UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   Form 10-KSB

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

For the fiscal year ended: June 30, 2002

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934
For the transition period from _______________________ to _____________

                        Commission file number: 000-24913

                          SWISSRAY INTERNATIONAL, INC.
                 (Name of small business issuer in its charter)

                                    Delaware
            (State or other jurisdiction of incorporation or 16-0950
               organization) (I.R.S. Employer Identification No.)

             100 Grasslands Road, Elmsford, N.Y.       10523
            (Address of principal executive offices) (Zip Code)

         Issuer's telephone number in the United States: (914) 345-3700

          Issuer's telephone number in Switzerland: 011-41 41 914 1200

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

                    COMMON STOCK, PAR VALUE $.0001 PER SHARE
                                (Title of class)


Check whether the issuer (i) 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 (ii) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ] No



Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not 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]



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The number of shares outstanding of each of the Registrant's classes of common
stock, as of October 1, 2002 is 41,654,747 shares(1), all of $.01 class, par
value. Of this number 26,808,147 shares have an aggregate market value of
$2,278,692, based on the closing price of Registrant's common stock of $.085 on
October 10, 2002 as quoted on the Electronic Over-the-Counter Bulletin Board
("OTCBB") were held by non-affiliates of the Registrant.

*Affiliates for the purpose of this item refers to the Registrant's officers and
directors and/or any persons or firms (excluding those brokerage firms and/or
clearing houses and/or depository companies holding Registrant's securities as
record holders only for their respective clienteles' beneficial interest) owning
5% or more of the Registrant's common stock, both or record and beneficially.



--------
1 The Company's transfer agent records, as of October 1, 2002 indicate
91,704,747 shares of common stock outstanding. Stockholder information contained
herein gives retroactive effect to (a) the cancellation of 52,442,347 shares
previously owned by Hillcrest Avenue LLC ("Hillcrest") and the subsequent
issuance of 2,442,347 shares to Hillcrest thereby reducing outstanding shares by
50,000,000 to 41,704,747; and (b) the further cancellation of an additional
725,000 shares issued in October 1999 and the re-issuance of 675,000 shares
thereby further reducing outstanding shares by 50,000 to the number currently
outstanding of 41,654,747.

<PAGE>

                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference, and the
part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(c) of the Securities Act of 1933 ("Securities Act"). NONE. Except for the
incorporation by reference of the Company's Form S-1 Registration Statement
(under File Number 333-55898 as declared effective March 9, 2001) and in
particular, those sections therein entitled "Risk Factors" (which is herewith
incorporated by reference to Part 1, Item 1, of this Form 10-K) and "Market
Prices and Dividend Polciy" subsection entitled "Nasdaq Delisting" (which is
herewith incorporated by reference into Park II, Item 5, of this Form 10-K).


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                                TABLE OF CONTENTS

PART I        .................................................................1

    Item 1.   Business.........................................................1
    Item 2.   Properties......................................................24
    Item 3.   Legal Proceedings...............................................24
    Item 4.   Submission Of Matters To A Vote Of Security Holders.............25

PART II       ................................................................25


    Item 5.   Market For Registrant's Common Equity And Related Stockholder
              Matters.........................................................25
    Item 6.   Selected Financial Data.........................................27
    Item 7.   Management's Discussion And Analysis Of Financial Condition And
              Results Of Operations...........................................28
    Item 7A.  Quantitative And Qualitative Disclosures About Market Risk......34
    Item 8.   Financial Statements And Supplementary Data ....................34
    Item 9.   Changes In And Disagreements With Accountants On Accounting And
              Financial Matters...............................................35

PART III      ................................................................35

    Item 10.  Directors And Executive Officers Of The Registrant..............35
    Item 11.  Executive Compensation..........................................37
    Item 12.  Security Ownership of Certain Beneficial Owners and Management..44
    Item 13.  Certain Relationships And Related Transactions..................46

Part IV      .................................................................47

    Item 14.  Exhibits, Financial Schedules and Reports on Form 8-K...........47


SIGNATURES....................................................................48

Supplemental Information......................................................49

CERTIFICATIONS................................................................50




<PAGE>

                                     PART I


Item 1.  Business

Background Summary

The Registrant was incorporated under the laws of the State of New York on
January 2, 1968 under the name CGS Units Incorporated. On June 15, 1994, the
Registrant merged with Direct Marketing Services, Inc. and changed its name to
DMS Industries, Inc. In May of 1995 the Registrant discontinued the operations
then being conducted by DMS Industries, Inc. and acquired all of the outstanding
securities of SR Medical AG, a Swiss corporation engaged in the business of
manufacturing and selling X-ray equipment, components and accessories. On June
5, 1995 the Registrant changed its name to Swissray International, Inc. The
Registrant's operations are being conducted principally through its wholly owned
subsidiaries, Swissray Medical AG (formerly known as SR Medical Holding AG and
SR Medical AG) a Swiss corporation and its wholly owned subsidiaries Swissray
GmbH (formerly known as Swissray (Deutschland) Rontgentechnik GmbH and SR
Medical GmbH), a German limited liability company and Swissray Romania SRL as
well as through the Company's other wholly owned Delaware subsidiaries, Swissray
America, Inc. and Swissray Information Solutions, Inc.

Swissray Medical AG acquired all assets and liabilities, effective July 1998, of
its wholly owned subsidiaries, SR Medical AG (known as Teleray AG until renamed
in February 1998, a Swiss corporation and Teleray Research and Development AG, a
Swiss corporation. Swissray Medical AG also absorbed all assets and liabilities
of the Company's other wholly owned subsidiary SR Management AG (formerly SR
Finance AG), a Swiss corporation.

Effective as of September 10, 2001 Swissray Medical Systems, Inc., a Delaware
corporation (formerly Swissray America Corporation), Swissray Healthcare, Inc.
and Empower Inc., a New York corporation, merged into Swissray America Inc., a
Delaware corporation.

In accordance with Stockholder approval obtained at the January 25, 2002 Annual
Meeting, the Registrant changed its State of Incorporation from New York to
Delaware effective May 13, 2002.

Unless otherwise specifically indicated, all references hereinafter to the
"Company" refer to the Registrant and its subsidiaries.

The Company and its predecessors have been in the business of manufacturing and
selling X-ray equipment in Switzerland and Germany since 1988. Beginning in
1991, the Company's predecessors began to expand into other markets in Europe,
the Middle East and Asia. In 1992, SR Medical AG entered into a first Original
Equipment Manufacturing ("OEM") Agreement with Philips Medical Systems GmbH
("Philips Medical Systems") providing for the manufacturing of a multi-
radiography system ("MRS"). In 1996, this agreement was replaced with a new OEM
Agreement ("Philips OEM Agreement") which provides for the manufacturing of the
Bucky Diagnost TS bucky table in addition to the MRS System. Simultaneously, the
Company developed the first SwissVision(R) post-processing system which was able
to convert analog images obtained in fluoroscopy into digital information.
Beginning in 1993, the Company began the development of direct digital X-ray
technology for medical diagnostic purposes. This is currently the Company's
primary focus (as opposed to the further development and/or sale of conventional
X-ray equipment).

                                       1

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With respect to information regarding the Company acquisition of Empower Inc. on
April 1, 1997 and subsequent litigation resulting therefrom, reference is
herewith made to Item 1 subsection entitled "Sale of Substantially All of the
Assets of Empower, Inc." as well as to Item 3 "Legal Proceedings"

In October 1999 the Company was awarded a purchase order for 32 of its direct
digital Radiography Systems from the Romanian Ministry of Health for its
multifunctional ddRMulti, valued at over US$13,800,000. Installation was made in
various hospitals throughout Romania. The initial payment aggregating 15% of the
aforesaid total proceeds (i.e., $2,070,000) was received by the Company in early
March 2000. The Company sold 25 of the 32 ddRMulti through close of its fiscal
year ended June 30, 2000 while the balance of 7 Systems were sold through August
2000 with the Company receiving the full balance of $11,730,000 by such date.

In October, 2000 the Romanian Ministry of Health ordered 30 ddR Chest valued at
more than $7,000,000 which were all subsequently sold. By virtue of the extent
and nature of these contracts, the Romanian Ministry of Health was then the
Company's single largest customer.

The Company's primary focus is currently on direct digital radiography ("ddR")
as opposed to conventional X-ray equipment. In that regard the Company's German
subsidiary (Swissray GmbH, Wiesbaden, Germany) and Swissray Medical AG sold
their conventional X-ray business divisions in March 2000 and June 2000
respectively to an unaffiliated third party in order to more extensively focus
upon sales and marketing of ddR equipment. The March 2000 transaction
principally consisted of the sale of inventory and equipment (at costs
approximating $53,000) and the purchaser's agreement to assume certain fixed
costs (approximating an additional $32,000) while the June 2000 transaction
resulted in the sale of customer base for approximately $200,000. There was no
gain or loss to the Company as a result of this transaction.

Notwithstanding the above-referenced March 2000 sale of the conventional X-ray
division, management of the Company does not have any current plans to sell its
conventional OEM business.

The dollar amount of sales from conventional X-ray Systems for the fiscal years
ended June 30, 2002, June 30, 2001 and June 30, 2000 were $553,685, $268,842 and
$1,803,716 respectively. The dollar amount of sales from conventional OEM
business for the fiscal years ended June 30, 2002, June 30, 2001 and June 30,
2000 were $350,595, $1,054,172 and $3,883,257 respectively.

Overview

The Company is active in the markets for diagnostic imaging devices for the
health care industry. Diagnostic imaging devices include X-ray equipment,
computer tomography ("CT") systems and magnetic resonance imaging ("MRI")
systems for three dimensional projections, nuclear medicine ("NM") imaging
devices and ultrasound devices. The Company is primarily engaged in the business
of manufacturing and selling diagnostic X-ray equipment for all radiological
applications other than mammography and dentistry. In addition, the Company is
in the business of selling imaging systems and components and accessories for
X-ray equipment manufactured by third parties and providing services related to
diagnostic imaging.

                                       2

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X-rays were discovered in 1895 by Wilhelm Konrad Rontgen. Shortly thereafter,
X-ray imaging found numerous applications for medical diagnostic and non-medical
purposes. Today, medical X-ray imaging is a fundamental tool in bone and soft
tissue diagnosis. X-ray diagnosis is primarily used in orthopedics,
traumatology, gastro-enterology, angiography, urology, ulmology, mammography and
dentistry. The principal elements of a diagnostic X-ray system are the X-ray
generator, the X-ray tube and the bucky device. The generator produces high
tension, which is converted into X-rays in the X-ray tube. The X-rays so created
then penetrate a patient's body and subsequently expose a film contained in the
bucky device. Following exposure, the film is chemically processed and dried in
a dark room. A typical room used for general X-ray examinations (bucky room)
contains an X-ray system which includes a table with a bucky device for
examinations of recumbent patients (bucky table) and a wall stand with a second
bucky device for examinations of sitting and standing patients (bucky wall
stand).

The film used in conventional X-ray systems has certain inherent disadvantages,
including the significant amount of time and operating expenses associated with
the handling, processing and storage thereof, the need for chemicals to develop
films and the environmental concerns related to their disposal. Additional
expenses and inconveniences arise in connection with the storage, duplication
and transportation of conventional films. The following X-ray systems have been
developed to overcome these disadvantages: scanning devices, phosphor plate or
Computed Radiography(TM) ("CR") Systems and ddR Systems. Scanning devices are
used to convert existing X-ray images into a digital form. While the use of
scanning devices permits the electronic storage, retrieval and transmission of
X-ray images, they do not eliminate the other inconveniences of conventional
film and add time and expenses associated with the scanning process.

In a CR system the film cassette is replaced with a phosphor plate which is
electrically charged by X-rays. The electrical charges on this phosphor plate
are then converted into digital information by a laser scanner. Although this
system has the advantage that the phosphor plates are reusable and the
inconveniences related to the development of X-ray films are eliminated, it does
not achieve instant images and a significant amount of time and operating
expenses are required in connection with the handling and scanning of the
phosphor plates. Additional expenses arise due to the fact that phosphor plates
have a limited lifespan.

ddR technology is designed to eliminate the disadvantages and significant
operating costs associated with conventional X-ray systems and CR systems. With
ddR technology digital information can be made available for diagnostic purposes
within a few seconds after an X-ray image is taken without any additional steps,
thereby reducing processing time and related operating expenses. Direct digital
X-ray technology uses either charge coupled devices ("CCD") arrays, amorphous
silicon/selenium panels or selenium drums to convert X-rays into digital
information.

Products

The Company's marketing strategy is to offer its customers a complete package of
products and services in the field of radiology, including equipment,
accessories and related services such as consulting and after-sales services.

                                       3

<PAGE>

The Company's products include conventional X-ray equipment for diagnostic
purposes other than mammography and dentistry, a full line of ddR Systems for
any application in direct digital Radiography as well as the SwissVision(R) line
of DICOM 3.0/IHE compatible post-processing work stations operating on a Windows
NT/2000 platform. Currently, most of the Company's X-ray equipment is
manufactured and developed in Switzerland. On March 8, 1999 Swissray Medical AG,
the Company's Swiss research and development, production and marketing
subsidiary became ISO 9001 and EN 46001 certified. Appendix II for
CE-Certification was completed in December 1999 thus allowing the Company to use
the CE-Label, including the medical device numbers for all products manufactured
and/or sold through the Company. See also "Products - Distribution of Agfa
Products", "New Products" and "Regulatory Matters".

Direct Digital Systems (ddR)/SwissVision

 The ddR line of products (which includes the ddRMulti, ddRCombi, ddRModulaire
and ddRChest) and a SwissVision(R) workstation for the postprocessing of digital
image data and the transfer of such data through central networks or via
telecommunications systems, are complete multi-functional direct digital X-ray
systems. All ddR Systems use the Company's AddOn Bucky(R) as the digital
detector. The AddOn Bucky(R) is able to make available an X-ray image in a
direct digital way for diagnostic study within seconds. As a consequence, the
efficiency and the throughput of the bucky room can be increased. The Company
believes that a significant advantage of the Company's ddR Systems is the fact
that a variety of X-ray examinations can be made with the use of only one
digital detector, the most expensive part of an X-ray system using direct
digital technology. See also "New Products" hereinafter.

During the 100 years in which X-ray imaging has been used for medical purposes,
there has been a continuous trend to improve image quality, to reduce the
radiation dose and to improve the ergonomic features of X-ray equipment.
Management believes that the ddR technology developed by the Company will take
this development to the next level because the ergonomically advanced ddR
Systems provide excellent image quality with minimal radiation doses and at the
same time reduce operating expenses through the elimination of films, cassettes
or phosphor plates and the handling, development and storage thereof.

The Company's line of SwissVision(R) post-processing workstations permits the
post-processing of digital X-ray images, including section, zooming,
enlargement, soft tissue and bone structure imaging, accentuation of the
limitation of the joints, noise suppression, presentation of different fields of
interest within an area and archiving and transferring the data through central
networks and telecommunication systems. In addition, the SwissVision(R)
post-processing workstations are able to analyze data stored with respect to a
particular patient. As a result, consistent image quality of different images of
the same patient can be achieved.

The workstations operate on a Windows NT/2000 platform and are DICOM 3.0/IHE
compatible. The Company is also offering products and services related to
networking and electronic distribution of digital X-ray images.

Conventional X-Ray Equipment, Imaging Systems, Components and Accessories

The Company manufactures and sells conventional diagnostic X-ray equipment for
radiological applications other than mammography and dentistry. In addition, the
Company sells components and accessories for X-ray systems. In general, the
components and accessories for X-ray equipment sold by the Company are
manufactured by third parties.

                                       4

<PAGE>

Original Equipment Manufacturing (OEM)

On June 11, 1996, the Company entered into the Philips OEM Agreement which
replaced the previous OEM Agreement with Philips Medical Systems, dated July 29,
1992. The Philips OEM Agreement provides for the production of two conventional
X-ray systems, the Bucky Diagnost TS bucky table and a MRS, which is approved by
the World Health Organization ("WHO") as a World Health Imaging System for
Radiology ("WHIS-RAD"). As a result, the Company's MRS may be tendered in
projects financed by the World Bank. Under the Philips OEM agreement these two
products are marketed worldwide by Philips Medical Systems through its existing
distribution network. The initial term of the Philips OEM Agreement which would
have expired December 31, 2000 has been automatically extended (from year to
year). Since entry into the initial OEM Agreement the parties have maintained a
mutually satisfactory relationship. The Company continues to deal directly with
Philips with respect to its MRS.

Services

The services offered by the Company include the installation and after-sales
servicing of imaging equipment sold by the Company, consulting services,
application training of radiographers, second line support for the Company's
distributors as well as technical training on the different Systems.

Distribution of Agfa Products

In April of 1998 the Company entered into an OEM Agreement with Agfa for the
distribution of the latter's laser imagers, dry printers and computed
radiography systems. By virtue of having entered into such distribution
agreement, the Company is able to offer a complete solution for a total digital
radiology department. Both Company products and Agfa products are DICOM 3.0
compatible and can be used on a network or for point-to-point connections. Agfa,
a leading worldwide manufacturer of imaging products and systems, is part of the
Agfa-Gevaert Group, with Agfa-Gevaert being a wholly owned subsidiary of
Bayer AG. The software license with Agfa is a worldwide, non-exclusive,
non-transferable license to use and distribute the Agfa software in combination
with the AddOn Bucky and is based upon certain purchase order requirements.

New Products

1999 Introduction of ddRChest and ddRCombi

To compliment its ddRMulti, the Company developed two new ddR Systems, each of
which were initially introduced at the Radiological Society of North America
("RSNA") annual assembly held in Chicago in November 1999 and subsequently
exhibited at the European Congress of Radiology ("ECR-2000") in March 2000 in
Vienna, Austria. The Systems are known as the (a) ddRChest and (b) ddRCombi.
Both Systems are based upon the patented technology of the AddOn Bucky. The
ddRChest is a dedicated chest unit capable of taking all chest examinations in a
direct digital format. The ddRCombi is a multi-functional system able to perform
examinations on the seated, upright and recumbent patient, can be coupled with
an automated or manual ceiling suspension or may be combined with an existing
ceiling suspension unit. It is designed and suited for trauma and emergency room
applications. Retail pricing on the ddrChest approximates 80% and on the
ddRCombi approximates 104% of retail pricing for the Company's ddRMulti.

                                       5

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The initial installation of a ddRCombi occurred in November 2000. An additional
21 ddRCombi were subsequently ordered with 15 having been installed through
August 2002.

2000 Introduction of Five Additional New Products

To further complete its ddRMulti and add to the two new ddR Systems referred to
in the previous subsection, Swissray announced the introduction of five new
products that were exhibited at RSNA 2000 held in Chicago during the last week
of November 2000. These new products may be briefly summarized as follows:

o                 ddRModulaire - a new system intended to lower the ddR price
                  barrier which incorporates Swissray's patented, overlapping
                  Quad-CCD detector into a new stand with a price comparable
                  with detector-only retrofits offered by competitors while
                  providing a complete entry level, multifunctional system for
                  those within the medical/healthcare community with limited
                  space and investment capital.

o                 ddRFluoroscopy (work in progress) - designed to extend the
                  clinical utility ddR by adding full motion imaging to
                  complement the high resolution radiographic images already
                  provided.

o                 in order to meet special patient positioning needs of
                  efficient, single detector ddR Systems, Swissray introduced
                  two new tables. The IGS2000 (work in progress) - pedestal
                  based table designed to provide positioning flexibility allows
                  for head-to-toe horizontal coverage, tilts 90 degrees for
                  upright imaging, pivots 90 degrees for decubitus exams and
                  swings out of the way for chest radiography and the IGS1000 -
                  a table that combines the convenience of a 4- way floating top
                  with the flexibility of a portable table; and

o                 the OrthoVision - a package of clinical software tools
                  optimized to meet special requirements of orthopedic radiology
                  including image stitching to enable full length spine imaging
                  for scoliosis studies.

Introduction of Additional New And/Or Improved Products During 2001-2002

The Registrant introduced several new performance enhancements for its direct
digital Radiography ddR product line in November, 2001 at the Radiology Society
of North America (RSNA) Exhibition.

o                 The new expert (TM) 4000 drew the most attention. The control
                  system increases patient throughput while also providing an
                  efficient communication link to Swissray's Expert-Center
                  support services. The expert (TM) 4000 improves technologist
                  productivity by automating many procedure tasks while enabling
                  Swissray experts to remotely monitor, service and upgrade ddR
                  system performance in real time.

                                       6
<PAGE>

o                 Patient dose is substantially reduced and image quality
                  improved with the new dOd-HP High Performance detector. The
                  modular design of Swissray's digital Optical detector dOd
                  allows continuous performance improvement.

o                 The new ddR Modulaire provides a space efficient and
                  cost-effective solution for healthcare providers with smaller
                  procedure volumes. Now, thanks to the lower price point, the
                  many advantages of ddR are available to an even larger
                  radiography market segment.

o                 The improved SwissVision II workstation provides several new
                  options for technologists. Radiographic images can now be
                  acquired from CR plate and analog film scanners as well as
                  Swissray ddR systems. This multi-media integration feature
                  allows technologists to combine images from multiple sources
                  into a single patient file. SwissVision II also features
                  several new software processing additions that were previously
                  only available in separate workstations. These features
                  include: image combination for full-length spine scoliosis
                  imaging, leg length studies and Computer Aided Detection
                  (CAD).

o                 Swissray also showcased Real-Time Radiograph (high resolution
                  full motion imaging) as a work-in-progress. This capability,
                  analogous to adding video imaging to a photographic camera,
                  adds important clinical utility to Swissray's radiograph
                  systems including joint motion studies for orthopedics as an
                  example.

Swissray also introduced the expert (TM) 4000 control system to European buyers
at the European Congress of Radiology (ECR) Exhibit in Vienna during March 2002.
ECR marked the first time that the expert (TM) 4000 has been exhibited outside
of North America.

Awards and Milestones

o                 For the fourth time Swissray was recognized by Deloitte &
                  Touche as one of the 50 fastest growing technology companies
                  in New York, Westchester and Rockland counties.

o                 Frost & Sullivan presented Swissray with a Market Penetration
                  Leadership Award for capturing an impressive 47.7% share of
                  the new and rapidly growing direct digital Radiography ddR
                  equipment market. For further information relating both to the
                  award and Foster & Sullivan, reference is hereby made to
                  Swissray's February 13, 2002 Press Release.

o                 In June 2002, Swissray was recognized by the Business
                  Marketing Association's Chicago Chapter, BMA Chicago, earning
                  a Gold BMA Tower Award for its "Back to the Future" exhibition
                  at RSNA 2001. The BMA Tower Awards are Chicago's most
                  prestigious business-to-business marketing awards competition.
                  Swissray won the Gold BMA Tower Award for "Tradeshow Marketing
                  Program", the highest award in this category, in a year when a
                  record number of entries were received. This award recognizes
                  excellence in a complete communication program's objectives,
                  strategy and results. Swissray was the only company to win an
                  award in this category.

                                       7
<PAGE>

o                 In April 2002 Swissray announced the achievement of having
                  installed its 100th U.S. direct digital Radiography ddR
                  system. To date, Swissray has also installed 97 systems
                  outside of the United States.

Markets

Product Markets

The Company estimates that the global market for X-ray equipment and accessories
is approximately $10 billion, 45% of which is in the United States, 26% in
Western Europe, 19% in Japan and 10% in the rest of the world (Sources: National
Electrical Manufacturers Association; Market Line). The Company's principal
markets for its X-ray equipment, components and accessories by country are
Switzerland, the United States and Germany accounting for approximately 68.8%,
29.8% and 1.4% respectively of total sales during the fiscal year ended June 30,
2000. Included in the 68.8% indicated in business conducted in Switzerland is
monies received as a result of contracts entered into with the Romanian Ministry
of Finance due to the fact that the down payment received of approximately
$2,070,000 was guaranteed by the Swiss Export Risk Guaranty ("ERG") with funding
coming from ABN AMRO Bank, which financed the agreement. Business conducted in
Switzerland, the United States and Germany accounted for approximately 53.3%,
45.3% and 1.4% respectively of total sales during fiscal year ended June 30,
2001 and 9.15%, 86.07% and 4.37% respectively, of total sales during fiscal year
ended June 30, 2002. The Company believes that because of the need to bring
medical services to Western standards, Eastern Europe continues to offer
interesting opportunities as a market for the Company's conventional X-ray
equipment and accessories. The Company has also been able to gain access to
markets in Asia, the Middle East and Africa. See "-- Sales and Marketing."

