortization  will result in
          charges  against  earnings  of $66 per  year  for  each of the  years.
          Amortization  expense  charged to operations  during the quarter ended
          March 31, 1998, was $17.


NOTE 5 - NOTES PAYABLE-OFFICERS (RELATED PARTY TRANSACTIONS)
------------------------------------------------------------

          An Officer of the Company loaned the Company  $1,000,  which is due on
          demand and with no interest  rate  currently  applicable.  The Company
          repaid this loan in March 1998.




   The accompanying notes are an integral part of these financial statements.
                                      F-15

<PAGE>


                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      MARCH 31, 1998 AND DECEMBER 31, 1997


NOTE 6 - STOCK OPTIONS
----------------------

          The Company has issued stock  options to various  directors,  officers
          and employees. The option prices are based on the fair market value of
          the stock at the date of the  grant.  The  Company  makes no charge to
          operations in relation to option  grants,  unless the options  granted
          are less than fair market,  then a charge to operations  would be made
          over the vesting period.  The Company's stock option  transactions for
          the quarter ended March 31, 1998 are summarized as follows:

<TABLE>
<CAPTION>
                                            Number of  Option
                                            Shares     Price
<S>                                         <C>        <C>

Options outstanding and exercisable at
     December 31, 1995                      500,000    $   3.00
Options granted in 1996                     300,000        4.50
Options exercised during 1996 under
   the 1995 Stock Option Plan               (36,000)       3.00
Options exercised during 1996 under
   the 1996 Stock Option Plan                (3,000)       4.50
                                                          -----
Options outstanding and exercisable
     at December 31, 1996                   761,000
Options granted in 1997                     200,000        4.50
Options granted in 1997                     300,000        6.50
Options exercised during 1997 under
     the 1995 Stock Option Plan             (54,000)       3.00

Options exercised during 1997 under
     the 1996 Stock Option Plan             (17,000)       4.50
                                                           -----
Options outstanding and exercisable
    at December 31, 1997                  1,190,000    $3.00-$6.50
 Options exercised during 1998 under
     the 1995 Stock Option Plan             (18,000)       3.00

Options exercised during 1998 under
     the 1996 Stock Option Plan              (6,000)       4.50
                                                          -----

Options outstanding and exercisable
    at March 31, 1998                     1,166,000    $3.00-$6.50
                                                        ==========
</TABLE>

          The Company has  authorized  the 1998 Stock  Option Plan and  reserved
          500,000  shares of its common stock,  of which 290,000  shares will be
          offered at $6.50 and the  balance  of 210,000  shares at a price to be
          determined, for issuance thereunder subject to stockholder approval at
          the next annual meeting.



   The accompanying notes are an integral part of these financial statements.
                                      F-16

<PAGE>


                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      MARCH 31, 1998 AND DECEMBER 31, 1997


NOTE 7 - STOCK WARRANTS
-----------------------

          In July,  1997, the Company  offered 300,000 shares of common stock at
          $6.00  each,  along  with an  additional  300,000  shares of  purchase
          warrants  at $6.00  each,  good  until July 7,  2002.  In March  1998,
          200,000 shares of common stock were  exercised at $6.00 per share,  or
          $1,200,000.

NOTE 8 - PREFERRED STOCK - SERIES A
-----------------------------------

          On June 20, 1997,  the Company began  offering for sale a Regulation D
          offering  under Rule 506. This offering was for the Series A Preferred
          Stock of the Company  and was sold for  $10,000 per share,  in minimum
          subscription  amounts  of  at  lease  ten  shares  ($100,000)  and  in
          increments of five shares in excess  thereof.  The total  offering was
          for $3,000,000,  with a minimum of $1,650,000.  The offering closed on
          July 8, 1997 with the minimum offering placed. The preferred stock was
          accompanied by warrants to purchase a number of shares of common stock
          of the Company equal to 33 1/3%  multiplied by the aggregate  purchase
          price of the Subscriber's preferred stock outstanding on each of nine,
          twelve and fifteen months  following the closing date of the offering,
          divided by the Fixed Conversion Price as herein defined.

          The Series A  Preferred  Shareholder  shall be  entitled  to  convert,
          subject to the Company's right of redemption,  if the conversion price
          is less than the Fixed  Conversion  Price at the time of  receipt of a
          notice of conversion.  The conversion  price is equal to the lessor of
          115% of the average  Closing Bid Price for five trading days ending on
          June 6,  1997,  which is  $7.346  (The  Fixed  Conversion  Price) or a
          discount,  ranging from 10% to 20% over a 12 months  period  beginning
          July 8, 1997,  of the average  Closing Bid Price for five trading days
          immediately preceding the Date of Conversion divided into the original
          purchase price of the preferred stock,  plus an 8% per annum accretion
          rate  equal to the  period  that has passed  since the  closing  date.
          Assuming  that  all  the  of  the  warrants  would  be  exercised,  an
          additional  271,850  shares of common  would be issued as of March 31,
          1998.

