<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                       ----------------------------------

                                    FORM 10-Q

(Mark One)
|X|    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2001

                                       OR

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

For the transition period from                      to
                               --------------------    -----------------------

                         Commission File Number 0-29796


                         MARINE SHUTTLE OPERATIONS INC.
             ------------------------------------------------------
             (Exact name of Registrant as Specified in Its Charter)

               Nevada                                     91-1913992
   ---------------------------------           --------------------------------
    (State or Other Jurisdiction of                   I.R.S. Employer
     Incorporation or Organization)                   Identification No.)

      Luramyrveien 29, Sandnes, Norway                     4391
-------------------------------------------    ------------------------------
  (Address of Principal Executive Offices)              (Zip Code)

Registrant's Telephone Number, Including Area Code (47) 51962300
                                                   -------------



         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO _

The number of outstanding shares of the issuer's common stock at May 10, 2001
was 56,804,346


<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION
                                    FORM 10-Q

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>

<S>                                                                                                                  <C>
PART I.    FINANCIAL INFORMATION................................................................................       3

ITEM 1.    FINANCIAL STATEMENTS (UNAUDITED).....................................................................       3

CONSOLIDATED BALANCE SHEETS.....................................................................................       3

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS..........................................................       4

CONSOLIDATED STATEMENTS OF CASH FLOWS...........................................................................       5

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS..................................................................       6

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
           OPERATIONS...........................................................................................      10

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...........................................      14

PART II.   OTHER INFORMATION....................................................................................      15

ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS............................................................      15

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K.....................................................................      15

SIGNATURES......................................................................................................      16

</TABLE>

                                       2

<PAGE>



                                     PART I.

                              FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

                         MARINE SHUTTLE OPERATIONS INC.
                          (A development stage company)
                           CONSOLIDATED BALANCE SHEETS
                                 (U.S. Dollars)

<TABLE>
<CAPTION>

                                                                                      March 31,        December 31,
                                                                                        2001               2000
                                                                                     -----------       ------------
                                                                                     (unaudited)
<S>                                                                               <C>                <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents                                                          $    194,698        $    203,207
Restricted cash                                                                          13,506              21,863
Accounts receivables                                                                     50,270              28,270
Other current assets                                                                    171,803              56,804
                                                                                   ------------        ------------
Total Current Assets                                                                    430,277             310,143

Property, plant and equipment, net                                                    6,345,714           6,445,875
Debt issue cost                                                                       2,068,880           1,936,867
Goodwill, net                                                                        25,072,356          25,925,553
Patents and agreements, net                                                           2,556,982           2,712,464
                                                                                   ------------        ------------
TOTAL ASSETS
                                                                                   $ 36,474,209        $ 37,330,903
                                                                                   ============        ============

LIABILITIES AND SHAREHOLDERS` EQUITY
Current Liability
Accounts payable                                                                   $    710,120        $    847,868
Notes payable                                                                         3,450,000           4,900,000
Other current liabilities                                                               918,693             754,100
                                                                                   ------------        ------------
Total current liabilities                                                             5,078,813           6,501,968
                                                                                   ------------        ------------
Long Term Debt                                                                          258,661             265,312

Minority interest                                                                          --                  --

Contingency (Note 3)

SHAREHOLDERS' EQUITY
Authorized 75,000,000 common shares with a par value of $0.001. Issued and
outstanding 54.844.346 common shares with a par value of $0.001 at March 31,
2001 and 44.463.356 common shares at December 31, 2000                                   54,844              44,463
Other paid in capital                                                                52,544,964          50,292,949
Deficit accumulated during the development stage                                    (20,471,940)        (18,933,079)
Accumulated other comprehensive loss                                                   (991,133)           (840,710)
                                                                                   ------------        ------------
Total shareholders' equity                                                           31,136,735          30,563,623

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                         $ 36,474,209        $ 37,330,903
                                                                                   ============        ============

</TABLE>

See accompanying notes to consolidated financial statements.