The Company believes that the principal markets for its direct digital X-ray
equipment are located in North America and Western Europe, where the first sales
of ddR Systems have been made. The Company submitted both its AddOn Bucky(R) and
ddR Systems to the FDA for Section 510(k) clearance. On November 21, 1997, the
Company's AddOn Bucky(R), the direct digital detector of the ddRMulti-System,
received FDA clearance and on December 18, 1997 the Company's ddRMulti-System
received FDA clearance; the Company thus receiving authorization to market the
ddRMulti-System in the United States. The Company's ddRCombi, ddRChest and
ddRModulaire received FDA clearance in January 2001. Having obtained the
required clearance from the FDA, the Company now sells all the Systems in the
United States through its subsidiaries and other channels including its U.S.
distributors, Hitachi Medical Systems, Inc. and Philips Health Care Products
(Philips HCP). See "Business - Regulatory Matters" and "Distribution Agreements
- The Hitachi Agreement" and "The Marconi Agreement" hereinafter.

The percentage of revenues for fiscal year ended June 30, 2000, June 30, 2001
and June 30, 2002 attributed to product markets amounted to 91.97%, 95.62% and
97.77% respectively.

                                       8

<PAGE>

Service Markets

The Company estimates that the worldwide market for services related to X-ray
equipment, including maintenance management is approximately $44 billion, of
which approximately $40.5 billion (or 92%) relate to after-sales services. The
markets for maintenance management and capital planning amount to $3.4 billion
or 8% of the total market for services related to X-ray equipment. The principal
markets for after-sales services are the United States (45%), Western Europe
(26%) and Japan (19%). The Company expects that as the installed base of
X-ray equipment grows, the market for after-sales services will also expand.
Additional growth may result from a general increase in the demand for such
services. To date, a significant market for maintenance management and capital
planning has only developed in the United States as a result of the impact of
managed care plans and health maintenance organizations ("HMOs") on the health
care industry. The Company expects that in the future there will be a similar
trend in Europe, which may lead to the development of a market for such services
in Europe. See "-- Products" and "-- Sales and Marketing."

The Company currently intends to continue to concentrate its marketing efforts
within Switzerland and the U.S. wherein approximately 98.6% of all Company sales
were concluded during fiscal year ended June 30, 2000, with Switzerland
accounting for 68.8% of all sales and the U.S. accounting for 29.8% of such
sales (with the balance of 1.4% of sales being conducted in Germany). For the
year ended June 30, 2001, 98.6% of all Company sales were from Switzerland and
the United States; 53.3% from Switzerland, 45.3% from the United States and 1.4%
from Germany and elsewhere, as compared to 9.15%, 86.07% and 4.37% for
Switzerland, the United States and Germany respectively, for fiscal year ended
June 30, 2002 (with Romania accounting for the balance of .41%). See also Note
14 to audited financial statements.

The percentage of revenues for fiscal year ended June 30, 2000, June 30, 2001
and June 30, 2002 attributed to services amounted to 8.03%, 4.38% and 7.23%
respectively.

Sales and Marketing

The Company's customers are universities, hospitals, clinics and imaging
centers. The Company markets its products and services primarily through its own
sales force in the United States, Switzerland, Germany and Eastern Europe and
through resellers in these and other markets in Europe, Middle East, Africa,
Asia, and Latin America. See also "Distribution Agreements - The Hitachi
Agreement" as relates to Hitachi's distribution of SRMI's ddR Systems to end
users within certain defined territories within the U.S. and "The Marconi
Agreement". The Company also offers products and services related to networking
and electronic distribution.

Two of the Company's products, the MRS System and the Bucky Diagnost TS system,
are distributed worldwide through Philips Medical Systems; the latter pursuant
to a License Agreement.

The Company believes that in the foreseeable future there will be a continuous
world-wide growth in the markets for complete X-ray systems, components,
accessories and related services because of the improvement of health care
services in developing countries and Eastern Europe and the necessity to meet
increasingly stricter regulations with respect to radiation dosage and other
safety features and environmental hazards in many jurisdictions. With the
transition from conventional to digital X-ray systems, the demand for products
and services related to networking, archiving and electronic distribution of
digital X-ray images will grow in industrialized countries. In these markets the
demand for conventional X-ray equipment, accessories and related services will
decrease over time. See "-- Markets."

                                       9

<PAGE>

Contract with Department of Veteran Affairs

In May 1998 Swissray Medical Systems, Inc., was awarded a contract from the
Department of Veterans Affairs ("VA") for the ddRMulti-System, with the VA
extending the contract until March 31, 2003. With the official contract award in
hand, management has actively pursued sales to various VA hospitals, medical
centers and outpatient community and outreach clinics throughout the United
States. Since receipt of such award the Company has contracted for the sale of 7
ddR Systems (through June 30, 2002) to different government institutions.

Distribution Agreements

In April of 1999 the Company entered into distribution agreements with (a)
Linear Medical Systems, Inc. ("Linear") for the territory of Arizona and (b)
Capital X-Ray, Inc. ("Capital") for the territories of Alabama and Mississippi.
The Linear agreement expired in February 2000 and the Company is conducting its
own distribution within the territory indicated while the Capital agreement was
to have expired December 31, 1999, was initially renewed through July 31, 2000,
further renewed through July 31, 2001 and continues to date on a month for month
basis.

Additional Distribution Agreements

The following additional summarized information relates to certain exclusive or
non-exclusive Distribution Agreements and indicates the name of distributor,
country of distribution and both commencement and expiration date.
<TABLE>
<CAPTION>


                                                           Genre of  Commencement Expiration     Non-
          Name                   Country      Agreement      Date        Date      Exclusive   Exclusive
          ----                  ---------     ---------      ----        ----      ---------   ---------
<S>                                                          <C>         <C>
Cross Medical Ltd., London     Great Britain  Distribution   08-01       12-02         x

ImaXperts Digital Imaging BV,   Benelux       Distrubition   11-01       11-02         x
Almere/NL

Panou S.A., Athens               Greece       Distribution   07-01       06-03                     x

Scanex Medical Systems AB,       Sweden,      Distribution   04-00       04-03         x
Helsingborg                      Norway,                                               x
                                 Finland                                               x
Global Medical Consultants
Inc.,  Moscow                    Russia       Distribution   04-02       04-03                     x

CIS Co ZAO Schiller Russia,
 Moscow                          Russia       Distribution   04-02       04-03                     x

Gisvis Management and            Russia       Distribution   04-02       04-03                     x
 Techmology Consultants, Ltd.,
 Moscow

Dover Medical & Scientific
 Equipment                       Israel     Representation   01-01       01-04                     x
Ltd., Herzliya                                 Agreement

TechnoWave S.A.E., Cairo          Egypt       Distribution   01-01       01-04                     x

Schmidt BioMedTech Asia Ltd.,   Indonesia,    Distribution   11-01     unlimited       x
Petaling Jaya                   Hong Kong,                                             x
                                Singapore,                                             x
                                 Malaysia,                                             x
                                  Vietnam,                                             x

Schmidt BioMedTech, Hong Kong       China     Distribution   11-01     unlimited                   x
</TABLE>

                                       10
<PAGE>

Representative sales of ddRMulti

In July of 1998 the Company sold its ddRMulti-System, to the largest Diagnostic
Out Patient Center in Warsaw, Poland, the Diagnostic Center Luxmed. This order
represented Swissray's first sale within the Eastern European Market,
complementing sales previously made in both Western Europe and the United
States.

In February of 1999 the Company announced the sale of three of its
ddRMulti-Systems, to Houston, Texas - based Kelsey-Seybold Clinic and to the
Federal Maximum Security Facility in Florence, Colorado. The two Kelsey-Seybold
systems were viewed in clinical use by attendees of the annual Society for
Computer Applications (SCAR) meeting in Houston in May 1999 while the Colorado
sale was made through the above indicated contract with the Department of
Veterans Affairs.

In October 1999 the Company was awarded a purchase order for 32 of its ddR
Systems from the Romanian Ministry of Health for its multifunctional
ddRMulti-System, valued at over $13,800,000 U.S. dollars. Installation was made
in various hospitals throughout Romania. The initial payment aggregating 15% of
the aforesaid total proceeds (i.e., approximately $2,070,000) was received by
the Company in early March 2000. The Company sold 25 of the 32 dRMulti-Systems
through close of its fiscal year ended June 30, 2000 while the balance of 7
Systems were sold through August 2000 with the Company receiving the full
balance of $11,730,000 by such date.

In October 2000 Swissray entered into a further agreement with the Romanian
Ministry of Health (Romania) for the latter's purchase of 30 ddRChest-Systems in
an agreement valued at more than $7,000,000 and guaranteed by the Swiss Export
Risk Guaranty. Financing of the agreement was provided by ABN AMRO Bank. All 30
ddRChest-Systems were subsequently sold. There have not been any further
significant sales to Romania during fiscal year ended June 30, 2002.

The Hitachi Agreements

In August of 1999 the Company signed a one year exclusive sales, marketing and
service agreement with Hitachi Medical Systems America, Inc. (HMSA), a
subsidiary of Hitachi Medical Corporation. Under the terms of the agreement HMSA
provided sales, marketing, and service for the distribution of Swissray's
ddRMulti-System to end users within certain defined territories within the
United States.

The defined territories referred to consisted of the entire U.S. except for: (i)
the states of Alabama, Arizona, Connecticut, Mississippi, Maine, Massachusetts,
New York, Rhode Island, Vermont and New Hampshire; (ii) a portion of New Jersey
that includes the Atlantic City Expressway and north; (iii) certain designated
counties within the state of Pennsylvania; (iv) the counties Orange and San
Diego within the state of California; and (v) the Panhandle of Florida
-Tallahassee West.

Additionally, the Agreement contained provisions whereby additional exclusions
existed with respect to various identified customers reserved to the Company
principally due to the Company's prior contact with and/or dealings with such
clientele.

                                       11

<PAGE>

In addition HMSA utilized and promoted Swissray Information Solutions services
and products consisting of consulting and product solutions for medical imaging
informatics.

In accordance with such agreement, the Company is required to provide and
provided HMSA with service training, installation, technical support and spare
parts. The Company also warranted to the End-User that its product (exclusive of
product software) would be free from defects in material and workmanship at time
of delivery to End-User and for a period of 12 months from date of completion of
product installation.

The initial term of the Agreement expired in August 2000 without either party
seeking cancellation thereof and remained in effect subject to all of the terms
and conditions as set forth therein during the period of time that the parties
actively negotiated and subsequently entered into a new two (2) year sales,
marketing and service agreement (Agreement) effective February 1, 2001.

The new Agreement, in a manner similar to the terminated Agreement, contains
provisions regarding: (i) defined territories in the U.S. to which HMSA would
market Company products; (ii) certain additional exclusions with respect to
various identified customers reserved to the Company; and (iii) service
training, installation, technical support and spare parts provisions as well as
a Company warranty to End-User - the latter in the same manner as indicated
above with respect to the initial Agreement.

The new Agreement (which expires February 1, 2003) also contained certain
provisions (since excluded by way of amendment dated June 12, 2001 when the
Company entered into a separate Distribution Agreement with the Health Care
Products (HCP) Division of Philips Medical Systems, Inc., see the Marconi
Agreement, below. The aforesaid June 12, 2001 amendment also contained, in
exchange for such exclusions, HMSA's waiver of the Company's prohibition from
selling its products to certain U.S. customers with the exception of certain
reserved accounts which did not exist in the prior Agreement, primarily relating
to the fact that (a) the Company was to receive a "marketing fee" of $100,000
per annum payable in equal quarterly payments during the first year of the
Agreement and (b) HMSA was obligated to purchase a minimum of 25 units during
the first year of the Agreement.

Product pricing for the second year of the Agreement is subject to adjustment
based upon mutual agreement between the parties.

The Marconi Agreement (Now Known As Philips HCP)

The principal reason for the Company entering into the above referenced
modification to its ongoing HMSA agreement (see "The Hitachi Agreements", above)
was to permit the Company to enter into a separate Distributor Agreement with
the Health Care Products Division of Marconi Medical Systems, Inc. ("HCP"),
which latter agreement required, as a condition to its effectiveness, that the
Company terminate or amend certain existing Distributor Agreements to the extent
necessary so as to permit the new Marconi HCP agreement to become effective. The
Marconi HCP Distributor Agreement dated June 1, 2001 became effective as of June
15, 2001 and expires March 31, 2004 - the date the Company's notification to
Marconi HCP of its having concluded necessary amendments to existing Distributor
Agreement(s).

                                       12

<PAGE>

The HCP Distributor Agreement is to run for a period of three years during which
period of time HCP is to act as a non-exclusive distributor of Company products
in the U.S. HCP sells and services a wide variety of products in medical imaging
and is considered to maintain a high quality sales and service work force which
calls upon hospitals, medical facilities and imaging centers (i.e., potential
end users of the Company's ddR products). HCP has agreed that during the term of
the Distributor Agreement it will not market other ddR or competing digital
radiography systems and has agreed to develop marketing and sales programs to
maximize awareness of the benefits of ddR over CR in the target markets.

Additional New Agreements

During fiscal year ended June 30, 2002, the Registrant also entered into
distribution agreements with (i) MTM - a non-exclusive agreement for Canadian
distribution which expires January 1, 2003; and (ii) TESA, an exclusive
agreement for Mexican distribution which expires September 15, 2003.

Percentage of ddRMulti Sold Directly by Company as Compared To Its Distributors

With respect to a total of 64 ddRMulti-Systems contracted for sale during fiscal
year ended June 30, 2000, 47 (73%) of same were made directly through the
efforts of the Company's internal staff and sales team while the balance of 17
(27%) were made through the efforts of Company distributors. HMSA was
responsible for 10 of such 17 contracted for distributor sales with no other
Company distributor being responsible for more than two of such contracts.

During fiscal year ended June 30, 2001 Swissray contracted for the sale of 66
ddR Systems (inclusive of its October 2000 contract for the sale of 30
ddRChest-Systems to the Government of Romania which was its single largest
customer) with 90% of such sales being made directly by Swissray's internal
staff and sales team.

During fiscal year end June 30, 2002 the Registrant contracted for the sale of
73 ddR Systems with approximately 14% (10 Systems) of such sales being made by
Swissray's internal staff and approximately 86% of such sales (63 Systems) being
made by distributors - principally Hitachi and HCP.

Additional Sales Information

In the past, the Company has made a significant amount of sales of its X-ray
equipment to a few large customers. For the fiscal year ended, June 30, 2000,
June 30, 2001 and June 30, 2002, sales to the Company's single largest customer
accounted for approximately 49.14%, 34.49% and 35.7% of all revenues. The single
largest customer for both fiscal years ended June 30, 2000 and June 30, 2001 was
the Government of Romania, while the Company's single largest customer(s) for
fiscal year ended June 30, 2002 was Hitachi Medical Systems America.

The Company considers the relationship with its largest customers to be
satisfactory. Historically, the identity of the Company's largest customers and
the volumes purchased by them has varied. The loss of the Company's current
single largest customer or a reduction of the volume purchased by it would have
an adverse effect upon the Company's sales until such time, if ever, as
significant sales to other customers can be made. The Company expects that as
sales of its ddR Systems increase, the Company's revenue will be less dependent
on a few large customers.

                                       13

<PAGE>

In August 1998 the Company entered into a global distributorship agreement for
its ddRMulti-System with Elscint Ltd. of Haifa to sell and service such product
in 14 countries in Europe, Canada, South America and Africa. Thereafter, almost
all of the assets of Elscint Ltd. were sold to Picker International and GE
Medical Systems respectively. Neither Picker International nor GE Medical
Systems have executed or honored the distributorship agreement as of the date
hereof and therefore the Company was unable to sell the anticipated 75
ddRMulti-Systems (partially anticipated to be sold through Elscint Ltd.) within
the fiscal year 98/99 as originally planned. See Item 3 "Legal Proceedings"
regarding litigation which the Company instituted against Elscint Ltd. in March
2002.

Research and Development

During fiscal year ended June 30, 2002 research and development expenses
amounted to $2,549,384; a 10.6% increase over 2001. The increase of the
Company's research and development expenses from the fiscal year ended June 30,
2001 to the fiscal year ended June 30, 2002 resulted primarily from costs
associated with development of the new products heretofore described under Item
1 "Business - New Products".

During fiscal year ended June 30, 2001 research and development expenses
amounted to $2,305,165. During the fiscal year ended June 30, 2000 the Company
incurred expenses regarding research and development of $1,914,065 (accounting
for 11% of the Company's operating expenses). The increase of the Company's
research and development expenses by 20% from the fiscal year ended June 30,
2000 to the fiscal year ended June 30, 2001 resulted primarily from costs
associated with development of the new products heretofore described under Item
1 "Business - New Products".

It is currently anticipated that the Company will continue to incur significant
research and development expenses associated with the further development of new
products (including diagnostic hardware and software products and new digital
X-ray products) and improvements to existing products manufactured by the
Company.

As of June 30, 2002, the Company employed 18 people in research and development.
The number of people employed in research and development has increased by 20%
since June 30, 2001. The Company is outsourcing certain research and development
activities and intends to continue this policy in the future.

The Company has established a scientific advisory board to support its research
and development projects and to enable the Company to develop technologically
advanced products. The Company believes that the integration of academic
institutions and hospitals will allow the Company to save research and
development expenses and will provide it with access to clinical and scientific
experience and know-how.

                                       14

<PAGE>

Raw Materials and Suppliers

The Company has a policy of outsourcing the manufacturing of components for its
X-ray equipment whenever such outsourcing is more efficient and cost effective
than in-house production. In particular, components for which serial production
is available are produced by third-party manufacturers according to Company
specifications. Generally, the X-ray accessories sold by the Company are
manufactured by third parties.

There is virtually no stock of finished X-ray equipment on the Company's
premises for any extended period of time since X-ray equipment is generally
manufactured at a customer's request. At June 30, 2002 finished products
accounted for approximately 7% of inventory while raw material, parts and
supplies accounted for approximately 84% of inventory and work in process for
approximately 9%.

The percentage of Company revenues derived from products which included
components then only currently available from a single source supplier amounted
to 86.14% as of June 30, 2001 as compared to 64.2% as of June 30, 2000 (all of
which related to both single source supplier of certain camera electronics and
single source supplier of optics since both items are included in the same
product). See below with respect to in-house production of camera electronics.

A.       Information With Respect to In-house Production of Camera Electronics

The agreement with the single source supplier of certain camera electronics
terminated December 31, 1999 due to the fact that its manufacturing plant where
the camera electronics had been manufactured permanently closed on such date and
Company management was not satisfied with proposals submitted to it by such
supplier regarding the latter's intentions of establishing a new manufacturing
plant. Company agreement with its then new supplier of camera electronics
provided for availability of such camera electronics to the Company commencing
January 1, 2000. In January of 2000 the Company entered into a new arms- length
agreement with its CCD camera supplier Laboratories d'Electronique Philips
S.A.S. whereby the Company has purchased, from available working capital, the
production facility (including necessary tools equipment, diagrams and related
know-how) for approximately 250,000 Swiss Francs (US$161,290) and it is
management's ongoing intention through such purchase) to have a sufficient
number of CCD cameras on hand (four per system) to cover in excess of those
immediately required to cover orders. Through in-house production of key camera
components the Company has eliminated its reliance upon its former supplier,
reduced camera costs because at a minimum the Company is no longer funding its
former suppliers profit margin and has not incurred any material business
interruptions regarding CCD camera availability in a timely manner. Further,
such in-house production has not had any adverse effect upon quality of its ddR
Systems.

B.       Agreement With Single Source Supplier of Optics

The agreement with the single source supplier of optics expires in August 2003,
may not be terminated by either party without cause and is subject to
renegotiations which are expected to occur assuming contract fulfillment
continues to be concluded in a timely and satisfactory manner with price and

                                       15

<PAGE>

payment terms being comparable to those currently being utilized and meeting
Company capacity requirements. The percentage of revenues from this single
source supplier of optics amounted to approximately 64.2% at fiscal year ended
June 30, 2000, 86.14% at fiscal year ended June 30, 2001 and 87.67% for fiscal
year ended June 30, 2002. While management has no current expectation or need to
replace this supplier it does not envision encountering any material
difficulties in replacing such supplier (with a different optics manufacturer
having the ability to timely deliver comparable optic quality) if necessary in
the event of any unforeseen circumstances which may require replacement.

Backlog

As of October 4, 2002, backlog amounted to $7,086,228 with digital unit backlog
constituting $6,769,602 and the balance being conventional X-ray equipment and
services.

At fiscal year ended June 30, 2001 total order backlog amounted to approximately
$8,013,600 of which approximately $6,131,200 represented digital with the
balance representing conventional X-ray equipment and services. As of the end of
fiscal year ended June 30, 2000 the Company had an order backlog of $8,800,000
which consisted of $2,080,000 in conventional X-ray equipment and $6,720,000 in
digital (i.e. ddRMulti and information solutions). While the Company expects to
continue to have an order backlog for conventional X-ray equipment in the future
because of the Philips OEM Agreement, the order backlog for digital X-ray
equipment is anticipated to increase due to the Company's sales focus.

Competition

X-Ray Equipment Market

The markets in which the Company operates are highly competitive and are
characterized by rapid and significant technological change. Most of the
Company's competitors are significantly larger than the Company and have access
to greater financial and other resources than the Company. The principal
competitors for the Company's conventional X-ray equipment are General Electric,
Siemens, Toshiba, Hologic, Shimatsu and Philips. In general, it is the Company's
strategy to compete primarily based on the quality of its products. In the
market for conventional X-ray equipment, the Company's strategy is to focus on
niche products and niche markets.

To the Company's knowledge the only direct digital X-ray systems for medical
diagnostic purposes other than the ddR Systems of the Company currently
available are chest examination systems and mammography systems offered by
Philips, IMIX, Odelft and General Electric. In addition, there are several
direct digital X-ray systems available for dental purposes. None of these
systems is able to perform bone examinations on extremities. Furthermore, there
are two companies, Hologic and Canon, offering multifunctional direct digital
Radiography systems competing with the Company's ddR Systems. The Company has
succeeded to gain the leadership position in the market of multifunctional
direct digital Radiography systems with currently 197 of such systems installed.

                                       16

<PAGE>

Service Market

In the markets for services related to imaging equipment the Company's
competitors are equipment manufacturers (including certain of the Company's
competitors in the X-ray equipment market) and independent service
organizations. In the service markets, it is the Company's strategy to build a
market position based on the confidence of its customers in the quality of its
products and service personnel. See "-- Products," "-- Markets".

Intellectual Property and Patents

The Company has obtained patent protection for certain aspects of its
conventional X-ray technology. The Company has filed patent applications
covering certain aspects of its direct digital technology in key markets in
Europe, North America and Asia, including the United States, Canada, Switzerland
and Germany. Although the Company believes that its products do not infringe
patents or violate proprietary rights of others, it is possible that
infringement of proprietary rights of others has occurred, may occur or may be
claimed. In the event the Company's products infringe patents or proprietary
rights of others, the Company may be required to modify the design of its
products or obtain a license. There can be no assurance that the Company will be
able to do so in a timely manner, upon acceptable terms and conditions or at
all. The failure to do any of the foregoing could have a material adverse effect
upon the Company. In addition, there can be no assurance that the Company will
have the financial or other resources necessary to enforce or defend a patent
infringement action and the Company could, under certain circumstances, become
liable for damages, which also could have a material adverse effect on the
Company.

The Company also relies on proprietary know-how and employs various methods to
protect its concepts, ideas and technology. However, such methods may not afford
complete protection and there can be no assurance that others will not
independently develop such technology or obtain access to the Company's
proprietary know-how or ideas. Furthermore, although the Company has generally
entered into confidentiality agreements with its employees, consultants and
other parties, there can be no assurance that such arrangements will adequately
protect the Company. The Company has obtained licenses to use certain technology
which is essential for certain of the Company's products, including certain
software used for its line of SwissVision(R) post-processing systems. The
software license is a worldwide, non-exclusive, non-transferable license to use
and distribute the Agfa software in combination with the AddOn Bucky and is
based upon certain purchase orders.

The Company considers the Swissray name as material to its business and has
obtained trademark protection in key markets. The Company is not aware of any
claims or infringement or other challenges to the Company's rights to use this
or any other trademarks used by the Company which it considers to have any merit
whatsoever.

The Company has patented certain aspects of its proprietary technology in
certain markets and has filed patent applications for its direct digital
technology in key markets, including the United States. The European patent as
well as the U.S. patent for the AddOn Bucky have been granted and expire
December 2015. The duration of other patents range from 2000 to 2016. In many
instances where patents are filed the "applicant" is listed as a specific
individual (such as the Company's President) while the patent ownership is
listed in the Company's name thereby assuring that the exclusive patent holder
is the Company.