          On January 5, 1998, three (3) shares of preferred stock were converted
          to 4,851 shares of common  stock at $6.45131 per share.  On January 6,
          1998,  three (3) shares of  preferred  stock were  converted  to 4,803
          shares of common stock at $6.51875 per share.

NOTE 9 - DISCONTINUED OPERATIONS OF A BUSINESS SEGMENT
------------------------------------------------------

          On January 1, 1997,  the Company  sold Manon  Consulting,  LTD at book
          value.  No  revenues  or expenses  are  included  in the  consolidated
          financial  statements  for the year ended  December 31, 1997 and 1996.
          The statement of operations  for the years ended December 31, 1996 and
          1995 have been restated to remove the net losses of $3,169 and $1,320,
          respectively. Gross revenues for the years ended December 31, 1996 and
          1995

   The accompanying notes are an integral part of these financial statements.
                                      F-17

<PAGE>


                   MEDCARE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      MARCH 31, 1998 AND DECEMBER 31, 1997


NOTE 9 - DISCONTINUED OPERATIONS OF A BUSINESS SEGMENT
------------------------------------------------------

          were $8,118 and $1,729. The Company reported a gain on the transaction
          of $15,770.  The following is a condensed  balance sheet and statement
          of  operations of Manon  Consulting,  LTD, as of December 31, 1996 and
          1995:

<TABLE>
<CAPTION>

                                1996        1995
                                ----        ----
<S>                             <C>         <C>

Condensed Balance Sheet
          Current Assets        $    787    $    533
          Equipment, Net           7,203      11,132
          Other Assets                64         138
                                --------    --------
                                $  8,054    $ 11,803
                                ========    ========

                                    1996        1995
                                --------    --------

          Current Liabilities   $ 23,825    $ 24,405
          Common Stock                 7           7
           Deficit               (15,778)    (12,609)
                                --------    --------
                                $  8,054    $ 11,803
                                ========    ========

          Revenues              $  8,118    $  1,729
          Expenses                11,287       3,049
                                --------    --------
          Net Loss              $ (3,169)   $ (1,320)
                                ========    ========
</TABLE>

NOTE 10 - COMMITMENTS
---------------------

          The  company  leases  certain  office  equipment  under  noncancelable
          operating  leases for a period of less than three  years.  Total lease
          expense  charged to operations  for the period ended March 31, 1998 is
          $939.

          Future minimum payments under noncancelable  operating leases at March
          31 are:

<TABLE>
<CAPTION>
                                            <S>                        <C>
                                            1999                       $  2,204
                                            2000                       $  2,204
                                            2001                       $  2,204
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                      F-18

<PAGE>




<PAGE>




ITEM 2     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

         When  used in this  discussion,  the words  "believes",  "anticipates",
         "expects"   and   similar   expressions   are   intended   to  identify
         forward-looking  statements.  Such  statements  are  subject to certain
         risks and  uncertainties  which  would could  cause  actual  results to
         differ  materially from those  projected.  Readers are cautioned not to
         place undue reliance on these  forward-looking  statements  which speak
         only as of the date hereof.  The Company  undertakes  no  obligation to
         republish  revised  forward-looking  statements  to  reflect  events or
         circumstances  after the date  hereof or to reflect the  occurrence  of
         unanticipated  events.  Readers are also urged to carefully  review and
         consider the various  disclosures  made by the Company which attempt to
         advise  interested  parties of the factors  which affect the  Company's
         business,  in this report, as well as the Company's periodic reports on
         Forms  10-K,  10Q  and 8-K  filed  with  the  Securities  and  Exchange
         Commission.

Overview
--------

         The  Company  has  developed  The  MedCare  Program,   a  non-surgical,
         non-drug, non-invasive and cost effective treatment program for urinary
         incontinence,  as well as  pelvic  pain,  chronic  constipation,  fecal
         incontinence,  and  disordered  defecation.  The  MedCare  program is a
         multi- modality  program based primarily on behavioural  techniques for
         treatment.  These techniques include biofeedback using electromyography
         (EMG),   pelvic   floor  muscle   exercises,   and  bladder  and  bowel
         re-training.  The program is designed to activate  and  strengthen  the
         various  sensory-  response  mechanisms that maintain bladder and bowel
         control.  The therapy is  provided  through  computerized  instrumental
         electromyography  biofeedback  and is  based  on  operant  conditioning
         strategies whereby specific  physiological  responses are progressively
         shaped, strengthened, and coordinated.

         The MedCare  Program is available  through the  practices of physicians
         (urologist,  urogynecologist,  gastroenterologist,  and/or colon rectal
         surgeon), either in a private office, clinic, or a hospital setting. As
         at  March  31,  1998,   the  Company  had  12  MedCare   Program  sites
         established, and was in the process of opening an additional 15 MedCare
         Program sites in various parts of the country.