                                       3
<PAGE>




                         MARINE SHUTTLE OPERATIONS INC.
                          (A development stage company)
             CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
                                 (U.S. Dollars)
                                   (unaudited)

<TABLE>
<CAPTION>



                                                        Cumulative to
                                                        March 31, 2001          Three Months Ended
                                                        from date of                 March 31,
                                                          inception          ----------------------------
                                                         May 23, 1997           2001                2000
                                                       ----------------         -----               -----
<S>                                              <C>                    <C>                   <C>
Operating revenues                                         390,360                50,759                   --
                                                   ----------------      ----------------     ----------------

EXPENSES
 Personnel costs                                         3,380,728               382,601              315,810
 Legal, audit and advisory services                      2,117,741                56,223              115,306
 Cost of cancelled financing                               606,721                    --                   --
 General and administrative                              2,455,533                90,442              249,012
 Marketing                                               1,143,117                22,735               55,156
 Technical Development                                     581,473                    --               29,197
 Depreciation                                              201,249                16,052               23,503
 Amortization -- goodwill and intangibles               10,787,332             1,017,206              972,571
 Write down on investment                                   90,000                    --                   --
 Currency exchange loss (gain)                             (15,315)                 (633)              (4,629)
                                                   ----------------      ----------------     ----------------

 Total operating expenses                          $    21,348,580       $     1,584,626      $     1,755,926
                                                   ----------------      ----------------     ----------------
 Interest expense, net of capitalized                      153,453                 8,530                7,346
 Interest income                                           (87,215)               (3,535)              (4,431)

 Net loss before minority interest                 $   (21,024,458)      $    (1,538,862)     $    (1,758,841)
                                                   ----------------      ----------------     ----------------
 Minority interest                                        (552,518)                   --             (181,626)
                                                   ----------------      ----------------     ----------------

 Net loss                                          $   (20,471,940)      $    (1,538,862)     $    (1,577,215)
                                                   ================      ================     ================

 Other comprehensive (loss) income:
  Accumulated other comprehensive income
   (loss) foreign currency translation
   adjustments                                            (991,133)             (150,424)             (74,602)
                                                   ----------------      ----------------     ----------------

 Comprehensive loss                                $   (21,463,073)      $    (1,689,286)     $    (1,651,817)
                                                   ----------------      ----------------     ----------------

 Basic and diluted loss per share                                        $         (0.03)     $         (0.04)
                                                                         ================     ================

 Basic and diluted weighted average shares
   outstanding                                                                48,323,298           40,750,642
                                                                         ================     ================

</TABLE>

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>


                         MARINE SHUTTLE OPERATIONS INC.
                          (A development stage company)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (U.S. Dollars)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                          Cumulative to
                                                          March 31, 2001                Three Months Ended
                                                           rom date of                        March 31
                                                           inception            -----------------------------------
                                                          May 23, 1997               2001                2000
                                                        -----------------       ---------------   -----------------
<S>                                                    <C>                      <C>               <C>
 OPERATING ACTIVITIES

 Net Loss                                                  $ (20,471,940)         $ (1,538,862)       $ (1,577,215)
 Adjustments to reconcile net income to net cash
 provided by operating activities:
 Depreciation and amortization                                10,988,580             1,033,258             996,074
 Minority interest                                              (552,517)                   --            (181,626)
 Loss on investment                                               90,000                    --                  --
 Loss on disposal of assets                                        5,708                    --                  --
 Unrealized loss on foreign currency                              33,786                    35              (3,431)
 Changes in working capital:
 Accounts receivable                                             (50,270)              (22,000)             38,619
 Other current assets and restricted cash                       (185,307)             (106,643)            (34,718)
 Accounts payable                                                710,120              (137,748)           (281,230)
 Other current liabilities                                       884,906               164,558             262,288
                                                           --------------         -------------       -------------
 Net cash used on operating activities                     $  (8,546,934)         $   (607,402)       $   (781,239)
                                                           --------------         -------------       -------------

 INVESTING ACTIVITIES

 Investments                                                   (100,000)                    --                  --
 Capital expenditures                                        (5,512,818)               (12,598)           (466,578)
 Proceeds on sale of investment                                  55,196                     --                  --
 Advance to Marine Shuttle Operations AS                       (249,986)                    --                  --
 Acquisition of Marine Shuttle Operations AS                    416,635                     --                  --
 Advance to Offshore shuttle AS                                (100,000)                    --                  --
 Acquisition of Offshore Shuttle AS                             482,476                     --                  --
                                                           --------------         -------------       -------------
 Net cash used on investing activities                     $ (5,008,497)          $    (12,598)       $   (466,578)
                                                           --------------         -------------       -------------