                                       17

<PAGE>

In March of 1999 the European Patent Office issued patent No. EP 0 804 853 and
and in July of 1999 the U.S. Patent Office issued patent No. 5,920,604 - both
for the Company's Radiography (ddR) detector, the AddOn-Bucky (R) which patent
relates to the optical arrangement and process for transmitting and converting
primary X-ray images, which is the first of two inventions for the AddOn
Bucky(R). The second patent application for optical arrangement and method for
electronically detecting an X-ray image was granted in March 2000 (Patent No.
6,038,286) in the U.S., while the European patent was granted in April 2001. The
AddOn Bucky(R) is incorporated in Swissray's unique ddR Systems.

The U.S. patent was awarded to Swissray pursuant to application submitted by
inventors R.G. Laupper, Chairman, President and Chief Executive Officer of
Swissray International, Inc. and Peter Waegli (Bremgarten, Switzerland), for the
optical arrangement and process for transmitting and converting primary X-ray
images generated on a two dimensional primary image array. The Company had
previously been awarded, in March 1999 the European patent for the technology
indicated herein.

The second patent application for the optical arrangement and method for
electronically detecting an X-ray image was granted (in Europe) in April 2001
while the U.S. patent therefore was granted to the Company (Patent No.
6,038,286) in March 2000.

Regulatory Matters

The Company's X-ray equipment, components and related accessories are subject to
regulation by national or regional authorities in the markets in which the
Company operates. Pursuant to the Federal Food, Drug and Cosmetic Act, X-ray
equipment is a class IIb medical device which may not be marketed in the United
States without prior approval from the FDA and EWG.

The FDA review process typically requires extended proceedings pertaining to the
safety and efficacy of new products. A 510(k) application is required in order
to market a new or modified medical device. If specifically required by the FDA,
a pre-market approval ("PMA") may be necessary. The Company submitted both its
AddOn Bucky(R) and the ddRMulti for Section 510(k) clearance with the FDA. On
November 21, 1997, the Company's AddOn Bucky(R), the direct digital detector of
the ddRMulti, received FDA approval and on December 18, 1997 the

Company's ddRMulti received FDA approval; the Company thus receiving
authorization to market the ddRMulti in the U.S. The FDA also regulates the
content of advertising and marketing materials relating to medical devices.
There can be no assurance that the Company's advertising and marketing materials
regarding its products are and will be in compliance with such regulations.

The Company is also subject to other federal, state, local and foreign laws,
regulations and recommendations relating to safe working conditions, laboratory
and manufacturing practices. The electrical components of the Company's products
are subject to electrical safety standards in many jurisdictions, including
Switzerland, EU and the United States. The Company believes that it is in
compliance in all material respects with applicable regulations. Failure to
comply with applicable regulatory requirements can result in, among other
things, fines, suspensions of approvals, seizures or recalls of products,
operating restrictions and criminal prosecutions. The effect of government
regulation may be to delay for a considerable period of time or to prevent the

                                       18

<PAGE>

marketing and full commercialization of future products or services that the
Company may develop and/or to impose costly requirements on the Company. There
can also be no assurance that additional regulations will not be adopted or
current regulations amended in such a manner as will materially adversely affect
the Company.

Company product certifications may be briefly summarized as follows: On March 8,
1999 Swissray Medical AG, the Company's Swiss research and development,
production and marketing subsidiary became ISO 9001 and EN 46001 certified.
Appendix II for CE - Certification was completed in December 1999 thus allowing
the Company to use the CE-Label, including the medical device numbers for all
products manufactured and/or sold through the Company.

Environmental Matters

The Company is subject to various environmental laws and regulations in the
jurisdictions in which it operates, including those relating to air emissions,
wastewater discharges, the handling and disposal of solid and hazardous wastes
and the remediation of contamination associated with the use and disposal of
hazardous substances. The Company owns or leases properties and manufacturing
facilities in Switzerland, the United States, Germany, Czech Republic and
Romania. The Company, like its competitors, has incurred, and will continue to
incur, capital and operating expenditures and other costs in complying with such
laws and regulations in both the United States and abroad as may specifically
apply to it. The Company does not believe that it has been involved in
utilization of any types of substances and/or wastes which it considers to be
hazardous and the operation of its business (or former business), accordingly,
is not believed to have created any potential liability involving environmental
matters. Although the Company believes that it is in substantial compliance with
applicable environmental requirements and the Company to date has not incurred
material expenditures in connection with environmental matters, it is possible
that the Company could become subject to additional or changing environmental
laws or liabilities in the future that could result in an adverse effect on the
Company's financial condition or results of operations.

Sale of Substantially All of the Assets of Empower, Inc.

On April 1, 1997, the Company acquired Empower, Inc. ("Empower") which since
incorporation in 1985, had been engaged in distributing and servicing diagnostic
X-ray equipment and accessories in the New York, New Jersey and Connecticut
area. Certain details with respect to such acquisition were reported in a Form
8-K and Form 8-K/A1 with date of report of April 1, 1997. In February 1998 the
Company entered into a letter of intent with E.M. Parker Co., Inc., a
Massachusetts corporation ("Parker") with respect to the sale of Empower's film
and X-ray accessories business. Thereafter, the Company and its wholly owned
subsidiary, Empower, Inc. ("Empower") entered into an Asset Purchase Agreement
with Parker pursuant to which the Company and Empower sold and Parker purchased
substantially all of the assets of Empower (excluding certain excluded assets as
defined in the Agreement) in consideration of: (i) the assumption by Parker of
certain liabilities of Empower; (ii) the cash purchase price of $250,000; and
(iii) the payment by Parker of approximately $376,000 to a banking institution
in satisfaction of certain outstanding indebtedness of Empower. Empower remains
a wholly owned (but currently inactive) subsidiary of the Company. Empower has
been merged into Swissray America, Inc. effective September 10, 2001. The
Company is currently engaged in litigation with the former CEO of Empower, to
wit: J. Douglas Maxwell. For information regarding such litigation reference is
made to Item 3 "Legal Proceedings".

                                       19

<PAGE>

Both the original purchase and subsequent sale referred to in the preceding
paragraph were contracted on an arms-length basis. The sale of Empower's assets
less than one year after acquisition of Empower related primarily to the sale of
film, chemical and certain servicing of conventional X-ray equipment since these
areas no longer constituted the Company's "core" business which revolves around
its ddRMulti and filmless digital technology. The original purchase of Empower
was for $120,000 and the subsequent sale referred to resulted in a gain of
$55,000. Counsel representing the Company with respect to this transaction
determined that such transaction was not material, did not require stockholder
approval and advised management which acted upon reliance of such legal advice.

Sale of Conventional X-Ray Division in Germany and Switzerland

The Company's primary focus is currently on ddR as opposed to conventional X-ray
equipment. In that regard the Company's German subsidiary (Swissray GmbH) and
Swissray Medical AG (Switzerland) sold their conventional X-ray business
divisions in March 2000 and June 2000 respectively to an unaffiliated third
party in order to more extensively focus upon sales and marketing of ddR
equipment.

Employees

At fiscal year ended June 30, 2002, 18 individuals were employed by subsidiaries
in the United States, 90 persons in Switzerland and 18 persons in European
countries other than Switzerland. The Company believes that its relationship
with employees is satisfactory. The Company has not suffered any significant
labor problems during the last five years.

Consulting Agreements Entered Into With (a) Liviakis Financial Communications,
Inc. ("LFC") dated March 29, 1999 and March 29, 2000; and (b) Rolcan Finance
Ltd. ("Rolcan") dated March 29, 1999

Certain pertinent terms and conditions contained in the Agreements entered into
by the Company and LFC and Rolcan were summarized in the Registrants Form 10-K
for fiscal year ended June 30, 2001 to which reference is made, but did not
purport to be complete summaries of either of such Agreements. Copies of such
Agreements are filed with the SEC in a Company Form S-1 Registration Statement
under SEC file number 333-59829. Accordingly, further information may be
obtained through the Commission's World Wide Web site utilized for issuers (such
as the Company) that file electronically with the Commission. The address of
such site is http:\\www.sec.gov.

Recent Developments

Hitachi and Marconi Agreements

See Item 1 - "Business - Sales and Marketing - Distribution Agreements - The
Hitachi Agreement and The Marconi Agreement" with respect to the current status
of each of such Agreements entered into during fiscal year ended June 30, 2001.

                                       20

<PAGE>

The Hillcrest Agreement

The Company, principally during December of 2000, entered into various
negotiations with those persons and/or firms with whom it had entered into prior
financing agreements, which persons and/or firms were then the holders of
outstanding: (i) convertible debentures; (ii) Series A Preferred Stock; and/or
(iii) promissory notes. For specific information with respect to such prior
financings, reference is herewith made to Registration Statement under Sec File
No. 333-59829 as declared effective on August 14, 2000 and in particular, but
not limited to, those sections entitled "History of Past Financings", " Selling
Holders ", "Plan of Distribution" and "Description of Capital Stock - Promissory
Notes Subsequently Converted into Debentures" and "Registration Rights" as well
as to those Risk Factors in such Registration Statement which similarly dealt
with matters specifically relating to such financings and are entitled
"Potential Adverse Effect Upon Stock Price and Regulation D", "Inability to
Currently Determine Number of Shares in Outstanding Shares" and "Requirements
for the Issuance of Additional Shares Financing Agreements".

With respect to the above, 13 of the Selling Holders named in the section
entitled "Selling Holders" assigned all of their rights and interests to an
entity known as Hillcrest Avenue LLC ("Hillcrest"), a corporation incorporated
under the laws of the Cayman Islands. The Selling Holders who assigned their
rights to Hillcrest are as follows: Dominion Capital Fund, Sovereign Partners
LP, Dominion Investment Fund LLC., Aberdeen Avenue LLC, Parkdale LLC, Canadian
Advantage Limited Partnership, Atlantis Capital Fund Ltd., Striker Capital,
Southridge Capital Management LLC, Fetu Holding, Greenfield Investment
Consultants, LLC, Dundurn Street LLC and Southshore Capital Fund Ltd. Of such
group of 13 the following "Selling Holders" were principal stockholders prior to
such assignment - Dominion Capital Fund Limited, Sovereign Partners LP and
Parkdale LLC.

Hillcrest thereafter and in accordance with negotiations with the Company
entered into written agreements, each dated as of December 29, 2000, pursuant to
which all of those rights acquired by Hillcrest in accordance with the aforesaid
assignments were exchanged for the issuance to Hillcrest of 52,442,347
restrictive shares of Company common stock thereby extinguishing those
convertible debentures, Preferred Shares and promissory notes heretofore
assigned to Hillcrest by Selling Holders. At the time of assignment the debt
instruments indicated had a valuation of $16,907,573 (inclusive of interest and
penalties), all of which was extinguished in exchange for issuance of the
aforesaid 52,442,347 Company shares to Hillcrest.

As a direct result of the above referenced transaction Hillcrest became and
remains the single largest stockholder of the Company owning approximately
61.88% of all issued and outstanding common stock of the Company as of August
15, 2001. Notwithstanding such ownership, Hillcrest has given Ruedi G. Laupper
the Company's President, sole voting rights over such shares as were owned by
Hillcrest so that Ruedi G. Laupper could vote such shares in such manner as he
may choose (including in his favor to continue to maintain his current positions
with the Company) and in his sole discretion at all Company shareholder
meetings; such rights being limited, to an extent, by certain exceptions thereto
as are enumerated in Shareholder Agreement hereinafter referred to at Section
2.2b(a) through (j) inclusive thereto. The Shareholders Agreement (absent
voluntary agreement to terminate or receivership, bankruptcy or matters of a
similar nature) was to terminate on such date as Hillcrest's record and
beneficial ownership is equal to 9.9% or less of all then issued and outstanding
Common Stock of the Company (although certain provisions of the Shareholders
Agreement as relate to the "Anti-Dilution" provisions as were contained therein
survived such termination). Notwithstanding Ruedi G. Laupper's voting rights (as
outlined above), Hillcrest had retained sole investment power over the Company
shares heretofore referred to. Additionally, effective July 1, 2002, the
Shareholders Agreement (dated December 20, 2000) which contained the
above-referenced voting rights was terminated. See also "Subsequent Event"
below.

                                       21

<PAGE>

The written agreements dated December 29, 2000 as entered into between
Hillcrest, the Company and others are entitled (a) Exchange Agreement, (b)
Shareholders Agreement and (c) Registration Rights Agreement (the latter of
which required that the Company file a Registration Statement with the SEC
within 60 days from closing of the Exchange Agreement so as to register the
aforesaid 52,442,347 shares notwithstanding the fact that Hillcrest agreed that
it may not sell all or any portion of such shares for a period of no less than 6
months and 1 day from closing the Exchange Agreement.

Each of the agreements referred to (i.e., Exchange Agreement, Shareholders
Agreement and Registration Rights Agreement) were filed with the SEC as Item
7(c) Exhibits to Form 8-K with date of report of December 29, 2000.

The required Registration Statement to register the 52,442,347 Company shares
issued to Hillcrest was filed with the SEC on February 20, 2001 (File No.
333-55898) and declared effective on March 9, 2001.

See "Subsequent Event" hereinafter for current status of this Agreement.

The DIANAssociates Agreement

In December 2000 the Company announced that it received an order for 10 ddR
Systems from DIANAssociates, Inc., a telemedicine service provider based in
Maryland (so as to provide TB screening services at 10 geographically diverse
locations in the U.S.).

The Redington Agreement

In March 2001 the Company engaged Redington, Inc. ("Redington"), a Fairfield,
Connecticut based firm specializing in working with emerging technology
companies, to perform various investor relations services in order to improve
shareholder relations and increase corporate awareness in the financial
community.

It is intended that Redington's work on behalf of Swissray will include national
awareness programs designed to articulate the unique advantages of Swissray's
ddR Systems, and to help investors better understand the potential market
opportunities for this technology.

The initial term of the contract is for a one year period ending February 28,
2002 and was not renewed. In addition to an agreed to monetary fee (paid for
approximately 68% in cash with the balance being paid in shares of Swissray
common stock) the Company is obligated to issue Warrants (over a period of up to
5 years) to purchase up to 500,000 shares of Company common stock at various
exercise prices equal to market price on date of grant. The specific number of
Warrants to be issued will be determined based upon certain defined trading
price goals being achieved and, accordingly, may be considered as a form of
incentive compensation. To date 100,000 Warrants exercisable through March 15,
2006 (at the closing bid price on the March 15, 2001 date of issuance) have been
issued and remain unexercised.

                                       22

<PAGE>

Subsequent Event

On July 12, 2002, the Company entered into a Securities Purchase Agreement with
Kew Court, LLC (hereinafter "Kew Court") pursuant to which Kew Court agreed to
purchase Convertible Promissory Notes (bearing interest at five (5%) percent per
annum and convertible into shares of Company Common Stock at ninety (90%)
percent of the average closing bid price for the Five (5) trading days
immediately preceding conversion) The initial purchase is Two Hundred Fifty
Thousand ($250,000) Dollars out of a total offering of not more than Three
Million ($3,000,000) Dollars. The Company is required to register the shares of
Company Common Stock issued pursuant to note conversion. The purchase of
additional notes past the initial $250,000 is conditioned upon the Company (i)
shipping a minimum number of radiography units during the previous month; (ii)
achieving certain cost savings goals over the next two (2) quarters; and (iii)
having an aggregate dollar trading volume in its common stock over certain
defined periods.

In addition, on August 14, 2002 the Company entered into a separate Exchange
Agreement with Kew Court LLC ("Kew Court") pursuant to which Kew Court agreed to
exchange Convertible Series B Preferred Shares previously issued to it (and
having a face value approximating Three Million Eight Hundred Thousand
($3,800,000) Dollars with Kew Court then having the right to convert such Series
B Preferred Shares into Eighteen Million Seven Hundred Fifty Thousand
(18,750,000) Company Common Shares). In return for cancellation of the Series B
Preferred Kew Court is to receive Three Hundred Seventy (370) shares of the
Company's Series C Convertible Preferred Stock (convertible into shares of
Company Common Stock in accordance with the terms and conditions set forth in
the Company's "Certificate of Designations of Rights and Preferences of the
Series C Convertible Preferred Stock" which permits conversion until March 31,
2003, absent any change of control, at the greater of One ($1.00) Dollar and a
defined variable conversion price with conversions subsequent to March 31, 2003
being at Ninety (90%) Percent of the average closing bid price for the 5 day
period preceding conversion).

On August 14, 2002 the Company entered into a separate Exchange Agreement with
its single largest shareholder, Hillcrest Avenue LLC (hereinafter "Hillcrest")
pursuant to which Hillcrest agreed to exchange Fifty Million (50,000,000) shares
of Company Common Stock owned by it for Two Thousand Eight Hundred and Thirty
(2,830) shares of the Company's Series C Convertible Preferred Stock with
conversion terms identical to those described above.

Hillcrest and Kew Court have identical registration rights for the shares of
Company Common Stock issuable upon Series C Preferred Conversion in accordance
with the terms and conditions of a Registration Rights Agreement.

The foregoing is intended solely as a summary of certain material terms and
provisions contained in the above-referenced Agreements, and does not purport to
summarize all pertinent and/or relevant additional information including various
warranties and representations of the parties to such agreements, the various
obligations assumed thereunder and their respective remedies in the event of any
defaults.

CAUTIONARY STATEMENTS FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

As heretofore indicated on the cover page of this Form 10-K under the heading
"Documents Incorporated by Reference" certain portions of the Company's recently
declared effective (February 20, 2001) Registration Statement and in particular,
but not limited to, the section therein entitled "Risk Factors" have been
incorporated by reference. As a result thereof the following "Cautionary
Statement" should be taken into careful consideration.

                                       23

<PAGE>

Investment in the securities of the Company involves a high degree of risk. In
evaluating an investment in the Company's Common Stock, Company stockholders and
prospective investors should carefully consider the information contained in
this Form 10-K for the fiscal year ended June 30, 2002 including, without
limitation, Item 1 "Business" and Item 6 "Management's Discussion and Analysis
of Financial Condition and Results of Operations", as well as information
incorporated by reference from the Company's aforesaid Registration Statement.

This Form 10-K includes forward-looking statements that reflect the Company's
current views with respect to future events and financial performance, including
capital expenditures, strategic plans and future cash sources and requirements.
These forward-looking statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially from historical results of
those anticipated. The words, "believe", "expect", "anticipate", "estimate" and
similar expressions identify forward-looking statements. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of their dates. The Company undertakes no obligation to publicly update
or revise any forward-looking statements whether as a result of new information,
future events or otherwise.

Item 2.  Properties

On May 15, 1997, the Company purchased a new office and production facility of
approximately 43,000 square feet and moved its entire production to this
facility and has since moved the offices and other facilities formerly located
in its Hitzkirch facility to the new Hochdorf facility. The Company believes
that its Hochdorf facility provides it with sufficient production and office
space to meet its current demand in Switzerland for the foreseeable future. In
September 2000 the Company purchased an additional approximate 21,000 square
feet (adjacent to its facilities) for production expansion purposes, if and when
advisable.

The Company also leases office space in Elmsford, New York, Brno, Czech
Republic, Wiesbaden, Germany and Bucharest, Romania.

Item 3.  Legal Proceedings

A. Dispute with J. Douglas Maxwell. On or about July 1, 1999 an action was
commenced in the Supreme Court, State of New York, County of New York (Index No.
113099/99) entitled J. Douglas Maxwell ("Maxwell") against Swissray
International, Inc. ("Swissray"), whereby Maxwell is seeking judgment in the sum
of $380,000 based upon his interpretation of various terms and conditions
contained in an Exchange Agreement between the parties dated July 22, 1996 and a
subsequent Mutual Release and Settlement Agreement between the parties dated
June 1, 1998. Swissray has denied the material allegations of Maxwell's
complaint and has asserted three affirmative defenses and two separate
counterclaims seeking dismissal of the complaint and rescission of the
settlement agreement. It is Swissray's management's intention to contest this
matter vigorously. An Order has been made on July 24, 2000 granting Maxwell
partial summary judgment on portion of his claim for approximately $320,000 plus
interest. Maxwell's application for judgment on the balance of his claim was
dismissed, and thereafter (August 22, 2002) reversed on appeal by the Appellate
Division of the State of New York.

                                       24

<PAGE>

B. Dispute with Elscint Ltd. In August 1998 the Company entered into a global
distributorship agreement for its ddRMulti with Elscint Ltd. of Haifa to sell
and service such product in 14 countries in Europe, Canada, South America and
Africa. Soon thereafter almost all of the assets of Elscint Ltd. were sold to
Picker International and GE Medical Systems respectively. Neither Picker
International nor GE Medical Systems have executed or honored the
distributorship agreement as of the date hereof and therefore the Company was
unable to sell the anticipated 75 ddRMulti (partially anticipated to be sold
through Elscint Ltd.) within the fiscal year 98/99 as originally planned. The
Company instituted legal proceedings against Elscint Ltd. in March 2002 in The
Supreme Court of New York, County of New York, Index No. 01144/02, alleging
fraud, breach of contract, and other claims in connection with two distribution
agreements executed in August of 1998. The suit alleges that Elscint breached
agreements to distribute Swissray ddR technology internationally and for
Swissray to distribute Elscint imaging equipment in Switzerland. The complaint
alleges various improprieties in Elscint's negotiation tactics, its fraudulent
concealment of the impending sale of its imaging business, and the inevitable
breaches of the distribution agreements that followed the sale.

C. Commencement of a Patent Infringement suit in March 2000: Swissray filed
(before the Tribunal de Grande Instance de Marseille) a patent infringement suit
against a firm known as Apelem alleging that the French part of its European
patent number EP 862 748 was infringed by virtue of the production/offer/sale of
x-ray equipment by Apelem. Apelem filed its answer in January 2002 and the
Company filed its reply in June 2002.

Item 4.           Submission Of Matters To A Vote Of Security Holders

The Company held its Annual Meeting of Stockholders for fiscal year ended June
30, 2001 on January 25, 2002 at its Elmsford, New York offices.

With proxies being received for approximately 94% of all shares entitled to
vote, stockholders' elected each of the 5 nominees to the Company's Board of
Directors by an overwhelming majority (approximately 99%) of all votes cast.
Stockholders also approved the appointment of Feldman Sherb & Co., P.C. as
independent auditors for fiscal year ended June 30, 2002 as well as the
proposals (i) to increase authorized shares of Company common stock to
150,000,000; and (ii) to re-incorporate in Delaware.

The Company expects to hold its Annual Meeting of Stockholders for fiscal year
ended June 30, 2002 in late 2002. Specific plans as to exact date, location and
agenda have not yet been finalized but once a definitive time frame and agenda
have been arrived at all stockholders of record, as of the chosen record date,
shall be properly notified.

                                     PART II

Item 5.           Market For Registrant's Common Equity And Related Stockholder
                  Matters.

                                       25

<PAGE>

Market Information

The Registrant's common stock, $.01 par value (the "Common Stock") was listed on
the Nasdaq SmallCap Market and traded under the symbol SRMI until October 26,
1998 delisting(1). Since January 1999 the Company's common stock has been
trading on the Electronic Over-the-Counter Bulletin Board under the same symbol.
The following table sets forth, for the periods indicated, the range of high and
low bid prices on the dates indicated for the Registrant's securities indicated
below for each full quarterly period within the three most recent fiscal years
(if applicable) and any subsequent interim period for which financial statements
are included and/or required to be included.

         Fiscal Year Ended June 30, 2000                 Quarterly Common Stock
                    By Quarter                                Price Ranges

Quarter             Date                             High               Low
-------             ----                             ----               ---
1st                 September 30, 1999              $ 4.062            $ 1.875
2nd                 December 31,  1999              $ 7.40625          $ 2.71875
3rd                 March 31, 2000                  $ 9.937            $ 3.375
4th                 June 30, 2000                   $ 4.05             $ 2.187

             Fiscal Year Ended June 30, 2001             Quarterly Common Stock
                       By Quarter                             Price Ranges(2)
Quarter             Date                             High               Low
-------             ----                             ----               ---
1st                 September 30, 2000              $ 2.81             $ 1.47
2nd                 December 31, 2000               $ 1.75             $ 0.30
3rd                 March 31, 2001                  $ 1.00             $ 0.36
4th                 June 30, 20001                  $ 1.03             $ 0.35

             Fiscal Year Ended June 30, 2002             Quarterly Common Stock
                       By Quarter                             Price Ranges

Quarter             Date                             High               Low
-------             ----                             ----               ---
1st                 September 30, 2001              $ 1.24             $  .40
2nd                 December 31, 2001               $   .82            $  .49
3rd                 March, 31, 2002                 $   .61            $  .40
4th                 June 30, 2002                   $   .47            $  .30

-------------------------
(1)      The Registrant's Common Stock began trading on the Nasdaq SmallCap
         market on March 20, 1996 with an opening bid of $4.75. The following
         statement specifically refers to the Common Stock activity, if any,
         prior to March 20, 1996 and subsequent to October 26, 1998 NASDAQ
         delisting. The existence of limited or sporadic quotations should not
         of itself be deemed to constitute an "established public trading
         market." To the extent that limited trading in the Registrants's Common
         Stock took place, such transactions have been limited to the over-the-
         counter market. Until March 20, 1996 and since October 26, 1998, all
         prices indicated are as reported to the Registrant by broker-dealer(s)
         making a market in its common stock in the National Quotation Data
         Service ("pink sheets") and in the Electronic Over-the-Counter Bulletin
         Board. During such dates the Registrant's Common Stock was not traded
         or quoted on any automated quotation system other than as indicated
         herein. The over-the-counter market and other quotes indicated reflect
         inter-dealer prices without retail mark-up, mark-down or commission and
         do not necessarily represent actual transactions.