         The  Company   plans  to  devote  the  majority  of  its  resources  to
         establishing new MedCare Program sites, in operating  existing centres,
         and in  developing  new  business  models for the  introduction  of the
         MedCare  Program  into new  markets,  such as  nursing  homes and other
         institutions, and possibly foreign countries.

Results of Operations
---------------------

         The Company had revenues of $227,008 for the three month period  ending
         March 31, 1998  compared to $37,236 for the three month  period  ending
         March 31, 1997, and $91,802 for fiscal 1997. Since the Company had only
         12 MedCare Program  centres  operating as at March 31, 1998, of which 8
         were  recently  opened (1 in November  1997,  1 in January  1998,  1 in
         February  1998,  and 5 in March 1998),  the  majority of the  Company's
         first quarter revenues were generated by

                                       37

<PAGE>



         previously  established  sites.  Until public  awareness builds amongst
         incontinence  sufferers and local area physicians  through  advertising
         and word of mouth  referrals from patients,  the Company expects modest
         revenues  from all newly  opened  sites  during  the first 12 months of
         operations.  To date,  the Company has not relied on any  revenues  for
         funding its  activities  and it does not expect to receive  significant
         revenues  from  operation in the near  future.  During the next several
         years,  the Company  expects to derive the  majority  of its  potential
         revenues from the opening of new MedCare  Program centres in the United
         States, and possible abroad.

         For the three month period ending March 31, 1998, the Company's general
         and administrative  expenses increased to $765,710 compared to $197,731
         for the  corresponding  period in 1997.  The 1998 amount  represents an
         increase of 287% due primarily to the hiring of  additional  management
         and  nursing  staff,  expenses in moving to larger  office  facilities,
         greater advertising and marketing expenses,  increased expenses related
         to financial  public  relations and increased legal and accounting fees
         related to the Company's Form 10-SB2 and application for listing on the
         NASDAQ Small Cap market.

         The Company's net loss was $496,033,  or $0.02 per share, for the first
         quarter of 1998 compared to a net loss of $158,564, or $0.08 per share,
         for the  corresponding  period in 1997. This increase was primarily due
         to the increase in general and administrative costs described above.

Liquidity and Capital Resources
-------------------------------

         As at March 31,  1998,  the  Company's  cash  balance  was  $4,225,880,
         compared to $1,202,631  as at March 31, 1997.  The Company has financed
         its  operations  primarily  through the  exercise of Stock  Options and
         Share Purchase  Warrants from a previous  private  placement  totalling
         $1,187,000 for the three month period ending March 31, 1998.

         The  Company's  future  funding  requirements  will  depend on numerous
         factors,  including  the  Company's  ability to  establish  and operate
         profitability current and future MedCare Program locations,  recruiting
         and training  qualified  management and clinical  personnel,  competing
         against  any  potential  technological  advances  in the  treatment  of
         urinary  incontinence  and other  afflictions of the pelvic floor area,
         and the Company's  ability to compete against other better  capitalized
         corporations  who offer  alternative or similar  treatment  options for
         urinary incontinence and other afflictions of the pelvic floor area.

         Due to the "start up" nature of the  Company's  business,  the  Company
         expects to incur losses as it expands its  business.  While the Company
         has enough cash to fund its early stage  expansion  plans,  the Company
         may choose to raise  additional  funds through private or public equity
         investment  in order to expand  the  range  and  scope of its  business
         operations.  Even if the Company  does not have an  immediate  need for
         additional cash, it may seek access to the public equity markets if and
         when  conditions  are  favourable.  There  is no  assurance  that  such
         additional  funds will be  available  for the  Company  to finance  its
         operations on acceptable terms, if at all.



                                       38

<PAGE>



ITEM 1   LEGAL PROCEEDINGS

         None

ITEM 2   CHANGES IN SECURITIES

         As detailed in the  financial  statements,  the Company  issued  24,000
         common shares for the exercise of stock options  ranging in prices from
         $3.00 to $4.50 per share,  issued  200,000  common  shares at $6.00 per
         share for the  exercise  of share  purchase  warrants  from a  previous
         private  placement  completed at $6.00 per share,  converted 3 Series A
         Preferred  Shares into 4,851 common  shares,  and  converted 3 Series A
         Preferred  Shares into 4,803 common  shares.  The total  common  shares
         issued  during the three month period ending March 31, 1998 was 233,654
         shares.

ITEM 3   DEFAULTS UPON SENIOR SECURITIES

         None

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None

ITEM 5   EXHIBITS AND REPORTS ON FORM 8-K

         None


                                       39

<PAGE>


SIGNATURE PAGE

         Pursuant to the  requirements  of section 13 or 15(d) of the Securities
         Exchange Act of 1934,  the Registrant has duly caused this report to be
         signed on its behalf by the undersigned, thereunto duly authorized.



                                              MEDCARE TECHNOLOGIES, INC.




                                              /s/ Harmel S. Rayat
                                              Harmel S. Rayat
                                              Chairman of the Board and
                                              Chief Executive Officer


         Dated: August 19, 1998

                                       40

<PAGE>