 FINANCING ACTIVITIES

 Issuance of capital stock                                   14,016,446              2,262,396                  --
 Share issue cost                                              (746,881)                    --                  --
 Debt issue cost                                             (2,068,880)              (132,013)           (176,815)
 Payment on Note payable                                     (7,325,000)            (1,450,000)                 --
 Borrowing on Note payable                                   11,068,379                     --             500,000
                                                           --------------         -------------       -------------
 Net cash provided by financing activities                 $ 14,944,064           $    680,383        $    323,185
                                                           --------------         -------------       -------------

Effect of exchange rate change in cash and
cash equivalents                                             (1,193,935)               (68,892)            (81,986)

 Net increase (decrease) in cash and cash equiv.           $    194,698           $     (8,509)       $ (1,006,618)
                                                           --------------         -------------       -------------

 Cash and cash equivalents at beginning of period                    --                203,207           1,119,564
                                                           --------------         -------------       -------------

 Cash and cash equivalents at end of period                $    194,698           $    194,698        $    112,946
                                                           ==============         ==============      =============

</TABLE>

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>



                         MARINE SHUTTLE OPERATIONS INC.
                          (A development stage company)
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

1.    BASIS OF PRESENTATION

         The accompanying consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three month period ended March 31, 2001 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2000. In connection
with the preparation of these financial statements, management was required to
make estimates and assumptions that affect the reported amount of assets,
liabilities, revenues, expenses and disclosure of contingent liabilities. Actual
results could differ from such estimates. These financial statements should be
read in conjunction with the financial statements and footnotes thereto included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2000.

2.    NATURE OF OPERATIONS

         Marine Shuttle Operations Inc. (the "Company"), through its
wholly-owned Norwegian subsidiary, Marine Shuttle Operations AS ("MSOAS"), is
seeking to become a leading player in the market for installing,
decommissioning, and transporting offshore oil and gas structures. The Company,
being in the development stage, has not generated any significant revenues from
operations and does not expect to generate any significant revenues from
operations until the year 2003, at the earliest. There can be no assurance,
however, that the Company will ever achieve commercially significant sales. To
date, the Company has not entered into any contracts for the use of its proposed
services, and no assurance can be given that any such contracts will
materialize.

         In 1998, the Company acquired 100% of MSOAS, and approximately 68% of
the outstanding capital stock of Offshore Shuttle AS ("OSAS"). At the time, OSAS
held the licensing and marketing rights to the "Offshore Shuttle", a vessel
being developed to lift and carry large offshore oil and gas installations. In
September 1999, OSAS merged into MSOAS. As a result, MSOAS became the holder of
the licensing and marketing rights to the Offshore Shuttle, and the Company's
ownership interest in MSOAS became approximately 81%. In April and June 2000,
the Company acquired the remaining outstanding minority interest and the Company
now owns all of the outstanding shares of MSOAS. See Note 8. Unless the context
otherwise requires, the term "Company" hereinafter includes Marine Shuttle
Operations Inc. and its subsidiaries.

3.    GOING CONCERN

         The Company's ability to continue as a going concern is dependent on
its ability to obtain significant additional financing. As shown in the
financial statements, the Company is in the development stage and at March 31,
2001 had accumulated losses from operations amounting to $20,471,940 and a
working capital deficit of $4,648,536, with no operating assets presently
generating cash to fund its operating and capital requirements. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The Company is seeking to raise additional capital. There can be no
assurance that the Company will be able to raise additional capital on
reasonable terms, if at all, or that any financing transaction will not be
dilutive to current shareholders. If the Company is not able to raise additional
capital, it may be required to significantly curtail or cease its operating
activities. The financial statements have been prepared assuming that the
Company will continue as a going concern, and do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
outcome of this uncertainty.