(2)      On the date of NASDAQ's delisting (October 26, 1998) the common stock
         price was $.97 per share.

Holders

As of the close of business on October 1, 2002 there were 427 stockholders of
record of the Registrant's Common Stock and 41,654,747 shares issued and
outstanding after giving retroactive effect to information appearing on page 2
of this Form 10-K in footnote number 1.

Dividends

The payment by the Registrant of dividends, if any, in the future rests within
the discretion of its Board of Directors and will depend, among other things,
upon the Company's earnings, its capital requirements and its financial
condition, as well as other relevant factors. The Registrant has not paid or
declared any dividends upon its Common Stock since its inception


                                       26

<PAGE>

and, by reason of its present financial status and its contemplated financial
requirements, does not contemplate or anticipate paying any dividends upon its
Common Stock in the foreseeable future.

Nasdaq Delisting

On October 26, 1998 Nasdaq determined to delist Company's securities from The
Nasdaq Stock Market effective with the close of business October 26, 1998.The
Nasdaq Listing and Hearing and Review Council ("Council") on its own motion on
December 9, 1998 determined to review the Nasdaq Listing Qualifications
Panel("Panel") delisting decision. The Company, on its own initiative also
timely perfected its appeal. On April 1, 1999 the Council issued a decision
hereby it reversed and remanded the decision of the Nasdaq Panel with certain
instructions. The Panel, in a November 5, 1999 decision, opined that the Company
failed to evidence compliance with all requirements for continued listing on the
Nasdaq SmallCap Market and on June 1, 2000 the Council affirmed the decision of
the Panel indicating that it agreed with the Panel's various conclusions.
Thereafter and pursuant to NASD Rule 4850(a), the NASD Board of Governors
declined to call this decision for review and the Company was so notified on
July 28, 2000.

For detailed summarized information regarding certain pertinent findings of both
the Panel and Council from initial delisting through conclusion of the Nasdaq
appeal process, reference is herewith made to the Company's Form S-1
Registration Statement (under File No. 333-55898) as declared effective March 9,
2001 and in particular to that portion thereof entitled "Market Prices and
Dividend Policy" subheading "Continued Nasdaq Delisting". See also cover page to
this Form 10-K under the heading "Documents Incorporated by Reference".

Item 6.  Selected Financial Data

                             Swissray International
                      SELECTED CONSOLIDATED FINANCIAL DATA
                     (in thousands, except per share data)

     The selected consolidated financial data presented below should be read in
conjunction with "Management's Discussion Analysis of Financial Condition and
Results of Operations" and the Consolidated Financial Statements and related
notes thereto included elsewhere in this document. The selected consolidated
financial data as of and for the fiscal years ended June 30, 1998, June 30,
1999, June 30, 2000, June 30, 2001 and June 30, 2002 are derived from the
consolidated financial statements of the Company.

                                                   Year Ended
                                                    June 30,
                                   ---------------------------------------------
                                     2002     2001      2000     1999*    1998
                                    ------   ------    ------   ------   -------
STATEMENT OF OPERATIONS DATA:
Net sales                           19,304   22,161    22,030   17,296   22,893
Cost of goods sold                  14,407   15,859    16,500   13,529   18,082
                                    ------   ------    ------   ------   -------
Gross profit                         4,897    6,302     5,530    3,767    4,811
Gross profit margin (%)                25%      28%       25%      22%      21%

Selling, general and administrative
expenses                            12,419   13,785    17,011   19,346   18,748
                                    ------   ------    ------   ------   -------
Operating loss                      (7,522)  (7,483)  (11,481) (15,579) (13,937)
Other expenses (income)              1,111      147      (190)     (40)     281
Interest expense                       689    1,723    10,347    5,639    8,590
                                    ------   ------    ------   ------   -------
Loss from continuing operations     (9,322)  (9,353)  (21,638) (21,178) (22,808)

Loss from continuing operations
per common share                     (0.14)   (0.17)    (1.14)   (3.24)   (8.48)

BALANCE SHEET DATA:
Total assets                         19,435  19,806    25,383   23,511   25,915
Long-term liabilities                    22      11    14,150   15,501    7,771

Common stock subject to put             320     320       320    1,820    1,820

   (1) On October 1, 1998 the Company declared a 1 for 10 reverse stock split.
       The financial statements for all periods present have been retroactively
       adjusted for the split.

       * Restated
                                       27

<PAGE>

Item 7.           Management's Discussion And Analysis Of Financial Condition
                  And Results Of Operations

All References Herein To The "Registrant" Refer To Swissray International Inc.
All References Herein To The "Company" Refer To Swissray International, Inc.
And Its Subsidiaries.

General

Throughout fiscal year ended June 30, 2002 the Company took a number of
important steps to strengthen its position in the field of radiology with
specific emphasis upon its ddR line of products and additions thereto so as to
expand its dedicated systems and so as to offer solutions to important aspects
of digital radiography.

Market penetration of the Company's flag ship product, the ddR Systems,
continued to increase as a result of the sales efforts of the Company's internal
sales staff as well as the sales and distribution efforts of HMSA and Philips
HCP, the Company's two principal distributors. Furthermore the Company has been
able to sell its ddR Systems into new markets including Canada, Russia, Malaysia
and Greece.

While initial market penetration resulted in the sale of 8 ddR Systems during
fiscal year ended June 30, 1999, fiscal year ended June 30, 2000 saw substantial
and significant further market penetration in that the Company contracted for
the sale of 64 ddR Systems (29 of which were contracted for sale in the U.S.
with the balance being contracted for sale outside the U.S., inclusive of 32 ddR
Systems contracted for sale to the Government of Romania). Fiscal year ended
June 30, 2001 saw further continued success with the Company having contracted
for the sale of 66 additional ddR Systems (inclusive 30 systems sold to the
Government of Romania, 10 Systems sold to DIANAssociates and 10 Systems sold to
Israel). During Fiscal Year ended June 30, 2002 the Company contracted for 73
ddR Systems (52 were contracted for sale in the U.S., 2 in Canada and 19 in
Europe and rest of world). The 73 ddR Systems contracted in Fiscal Year ended
June 30, 2002 all have been sold in structured markets versus 16 units of the 66
Systems sold during Fiscal Year Ended June 30, 2001 and 32 units of the 64
Systems sold during Fiscal Year ended June 30, 2000.

With the introduction of several new performance enhancements for its direct
digital Radiography ddR product line the Company has succeeded in further
positioning itself with a high tech image and has entered the new millennium
with a substantial list of potential ddR and informatics business opportunities.
The new products are principally based upon the patented technology of the
AddOn Bucky. See also Item 1 - "Business - New Products" for further
information.

The Company's efforts were again recognized for the fourth consecutive year (by
unaffiliated third parties) as evidenced by its having been chosen (in August of
2002) as one of the 50 fastest growing technology companies in the New York
City/Westchester/Rockland County areas. This program was sponsored by Deloitte &
Touche.

Ongoing efforts in the Company's research and development department have
recently led to the Company being issued patents in both the U.S. and in Europe
for the ddR detector, the AddOn Bucky. These patents relate to the optical
arrangement and process for transmitting and converting primary X-ray images
generated on a two dimensional primary image array. Furthermore, the patent for
the mirror optics has been approved in the U.S. for the optical arrangement and
method for electronically detecting an X-ray image while a similar patent has
been approved in Europe in April 2001. For the aforesaid ddRCombi and ddRChest
the Company was granted a design protection in Switzerland. Additional patent
applications for the design protection for both Systems have been submitted in
Sweden, Germany, Benelux, France, Canada and the U.S. and are currently pending
approval.

See Item 1 "Business - Intellectual Property and Patents" for information
regarding patent numbers and dates of issuance.

The Company received its UL (July 1999) and CE (December 1999) label for its ddR
Systems. This certification is a public statement of compliance with a known
standard and an extremely stringent approval process involving assessment and
documentation of a product sample by an independent third party organization
followed by on-going periodic product inspections at the manufacturing site.

The Company was also challenged within the changing financial market
environment. Due to lack of liquidity the Company has not been able to deliver
all of its backlog during fiscal year ended June 30, 2002 and also had to
finance its backlog by giving away prepayment interest to its distributors of
$452,046 which resulted in an impact of decreased gross margin of 2.71% for the
twelve month period. Management of the Company hopes that its effort to attract
new capital to strengthen its liquidity will have a positive result in the
foreseeable future.

                                       28

<PAGE>

Management of the Company believes that its unique technology and vision for the
future have set the stage for continued growth in the years to come and
anticipate a continued increase in demand for the Company's ddR solutions, which
belief is based upon results of clinical successes in the U.S. as well as in
Europe.

Year Ended June 30, 2002 Compared To Year Ended June 30, 2001

Results Of Operations

Net sales amounted to $19,303,840 for the year ended June 30, 2002, compared to
$22,161,014 for the year ended June 30, 2001 a decrease of $2,857,174 or 12.89%
from the year ended June 30, 2001. The 12.89% decrease in net sales was mainly
due to the decrease in sales of ddR units by 11.34% or $2,164,537, ddR related
information solutions decreasing by 89.78% or $699,533 and the decrease in
conventional OEM-Business by 66.74% or 703,577. This decrease was slightly
offset by a increase in conventional X-ray of 105.95% ($284,843) and service of
43.89% ($425,631).

The Company's overall sales and marketing strategy includes the use of a direct
sales force, distribution agreements with other medical imaging companies, local
distributors and OEM agreements. The decrease in sales of ddR units is due to
the lower sell prices for sales through distribution agreements vs. direct sales
(direct sales of 16 units during fiscal year ended June 30, 2002 vs. 57 units
during fiscal year ended June 30, 2001) and the prepayment discount of $452,046
due to tight liquidity. The decrease in Information Solution is due to the
Companies  focus in the USA, the single largest market for the Company, to sell
its ddR-products mainly through distribution agreements who are providing
similar services to the End User whereas the decease in conventional
OEM-Business is due to the Company's conscious effort of promoting sales of
ddR-Systems with a corresponding decline of interest in sales of conventional
x-ray and conventional OEM-Business.

The increase in conventional X-ray is due to executed conventional projects. The
increase in service is going in line with an increase installed base of ddR
units.

Gross profit decreased by $1,404,584 or 22.28% to $4.897.010 for the year ended
June 30, 2002, from $6,301,594 for the year ended June 30, 2001. Gross profit as
a percentage of net revenues decreased to 25.37% for the year ended June 30,
2002 from 28.44% for the year ended June 30, 2001. The decrease in gross profit
as a percentage of net revenues is attributable to the prepayment interest
which accounts for 2.71% itself and a fraction of higher units sales and a lower
average selling price due to the concentration on strong ddR-distribution
agreements.

Operating expenses decreased by $1,365,713 or 9.9% to $12,419,116 or 64.33% of
net revenues, for the year ended June 30, 2002, from $13,784,828, or 66.2% of
net revenues for the year ended June 30, 2001. The principal items were officers
and directors compensation of $643,987 or 3.34% of net sales for the year ended
June 30, 2002 compared to $618,038 or 2.8% of net sales for the year ended June
30, 2001, salaries (net of officers and directors compensation) of $3,439,919 or
17.82% of net sales for the year ended June 30, 2002 compared to $4,239,179 or
19.1% of net sales for the year ended June 30, 2001 and selling expenses of
$3,155,340 or 16.35% of net sales for the year ended June 30, 2002 compared to
$3,961,148 or 17.9% of net sales for the year ended June 30, 2001. Research and
development expenses were $2,549,384 or 13.21% of net sales for the year ended
June 30, 2002 compared to $2,305,165 or 10.4% of net sales for the year ended
June 30, 2001. The slight increase is primarily due to the development of new
performance enhancements for its direct digital Radiopgraphy ddR product line.
General and administrative expenses decreased by $126,995 or 14.7% to $ 736,900
or 3.82% of net sales for the year ended June 30, 2002 from $863,895 or 3.9% of
net sales for the year ended June 30, 2001. The decrease in selling and general
administrative expenses is due to overall savings, primarily on professional
fees and services. Other operating expenses decreased by $102,317 or 18.13% to
$462,013 of net sales for the year ended June 30, 2002 from $564,330 or 2.6% of
net sales for the year ended June 30, 2001. This decrease is due to the overall
savings.

                                       29

<PAGE>

Interest expenses decreased to $688,457 for the year ended June 30, 2002
compared to $1,723,259 for the year ended June 30, 2001. This decrease is
primarily due to the decrease in amortization of Debenture issuance cost and
Conversion Benefit.

Financial Condition

June 30, 2002 compared to June 30, 2001

Total assets of the Company on June 30, 2002 decreased by $371,687 to
$19,434,548 from $19,806,235 on June 30, 2001, primarily due to the decrease of
other assets. Current assets increased by $2,074,948 to $10,832,608 on June 30,
2002 from $8,757,660 on June 30, 2001. The increase in current assets is
attributable to the increase of cash and cash equivalents of $1,570,370, the
increase of accounts receivable of $470,987, the increase in inventory of
$76,156 and in prepaid expenses and sundry receivables of $42,566. Other assets
decreased $2,205,950 to $2,424,872 on June 30, 2002 from $4,630,822 on June 30,
2001. The decrease is primarily attributable to the amortization of the
licensing agreement, patents and trademark, software development cost and the
change in accounting practice in respect to goodwill.

On June 30, 2002, the Company had total liabilities of $ 20,613,953 compared to
$13,855,792 on June 30, 2001. On June 30, 2002, current liabilities were
$20,591,756 compared to $13,845,281 on June 30, 2001. Working capital at June
30, 2002 was $(9,759,148) compared to $(5,087,621) at June 30, 2001. The
increase in liabilities and the decrease in working capital was due to increased
borrowings from a bank.

Cash Flow And Capital Expenditures Year Ended June 30, 2002 Compared To Year
Ended June 30, 2001.

Cash used for operating activities for the years ended June 30, 2002, June 30,
2001 and June 30, 2000 was $3,029,353, $2,265,666 and $4,360,009 respectively.
Cash used for investing activities for years ended June 30, 2002, June 30, 2001
and June 30, 2000 was $1,232,737, $743,170, and $639,778 respectively. Cash flow
from financing activities for years ended June 30, 2002, June 30, 2001 and June
30, 2000 was $ 6,663,397, $1,646,817and $6,215,558 respectively.

Liquidity

On November 27, 2001, the Company negotiated a revolving line of credit
agreement with Credit Suisse for up to $3,000,000. Interest on the loan is 8.5%
per annum and the loan is collateralized by certain accounts receivable. The
Company is currently in default of certain financial covenant and has until
November 1, 2002 to cure such deficiency.

The Company anticipates that its use of cash will remain substantial for the
foreseeable future. In particular, management of the Company expects substantial
expenditures in connection with the production of the planned increase of sales,
the continuation of the strengthening and expansion of the Company's marketing
organization and, to a lesser degree, ongoing research and development projects.
The Company expects that funding for these expenditures will be dependent to a
significant extent on additional debt or equity financing. There can be no
assurance whether or not such financing will be available on terms satisfactory
to management, if and when needed.

Reference is made to the Company's current report on Form 8-K filed November 12,
3003. As stated therein, the Company and its major shareholders have entered an
advanced stage of negotiation for the acquisition by a U.S.-based private equity
firm of a majority of the capital stock of the Company, pursuant to discussions
begun under a non-binding letter of intent executed in October. The Company
believes that the transaction may be completed as soon as the end of November
and, if completed, would provide a substantial infusion of capital, sufficient
to permit the Company to fund its day-to-day operations for the near future.

A transaction such as this would allow the Company to continue in operation and
would preserve for the Company's common shareholders a residual interest,
however modest, in the Company's equity value. But it is likely that the
shareholders, who currently are subordinated in right of payment upon
liquidation to $32,000,000 face amount of preferred shares, would as a result of
the proposed transaction be subordinated to a much greater amount of preferred
stock, and could not expect to recover any substantial value in the foreseeable
future if at all.

The planned transaction will go far toward resolving the Company's liquidity
problems, which have been approaching a critical stage. The Company's operations
are not providing and have not provided in the past positive cash flow and, as
it has indicated in its public announcements to date, the Company will need
additional financing to survive. If the planned transaction, or an alternative
new financing, is not secured within the coming weeks, the Company's would not
be able to continue as a going concern.


                                       30

<PAGE>

June 30, 2001 compared to June 30, 2000

Cash Flow And Capital Expenditures Year Ended June 30, 2001 Compared To Year
Ended June 30, 2000.

Cash used for operating activities for the years ended June 30, 2001, June 30,
2000 and June 30, 1999 was $2,265,666, $4,360,009 and $9,788,606 respectively.
Cash used for investing activities for years ended June 30, 2001, June 30, 2000
and June 30, 1999 was $743,170, $639,778 and $879,303 respectively. Cash flow
from financing activities for years ended June 30, 2001, June 30, 2000 and June
30, 1999 was $1,646,817, $6,215,558 and $11,068,406 respectively.

Year Ended June 30, 2001 Compared to Year Ended June 30, 2000

Results of Operations

Net sales amounted to $22,161,014 for the year ended June 30, 2001, compared to
$22,030,124 for the year ended June 30, 2000 an increase of $130,890 or .6% from
the year ended June 30, 2000. The .6% increase in net sales was mainly due to
the sales of ddRMulti increasing by 35.01% or $4,949,944 and ddR related
information solutions increasing by 79.55% or $344,752. This significant
increase was slightly offset by a decrease in conventional X-ray of 85.10%
($1,534,874) and conventional OEM-Business of 72.85% ($2,829,084) and service of
45.20% ($799,828). The decrease in conventional X-ray and conventional
OEM-Business is due to the Company's conscious effort of promoting sales of ddR
Systems with a corresponding decline of interest in sales of conventional X-ray
and conventional OEM-Business, whereas service is going in line with an increase
in ddR related service and a decrease in conventional and conventional
OEM-Business related service.

In the past the Company has been substantially reliant upon Philips Medical
Systems ("Philips") but at this stage of the Company's maturation process and as
same continues to develop, reliance upon Philips has correspondingly decreased.
Additionally, the Company's agreement with Philips relates to conventional X-ray
equipment which has been a low profit margin item. More and more this type of
sale is being replaced by (a) Company sale of conventional X-ray equipment
directly to purchasing country and/or hospital and/or to the ultimate user
thereof and (b) more significantly and importantly by Company's sales of its ddR
Systems - its flagship product.

Gross profit increased by $771,466 or 14% to $6,301,594 for the year ended June
30, 2001, from $5,530,128 for the year ended June 30, 2000. Gross profit as a
percentage of net revenues increased to 28.4% for the year ended June 30, 2001
from 25.1% for the year ended June 30, 2000. The increase in gross profit as a
percentage of net revenues is attributable to the fact that the percentage of
sales of ddRMulti to total sales increased to 86.14% of total sales for the year
ended June 30, 2001 from 64.2% for the year ended June 30, 2000.

Operating expenses decreased by $3,226,269 or 19% to $13,784,828, or 66.2% of
net revenues, for the year ended June 30, 2001, from $17,011,097 or 77.2% of net
revenues for the year ended June 30, 2000. The principal items were officers and
directors compensation of $618,038 or 2.8% of net sales for the year ended June
30, 2001 compared to $2,831,662 or 12.9% of net sales for the year ended June
30, 2000, salaries (net of officers and directors compensation) of $4,239,179 or
19.1% of net sales for the year ended June 30, 2001 compared to $3,762,009 or
17.1% of net sales for the year ended June 30, 2000 and selling expenses of
$3,961,148 or 17.9% of net sales for the year ended June 30, 2001 compared to

                                       31


<PAGE>

$4,352,016 or 19.8% of net sales for the year ended June 30, 2000. Research and
development expenses were $2,305,165 or 10.4% of net sales for the year ended
June 30, 2001 compared to $1,914,065 or 8.7% of net sales for the year ended
June 30, 2000. The increase is primarily due to the development of the
ddR-Combis and the ddRChest unit as well as introduction (during calendar year
2000) of five additional new products. General and administrative expenses
decreased by $952,933 or 52.5% to $863,895 or 3.9% of net sales for the year
ended June 30, 2001 from $1,816,828 or 8.2% of net sales for the year ended June
30, 2000. The decrease in officers and directors compensation of $2,213,624 or
78.2% is due to the fact that such officers received, during fiscal year ended
June 30, 2000, common stock for services rendered which was valued at $2,165,625
while no shares for services rendered were issued during the succeeding fiscal
year. The decrease in selling and general administrative expenses is due to
overall savings, primarily on professional fees and services. Other operating
expenses decreased by $319,505 or 36.1% to $564,330 or 2.6% of net sales for the
year ended June 30, 2001 from $883,835 or 4% of net sales for the year ended
June 30, 2000. This decrease is due to the overall savings, primarily in rent
and insurance costs.

Interest expenses decreased to $1,723,259 for the year ended June 30, 2001
compared to $10,347,427 for the year ended June 30, 2000. This decrease is
primarily due to the decrease of interest expense for accrual of penalty
interest on periodic payments required by terms of financing agreements and an
increase in amortization of Debenture issuance cost and Conversion Benefit.

Financial Condition

June 30, 2001 compared to June 30, 2000

Total assets of the Company on June 30, 2001 decreased by $5,576,779 to
$19,806,235 from $25,383,014 on June 30, 2000, primarily due to the decrease of
current assets. Current assets decreased $5,073,841 to $8,757,660 on June 30,
2001 from $13,98313501on June 30, 2000. The decrease in current assets is
attributable to the decrease of cash and cash equivalents of $1,422,693,
restricted cash of $1,385,600, the decrease of accounts receivable of $1,081,014
of which approximately $1,840,250 arises from the receipt of cash from the sale
of ddRMulti to Romania, the decrease in inventory of $358,792 and the decrease
in prepaid expenses and sundry receivables of $525,742. Other assets decreased
$620,075 to $4,630,822 on June 30, 2001 from $5,250,897 on June 30, 2000. The
decrease is primarily attributable to the amortization of the licensing
agreement, patents & trademark, software development cost and the goodwill.

On June 30, 2001, the Company had total liabilities of $13,855,792 compared to
$35,384,045 on June 30, 2000. On June 30, 2001, current liabilities were
$13,845,281 compared to $21,233,649 on June 30, 2000. Working capital at June
30, 2001 was $(5,087,621) compared to $(7,402,148) at June 30, 2000.

Cash Flow And Capital Expenditures Year Ended June 30, 2001 Compared To Year
Ended June 30, 2000.

Cash used for operating activities for the years ended June 30, 2001, June 30,
2000 and June 30, 1999 was $2,265,666, $4,360,009 and $9,788,606 respectively.
Cash used for investing activities for years ended June 30, 2001, June 30, 2000
and June 30, 1999 was $743,170, $639,778 and $879,303 respectively. Cash flow
from financing activities for years ended June 30, 2001, June 30, 2000 and June
30, 1999 was $1,646,817, $6,215,558 and $11,068,406 respectively.

                                       32

<PAGE>

Effect Of Currency On Results Of Operations

The results of operations and the financial position of the Company's
subsidiaries outside of the United States are reported in the relevant foreign
currency (primarily in Swiss Francs) and then translated into US dollars at the
applicable foreign exchange rate for inclusion in the Company's consolidated
financial statements. Accordingly, the results of operations of such
subsidiaries as reported in US dollars can vary significantly as a result of
changes in currency exchange rates (in particular the exchange rate between the
Swiss Franc and the US dollar).

Inflation

Inflation can affect the costs of goods and services used by the Company. The
competitive environment in which the Company operates limits somewhat the
Company's ability to recover higher costs through increasing selling prices.
Moreover, there may be differences in inflation rates between countries in which
the Company incurs the major portion of its costs and other countries in which
the Company sells its products, which may limit the Company's ability to recover
increased costs, if not offset by future increase of selling prices. To date,
the Company's sales to high-inflation countries have either been made in Swiss
Francs or US dollars. Accordingly, inflationary conditions have not had a
material effect on the Company's operating results.

Seasonality

The Company's business has historically experienced a slight amount of seasonal
variation with sales in the first fiscal quarter slightly lower than sales in
the other fiscal quarters due to the fact that the Company's first quarter
coincides with the summer vacations in certain of the company's markets.

Backlog

Management estimates that as of the end of fiscal year ended June 30, 2001the
Company had an order backlog of $8,013,600 which consisted of $1,882,400 in
conventional X-ray equipment and services and $6,131,200 in digital (i,e.,
ddRMulti and information solutions) as compared to an order backlog of
$8,800,000 which consisted of $2,080,000 in conventional X-ray equipment and
$6,720,000 in ddRMulti as of the fiscal year ended June 30, 2000.

Order backlog as of October 4, 2002 amounted to $7,086,228 of which digital
backlog accounted for $6,769,602.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards No. 141, Business Combinations, and
No. 142, Goodwill and Other Intangible Assets, effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill and intangible
assets deemed to have indefinite lives will no longer be amortized but will be
subject to annual impairment tests in accordance with the Statements. Other
intangible assets will continue to be amortized over their useful lives. Upon
adoption of FASB No. 142, the Company recorded a one-time, non-cash charge of
approximately $1,120,000 to write off the carrying value of its goodwill. Such
charge is non-operational in nature and is reflected as a cumulative effect of
an accounting change in the accompanying consolidated statement of operations.

In July 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations.  This statement addresses financial  accounting and reporting for
obligations  associated with the retirement of tangible  long-lived  assets
and the associated  retirement  costs.  This  statement  applies to all
entities. It applies to legal  obligations associated with the retirement of
long-lived

                                      33

<PAGE>

assets that result from the acquisition, construction, development and (or) the
normal operation of a long-lived asset, except for certain obligations of
lessees. This statement is effective for financial statements issued for fiscal
years beginning after June 15, 2002. The Company does not believe the adoption
of this standard will have a material impact on the Company's financial
statements.

In August 2001, the FASB issued SFAS No. 144,  Accounting for the  Impairment or
Disposal of Long-Lived  Assets.  1 This statement  addresses  financial
accounting and reporting for the impairment or disposal of long-lived  assets
and supersedes FASB No. 121, Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to Be Disposed Of. The Company does not believe the
adoption of these standards will have a material impact on the Company's
financial statements.

In July 2002, the FASB issued Statement No. 146 (SFAS 146), "Accounting for
Costs Associated with Exit or Disposal Activities." This Standard supercedes the
accounting guidance provided by Emerging Issues Task Force Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity" (including "Certain Costs Incurred in a Restructuring").
SFAS No. 146 requires companies to recognize costs associated with exit
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. SFAS No. 146 is to be applied prospectively to exit or
disposal activities initiated after December 31, 2002. The Company is currently
evaluating this Standard.

Item 7A.  Quantitative And Qualitative Disclosures About Market Risk

Not applicable.

Item 8.  Financial Statements And Supplementary Data

The following  financial  statements  have been prepared in accordance  with the
requirements of Regulation S-X and supplementary  financial information included
herein, if any, has been prepared in accordance with Item 301 of Regulation S-K.

                         INDEX TO FINANCIAL STATEMENTS

                                                                     Page

Audited Financial Statements for Fiscal Years Ended
 June 30, 2002, 2001 and 2000

Independent Auditors' Report                                          F 1

Consolidated Balance Sheets at June 30, 2002 and 2001                 F 2-3

Consolidated Statements of Operations for the years ended
 June 30, 2002, 2001 and 2000                                         F 4

Consolidated Statements of Stockholders Equity for the years ended
 June 30, 2002, 2001 and 2000                                         F 5

Consolidated Statements of Cash Flows for the years ended
 June 30, 2002, 2001 and 2000                                         F 6-7

Notes to Consolidated Financial Statements                            F 8-24

                                       34
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


To the Stockholders and Board of Directors
Swissray International, Inc.
New York, New York

         We have audited the accompanying consolidated balance sheets of
Swissray International, Inc. and subsidiaries as of June 30, 2002 and 2001 and
the related consolidated statements of operations, stockholders' deficit and
cash flows for the fiscal years ended June 30, 2002, 2001 and 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Swissray
International International, Inc. and subsidiaries as of June 30, 2002 and 2001
and the results of their operations and their cash flows for each of the three
years then ended, in conformity with accounting principles generally accepted in
the United States of America.

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company incurred losses of
$10,441,442, has a working capital deficiency of $9,759,149 and is currently
in default on its revolving credit agreement at June 30, 2002. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans with respect to these matters are also described in
Note 1 to the financial statements. The accompanying financial statements do not
include any adjustments that might result should the Company be unable to
continue as a going concern.


                                                /s/Sherb & Co., LLP
                                                   ----------------
                                                   Certified Public Accountants

New York, New York
August 9, 2002
except for Noye 19(b)
which is as of
November 19, 2002

                                       F 1



<PAGE>


                         SWISSRAY INTERNATIONAL INC.
                           CONSOLIDATED BALANCE SHEET

                                     ASSETS


                                             June 30,           June 30,
                                              2002               2001
                                          --------------     -------------
CURRENT ASSETS
Cash and cash equivalents                  $ 3,158,861        $ 1,588,490
Accounts receivable, net of allowance
 for doubtful accounts of $ 151,887
 and $ 134,700                               2,575,372          2,104,385
Inventories                                  4,354,516          4,278,360
Prepaid expenses and sundry receivables        743,859            786,425
                                          --------------     -------------
Total Current Assets                        10,832,608          8,757,660
                                          --------------     -------------
PROPERTY AND EQUIPMENT, at cost,
net of accumulated depreciation
of $ 1,746,858 and $ 1,705,622               6,177,068          6,417,753
                                          --------------     -------------

OTHER ASSETS
Loan receivable affiliiates                       -               963,249
Licensing agreement, net of
accumulated amortization of $ 3,352,439
and $ 2,855,781                              1,614,136          2,110,794
Patents and trademarks, net of
accumulated amortization of $ 194,884
and $ 167,548                                  118,445            145,782
Software develompent costs, net of
accumulated amortization of $ 163,523
and $ 436,674                                  638,991            161,099
Security deposits                               53,300             33,546
Goodwill, net of accumulated amortization
of $ 716,923 in 2001                              -             1,216,352
                                          -------------      -------------
TOTAL OTHER ASSETS                           2,424,873          4,630,822
                                          -------------      -------------
Total Assets                              $ 19,434,549       $ 19,806,235
                                          =============      =============


    The accompanying notes are an integral part of these financial statements

                                       F 2
<PAGE>


                           SWISSRAY INTERNATIONAL INC.
                           CONSOLIDATED BALANCE SHEET
                      LIABILITIES AND STOCKHOLDERS' DEFICIT

                                             June 30,           June 30,
                                              2002               2001
                                          --------------     -------------
CURRENT LIABILITIES
Current maturities of long-term debt      $     10,511       $     40,495
Notes payable - banks                        8,630,637          2,262,481
Notes payable - short-term                        -             3,045,226
Loan payable                                   134,260            110,634
Accounts payable                             7,610,211          4,995,528
Accrued expenses                             1,768,977          1,885,586
Customer deposits                            2,437,160          1,505,333
                                          -------------      -------------
TOTAL CURRENT LIABILITIES                   20,591,757         13,845,283
                                          -------------      -------------
LONG-TERM DEBT, less current maturities         22,197             10,511
                                          -------------      -------------
COMMON STOCK SUBJECT TO PUT                    319,985            319,985
                                          -------------      -------------
STOCKHOLDERS' DEFICIT
Convertible preferred shares - Series B      3,791,100               -
Common stock                                   909,549            843,809
Additional paid-in capital                 114,941,328        112,088,028
Treasury stock                              (2,040,000)        (2,040,000)
Deferred compensation                             -               (16,291)
Accumulated deficit                       (116,616,243)      (103,590,902)
Accumulated other comprehensive loss        (2,165,139)        (1,334,203)
Common stock subject to put                   (319,985)          (319,985)
                                          -------------      -------------
TOTAL STOCKHOLDERS' DEFICIT                 (1,499,390)         5,630,456
                                          -------------      -------------
TOTAL LIABILITIES AND STOCKHOLDERS'
 DEFICIT                                  $ 19,434,549       $ 19,806,235
                                          =============      =============

    The accompanying notes are an integral part of these financial statements

                                       F 3

<PAGE>

                           SWISSRAY INTERNATIONAL INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS

                                                      Year Ended
                                                       June 30,
                                      ------------------------------------------
                                         2002            2001             2000
                                      -------------  ------------  -------------
NET SALES                             $ 19,303,840   $22,161,014    $22,030,124
COST OF SALES                           14,406,830    15,859,420     16,499,996
                                      -------------  ------------  -------------
GROSS PROFIT                             4,897,010     6,301,594      5,530,128
                                      -------------  ------------  -------------
OPERATING EXPENSES
Officers and directors compensation        643,987       618,038      2,831,662
Salaries                                 3,439,919     4,239,179      3,762,009
Selling                                  3,155,340     3,961,148      4,352,016
Research and development                 2,549,384     2,305,165      1,914,065
General and administrative                 736,900       863,895      1,816,828
Other operating expenses                   462,012       564,330        883,835
Bad debts                                    2,092      (104,813)        93,570
Depreciation and amortization            1,429,481     1,337,887      1,357,112
                                       ------------  ------------  -------------
TOTAL OPERATING EXPENSES                12,419,116    13,784,829     17,011,097
                                       ------------  ------------  -------------
LOSS BEFORE OTHER INCOME (EXPENSES)     (7,522,106)   (7,483,235)   (11,480,969)

Other income (expenses)                 (1,111,193)     (146,415)       190,316
Interest expense                          (688,457)   (1,723,259)   (10,347,427)
                                       ------------  ------------  -------------
OTHER (EXPENSES)                        (1,799,650)   (1,869,674)   (10,157,111)
                                       ------------  ------------  -------------
LOSS BEFORE CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE                     (9,321,755)   (9,352,909)   (21,638,080)

Cummulative effect of change in
accounting principle                    (1,119,686)         -              -
                                       ------------  ------------  -------------
NET LOSS                               (10,441,442)   (9,352,909)   (21,638,080)

Imputed Preferred Stock Dividend        (2,583,900)     (107,450)          -
                                       ------------  ------------  -------------
Loss available to common
shareholders                          $(13,025,342) $ (9,460,359) $ (21,638,080)
                                       ============  ============  =============
BASIC AND DILUTED LOSS PER COMMON
SHARE
Loss from operations                  $      (0.14) $      (0.17) $       (1.14)
Cumulative effect of accounting
change                                       (0.01)         0.00           0.00
                                       ------------  ------------  -------------
NET LOSS                              $      (0.15) $      (0.17) $       (1.15)
                                       ============  ============  =============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING                      84,289,621    57,100,074     18,927,303
                                       ============  ============  =============


    The accompanying notes are an integral part of these financial statements

                                       F 4

<PAGE>
                          SWISSRAY INTERNATIONAL, INC.
                 CONSOLITATED STATEMENT OF STOCKHOLDERS' DEFICIT
                    YEARS ENDED JUNE 30, 2002, 2001 and 2000
<TABLE>
<CAPTION>



                                          Conv. Preferred Stock    Common Stock       Additional
                                          --------------------- --------------------   Paid-in       Treasury    Deferred
                                          Shares   Amount      Shares      Amount      Capital        Stock    Compensation
                                          ---------------------------------------------------------------------------------
<S>            <C> <C>                            <C>        <C>          <C>        <C>           <C>         <C>
BALANCE - JUNE 30, 1999                      -    $ -        14,006,239   $  140,062 $ 69,028,013  $  (540,000)$(1,282,500)

COMPREHENSIVE LOSS:
     Net loss                                -      -            -             -           -                -           -
     Foreign currency translation
     gain net of taxes $ -0-                 -      -            -             -           -                -

     TOTAL COMPREHENSIVE LOSS                -      -            -             -           -                -           -

Issuance of common stock for cash            -      -         6,269,700       62,697    9,781,276           -           -
Stock options exercised for cash             -      -         1,125,500       11,255    2,124,894           -           -
Issuance of common stock in lieu
of interest payment                          -    165,400         1,654      277,946       -
Issuance of common stock "Settelment"        -      -           150,000        1,500      673,500           -
Amortization of shares issued
for services                                 -      -            -             -           -                -    1,282,500
Shares issued to officers/employees
for services                                 -      -         1,157,065       11,571    2,798,365           -           -
Shares issued for services                   -      -           526,000        5,260    1,325,941                 (998,399)
Purchase of 33,333 shares subject
to put                                       -      -            -             -           -        (1,500,000)         -
Beneficial conversion feature of
convertible debentures                              -            -             -        1,131,061           -           -
Interest expense on option value
per black scholes                            -      -            -             -        1,066,536           -           -
                                          --------------------------------------------------------------------------------
BALANCE - JUNE 30, 2000                      -      -        23,399,904      233,999   88,207,532   (2,040,000)   (998,399)

COMPREHENSIVE LOSS:
     Net loss                                -      -            -             -           -               -           -
     Foreign currency translation
     gain net of taxes $ -0-                 -      -            -             -           -               -

     TOTAL COMPREHENSIVE LOSS                -      -            -             -           -               -           -

Issuance of convertible preferred
shares "Penalty"                         7,000   7,000,000       -             -           -               -           -
Conversion of convertible preferred
into common                             (7,000) (7,000,000)  21,515,035      215,150    6,784,850
Conversion of convertible
debentures, notes payable
 and accrued interest into common            -      -        39,289,293      392,893   16,913,288           -           -
Stock options exercised for cash             -      -           150,000        1,500      148,500           -           -
Amortization of shares issued for
services                                     -      -            -             -           -                -      998,399
Shares issued for services                   -      -            26,700          267       59,733
Cost related to refinancing                  -      -            -             -         (175,000)          -           -
Imputed preferred stock dividend             -      -            -             -          107,450
Interest expense on option value per
black scholes                                -      -            -             -           41,675           -      (16,291)
                                          --------------------------------------------------------------------------------
BALANCE - JUNE 30, 2001                      -      -        84,380,932      843,809  112,088,028   (2,040,000)    (16,291)

COMPREHENSIVE LOSS:
     Net loss                                -      -            -             -            -               -           -
     Foreign currency translation
     gain net of taxes-$ -0-                 -      -            -             -            -               -

     TOTAL COMPREHENSIVE LOSS                -      -            -             -            -               -           -

Issuance of convertible preferred shares   3,791  3,791,100      -             -            -               -           -
Issuance of common stock for cash            -      -           200,000        2,000       58,000           -           -
Stock options exercised for cash             -      -           666,000        6,660      268,480           -           -
Cancellation of common stock "Settelment"    -      -          (526,000)      (5,260)       5,260           -           -
Amortization of shares issued for services   -      -            -             -            -               -       16,291
Imputed preferred stock dividend             -      -            -             -        2,583,900           -           -
Issusance of anti-dilution
shares - Hillcrest                           -      -         6,234,029       62,340      (62,340)          -           -
                                          --------------------------------------------------------------------------------
BALANCE - JUNE 30, 2002                    3,791 $3,791,100  90,954,961   $  909,549 $114,941,328  $(2,040,000)  $      -
                                          ================================================================================

                       The accompanying notes are an integral part of these financial statements
                                                          F 5
<PAGE>

                          SWISSRAY INTERNATIONAL, INC.
                 CONSOLITATED STATEMENT OF STOCKHOLDERS' DEFICIT
                    YEARS ENDED JUNE 30, 2002, 2001 and 2000

                                                           Other
                                           Accumulated  Comprehensive  Common Stock
                                             Deficit        Loss       Subject to    Total
                                                                          Put
                                          ---------------------------------------------------
BALANCE - JUNE 30, 1999                   $ (72,492,463)$ (1,787,735)$(1,819,985) $(8,754,608)

COMPREHENSIVE LOSS:
     Net loss                               (21,638,080)        -            -    (21,638,080)
     Foreign currency translation
     gain net of taxes $ -0-                       -         514,115                  514,115
                                                                                --------------
     TOTAL COMPREHENSIVE LOSS                                                     (21,123,965)
                                                                                --------------
Issuance of common stock for cash                  -            -            -      9,843,973
Stock options exercised for cash                   -            -            -      2,136,149
Issuance of common stock in lieu
of interest payment                                -            -            -        279,600
Issuance of common stock "Settelment"              -            -            -        675,000
Amortization of shares issued for services         -            -            -      1,282,500
Shares issued to officers/employees
for services                                       -            -            -      2,809,936
Shares issued for services                         -            -            -        332,802
Purchase of 33,333 shares subject to
put 1,500,000                                      -            -      1,500,000        -
Beneficial conversion feature of
convertible debentures                             -            -            -      1,131,061
Interest expense on option value
per black scholes                                  -            -            -      1,066,536
                                          ----------------------------------------------------
BALANCE - JUNE 30, 2000                     (94,130,543)  (1,273,620)   (319,985) (10,321,016)

COMPREHENSIVE LOSS:
     Net loss                                (9,352,909)        -            -     (9,352,909)
     Foreign currency translation
     gain net of taxes $ -0-                       -         (60,583)        -        (60,583)
                                                                                -------------
     TOTAL COMPREHENSIVE LOSS                      -            -            -     (9,413,492)
                                                                                -------------
                                                   -            -            -      7,000,000
Issuance of convertible preferred
shares "Penalty"                                   -            -            -          -
Conversion of convertible preferred
into common
Conversion of convertible debentures,
notes payable and accrued interest
into common                                        -            -            -     17,306,181
Stock options exercised for cash                   -            -            -        150,000
Amortization of shares issued for
services                                           -            -            -        998,399
Shares issued for services                                                             60,000
Cost related to refinancing                        -            -            -       (175,000)
Imputed preferred stock dividend               (107,450)        -            -           -
Interest expense on option value
per black scholes                                  -            -            -         25,384
                                          ---------------------------------------------------
BALANCE - JUNE 30, 2001                    (103,590,902)  (1,334,203)   (319,985)   5,630,456

COMPREHENSIVE LOSS:
     Net loss                               (10,441,441)        -            -   (10,441,441)
     Foreign currency translation
     gain net of taxes $ -0-                       -        (830,936)        -      (830,936)
                                                                                -------------
     TOTAL COMPREHENSIVE LOSS                                                    (11,272,377)
                                                                                -------------
Issuance of convertible preferred shares           -            -            -     3,791,100
Issuance of common stock for cash                  -            -            -        60,000
Stock options exercised for cash                   -            -            -       275,140
Cancellation of common stock
"Settelment"                                       -            -            -          -
Amortization of shares issued
for services                                       -            -            -        16,291
Imputed preferred stock dividend             (2,583,900)        -            -          -
Issusance of anti-dilution shares -
Hillcrest                                          -            -            -          -
                                          ---------------------------------------------------
BALANCE - JUNE 30, 2002                   $(116,616,243  $(2,165,139)  $(319,985)$(1,499,390)
                                          ===================================================
</TABLE>

    The accompanying notes are an integral part of these financial statements
                                       F 5
<PAGE>

                           SWISSRAY INTERNATIONAL INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        Year Ended
                                                         June 30,
                                        ----------------------------------------
                                              2002         2001           2000
                                        ----------------------------------------
CASH FLOWS FROM OPERATING ACTIVITES
Net loss                                $(10,441,441) $(9,352,909) $(21,638,080)
Adjustment to reconcile net loss to net
  cash used by operating activities
  Depreciation and amortization            1,596,438    1,440,710     1,438,719
  Provision for bad debts                     17,187      (36,183)      (49,110)
  Provision for non-operating loans          963,249      400,386          -
  Effect of change of accouning
   principle                               1,119,686         -             -
  Operating expenses through issuance
   of stock options and common stock to
   be issued                                    -          78,765     2,809,936
  Issuance of common stock in lieu of
   interest payments                            -       1,453,017       279,600
  Interest expense on debt issuance cost
   and conversion benefit                       -            -        1,131,061
  Interest expense on promissory note
   converted into preferred shares           372,600         -             -
  Interest expense on option value per
   black scholes                                -            -        1,066,536
  Settelment expense paid through issuance
   of common stock                              -            -          675,000
  Amortization of deferred compensation       16,291    1,005,109     1,615,302

  (Increase) decrease in operating assets:
  Accounts receivable                       (488,174)   1,086,811      (687,410)
  Inventories                                (76,156)     358,792     2,695,249
  Prepaid expenses and sundry receivables     42,566      455,742      (445,363)
  Increase (decrease) in operating
   liabilities:
  Accounts payable                         2,614,683      655,495    (1,082,288)
  Accrued expenses                           301,891     (431,210)    7,723,732
  Restructuring                                 -        (100,000)     (400,000)
  Customers deposits                         931,827      719,719       507,107
                                        ----------------------------------------
NET CASH USED BY OPERATING ACTIVITIES     (3,029,353)  (2,265,756)   (4,360,009)
                                        ----------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES
  Acquisition of property and equipment     (487,051)    (740,922)     (633,419)
  Other intangibles                         (725,932)      (5,575)      (13,469)
  Security deposits                          (19,754)       3,327        (8,838)
  Increase in loan receivable                   -            -           15,948
                                        ----------------------------------------
NET CASH USED BY INVESTING ACTIVITIES     (1,232,737)    (743,170)     (639,778)
                                        ----------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from short-term borrowings      6,368,156      378,410      (459,767)
  Proceeds related to debentures                -            -       (1,238,558)
  Principal payment of short-term
   borrowings                                (51,585)        -             -
  Principal payment of long-term
   borrowings                                 11,686      (72,591)     (111,993)
  Decrease (increase)  in restricted
   cash                                         -       1,385,600    (1,385,600)
  Note receivable - short-term                  -            -         (300,000)
  Loan receivable affiliates                    -        (194,602)     (768,647)
  Issuance of common stock for cash           60,000         -        9,843,974
  Issuance of stock options for cash         275,140      150,000     2,136,149
  Purchase of treasury stock                    -            -       (1,500,000)
                                        ----------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES      6,663,397    1,646,817     6,215,558
                                        ----------------------------------------
EFFECT OF EXCHANGE RATE ON CASH             (830,936)     (60,584)      514,115
                                        ----------------------------------------
NET INCREASE (DECREASE) IN CASH            1,570,371   (1,422,693)    1,729,886
CASH AND CASH EQUIVALENT - beginning
of year                                    1,588,490    3,011,183     1,281,297
                                        ----------------------------------------
CASH AND CASH EQUIVALENTS - end of year  $ 3,158,861  $ 1,588,490   $ 3,011,183
                                        ========================================

    The accompanying notes are an integral part of these financial statements
                                       F 6
<PAGE>


                           SWISSRAY INTERNATIONAL INC.


                                                       Year Ended
                                                        June 30,
                                        ----------------------------------------
                                              2002         2001           2000
                                        ----------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid for interest                 $ 370,561    $ 164,223     $ 154,157

    Shares issued in lieu of notes
     and interest payments                 3,791,100    1,294,200       279,600

    Beneficial conversion feature
       recorded as additional
       paid-in capital                          -            -        1,131,061

    Convertible debentures converted
       to common stock                          -      14,067,294     1,238,558





    The accompanying notes are an integral part of these financial statements
                                       F 7
<PAGE>
  SWISSRAY INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED JUNE 30, 2002, 2001 AND 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

The Company was incorporated under the laws of the State of New York on January
2, 1968 under the name CGS Units Incorporated. On June 6, 1994, the Company
merged with Direct Marketing Services, Inc. and changed its name to DMS
Industries, Inc. In May of 1995 the Company discontinued the operations of DMS
Industries, Inc. and acquired all of the outstanding stock of SR Medical AG, a
Swiss corporation engaged in the business of manufacturing and selling X-ray
equipment, components and accessories. On June 5, 1995 the Company changed its
name to Swissray International, Inc. The Company's operations are conducted
principally through its wholly owned subsidiaries.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany balances and
transactions are eliminated in consolidation.

BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. The Company has experienced losses
of $10,441,442, has a working capital deficit of $9,759,149 and is currently in
default on its revolving credit agreement. There is substantial doubt that it
will be able to continue as a going concern without additional funding.
Management intends to continue to seek additional financing to fund its
operations, although there can be no assurances that any such financing will be
available. The consolidated financial statements do not include any adjustments
that might be necessary should the Company be unable to continue as a going
concern.