                                        6

<PAGE>



                         MARINE SHUTTLE OPERATIONS INC.
                          (A development stage company)

           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (unaudited)


4.    EXTERNAL FINANCING

         In October 1998, the Company entered into an engagement letter with MFC
Merchant Bank S.A. pursuant to which MFC shall act, on a best-efforts basis, as
agent for the Company in raising additional capital. As consideration for its
services, MFC shall receive a success fee equal to five percent of the capital
raised plus DM 100,000 (approximately $47,350) per month until the completion or
termination of the MFC financing. In addition, all of MFC's out-of-pocket
expenses shall be reimbursed, and if the Company raises the necessary funds
through another source, MFC shall receive a break-up fee equal to the greater of
$1,200,000 or 350,000 shares of common stock. MFC agreed to defer the monthly
fee obligation from May 1, 2000 through December 1, 2000. In return for granting
this deferral, the deferred fees were increased by 10%. This 10% premium may be
paid with shares of common stock. Effective April 1, 2001, MFC will no longer
receive a monthly fee, but will invoice the Company for services rendered at the
request of the Company.

         On March 1, 1999, the Company entered into a loan agreement with
ValorInvest Ltd., an investment company, pursuant to which ValorInvest agreed to
lend the Company an aggregate of up to $6,000,000. The loan agreement was
amended and restated as of December 31, 1999, and was further amended as of
December 31, 2000. The loan agreement provides that advances shall be made in
increments of $250,000 and shall not exceed $500,000 in any single month unless
agreed to by ValorInvest. Any monies advanced under the loan agreement shall
bear interest at the rate of 7.5% per annum and shall be due and payable on June
30, 2001, except that if the Company raises, in the aggregate, in excess of
$5,000,000 from equity or long term debt financings after January 1, 2000, then
the loan shall be due to the extent of 25% of such excess. As of March 31, 2001,
$3,875,000 had been advanced under the loan agreement, and $2,550,000 was
outstanding under the loan agreement.

         In August 1999, the Company entered into a loan agreement with Statens
naerings og distriktsutviklingsfond (the Norwegian Industrial and Regional
Development Fund, "SND"), pursuant to which SND agreed to lend the Company an
aggregate of up to NOK 4,000,000, (approximately $438,476) to finance specific
tasks within the Offshore Shuttle project. As of March 31, 2001, NOK 2,358,617
(approximately $258,549) had been advanced under the loan agreement. The
principal is repayable two years after disbursement, over five years in
semi-annually installments, each in the amount of NOK 400,000.

         In September 1999, the Board of Westdeutsche Landesbank Girozentrale
(WestLB) of Dusseldorf issued its conditional approval to underwrite a U.S.
$157.5 million loan facility for the first Offshore Shuttle. Based on such
approval, the Company has mandated WestLB to act as sole arranger and
underwriter for the financing. WestLB's commitment is subject to several
material conditions, including satisfactorily completing its due diligence, the
Company's obtaining European government guarantees to secure a significant
portion of the loan facility, and its completing of an additional equity
financing. The Company is seeking to fulfill these conditions. The Company has
deferred debt issue costs related to the financing.

         In February 2000, the Company entered into a loan agreement with MFC
Merchant Bank S.A pursuant to which MFC agreed to lend an aggregate of up to
$2,000,000, provided that advances shall not exceed $350,000 in any single
month. Any monies advanced under this loan agreement shall bear interest at the
rate of LIBOR plus 3.5% per annum and shall be due and payable in full on
February 25, 2001. As of March 31, 2001, $900,000 was outstanding under this
agreement. MFC has agreed to extend the maturity date of the $900,000 loan to
June 30, 2001.

                                       7

<PAGE>




                         MARINE SHUTTLE OPERATIONS INC.
                          (A development stage company)

           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (unaudited)

4.    EXTERNAL FINANCING (continued)

         In July 2000, the Company entered into a loan agreement with Mr. Holger
Timm pursuant to which Mr. Timm agreed to lend the Company an aggregate of up to
$1,500,000, provided that advances shall not exceed $500,000 in any single
month. In January 2001, the $1,450,000 that had been advanced under the loan
agreement plus $42,396 in interest thereon was converted into 3,730,990 shares
of the Company's common stock at $0.40 per share.

         In November, 2000, the Company retained Frost & Partner GbR ("F&P") to
help arrange a $20 million to $40 million financing for the Company. Under the
terms of the agreement, F&P received $15,000 upon being retained, and will
receive up to an additional $30,000 in connection with their due diligence and
the preparation of presentation documents. In addition, F&P will receive a
success fee equal to two percent of the capital raised during the term of the
agreement or during the six month period thereafter (or 1% if the money is
raised other than through F&P's efforts). The agreement expires May 30, 2001.

          In January 2001, the Company sold 1,000,000 shares of common stock for
gross proceeds of $200,000.

         In February and March 2001, the Company sold 5,000,000 shares and
warrants to purchase 5,000,000 shares exercisable at $0.10 per share for gross
proceeds of $505,000. The warrants are exercisable until July 1, 2001. Also in
February and March 2001, the Company sold 650,000 shares for gross proceeds of
$65,000.


5.    INCOME TAXES

         The Company has not provided for an income tax liability due to the
availability of operating loss carry-forwards. The Company has net operating
losses which may give rise to future tax benefits of approximately $3,900,000 as
of March 31, 2001. To the extent not used, net operating loss carry-forwards
expire in varying amounts beginning in the year 2007. Based on available
evidence, including the Company's history of operating losses, the uncertainty
of future profitability and the impact of tax laws which may limit the Company's
ability to utilize such loss carry-forwards, management has recorded a full
valuation allowance against the realization of the net deferred tax assets.


6.    STOCK OPTIONS

         As of March 31, 2001, options to purchase 410,000 shares were
outstanding under the Stock Option Plan. The Company applies APB 25 in
accounting for its stock option plans. Accordingly, because the option price is
not less than the fair market price at the date of grant, no compensation
expense has been recognized for its stock option plans.

                                       8

<PAGE>




                         MARINE SHUTTLE OPERATIONS INC.
                          (A development stage company)

           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (unaudited)


7.    DERIVATIVES AND HEDGING ACTIVITIES

         In June 1998, the Financial Accounting Standards Board issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities. The
Statement requires the Company to recognize all derivatives on the balance sheet
at fair value. Derivatives that are not hedges must be adjusted to fair value
through income. The adoption of Statement No. 133 on January 1, 2001 resulted in
no cumulative effect of an accounting change as the Company does not utilize
derivatives.


8.    SUBSEQUENT EVENT

         In April 2001, the Company sold a total of 200,000 shares to an
employee for aggregate gross proceeds of $20,000.

         In May 2001, the Company sold 1,000,000 shares pursuant to the exercise
of warrants for gross proceeds of $100,000.

         In May 2001, the Company issued 760,000 shares to a foreign person as
consideration for amending the Intellectual Property Right Agreement between the
Company and such person.

                                       9

<PAGE>



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

         The following discussion and analysis of the Company's financial
condition and result of operations should be read in conjunction with the
financial statements and the notes thereto which appear elsewhere in this
quarterly report and the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.

General

         The Company, through its wholly-owned Norwegian subsidiary, Marine
Shuttle Operations AS ("MSOAS"), is seeking to become a leading player in the
market for installing, decommissioning, and transporting offshore oil and gas
structures.

         The Company has designed a vessel, the "Offshore Shuttle," which it
believes will be capable of lifting and carrying large offshore oil and gas
structures, eliminating the need for extensive cutting prior to decommissioning
and permitting onshore assembly prior to installation. The Company anticipates
that construction of the first Offshore Shuttle will commence six months after
the receipt of sufficient capital and will be operational 18 months thereafter.
Construction of a second Offshore Shuttle is intended to commence one year after
construction of the first Offshore Shuttle begins, and construction of a third
and a fourth Offshore Shuttle is intended to commence one year after
construction of the second begins.

         The Company was incorporated in Nevada in May 1997 under the name
Geoteck International, Inc. On May 29, 1998, the Company changed its name to
Marine Shuttle Operations Inc. In 1998, the Company acquired all of the
outstanding stock of MSOAS in exchange for 7,600,000 shares of common stock. The
Company also acquired approximately 68% of the outstanding stock of Offshore
Shuttle AS ("OSAS"), the holder of the licensing and marketing rights to the
Offshore Shuttle design, in exchange for 4,937,607 shares of common stock. This
transaction was accounted for using the purchase method.