REVENUE RECOGNITION

The Company follows the guidelines of SEC Staff Accounting Bulletin No. 101
"Revenue Recognition in Financial Statements". Revenues from direct sales of
products to end-users are recorded when the products are shipped, installed,
collection of the purchase price is probable and the Company has no significant
further obligations to the customer. Revenues from direct sales of products to
distributors are recorded when the products are shipped, collection of the
purchase price is probable and the Company has no significant further
obligations to the


                                       F 8

<PAGE>

customer. Costs of remaining insignificant Company obligations, if any, are
accrued as costs of revenue at the time of revenue recognition.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates.

WARRANTY

The company accrues a warranty allowance at the time of sale. The warranty
allowance is based upon the company's experience and varies between 0.5 and 2%
of the net sales amount.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standard No. 107 "Disclosures about Fair Value
of Financial Instruments" (SFAS 107) requires the disclosure of fair value
information about financial instruments whether or not recognized on the balance
sheet, for which it is practicable to estimate the value. Where quoted market
prices are not readily available, fair values are based on quoted market prices
of comparable instruments. The carrying amount of cash and equivalents, accounts
receivable, inventories, prepaid expenses and sundry receivables, current
maturities of long-term debt, notes payable - banks, loan payable, accounts
payable, accrued expenses and customer deposits approximates fair value because
of the short maturity of those instruments.

CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.

INVENTORIES

Inventories are stated at the lower of cost or market, with cost being
determined on the first-in, first-out (FIFO) method. Inventory costs include
material, labor, and overhead.

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost and are depreciated using the
straight-line method over the estimated useful lives of the respective assets.
Leasehold improvements are amortized over the shorter of the estimated useful
lives of the improvements, or the term of the facility lease.




                                      F 9

<PAGE>

IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews long-lived assets to assess recoverability from future
operations using undiscounted cash flows. When necessary, charges for
impairments of long-lived assets are recorded for the amount by which the
present value of future cash flows exceeds the carrying value of these assets.

INTANGIBLE ASSETS

Intangible assets are stated at cost and are being amortized using the straight
line method over the estimated useful lives of the respective assets.

SOFTWARE DEVELOPMENT COSTS

Capitalization of software development costs begins upon the establishment of
technological feasibility of new or enhanced software products. Technological
feasibility of a computer software product is established when the Company has
completed all planning, designing, coding and testing that is necessary to
establish that the software product can be produced to meet design
specifications including functions, features and technical performance
requirements. All costs incurred prior to establishing technological feasibility
of a software product are charged to research and development as incurred.

ADVERTISING AND PROMOTION

Advertising and promotion costs are expensed as incurred and included in
"Selling" expenses. Advertising and promotion expense for the years ended June
30, 2002, 2001 and 2000 were $ 1,866,674, $ 3,034,235 and $ 2,601,410,
respectively.

RESEARCH AND DEVELOPMENT

Costs associated with research, new product development, and product cost
improvements are treated as expenses when incurred.

INCOME TAXES

Deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to affect taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amounts expected to be realized.

EXPENSES RELATED TO SALES AND ISSUANCE OF SECURITIES

All costs incurred in connection with the sale of the Company's common stock
have been capitalized and charged to additional paid-in capital.



                                      F 10

<PAGE>

NET LOSS PER COMMON SHARE

Basic earnings per share is computed by dividing the net income (loss) available
to common shareholders by the weighted average number of outstanding common
shares. The calculation of diluted earnings per share is similar to basic
earnings per share except the denominator includes dilutive common stock
equivalents such as stock options and convertible debentures. Common stock
options and the common shares underlying the convertible debentures are not
included as their effect would be anti-dilutive.

ACCOUNTING FOR STOCK OPTIONS

The Company accounts for stock-based compensation using the intrinsic value
method as prescribed under Accounting Principles Board Opinion (APB) No. 25,
"Accounting for Stock Issued to Employees" and related Interpretations.

FOREIGN CURRENCY TRANSLATION

Assets and liabilities of subsidiaries operating in foreign countries are
translated into U.S. dollars using both the exchange rate in effect at the
balance sheet date or historical rate, as applicable. Results of operations are
translated using the average exchange rates prevailing throughout the year. The
effects of exchange rate fluctuations on translating foreign currency assets and
liabilities into U.S. dollars are included in stockholders equity (Accumulated
other comprehensive loss), while gains and losses resulting from foreign
currency transactions are included in operations.

SHIPPING AND HANDLING COSTS

The Company accounts for shipping and handling costs as a component of "Cost of
Sales".

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statements of Financial Accounting Standards No. 141, Business Combinations, and
No. 142, Goodwill and Other Intangible Assets, effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill and intangible
assets deemed to have indefinite lives will no longer be amortized but will be
subject to annual impairment tests in accordance with the Statements. Other
intangible assets will continue to be amortized over their useful lives. Upon
adoption of FASB No. 142, the Company recorded a one-time, non-cash charge of
approximately $1,120,000 to write off the carrying value of its goodwill. Such
charge is non-operational in nature and is reflected as a cumulative effect of
an accounting change in the accompanying consolidated statement of operations.

In July 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations.  This statement addresses financial  accounting and reporting for
obligations  associated with the retirement of tangible  long-lived  assets
and the associated  retirement  costs.  This  statement  applies to all
entities. It applies to legal  obligations associated with the retirement of
long-lived

                                      F 11

<PAGE>

assets that result from the acquisition, construction, development and (or) the
normal operation of a long-lived asset, except for certain obligations of
lessees. This statement is effective for financial statements issued for fiscal
years beginning after June 15, 2002. The Company does not believe the adoption
of this standard will have a material impact on the Company's financial
statements.

In August 2001, the FASB issued SFAS No. 144,  Accounting for the  Impairment or
Disposal of Long-Lived  Assets.  1 This statement  addresses  financial
accounting and reporting for the impairment or disposal of long-lived  assets
and supersedes FASB No. 121, Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to Be Disposed Of. The Company does not believe the
adoption of these standards will have a material impact on the Company's
financial statements.

In July 2002, the FASB issued Statement No. 146 (SFAS 146), "Accounting for
Costs Associated with Exit or Disposal Activities." This Standard supercedes the
accounting guidance provided by Emerging Issues Task Force Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity" (including "Certain Costs Incurred in a Restructuring").
SFAS No. 146 requires companies to recognize costs associated with exit
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. SFAS No. 146 is to be applied prospectively to exit or
disposal activities initiated after December 31, 2002. The Company is currently
evaluating this Standard.


NOTE 2 - INVENTORIES

Inventories are summarized by major classification as follows:




                                                  June 30,
                                      -----------------------------------------
                                             2002                   2001
                                      ------------------    -------------------
  Raw materials, parts and supplies   $        3,643,866    $         2,750,510
  Work in process                                394,479                749,938
  Finished goods                                 316,171                777,912
                                       ------------------   -------------------

                                      $        4,354,516    $         4,278,360
                                       ==================   ===================

NOTE 3  - PREPAID EXPENSES AND SUNDRY RECEIVABLES

Prepaid expenses and sundry receivables consist of the following:

                                                      June 30,
                                       ----------------------------------------
                                              2002                  2001
                                       -------------------    -----------------
 Prepaid expenses and advance payments $           354,362    $         402,686
 Prepaid and refundable taxes                      383,806              378,882
 Employee loans                                      5,691                9,857
                                       -------------------    -----------------
                                       $           743,859    $         786,425
                                       ===================    =================




                                      F 12


<PAGE>

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

                                                          June 30,
                                 Estimated    ------------------------------
                                Useful Lives
                                  (years)        2002          2001
                               ------------   -----------    -------------
Land                                 -        $   785,792   $    785,792
Building                            30          5,080,087      5,030,096
Equipment                            5          1,614,226      1,670,267
Office furniture and equipment     3-5            275,593        473,421
Leasehold Improvements              10            168,228        163,799
                                             -------------   ------------
                                                7,923,926      8,123,375
Less: Accumulated depreciation                  1,746,858      1,705,622
                                             -------------   ------------
                                             $  6,177,068    $ 6,417,753
                                             =============   ============

Depreciation and amortization expense, for property and equipment, for the years
ended June 30, 2002, 2001 and 2000 were $668,604 , $623,641 and $615,873
respectively.

NOTE 5 - INTANGIBLE ASSETS

Identifiable intangible assets at June 30, 2002 and 2001 consisted of the
following

                                                        June 30,
                                 Estimated       ---------------------------
                                Useful Lives        2002             2001
                                  (Years)
                                ------------      -----------    ------------
  Excess of cost over fair          10            $     -        $  1,933,275
  value of net assets acquired
  (a)
  Licensing (b)                     10              4,966,575       4,966,575
  Software development cost          5                802,514         597,773
  Patents and Trademarks            10                313,330         313,330
                                                   -----------    ------------
                                                    6,082,419       7,810,953
      Less: Accumulated amortization                3,710,847       4,176,926
                                                   -----------    ------------
                                                  $ 2,371,572     $ 3,634,027
                                                   ===========     ============

Amortization expense, for intangible assets, for the years ended June 30, 2002,
2001 and 2000 were $ 927,834, $ 817,069 and $ 822,876, respectively. Estimated
amortization expense over the next five years is as follows: 2003-$652,000,
2004-$652,000, 2005-$625,000, 2006-$625,000, 2007-$600,000.




                                      F 13

<PAGE>

The following table provides pro forma disclosure of net earnings and earnings
per common share for the years ended June 30, 2001 and June 2000, as if goodwill
had not been amortized.

                                            June 30, 2001        June 30, 2000
                                            -------------        -------------
  Net loss                                     $9,352,909         $21,638,080
  Amortization, net of tax (1)                    193,328             193,328
                                            -------------        -------------
  Adjusted net earnings                         9,159,581          21,444,752

  Basic and diluted loss per share             $   (0.17)         $    (1.14)
  Amortization, net of tax (1)                      0.00                0.01
                                            -------------        -------------
  Adjusted basic and diluted loss per share    $   (0.17)         $    (1.13)
                                            =============        =============

(a) Upon adoption of FASB No. 142 (see Note 1), the Company recorded a one-time,
non-cash charge of approximately $1,120,000 to write off the carrying value of
its goodwill. Such charge is non-operational in nature and is reflected as a
cumulative effect of an accounting change in the accompanying consolidated
statement of operations.

(b) The Company entered into a licensing agreement in June of 1995 with an
unaffiliated individual. The agreement is for an exclusive field-of-use license
within the United States and Canada to use the proprietary information,
including the patent rights, for certain technology regarding the integration of
computer technology with diagnostic x-ray and radiology medical equipment
through digital imaging systems. The total cost of the license was $4,966,575.
This agreement is for an indefinite term or until all of the proprietary
information becomes public knowledge and the patent rights expire.

NOTE 6 - NOTES PAYABLE - BANKS

The Company has negotiated an agreement with Migros Bank for up to $1,343,800
for the issuance of guarantees and letters of credit, both with a commission of
15% per $1,000,000, quarterly while outstanding. There were $1,259,445 in
outstanding guarantees as of June 30, 2002. The Company also negotiated a fixed
line of credit for up to $2,217,270 with an agreed repayment of $67,190 per
180 days. All lines of credit are based on the Exchange rate in effect on June
30, 2002.

On November 27, 2001, the Company negotiated a revolving line of credit
agreement with Credit Suisse for up to $3,000,000. Interest on the loan is 8.5%
per annum and the loan is collateralized by certain accounts receivable. The
Company is currently in default of certain financial covenant and has until
November 1, 2002 to cure such deficiency.


Notes payable are summarized as follows:




                                      F 14
<PAGE>

                                                               June 30,
                                                      2001              2000
                                                  ---------------  -------------
Migros  Bank,  on demand with six week notice,
with  interest as of June 30, 2002 and 2001
at 4% and 4.75% per annum, collateralized by
land and building                                 $    2,217,270   $  1,950,900

Migros Bank,  on demand with interest at 4.75%.
Cash balances on deposit at June 30, 2002 was $45.       113,993         43,614

Credit Suisse, on demand, collateralized by
certain accounts receivable, with interest at
8.5% per annum. Cash balance at Credit Suisse was
$3,033,530 at June 30, 2002.                          6,274,964             -

Other                                                    24,410         267,967
                                                  ---------------  -------------
                                                  $   8,630,637    $  2,262,481
                                                  ===============  =============

NOTE 7 - LOAN PAYABLE

The Company has negotiated a 4% demand loan from a private foundation fund. The
loan balance payable at June 30, 2002 and 2001 was $ 134,260 and $ 110,634
respectively.

NOTE 8 - CONVERTIBLE DEBENTURES

Through December 29, 2000, the Company converted all outstanding convertible
debentures and notes payable into 39,289,293 restrictive shares of Company
common stock thereby extinguishing those convertible debentures, and promissory
notes previously outstanding.

NOTE 9 - NOTES PAYABLE - SHORT-TERM

                                                        June 30,
                                          ------------------------------------
                                                  2002            2001
                                            ------------      -----------
Promissory note                             $     -           $    45,226

Promissory note, dated December 29,
2000 with interest payable
at 2.025% per month due December 29, 2001.        -             3,000,000
                                            ------------      -----------
                                            $     -           $ 3,045,226
                                            ============      ============

On December 29, 2000 the Company borrowed $3,000,000 from Kew Court LLC ("Kew
Court") in accordance with a promissory note bearing interest at the rate of
2.025% per month and due and payable on or before December 29, 2001. The
promissory note and related security

                                      F 15

<PAGE>

agreement were collateralized by the Company's inventory and accounts receivable
and further provided (amongst other matters) that in the event of default the
principal sum due on the note shall bear interest (commencing December 29, 2001)
at the rate of 5% per 30 calendar day period as liquidated damages. Shortly
prior to the December 29, 2001 due date on the promissory note (and with no
portion of the principal or interest thereon having been paid) the Company
entered into negotiations with Kew Court in an effort to resolve this matter
through means other than cash repayment. Such negotiations concluded with Kew
Court agreeing to cancel the aforesaid indebtedness evidenced by the promissory
note inclusive of all interest due thereunder and further agreed to release the
security interests which served as collateral thereunder in exchange for the
Company issuing to Kew Court convertible preferred shares having a face value
approximating $3,800,000 with the right to convert same into 18,750,000
restrictive shares of Company common stock. The convertible preferred shares do
not bear any interest nor does the Company have any obligation to file a
Registration Statement to register either the convertible preferred shares or
the underlying shares of Company common stock heretofore referred to. The
Company has the right to repurchase the aforesaid underlying shares of common
stock through September 30, 2002 at an agreed upon price of $0.80 per share.

NOTE 10 - LONG-TERM DEBT

Long-term debt consists of the following:

                                        June 30,
                              2002                      2001
                       -------------------       --------------------
Note payable - Other     $       10,511            $        50,518

Capitalized leases               22,197                        488
                       -------------------       --------------------
                                 32,708                     51,006
Less: Current portion           (10,511)                   (40,495)
                       -------------------       --------------------
                         $       22,197            $        10,511
                       ===================       ====================

The aggregate long-term debt principal payments are as follows:

                Year Ending June 30,
                        2003                        $ 10,511
                        2004                          22,197


NOTE 11- SHAREHOLDERS' EQUITY

Authorized Shares

On March 12, 1997, the Company amended its certificate of incorporation to
change the number of authorized common shares from 15,000,000 to 30,000,000 of
$.01 par value common shares. On December 26, 1997, the Company amended its
certificate of incorporation to change the


                                      F 16

<PAGE>

number of authorized common shares from 30,000,000 to 50,000,000 of $.01 par
value common shares. On July 20, 2000, the Company amended its certificate of
incorporation to change the number of authorized common shares from 50,000,000
to 100,000,000 of $.01 par value common shares.

Preferred Stock

In July 1999, the Company amended its Certificate of Incorporation to authorize
the issuance of 1,000,000 shares of preferred stock, $.01 par value per share.

Prior to the December 29, 2001 due date on a promissory note (see Note 9), the
Company entered into negotiations with Kew Court. Such negotiations concluded
with Kew Court agreeing to cancel the aforesaid indebtedness evidenced by the
promissory note inclusive of all interest due thereunder and further agreed to
release the security interests which served as collateral thereunder in exchange
for the Company issuing to Kew Court convertible preferred shares having a face
value approximating $3,800,000 with the right to convert same into 18,750,000
restrictive shares of Company common stock. The convertible preferred shares do
not bear any interest nor does the Company have any obligation to file a
Registration Statement to register either the convertible preferred shares or
the underlying shares of Company common stock heretofore referred to. The
Company has the right to repurchase the aforesaid underlying shares of common
stock through September 30, 2002 at an agreed upon price of $0.80 per share.
Michael - we need to discuss Imputed Dividend.

Stock Option

The Stock Option Plans ("Plans") provide for the grant of options to officers,
directors, employees, consultants, attorneys and advisors to the Company.
Options may be either incentive stock options or non-qualified stock options,
except that only employees may be granted incentive stock options. Options vest
at the discretion of the Board of Directors. All options granted in the plans
vest immediately. The maximum term of an option is ten years. The remaining
options available for grant under the plans were 3,060,556 at June 30, 2002. In
Fiscal 2002 and 2001, had compensation cost for the Stock Option Plans been
determined based on the fair value at the grant dates for awards under the Stock
Option Plans, except for grants to consultants for which compensation expense
has been recognized consistent with the method of SFAS No. 123, the Company's
net loss and net loss per share would have increased to the pro forma amounts
indicated below:

                                 Fiscal 2002                  Fiscal 2001
                         ----------------------------- -------------------------
                                As             Pro            As          Pro
                             Reported         Forma        Reported      Forma
                         ---------------- ------------ --------------- ---------
Net loss (in thousands)   $10,441           $10,441        $9,353        $9,679
Basic and diluted net
loss per share              $0.14             $0.14         $0.17         $0.17

The fair value of each option grant is estimated on the date of grant using the
Black Scholes option-pricing method with the following weighted average
assumptions used for grants in 2002

                                      F 17

<PAGE>

and 2001; dividend yield 0%, expected volatility 50%, risk-free interest rate
5.7%and 7%, expected lives in years-1 year.

The weighted average fair value of stock options granted during the year ended
June 30, 2002 and 2001 was $.46 and $ .35, respectively.

A summary of the status of the Stock Option Plans at June 30, 2002, 2001 and
2000 and the changes during the years then ended is presented below:

<TABLE>
<CAPTION>


                                         2002                           2001                            2000
                            ------------------------------- ------------------------------ --------------------------------
                                                Weighted                       Weighted                         Weighted
                               Shares           Average        Shares           Average        Shares           Average
                             Underlying         Exercise     Underlying        Exercise      Underlying         Exercise
                               Options           Price         Options           Price        Options            Price
                            --------------    ------------- --------------    ------------ ---------------    -------------
Outstanding
<S>                             <C>        <C>                  <C>        <C>                    <C>      <C>
at beginning of year            4,493,500  $          1.52      2,051,000  $         4.60         194,500  $         23.40

Granted                           363,944              .46      2,649,000             .35       2,987,000             2.36

Cancelled/Expired               (227,250)             5.43      (201,500)           18.47            -                 -

Exercised                       (665,944)              .41        -                -          (1,130,500)             1.93
                            --------------    ------------- --------------    ------------ ---------------    -------------
Outstanding
At end of year                  3,964,250  $          1.38     4,493,500  $          1.52      2,051,000  $           4.60
                            ==============    ============= ==============    ============ ===============    =============
Exercisable at end of year      3,964,250  $          1.38     4,493,500  $          1.52      2,051,000  $           4.60
                            ==============    ============= ==============    ============ ===============    =============

</TABLE>


The following table summarizes information about stock options under the Stock
Option Plans at June 30, 2002

                                   Options Outstanding and Exercisable
                         -------------------------------------------------------
                                           Weighted Average     Weighted Average
                               Number         Remaining        -----------------
 Range of Exercise Pr        Outstanding   Contractual Life      Exercise Price
----------------------   ----------------  ----------------   ------------------
    $.35 - $.37             2,165,250            1.2                $0.352
    $2.625 - $2.625         1,799,000             .3                $2.625
                         ----------------
                            3,964,250
                         ================


Stock Warrants

The following table summarizes information about stock warrants at June 30,
2002:

                                      F 18


<PAGE>



                                    Options Outstanding and Exercisable
                       ---------------------------------------------------------
       Range of              Number            Remaining       Average Exercise
   Exercise Price          Outstanding      Contractual Life        Price
 -------------------   -------------------  ----------------    ----------------
    $.438 - $9.38            387,500           1.00-3.75            $.85


NOTE 12 - DEFINED CONTRIBUTION PLANS

The Swiss and German Subsidiaries, mandated by government regulations, are
required to contribute approximately five (5%) percent of all eligible, as
defined, employees' salaries into a government pension plan. The subsidiaries
also contribute approximately five (5%) percent of eligible employee salaries
into a private pension plan. Total contributions charged to operations for the
years ended June 30, 2002, 2001 and 2000, were $682,236 $654,837 and $475,176,
respectively.

NOTE 13 - INCOME TAXES

Deferred income tax assets as of June 30, 2002 of $27,000,000 result of net
operating losses, have been fully offset by valuation allowances. The valuation
allowances have been established equal to the full amounts of the deferred tax
assets, as the Company is not assured that it is more likely than not that these
benefits will be realized.

Reconciliation between the statutory United States corporate income tax rate
(34%) and the effective income tax rates based on continuing operations is as
follows:



                                            Year Ended June 30,
                                ------------------------------------------------
                                     2002              2001           2000
                                -------------    --------------   --------------
Statutory federal income
tax (benefit)                   $ (3,500,000)    $  (3,200,000)   $  (7,400,000)
Foreign income tax (benefit)
in excess of domestic rate           300,000           400,000           77,000
Benefit not recognized on
operating loss                     3,000,000         2,300,000        4,973,000
Permanent and other differences      200,000           500,000        2,350,000
                                -------------    --------------   --------------
                                $       -        $        -       $        -
                                =============    ==============   ==============


Net operating loss carryforwards at June 30, 2002 were approximately as follows:



United States (expiring through June 30, 2017)          $       45,000,000

Switzerland (expiring through June 30, 2012)                    45,000,000
                                                        ------------------
                                                        $       90,000,000
                                                        ==================



                                      F 19

<PAGE>

These carryforwards are subject to limitations on annual utilization because
there are "equity structure shifts" or "owner shifts" involving 5% stockholders
(as these are defined in Section 382 of the Internal Revenue Code), which have
resulted in a more than 50% change in ownership.

NOTE 14 -OTHER INCOME (LOSS)

During the year ended June 30, 2002, the Company wrote of a receivable from an
affiliate of approximately $1.1 million.

NOTE 15 -  SIGNIFICANT CUSTOMER AND CONCENTRATION OF CREDIT RISK

The Company sells its products to various customers primarily in Europe and the
USA. The company performs ongoing credit evaluations on its customers and
generally does not require collateral. Export sales are usually made under
letter of credit agreements. The company establishes reserves for expected
credit losses and such losses, in the aggregate, have not exceeded management's
expectations.

The Company maintains its cash balances with major Swiss, United States and
German financial institutions. Funds on deposit with financial institutions in
the United States are insured by the Federal Deposits Insurance Corporation
("FDIC) up to $ 100,000.

During the years ended June 30, 2002, 2001 and 2000 there were sales to
customers that exceeded 10% of net consolidated sales. Sales to these customers
were: 2002 customer D $ 6,890,485 (36.7%) and customer E $5,801,663 (30.1%),
2001 customer B, $ 3,031,000 (14%) customer C $ 7,200,000 (32%), 2000 customer
A, $8,180,866 (23%),and customer B $ 10,825,000 (49%).  The company operates in
a single industry segment, providing x-ray medical equipment.