         To benefit from a more rational and cost efficient use of the resources
in MSOAS and OSAS, the Board of Directors of the two companies proposed to merge
the two companies. The proposed merger plan was approved by the shareholders of
both companies on May 30, 1999, and the merger became effective in September
1999. The OSAS shareholders received 1.5 MSOAS shares for each of their OSAS
shares. As a result of the merger, the Company owned approximately 81% of MSOAS,
and MSOAS acquired the licensing and marketing rights to the Offshore Shuttle.

         In April 2000, the Company acquired an additional 8.4% of the
outstanding shares of MSOAS from two individuals in exchange for an aggregate of
1,030,002 shares of common stock. In June 2000, the Company acquired an
additional 9.7% of the outstanding shares of MSOAS in exchange for an aggregate
of 1,186,283 shares of its common stock, and the Company acquired the remaining
1% of the MSOAS shares for cash. These acquisitions were accounted for as
purchases. The Company now owns all of the outstanding shares of MSOAS.

Results of Operations

         The Company is in the development stage and has generated revenues to
date only from study work. Since the merger of OSAS into MSOAS, the Company's
main operations have been conducted through MSOAS.


Three months ended March 31, 2001 and 2000:

         Operating revenues. Operating revenues for the three month period ended
March 31, 2001 were $50,759, generated from sporadic study work reimbursed by
clients. The Company did not generate any revenue during the same period in
2000. The Company is still in the development stage and does not expect to
generate revenues from operation until 2003 at the earliest, except from some
sporadic study work.

         Personnel costs. Personnel costs include costs for both employees and
hired personnel and were $382,601

                                       10

<PAGE>


for the three month period ended March 31, 2001, and $315,810 for the three
month period ended March 31, 2000. The increase in costs of $66,791 was mainly
due to more personnel working on client studies.

         Legal, audit and advisory services. Legal, audit and advisory services
for the three month period ended March 31, 2001 were approximately $56,223, a
decrease of $59,083 compared to legal, audit and advisory services of $115,306
in 2000. The decrease was mainly due to reduced use of legal and financial
services as a result of the slowdown in activities.

         General and administrative expenses. General and administrative
expenses were $90,442 and $249,012, respectively, for the three month periods
ended March 31, 2001 and 2000. The decrease in costs of $158,570 was mainly due
to a slowdown of spending by the Company to conserve capital.

         Marketing. Marketing expenses for the three month period ended March
31, 2001 were $22,735, a decrease of $32,421 from the marketing expenses of
$55,156 for the same period in 2000. The decrease was a result of purchasing
fewer marketing materials and services in the current period.

         Technical Development. The Company did not have any technical
development costs for the three month period ended March 31, 2001, mainly due to
a slowdown of spending by the Company to conserve capital. The technical
development costs for the same period in 2000 was $29,197.

         Amortization of goodwill and intangibles. Amortization of goodwill and
intangibles for the three month period ended March 31, 2001 was $1,017,206, an
increase of $44,635 compared to the amortization of goodwill and intangibles of
$972,571 for the same period in 2000. The increase was due to amortization of
increased goodwill and intangibles resulting from the acquisition of the
minority interest in MSOAS in June 2000.

Liquidity and Capital Resources

         The Company's ability to continue as a going concern is dependent on
its ability to obtain significant additional financing. As of March 31, 2001,
the Company had cash and cash equivalents of $194,698, a deficit accumulated
during the development stage of $20,471,940 and a working capital deficit of
$4,648,536. The Company is in the development stage with no operating assets
presently generating cash to fund its operating and capital requirements.

         Net cash used on operating activities was $607,402 for the three month
period ended March 31, 2001, a decrease of $173,837 compared to $ 781,239 used
for the three month period ended March 31, 2000. The decrease was the result of
the Company's efforts to reduce spending until the Company can raise additional
funds.

         For the three month period ended March 31, 2001 the Company used
$12,598 on capital expenditures, a decrease of $453,980 from the capital
expenditures of $ 466,578 for the same period in 2000. The decrease was the
result of the Company's efforts to reduce engineering work for the Offshore
Shuttle until the Company can raise additional funds.