The Company derives all of its revenues from its subsidiaries located in the
United States, Switzerland and Germany. Sales by geographic areas for the years
ended June 30, 2002, 2001 and 2000 were as follows:

                         2002               2001             2000
                    ---------------    --------------- ------------------
 United States       $  16,614,430     $ 10,043,047     $  6,561,669
 Switzerland             1,766,971       11,802,827       15,164,707
 Germany                   844,168          312,072          303,748
 Other export sales         78,271            3,068             -
                    ---------------    ---------------- ------------------
                     $  19,303,840     $ 22,161,014     $ 22,030,124
                    ===============    ================ ==================

The following summarizes identifiable assets by geographic area:

                          2002                       2001
                   -------------------        -------------------
 United States       $   3,895,136               $     6,918,589
 Switzerland            15,212,368                    12,316,508
 Germany                   212,671                       203,605
 Romania                   114,336                       102,646
 Venezuela                      38                       264,887
                   -------------------        -------------------
                     $  19,434,549               $    19,806,235
                   ===================        ===================


                                      F 20

<PAGE>

The following summarizes operating losses before provision for income tax:

                      2002            2001             2000
                -------------   ----------------  -------------------
 United States  $ (2,336,119)    $  (2,995,063)   $    (16,801,696)
 Switzerland      (7,914,719)       (5,600,280)        (4,277,240)
 Germany             397,471           (46,190)          (409,272)
 Romania            (347,813)         (391,719)              -
 Venezuela          (240,262)         (319,657)              -
                -------------   ----------------   -------------------
                $(10,441,442)    $  21,638,080)    $  (20,177,901)
                =============   ================   ===================


NOTE 16 - COMMITMENTS

The Company leases various facilities under operating lease agreements expiring
through September 2003. The facilities lease agreements provide for a base
monthly payment of $22,285 per month. Rent expense for the years ended June 30,
2002, 2001 and 2000 was $ 413,762, $ 245,165 and $ 361,757 respectively. Future
minimum annual lease payments, based on the exchange rate in effect on June 30,
2002 under all lease agreements are as follows: 2003 $ 337,998, 2004 $ 252,714,
2005 $ 252,714, 2006 $ 264,695, thereafter $0.

The Company has employment agreements with three of its executives. Minimum
compensation under these agreements are as follows:

                       Year Ended
                      June 30, 2003           $          646,129
                      June 30, 2004                      646,129
                      June 30, 2005                      493,543
                      June 30, 2006                      182,738
                                                 ----------------
                                              $        1,968,539
                                                 ================

NOTE 17-VALUATION AND QUALIFYING ACCOUNTS

                                    Balance at   Additions             Balance
                                    Beginning   Charged to             at End
                                     of Year     Expenses  Deductions  of Year
                                    ---------  ----------  ---------- ----------
Allowance for doubtful accounts:
   Year ended June 30, 2002         $ 134,700  $  17,187  $    -0-   $ 151,887
   Year ended June 30, 2001         $ 170,883  $ 102,755  $ 138,938  $ 134,700
   Year ended June 30, 2000         $ 219,993  $  93,570  $ 142,680  $ 170,883

                                      F 21

<PAGE>

NOTE 18-INTERIM FINANCIAL INFORMATION

The Company's unaudited quarterly financial data for the last two fiscal years
is as follows:
<TABLE>
<CAPTION>
                                          Sep-31          Dec-02          Mar-02           Jun-02
                                           2001            2001            2002             2002
                                         ----------      ----------     ----------        ----------
<S>                                     <C>             <C>             <C>              <C>
 Net Sales                              $ 4,168,325     $ 4,033,523     $ 6,341,307      $ 4,760,685
 Cost of Sales                          $ 2,977,315     $ 3,144,746     $ 4,580,212      $ 3,704,557
 Operating expenses                     $ 2,932,280     $ 4,615,824     $ 2,581,185      $ 2,289,827
 Operating Income (Loss)                $(1,741,270)    $(3,727,047)     $ (820,090)     $(1,233,699)

 Cummulative effect of change
in accounting principle                        -               -               -         $(1,119,686)

 Net Income (Loss)                      $(1,662,264)    $(4,010,153)     $ (925,048)     $(3,843,977)

 Income (Loss) available to
common sharesholders                    $(1,662,264)    $(6,594,053)     $ (925,048)     $(3,843,977)

 Basic and Diluted Loss per
 Common Share
 Loss from operations                   $ (0.02)        $ (0.08)        $ (0.01)         $ (0.03)
 Cumulative effect of accounting
 change                                     -               -               -              (0.01)
                                         ----------      ----------     ----------        ----------
 Net Loss                               $ (0.02)        $ (0.08)        $ (0.01)         $ (0.04)

                                          Sep-31          Dec-02          Mar-02           Jun-02
                                           2000            2000            2001             2002
                                         ----------      ----------     ----------        ----------
 Net Sales                              $ 4,928,825     $ 4,711,929     $ 4,737,664      $ 7,782,596
 Cost of Sales                          $ 3,738,514     $ 3,537,091     $ 3,159,808      $ 5,424,007
 Operating expenses                     $ 3,182,703     $ 3,944,794     $ 3,005,058      $ 3,652,274
 Operating Income (Loss)                $(1,992,392)    $(2,769,956)    $(1,427,202)     $(1,293,685)

 Cummulative effect of change
 in accounting principle

 Net Income (Loss)                      $(3,060,699)    $(2,949,337)    $(1,680,208)     $(1,662,665)

 Income (Loss) available to
commone sharesholders                  $(3,168,149)    $(6,594,053)    $(1,680,208)     $(1,662,665)

 Basic and Diluted Loss
 per Common Share
 Loss from operations                     $ (0.12)        $ (0.09)        $ (0.02)         $ (0.02)
 Cumulative effect of accounting
 change
 Net Loss                                 $ (0.12)        $ (0.09)        $ (0.02)         $ (0.02)
</TABLE>



NOTE 19-SUBSEQUENT EVENTS

(a) On July 12, 2002, the Company entered into a Securities Purchase Agreement
with Kew Court, LLC (hereinafter "Kew Court") pursuant to which Kew Court agreed
to purchase Convertible Promissory Notes (bearing interest at five (5%) percent
per annum and convertible into shares of Company Common Stock at ninety (90%)
percent of the average closing bid price for the Five (5) trading days
immediately preceding conversion) The initial purchase is Two Hundred Fifty
Thousand ($250,000) Dollars out of a total offering of not more than Three
Million ($3,000,000) Dollars. The Company is required to register the shares of
Company Common Stock issued pursuant to note conversion. The purchase of
additional notes past the initial $250,000 is conditioned upon the Company (i)
shipping a minimum number of radiography units during the previous month; (ii)
achieving certain cost savings goals over the next two (2) quarters; and (iii)
having an aggregate dollar trading volume in its common stock over certain
defined periods.

                                      F 22
<PAGE>

In addition, on August 14, 2002 the Company entered into a separate Exchange
Agreement with Kew Court LLC ("Kew Court") pursuant to which Kew Court agreed to
exchange Convertible Series B Preferred Shares previously issued to it (and
having a face value approximating Three Million Eight Hundred Thousand
($3,800,000) Dollars with Kew Court then having the right to convert such Series
B Preferred Shares into Eighteen Million Seven Hundred Fifty Thousand
(18,750,000) Company Common Shares). In return for cancellation of the Series B
Preferred Kew Court is to receive Three Hundred Seventy (370) shares of the
Company's Series C Convertible Preferred Stock (convertible into shares of
Company Common Stock in accordance with the terms and conditions set forth in
the Company's "Certificate of Designations of Rights and Preferences of the
Series C Convertible Preferred Stock" which permits conversion until March 31,
2003, absent any change of control, at the greater of One ($1.00) Dollar and a
defined variable conversion price with conversions subsequent to March 31, 2003
being at Ninety (90%) Percent of the average closing bid price for the 5 day
period preceding conversion).

On August 14, 2002 the Company entered into a separate Exchange Agreement with
its single largest shareholder, Hillcrest Avenue LLC (hereinafter "Hillcrest")
pursuant to which Hillcrest agreed to exchange Fifty Million (50,000,000) shares
of Company Common Stock owned by it for Two Thousand Eight Hundred and Thirty
(2,830) shares of the Company's Series C Convertible Preferred Stock with
conversion terms identical to those described above.

Hillcrest and Kew Court have identical registration rights for the shares of
Company Common Stock issuable upon Series C Preferred Conversion in accordance
with the terms and conditions of a Registration Rights Agreement.

The foregoing is intended solely as a summary of certain material terms and
provisions contained in the above-referenced Agreements, and does not purport to
summarize all pertinent and/or relevant additional information including various
warranties and representations of the parties to such agreements, the various
obligations assumed thereunder and their respective remedies in the event of any
defaults.

(b) On November 15, 2002, the Company entered into a Securities Purchase
Agreement, providing for the issue and sale by the Company to SWR Investments,
LLC, a Delaware limited liability company, of 12,000 shares of newly designated
Series E Convertible Participating Preferred Stock, for a purchase price of
$12,000,000. The purchaser has the option to purchase up to an additional 28,000
shares of newly-designated Series F Preferred Stock, for a price of $1,000 per
share, at any time until December 1, 2007. The Series E Preferred Stock and the
Series F Preferred Stock are senior in right of payment upon liquidation to all
other equity securities of the Company and bear a dividend, which if not paid in
cash is compounded quarterly, equal to 10% per annum of the liquidation value of
$1,000 per share. Upon a liquidation or upon certain extraordinary transactions
that are deemed liquidations, each share of the Series E Preferred Stock is
entitled to receive a liquidation preference, pari passu with the Series I
Preferred Stock but before any payment is made in respect of any other equity
security of the Company, equal to the sum of the liquidation value of $1,000 per
share and an additional preferential payment equal to 1 1/2 times the
liquidation value if the payment is made prior to the first anniversary of the
issuance of such share, two times the liquidation value if the payment is made
after the first and prior to the second anniversary of issuance, and 2 1/2 times
the liquidation value if the payment is made on or after the second anniversary
of the initial issuance (in each case subject to the pari passu claim of the
Series D Preferred Stock, the Series F Preferred Stock and certain management
employees of the Company in respect of shares of the preferred stock of the
Company to be held by them). Each share of the Series E Preferred Stock is
convertible at the option of the holder into a unit consisting of a share of
Series F Preferred Stock and a number of shares of Common Stock such that the
aggregate of all shares of Common Stock into which all the Series E Preferred
Stock is issuable equals 57 1/2% of the fully diluted Common Stock as of the
initial issuance of the Series E Preferred Stock. Whenever any matter
is put to the holders of the Common Stock for their vote, the holders of the
Series E Preferred Stock have the right to vote together with the holders of the
Common Stock in a single class, the holder of each such share having a number of
votes equal to the number of shares of Common Stock into which such share is
then convertible.

The Series F Preferred Stock has the same terms as the Series E Preferred Stock
as to seniority, the liquidation preferences and the dividend. The holdersof
such Series have no voting rights (except as required by law)and no conversion
right and, accordingly, do not have the common equity component of the Series E
Preferred Stock.


                                      F 23

<PAGE>

The Securities Purchase Agreement provides that concurrently with the closing of
the issuance and sale of the Series E Preferred Stock, pursuant to an Exchange
Agreement with the existing holders of the Company's Series C Preferred Stock,
such holders will surrender their shares of the Common Stock, all of their
shares of the Series C Preferred Stock, promissory notes of the Company with an
aggregate principal amount of $750,000 and a claim for reimbursement of expenses
in the amount of approximately $175,000. In exchange, such holders will receive
7,000 shares of newly designated Series D Preferred Stock and shares of newly
designated Series H Preferred Stock. The Series D Preferred Stock is pari passu
with the Series G Preferred Stock and the Series I Preferred Stock and junior in
right of payment to the Series E Preferred Stock and the Series F Preferred
Stock, and senior to the Common Stock, and bears a dividend, which if not paid
in cash is compounded quarterly, equal to 10% per annum of the liquidation value
of $1,000 per share, for an aggregate liquidation preference of $7,000,000. The
Series D Preferred Stock has no regular voting right and is not convertible. The
Series D Preferred Stock is redeemable at any time at the option of the Company
for a redemption price equal to the liquidation value of $1,000 per share plus
accrued and unpaid dividends.

The Series H Preferred Stock ranks on a parity with the Common Stock and is
entitled to no dividend except it's pro rata share of any dividend paid on the
Common Stock. Each share of the Series H Preferred Stock is convertible at any
time by the holders into a number of shares of the Common Stock such that the
conversion of all the shares of Series H Preferred Stock would result in the
holders thereof holding approximately 88% of the shares of Common Stock not held
by WR Investments, LLC and affiliates, provided that the Company has at the time
sufficient authorized but unissued shares of the Common Stock to carry out such
conversion. Whenever any matter is put to the holders of the Common Stock for
their vote, the holders of the Series H Preferred Stock have the right to vote
together with the holders of the Common Stock in a single class, the holder of
each such share having a number of votes equal to the number of shares of Common
Stock into which such shares is then convertible.

The Company is working diligently toward fulfilling the conditions to closing
the transactions described herein, and while there can be no assurance that an
early closing will occur, the Company expects the consummation of the
transactions described herein to occur prior to the end of November, 2002.


                                      F 24
<PAGE>


Item 9. Changes In And Disagreements With Accountants On Accounting
        And Financial Matters

Feldman Sherb & Co., P.C., a professional corporation of certified public
accountants ("Feldman") was the independent accounting firm for Swissray
International, Inc., a Delaware corporation (the "Company"), for the fiscal
years ended June 30, 2001 and 2000 and the ten month ten day period ended
May 10, 2002. The report of Feldman on the 2001 and 2000 consolidated financial
statements of  Registrant  contained no adverse opinion, disclaimer of opinion
or modification of the opinion.

            Feldman was merged into Grassi & Co., CPA's, P.C., ("Grassi") and
the principal accountants who had been responsible for the Company's audit
during the years ended December 31, 2001 and 2000 left and started their own
firm called Sherb & Co., LLP ("Sherb"). As a result, on May 11, 2002, the
Company dismissed Grassi and selected Sherb to serve as independent public
accountants for the fiscal year 2002.

            During the two most recent fiscal years and through May 10, 2002,
Registrant has not consulted with Sherb regarding the application of accounting
principles to a specific or contemplated transaction. Neither the Company nor
anyone on its behalf consulted with Sherb regarding the type of audit opinion
that might be rendered on the Company's financial statements or any matter that
was the subject of a disagreement or event as defined at Item 304(a)(2) of
Regulation S-X.

            The decision to change accountants was recommended and approved by
the board of directors of the Company. During the period from July 1, 1999 to
October 21, 2002, there were no disagreements with Feldman on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Feldman, would have caused it to make reference to the subject matter of the
disagreements in connection with its reports on the Company's financial
statements as described on Item 304(a)(1)(iv)(A). In addition, there were no
such events as described under Item 304(a)(1)(iv)(B) of Regulation S-X during
such periods.

                                    PART III


Item 10. Directors And Executive Officers Of The Registrant


Set forth below is certain information concerning each current director and
executive officer of the Registrant, including age, position(s) with the
Registrant, present principal occupation and business experience during the past
five years.

                                       35

<PAGE>

     Name                     Age           Position(s) Held

Ruedi G. Laupper               52     Chairman of the Board of Directors,
                                      President and Chief Executive Officer

Josef Laupper                  57     Secretary, Treasurer and Director

Ueli Laupper                   32     Vice President and Director

Dr. Erwin Zimmerli             55     Director and Member of the Independent
                                      Audit Committee

Dr. Sc. Dov Maor               55     Director and Member of the Independent
                                      Audit Committee

Michael Laupper                29     Chief Financial Officer

Directors are elected to serve until the next annual meeting of stockholders and
until their successors have been elected and have qualified. Officers are
appointed to serve until the meeting of the Board of Directors following the
next annual meeting of stockholders and until their successors have been elected
and have qualified.

Ruedi G. Laupper has been President, Chief Executive Officer and a director of
the Registrant since May 1995 and Chairman of the Board of Directors since March
1997. In addition, he is Chairman of the Board of Directors and President of the
Company's principal operating subsidiaries. Ruedi G. Laupper is the founder of
the predecessors of the Company and was Chief Executive Officer of SR Medical AG
from its inception in June 1988 until May 1995. He has approximately 23 years of
experience in the field of radiology. Ruedi G. Laupper is the brother of Josef
Laupper and the father of Ueli and Michael Laupper.

Josef Laupper has been Secretary, Treasurer (until January 1998 and recommencing
January 1999) and a director of the Registrant since May 1995 (with the
exception of not having served as Secretary from December 23, 1997 to February
23, 1998). He has held comparable positions with SR Medical Holding AG, SR
Medical AG, and their respective predecessors since 1990. He is principally in
charge of the Company's administration. Josef Laupper has approximately 19 years
of experience within the medical device business.

Ueli Laupper has overall Company responsibilities in the area of international
marketing and sales with approximately eight years of experience within the
international X-ray market. He has been a Vice President of the Company since
March 1997 and a director of the Registrant since March 1997. He was Chief
Executive Officer of SR Medical AG from July 1995 until June 30, 1997 having
previously been employed by the Company from January 1993 to July 1995 as Export
Manager. Since the beginning of July 1998 he has been in charge of the Company's
U.S. operations and currently serves as CEO of both Swissray America Inc. since
its formation in September 1998 and Swissray Healthcare, Inc.

Dr. Erwin Zimmerli has been a director of the Registrant since May 1995 and,
since March 1998, a member of the Registrant's Independent Audit Committee.
Since receiving his Ph.D. degree in law and economics from the University of St.
Gall, Switzerland in 1979, Dr. Zimmerli has served as head of the White Collar
Crime Department of the Zurich State Police (1980-86), as an expert of a Swiss
Parliamentary Commission for penal law and Lecturer at the Universities of St.
Gall and Zurich (1980-87), Vice President of an accounting firm (1987-1990) and
Executive Vice President of a multinational aviation company (1990-92). Since
1992 he has been actively engaged in various independent consulting capacities
primarily within the Swiss legal community.

                                       36

<PAGE>

Dr. Sc. Dov Maor was appointed as a member of the Registrant's Board of
Directors and a member of its Independent Audit Committee effective March 26,
1998.  Dr. Sc. Dov Maor currently holds the position of Vice President for
Technology with ELBIT Medical Imaging, Haifa.  Dr. Sc.  Dov Maor  is well
experienced  in the field of Nuclear  Medicine and medical  imaging and has been
employed  for over 10 years in a leading  position  in  Research &  Development.
Additionally,  he was working in conjunction  with the Max Planck  Institute for
Nuclear Physics in Heidelberg within his field of experience. In addition to his
technical knowledge, Dr. Sc. Dov Maor is experienced in the commercial sector of
the industry.

Michael Laupper assumed the position of Interim Chief Financial Officer of the
Company effective January 1, 1999, having previously worked in conjunction with
the Company's former CFO and has been the Company's CFO since August 1999.
Michael Laupper completed his commercial education in the chemical industry in
1991 in Switzerland and has additionally completed studies in finance and
accounting (in the United States during 1996-97). He has served the Company in
various management positions at SR Management AG and SR Medical AG, Company
subsidiaries since 1999 and prior to assuming his current position.

Key Personnel

In April 2002, Swissray employed Mr. Andreas Gisler, 39, lic. Oec. HSG as a
General Manager and Chief Executive Officer of Swissray Medical AG.  Mr. Gisler
is an internationally experienced Manager from the fields of company
organization, financing and controlling.  In his most recent position he was a
vice president at Grapha-Holding AG and was the head of the controlling of a
company active world-wide with over 4000 employees.

The Board of Directors

The Board of Directors has responsibility for establishing broad corporate
policies and for overseeing the performance of the Registrant. Members of the
Board of Directors are kept informed of the Registrant's business by various
reports and/or documents sent to them in anticipation of Board meetings as well
as by operating and financial reports presented at Board meetings. The
Registrant pays its directors fees or compensation for services rendered in
their capacity as directors. The current Board of Directors was elected and
assumed office as of December 23, 1997 with the exception that Dr. Sc. Dov Maor
assumed his position on March 26, 1998.

The Board does not currently have a standing nominating or compensation
committee or any committee or committees performing similar functions, but acts,
as a whole, in performing the functions of such committees. At a meeting of the
Board of Directors held on March 26, 1998, an Independent Audit Committee was
established.

Item 11. Executive Compensation

Employment Agreements

Ruedi G. Laupper entered into a five-year employment agreement with Swissray
Management AG, a wholly owned subsidiary of the Registrant, on December 18,
1997, which agreement provided for automatic renewal for another five years
unless terminated by either party no later than December 31, 2001. Such
agreement also provided for: (i) an annual salary of 299,000 Swiss francs (or
$194,121); (ii) an annual bonus of 12,000 Swiss francs (or $8,377); and (iii) a
performance based bonus, based on the audited consolidated financial statements
of the Company as of the end of the fiscal year. The bonus was calculated at 25%
of EBIT (earnings before interest and taxes) payable in stock of Swissray

                                       37

<PAGE>

International, Inc. valued at the average of the closing prices during the five
business days following the filing of the 10-K. In addition, the agreement
entitles Mr. Laupper to a car allowance, five weeks of vacation, $698 per month
for expenses and a "Bel Etage" insurance which provides certain pension benefits
not mandated by Swiss law. If such employment agreement is terminated for
reasons beyond the employee's control, Ruedi Laupper will receive 2 million
Swiss francs (or $1,396,258 at June 30, 2000) including any bonus. The
Registrant guarantees the obligation of Swissray Management AG in the event of a
default.

Pursuant to June 30, 1999 Board meeting (attended by the Company's President,
Ruedi G. Laupper, who absented himself from the meeting prior to vote upon and
adoption of resolutions) the EBIT bonus provisions referred to above were
extinguished in exchange for (a) extending the duration of the employment
agreement to December 18, 2007 and (b) issuance to Ruedi G. Laupper of 2,000,000
fully vested, and non- forfeitable shares of restrictive Company common stock in
exchange for and in consideration of his agreeing to cancel the above referenced
EBIT provisions in his employment contract which otherwise would have entitled
him to receive 25% of all Company earnings before interest and taxes ("EBIT")
payable in shares of Company Common Stock during each year of such employment
contract, which contract expires December, 2007 EBIT, in thousands, for the
years ended June 30, 1997, 1998, 1999 and 2000 was $(12,425), $(14,218),
$(15,539), $(10,294) and $(11,291) respectively. Accordingly, no bonus was
payable. Valuation assigned to the aforesaid 2,000,000 fully vested, and
non-forfeitable shares was based upon Board members agreement that such price
would be based upon 75% of bid price at the time proposal was initially made and
agreed to on March 12, 1999, i.e. 75% of $0.50 bid price on March 12, 1999. The
Board resolution approving the above referenced transaction (and utilizing the
aforesaid agreed to valuation date) occurred on June 30, 1999, at which time the
bid price of the common stock was $2.625 and at which time the above referenced
shares were issued to Mr. Laupper. In accordance with SEC guidelines (and
notwithstanding the percentage discount from bid price discussed above) the
Company's financial statements reflect a 10% (as opposed to 25%) discount from
bid price with respect to this transaction at date of issuance.


At such June 30, 1999 Board meeting members expressed their consensus that while
the Company had not, as yet, had any earnings, that its business (after
significant and ongoing infusions of capital) had now reached the point where it
was expected that "breakeven" (earnings before interest and taxes ("EBIT") being
$0) was reasonably foreseeable within the current fiscal year and that it was
further expected that in both the near term (i.e., within the next two fiscal
years) and long term (i.e., the period of time commencing subsequent to the
close of fiscal year ended June 30, 2002) that substantial and significant
earnings would be forthcoming as a result of its development of its ddRMulti
(and related products) and the industry's acceptance of same as reflected by
substantial sales increases and the then anticipated sale of a significant
number of its ddRMulti to the Government of Romania. The contract for sale of
ddRMulti was entered into in October 1999 as a result of the Romanian Bidding
Commission having accepted the Company's tender (in September 1999) as made to
the Ministry of Health of the Government of Romania. As a result thereof the
Company entered into the aforesaid contract for the sale of 32 of its ddRMulti
with a valuation of in excess of $13,800,000. An initial payment aggregating 15%
of the aforesaid total gross proceeds (i.e. a sum approximating $2,070,000) due
under such contract was made to the Company in early March 2000. The Company
installed and sold 25 of the 32 ddRMulti through close of its fiscal year ended
June 30, 2000 while the balance of 7 Systems were installed and sold through
August 2000 with the Company receiving the full balance aggregating $11,730,000
by such latter date.

                                       38

<PAGE>

Based upon the above, Board members reaffirmed their aforesaid March 12, 1999
agreement that it would be in the best interests of all parties concerned (and
especially Company stockholders) to eliminate the above referenced EBIT
provisions so that what might otherwise amount to significant earnings being
paid to the Company's President in stock (pursuant to the 25% of EBIT bonus
provisions) be replaced with a permanent one time solution. It was then resolved
and subsequently accepted by the Company's President that 2,000,000 restrictive
shares of the Company's Common Stock be issued to him in exchange for
cancellation of the above referenced 25% of EBIT bonus provisions and in
accordance with March 12, 1999 original agreement.

The above referenced proposal was initially orally made to the Company's
President by its Board of Directors on March 12, 1999 and the key meeting with
respect to discussion thereon occurred on such date, and such agreement was
subsequently finalized (i.e. reduced to writing) at the Company's June 30, 1999
Board meeting wherein discussions were basically limited to those set forth
above and at which the only persons present were Board members and at which time
Board members again agreed that valuation assigned to shares issued would
reflect price at time of initial proposal as previously agreed to. There were no
offers or counter-offers between the Company and its President but rather
directors agreed to and voted in favor of issuance of the above referenced
2,000,000 restrictive shares and the Company's President (abstaining himself
from such vote) agreed to such resolution. All material factors considered by
the Board consisted of those referred to above and were what it considered to be
"positive" factors without any negative factors or implications being discussed.
The Company has quantified all material factors to the extent practicable.

Management obtained stockholder ratification regarding this matter on July 12,
2000 after advising stockholders that even absent ratification the Board, in all
likelihood, would leave the agreement in effect, as is. Such ratification was
sought and received in an effort to comply with NASDAQ Marketplace Rule
4310(c)(25)(H)(i)(a). Notwithstanding ratification the NASD Board of Governors
on July 28, 2000 advised the Company that it had declined to review the June 1,
2000 decision of the Nasdaq Council. See also Items 5(d).

The above referenced Rule provides in part that "Each Issuer shall require
shareholder approval". (A) when a stock option or purchase plan is to be
established or other arrangements made pursuant to which stock may be acquired
by officers or directors, except for warrants or rights issued generally to
security holders of Swissray or broadly based plans and arrangement including
other employees (e.g., ESPOS). In a case where the shares are issued to a person
not previously employed by Swissray, as an inducement essential to the
individual's entering into an employment contract with Swissray shareholder
approval will generally not be required. The establishment of a plan or
arrangement under which the amount of securities which may be issued does not
exceed the lesser of 1 percent of the number of shares of Common Stock, 1
percent of the voting power outstanding, or 25,000 shares, will not generally
require shareholder approval".

Swissray is not currently on NASDAQ but nevertheless wished to obtain
stockholder ratification regarding issuance of restrictive shares of common
stock in amounts greater than 25,000 shares per person since NASDAQ may consider
this issue for companies who are reapplying for listing on a case by case basis.

                                       39

<PAGE>

Swissray has entered into four (4) year employment agreements with Michael
Laupper its Chief Financial Officer and Ueli Laupper its Vice President. Each of
such agreements will automatically renew for an additional 4 years unless notice
is given six (6) months prior to the initial expiration date. Ueli Laupper's
employment agreement commenced July 1, 2000 while the employment agreement of
Michael Laupper commenced November 1, 2000. The employment agreements of Michael
Laupper and Ueli Laupper provide for annual compensation of CHF182,000 and
US$104,000 per annum respectively. In accordance with the terms of each of the
two (2) agreements each employee is entitled to certain cost of living
adjustments, the use of a Swissray automobile and compensation in the sum of
$500,000 in the event that the employment agreement is dissolved prior to
expiration date on grounds for which employee is not responsible. The agreements
further provide for non-accountable monthly expense allowances to Michael
Laupper - CHF1,000 and Ueli Laupper - $1,500.

Notwithstanding certain information contained above with respect to the
Company's President, the Company also entered into new employment agreements
with both its Chairman, President and Chief Executive Officer, Ruedi G. Laupper,
and its Secretary/Treasurer and director, Josef Laupper. Each of these
agreements commenced April 1, 2001 and each replaced agreements entered into in
December of 1997. The Company's President's agreement is for a term of five (5)
years while the Secretary/Treasurer's agreement is for a term of four (4) years.
In both instances the agreements will automatically renew for an additional two
(2) years unless notice of termination is given within 6 months prior to the end
of its initial term. Ruedi G. Laupper's agreement provides for annual
compensation of CHF370,500 while Josef Laupper's agreement provides for annual
compensation of CHF162,500 with both of such agreements having provisions
relating to cost of living adjustments, use of Company automobile and
non-accountable expense allowances of CHF1,500 per month for the Company's
President and CHF1,000 per month for its Secretary/Treasurer. The agreements
further provide for compensation in the sums of US$2,000,000 for Ruedi G.
Laupper and $500,000 for Josef Laupper in the event that the employment
agreements is dissolved prior to its expiration date on grounds for which the
employee is not responsible.

The foregoing is intended to summarize certain pertinent information with
respect to current employment agreements between the Company and each of its
officers and does not purport to be a complete summary of such agreements.

All of these employment agreements are covered by Swiss law.

The following table indicates certain significant summarized current information
as relates to those officers and/or directors who have Special Employment
Agreements with the Company.


                                       40

<PAGE>
                                     Expiration         Annual      Other
                    Date of            Date of           Base       Compen
        Name        Contract          Contract          Salary(1)   sation  Car
        ----      --------------      --------         ---------    ------  ---

Ruedi G. Laupper  April 5, 2001     March 31, 2006      $225,671    $11,877  X

Josef Laupper     April 5, 2001     March 31, 2005      $ 98,978    $ 7,918  X

Ueli Laupper      August 15, 2000   June 30, 2004       $104,000    $19,500  X

Michael Laupper   November 1, 2000  October 31, 2004    $110,858    $ 7,918  X

-------------------
     (1) Dollar amounts are based upon Exchange Rate of 0.6091

Summary Compensation Table

The following Summary Compensation Table sets forth certain information for the
years ended June 30, 2000, 2001and 2002 concerning the cash and non-cash
compensation earned by or awarded to the Chief Executive Officer of the
Registrant and the three other most highly compensated executive officers of the
Registrant as of June 30, 2002 (the "Named Executive Officers").
<TABLE>
<CAPTION>

                                   Annual Compensation 1                                         Long - Term Compensation
                                   ----------------------                                        ------------------------
                                        Fiscal                                 Other Annual       Stock        All Other
     Name and Principal Position          Year        Salary       Bonus       Compensation      Options     Compensation
     ---------------------------          ----        ------       -----       ------------      -------     ------------
<S>                                     <C>        <C>                       <C>
Ruedi G. Laupper                        2002       $213,188          --      $  15,000                          ------
President                               2001       $228,109          --      $  15,000         45,220 5         ------
Chief Executive Officer,                2000       $200,878                  $695,625  2/3/6   181,250 4        ------
Chairman of the Board of Directors

Josef Laupper                           2002       $106,897          --      $  12,000                          ------
Secretary, Treasurer                    2001       $102,693          --      $  12,000         12,920 5         ------
                                        2000       $109,468                  $383,250 2/3/6    200,000 4        ------

Ueli Laupper                            2002       $124,052          --      $  10,000                          46,848
Vice President International Sales      2001       $120,401          --      $  10,000         32,300 5         ------
                                        2000       $114,494                  $628,750 2/3/6    218,750 4        ------

Michael Laupper                         2002       $118,779          --         ---                             ------
Chief Financial Officer                 2001       $113,991          --         ---            32,300 5         ------
                                        2000       $ 80,600                  $371,250 3/5/6    125,000 4        ------

</TABLE>

1 Excludes 3,060,556 stock options the Board of Directors has resolved to grant
during the fiscal year beginning July 1, 2002 to the named executive officers
(among others) at exercise prices equal to 50% of the market price calculated in
accordance with the relevant stock option plan at the date of grant, in respect
of services to be rendered by such executive officers during such period.
2 Fees for service on the Board of Directors
3 Includes 275,000, 150,000 250,000 and 150,000 shares of common stock issued to
Ruedi G. Laupper, Josef Laupper, Ueli Laupper and Michael Laupper respectively,
all of which shares were valued at $2.475 per share.
4 See "Stock Option Grants in Fiscal Year Ended June 20, 2000
5 See "Stock Option Grants in Fiscal Year Ended June 20, 2001
6 The shares issued to Ruedi G. Laupper, Josef Laupper and Michael Laupper were
subsequently cancelled subsequent to October 1, 2002. See Item 13 herein.

Stock Options And Stock Appreciation Rights

The following sets forth certain information concerning the grant of options to
purchase shares of the Common Stock to each of the executive officers of the
Registrant, as well as certain information concerning the exercise and value of
such stock options for each of such individuals. Options generally become
exercisable upon issuance and expire no later than ten years from the date of
grant.

Stock Options Granted In Fiscal Year Ended June 30, 2000

With respect to the named Executive Officers there were no granting of stock
options under either the Company's 1996, 1997. 1999 or 2000 Stock Option Plans
(the "Plans") during fiscal year ended June 30, 2000 excepting for options
granted (October 27, 1999 when the bid price was $2.625) from the 1999 Plan as
follows: Ruedi G. Laupper, Josef Laupper, Ueli Laupper and Michael Laupper
181,250,200,000, 218,750 and 125,000 options respectively. All of such options
are exercisable at $2.625 per share for a period of three years.

                                       41

<PAGE>

Aggregated Option Exercises In Fiscal Year Ended June 30, 1999 And Year-End
Option Values1

                            Number of Securities      Value of Unexercised
                           Underlying Unexercised     In-The-Money Options
                                   Options             At Fiscal Year End
                             At Fiscal Year End             (Dollars)
                                  (Number)

                                Exercisable/              Exercisable/
     Name                      Unexercisable             Unexercisable
Ruedi G. Laupper                 12,000/0 (3)            $1.79/0
Josef Laupper 4                     0/0                      0/0
Ueli Laupper 4                      0/0                      0/0
Herbert Laubscher 4                 0/0                      0/0
Ulrich R. Ernst 4/5                 0/0                      0/0

         1 No options were exercised by a Named Executive Officer during the
fiscal year ended June 30, 1997, 1998 and 1999.
         2 Options are in-the-money if the fair market value of the underlying
securities exceeds the exercise price of the option.
         3 Includes 12,000 options which are owned indirectly by Mr. Laupper
through SR Medical Equipment Ltd., a corporation which is wholly owned by Mr.
Laupper.
         4 These individuals own no stock options of the Registrant.
         5 Mr. Ernst was Chairman of the Board of Directors from May 1995 until
March 18, 1997.

Stock Options Granted In Fiscal Year Ended June 30, 2000

     Name              Options Granted a  Exercised b   Balance
----------------       -----------------   --------     ----------
Ruedi G. Laupper             181,250        25,000      156,250
Josef Laupper                200,000        25,000      175,000
Ueli Laupper                 218,750        25,000      193,750
Michael Laupper              125,000             0      125,000
Erwin Zimmerli                93,750             0       93,750
Dov Maor                      31,250             0       31,250
                             -------        ------     ---------
         Totals              850,000        75,000      775,000
                             =======        ======     =========
Stock Options Granted In Fiscal Year Ended June 30, 2001

                                       42


<PAGE>

     Name              Options Granted c  Exercised d   Balance
----------------       -----------------   --------     ----------
Ruedi G. Laupper             350,000             0      350,000
Josef Laupper                100,000       100,000            0
Ueli Laupper                 250,000             0      250,000
Michael Laupper              250,000             0      250,000
Erwin Zimmerli                30,000        30,000            0
Dov Maor                      20,000             0       20,000
                           ---------      --------     --------
         Totals            1,000,000       130,000      870,000
                           =========      ========     =========
-------------------------
         a   All granted on October 27, 1999.
         b   All exercised on January 19, 2000.
         c   All options granted on December 27, 2000 and are exercisable at
             $0.35 per share for a period of 2-1/2 years from date of grant.
         d   Exercised in July 2001, i.e., after close of June 30, 2001 fiscal
             year.

Stock Options Granted In Fiscal Year Ended June 30, 2002

There were no stock options granted to named executive officers during fiscal
year ended June 30, 2002.

On May 30, 2002 acting as administrator of the 2000 and 2001 Non-Statutory Stock
Option Plans, the Board of Directors resolved to grant an aggregate of 3,060,556
to the Registrant's officers and directors, in respect of services to be
rendered by them during the fiscal year beginning July 1, 2002. The options are
to be granted during the fiscal year at a time to be determined by the Board of
Directors, but not later than the last day of the fiscal year, at exercise
prices equal to 50% of the market price of the common stock calculated in
accordance with the stock option plans. See also footnote number 1 to Item 11
entitled Summary Compensation Table.

Stock Option Plans

Pursuant to February 1999 Board of Directors approval and subsequent July 23,
1999 stockholder approval, the Registrant adopted its 1999 Non Statutory Stock
Option Plan, whereby it reserved for issuance up to 3,000,000 shares of its
common stock. Thereafter in August 1999 the Registrant filed a Registration
Statement on Form S-8 (File No. 0-26972) so as to register those shares of
common stock underlying the aforesaid options. As of December 27, 2000, all of
these options had been granted.

Pursuant to October 1999 Board of Directors approval and subsequent July 12,
2000 stockholder approval, the Registrant adopted its 2000 Non Statutory Stock
Option Plan, whereby it reserved for issuance up to 4,000,000 shares of its
common stock. Thereafter in August 2000 the Registrant filed a Registration
Statement on Form S-8 (File No. 0-26972) so as to register those shares of
common stock underlying the aforesaid options. As of August 15, 2001, all
2,934,444 options had been granted.

Pursuant to September 2000 Board of Directors approval and subsequent November
30, 2000 stockholder approval, Swissray adopted its 2001 Non-Statutory Stock
Option Plan, whereby it reserved for issuance up to 2,000,000 shares of its
common stock. Thereafter in January 29, 2001 the Company filed a Registration
Statement on Form S-8 (File No. 0-26972) so as to register those shares of
common stock underlying the options. As of October 1, 2002, none of these
options have been granted.

                                       43

<PAGE>

Retirement and Long-Term Incentive Plans

The Swiss and German Subsidiaries, mandated by government regulations, are
required to contribute approximately five (5%) percent of eligible, as defined,
employees' salaries into a government pension plan. The subsidiaries also
contribute approximately five (5%) percent of eligible employee salaries into a
private pension plan. Total contributions charged to operations for the years
ended June 30, 2002, 2001 and 2000, were $1,114,294 $654,837 and $475,176
respectively.

Director Compensation

Directors of the Registrant receive $10,000 annually for serving as directors
except for Josef Laupper, who receives $12,000 and Ruedi Laupper, the Chairman
of the Board of Directors, who receives $15,000.

Compensation Committee Interlocks and Insider Participation

The Company had no Compensation Committee during the last completed fiscal year.
The Corporation's executive compensation was supervised by all members of the
Company's Board of Directors and the following directors were concurrently
officers of the Company in the following capacities: Ruedi G. Laupper (Chairman
of the Board of Directors, President and Chief Executive Officer); Josef Laupper
(Secretary, Treasurer and director) and Ueli Laupper (Vice President and
director). No executive officer of the Company served as a member of the Board
of Directors or compensation committee of any entity which has one or more
executive officers who serve on the Company's Board of Directors.

The Company did not issue any shares of its Common Stock to any of its officers
during fiscal year ended June 30, 1999 excepting for the issuance of 2,000,000
restrictive shares to Ruedi G. Laupper in exchange for and in consideration of
cancellation of certain bonus provisions contained in employment contract. See
Item 11 - "Employment Agreements". With respect to shares of common stock issued
to officers and directors during fiscal years ended June 30, 2000, 2001 and
2002. See Item 13.

Item 12.  Security Ownership Of Certain Beneficial Owners And Management

The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of October 1, 2002 (except where otherwise
noted) with respect to: (i) each person known by the Registrant to be the
beneficial owner of more than five percent of the outstanding shares of Common
Stock, (ii) each director of the Registrant; (iii) the Registrant's executive
officers and (d) all officers and directors of the Registrant as a group. Except
as indicated in the footnotes to the table, of the outstanding shares of Common
Stock, (b) each director of the Registrant, (c) the Registrant's executive
officers; and (iv) all officers and directors of the Registrant as a group.
Except as indicated in the footnotes to the table, all of such shares of Common
Stock are owned with sole voting and investment power. The title of class of all
securities indicated below is Common Stock with $.0001 par value per share. See
also footnote number 1 on page 2 of this Form 10-K

                                       44

<PAGE>

                                              Number of Shares     Percentage of
                                               Beneficially        Beneficially
                                               Owned                 Shares
      Name and Address of Beneficial Owner         1/10             Owned 1/10
      ------------------------------------         ----            -------------
Ruedi G. Laupper 2                              3,016,074              7.15%
c/o Swissray International, Inc.
Turbistrasse 25-27
CH 6280 Hochdorf
Switzerland
Josef Laupper 3                                   275,000                 *%
c/o Swissray International, Inc.
Turbistrasse 25-27
CH 6280 Hochdorf
Switzerland
Erwin Zimmerli 4                                  118,750                 *%
c/o Swissray International, Inc.
Turbistrasse 25-27
CH 6280 Hochdorf
Switzerland
Ueli Laupper 5                                  1,368,750              3.25%

c/o Swissray International, Inc.
100 Grasslands Road
Elmsford, New York 10523
Dov Maor 6                                         51,250                 *%
c/o Swissray International, Inc.
Turbistrasse 25-27
CH 6280 Hochdorf
Switzerland
Michael Laupper 7                                 400,000                 *%

c/o Swissray International, Inc.
Turbistrasse 25-27
CH 6280 Hochdorf
Switzerland
Hillcrest Avenue LLC                            8,676,376             20.83%
c/o Citco Trustees (Cayman) Limited
Corporate Centre
Windward One
West Bay Road
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands
Liviakis Financial Communications, Inc. 8       2,597,400              6.24%
495 Miller Avenue, 3rd Fl.
Mill Valley, CA   94941
All directors and officers as                   5,229,824             12.07%
 a group (six persons)

         *        Represents less than 1% of the 41,654,747 shares outstanding
                  as of October 1, 2002.

         1 Unless otherwise indicated, the Company believes that all persons
         named in the table have sole voting and investment power with respect
         to all shares of the Common Stock beneficially owned by them. A person
         is deemed to be the beneficial owner of securities which may be
         acquired by such person within 60 days from the date indicated above
         upon the exercise of options, warrants or convertible securities. Each
         beneficial owner's percentage ownership is determined by assuming that
         options, warrants or convertible securities that are held by such
         person (but not those held by any other person) and which are
         exercisable within 60 days of the date indicated above, have been
         exercised.

                                       45

<PAGE>

         2 Includes (i) 37,500 shares owned indirectly by Ruedi G. Laupper
         through SR Medical Equipment Ltd., a corporation which is wholly owned
         by him; (ii) 460,324 shares owned indirectly by Ruedi G. Laupper
         through Tomlinson Holding Inc., a corporation which is wholly owned by
         him, (iii) 12,000 shares which may be acquired upon exercise of
         immediately exercisable options, which options are owned indirectly by
         Ruedi G. Laupper through SR Medical Equipment Ltd., a corporation which
         is wholly owned by him and (iv) an additional 156,250 shares which may
         be acquired upon exercise of balance of immediately exercisable options
         issued in October 1999 as well as (v) an additional 350,000 options
         issued December 27, 2000.

         3 Includes 175,000 shares which may be acquired upon exercise of
         balance of immediately exercisable options issued in October 1999.

         4 Includes 93,750 shares which may be acquired upon exercise of balance
         of immediately exercisable options.

         5 Includes 193,750 shares which may be acquired upon exercise of
         balance of immediately exercisable options issued in October 1999 as
         well as an additional 250,000 options issued December 27, 2000.

         6 Includes 31,250 shares which may be acquired upon exercise of
         immediately exercisable options issued in October 1999 as well as an
         additional 20,000 options issued December 27, 2000.

         7 Includes 125,000 shares which may be acquired upon exercise of
         balance of immediately exercisable options issued in October 1999 as
         well as an additional 250,000 options issued December 27, 2000.

         8 Includes 526,000 shares which are to be cancelled as per written
         agreement, but remain outstanding. 9 Includes 1,657,000 shares issuable
         upon option exercise. 10 The number of shares, and the calculation of
         the total number of shares beneficially owned for purposes of
         determining the percentages, excludes 3,060,556 stock options the Board
         of Directors has resolved to grant during the fiscal year beginning
         July 1, 2002 to the named executive officers (among others), at
         exercise prices equal to 50% of the market price calculated in
         accordance with the relevant stock option plan at the date of grant in
         respect of services to be rendered by such executive officers during
         such period.

Item 13. Certain Relationships And Related Transactions

Reference is herewith made to Compensation Committee Interlock, regarding
2,000,000 restrictive shares issued to the Company's President during fiscal
year ended June 30, 1999. For further information with respect to this
transaction reference is herewith made to "Management - Employment Agreements",
second paragraph. With respect to such transaction the Company's Board
determined same to be as fair to the Company as could have been made with
unaffiliated parties and such transaction was unanimously approved by its Board
with the Company's President abstaining from voting.

Subsequent to June 30, 1999 year end, 497,824 restrictive shares of Company
common stock were issued to corporations controlled by the Company's President
in consideration of his pledging as collateral (and subsequently forfeiting)
shares of Company common stock owned by corporations controlled by him in order
to enable the Company to obtain financing.

During October of 1999 and in accordance with unanimous Board approval the
Company issued an aggregate of 875,000 shares to certain of its officers and/or
directors as consideration for services rendered as per Board resolution. Such
shares were issued as follows:

                                       46

<PAGE>



          Name                  Position(s) Held                No of Shares
          ----                  ----------------                ------------
Ruedi G. Laupper    Chairman of the Board of Directors,             275,000 a
                    President and Chief Executive Officer

Josef Laupper       Secretary, Treasurer and Director               150,000 a

Michael Laupper     Chief Financial Officer                         150,000 a

Ueli Laupper        Vice President and Director                     250,000 b

Dr. Erwin Zimmerli  Director and Member of the Independent
                    Audit Committee                                  50,000 a

         a        These shares have since been cancelled.
         b.       Ueli Laupper was issued an additional 675,000 in October 2002.

During January 2000 and July 2001 the follow officers and/or directors exercised
options and were issued shares as follows:

     Name                    January 2000             July 2001
     ----                    ------------             ---------
Ruedi G. Laupper               25,000                        0

Josef Laupper                  25,000                  100,000

Michael Laupper                     0                        0

Ueli Laupper                   25,000                        0

Erwin Zimmerli                      0                   30,000
                           -----------                --------
Totals                         75,000                  130,000


                                     Part IV


Item 14. Exhibits, Financial Schedules and Reports on Form 8-K


a.       Reference is herewith made to the consolidated financial statements and
         notes thereto included in this Form 10-K.


b.       99.1 Certification of CEO
         99.2 Certification of CFO


c. During the last quarter of the Company's fiscal year ended June 30, 2002, the
following Forms 8-K were filed. None, however, subsequent to June 30, 2002, the
Company filed: (i) on August 15, 2002, a Form 8-K with date of report of August
14, 2002; and (ii) on September 26, 2002, a Form 8-K with date of report of
September 24, 2002.

                                       47


<PAGE>




                                   SIGNATURES


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.


                                                    SWISSRAY INTERNATIONAL, INC.




                                               By:  /Ruedi G. Laupper/
                                                    --------------------
                                            Name:    Ruedi G. Laupper
                                            Title:   Chairman of the
                                                     Board of the Directors,
                                                     President and Principal
                                                     Executive Officer
Dated:   November 19, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.



<PAGE>



            Signature               Title                              Date

/Ruedi G. Laupper/       Chairman of the
---------------------    Board of Directors, President and     November 19, 2002
 Ruedi G. Laupper        Chief Executive Officer

/Josef Laupper/          Secretary, Treasurer and Director     November 19, 2002
---------------------
 Josef Laupper

/Michael Laupper/        Chief Financial Officer               November 19, 2002
---------------------
 Michael Laupper

/Ueli Laupper/           Vice President and Director           November 19, 2002
---------------------
 Ueli Laupper

/Dr. Erwin Zimmerli/     Director                              November 19, 2002
---------------------
 Dr. Erwin Zimmerli

/Dr. Sc. Dov Maor/       Director                              November 19, 2002
---------------------
 Dr. Sc. Dov Maor



                            Supplemental Information

Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act.

Not Applicable.

                                       48

<PAGE>




                                 CERTIFICATIONS


Certifications pursuant to Securities and Exchange Act of 1934 Rule 13a-14 as
adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002:


         I, Ruedi G. Laupper, Chief Executive Officer of Swissray International,
         Inc. (the Company") certify that:


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


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


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

                                                  /s/ Ruedi G. Laupper

                                                  ------------------------------
                                                  Swissray International, Inc.
                                                  Chief Executive Officer
                                                  November 19, 2002

I, Michael Laupper, Chief Financial Officer of Swissray International, Inc.
(the "Company") certify that:


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


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


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

                                                  /s/ Michael Laupper

                                                  ------------------------------
                                                  Swissray International, Inc.
                                                  Chief Financial Officer
                                                  November 19, 2002