         On March 1, 1999, the Company entered into a loan agreement with
ValorInvest, Ltd., an investment company, pursuant to which ValorInvest agreed
to lend the Company an aggregate of up to $6,000,000. The loan agreement was
amended and restated as of December 31, 1999, and was further amended as of
December 31, 2000. The loan agreement provides that advances shall be made in
increments of $250,000 and shall not exceed $500,000 in any single month unless
agreed to by ValorInvest. Any monies advanced under the loan agreement shall
bear interest at the rate of 7.5% per annum and shall be due and payable on June
30, 2001; except that if the Company raises, in the aggregate, in excess of
$5,000,000 from equity or long term debt financing after January 1, 2000, then
the loan shall be due to the extent of 25% of such excess. As of March 31, 2001,
$3,875,000 had been advanced under the loan agreement, and $2,550,000 was
outstanding under the loan agreement.

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<PAGE>


         In August 1999, the Company entered into a loan agreement with Statens
naerings og distriktsutviklingsfond (the Norwegian Industrial and Regional
Development Fund, "SND"), pursuant to which SND agreed to lend the Company an
aggregate of up to NOK 4,000,000, (approximately $438,476), to finance specific
tasks within the Offshore Shuttle project. As of December 31, 2000, NOK
2,358,617 ($258,549) had been advanced under the loan agreement. The principal
is repayable over a five year period commencing two years after disbursement, in
semi-annual installments, each in the amount of NOK 400,000.

         In February 2000, the Company entered into a loan agreement with MFC
Merchant Bank S.A, an investment company, pursuant to which MFC agreed to lend
an aggregate of up to $2,000,000, provided that advances shall not exceed
$350,000 in any single month. Any monies advanced under this loan agreement
shall bear interest at the rate of LIBOR plus 3.5% per annum and shall be due
and payable in full on February 25, 2001. As of March 31, 2001, $900,000 was
outstanding under this agreement. MFC has agreed to extend the maturity date of
the $900,000 loan to June 30, 2001.

         In July 2000, the Company entered into a loan agreement with Mr. Holger
Timm pursuant to which Mr. Timm agreed to lend the Company an aggregate of up to
$1,500,000, provided that advances shall not exceed $500,000 in any single
month. In January 2001, the $1,450,000 that had been advanced under the loan
agreement plus $42,396 in interest thereon was converted into shares of the
Company's common stock at $0.40 per share.

         In January 2001 the Company sold 1,000,000 shares of common stock for
gross proceeds of $200,000.

         In February and March 2001, the Company sold 5,000,000 shares and
warrants to purchase 5,000,000 shares exercisable at $0.10 per share for
aggregate gross proceeds of $505,000. The warrants expire on July 1, 2001. Also
in February, March and April 2001, the Company sold a total of 850,000 shares to
various of its officers, directors and employees for aggregate gross proceeds of
$85,000.

         In May 2001, the Company sold 1,000,000 shares pursuant to the exercise
of warrants for gross proceeds of $100,000.

         In May 2001, the Company issued 760,000 shares to a foreign person as
consideration for amending the Intellectual Property Right Agreement between the
Company and such person.

         The Company is seeking to obtain additional capital. In October 1998,
the Company entered into an engagement letter with MFC Merchant Bank S.A.
pursuant to which MFC shall act, on a best-efforts basis, as agent for the
Company in raising additional capital. As consideration for its services, MFC
shall receive a success fee equal to five percent of the capital raised plus DM
100,000 (approximately $47,350) per month until the completion or termination of
the MFC financing. In addition, all of MFC's out-of-pocket expenses shall be
reimbursed, and if the Company raises the necessary funds through another
source, MFC shall receive a break-up fee equal to the greater of $1,200,000 or
350,000 shares of common stock. MFC agreed to defer the monthly fee obligation
from May 1, 2000 through December 1, 2000. In return for granting this deferral,
the deferred fees were increased by 10%. This 10% premium may be paid with
shares of common stock. Effective April 1, 2001, MFC will no longer receive a
monthly fee, but will invoice the Company for services rendered at the request
of the Company.

         In November, 2000, the Company retained Frost & Partner GbR ("F&P") to
help arrange a $20 million to $40 million financing for the Company. Under the
terms of the agreement, F&P received $15,000 upon being retained, and will
receive up to an additional $30,000 in connection with their due diligence and
the preparation of presentation documents. In addition, F&P will receive a
success fee equal to two percent of the capital raised during the term of the
agreement or during the six month period thereafter (or 1% if the money is
raised other than through F&P's efforts). The agreement expires May 30, 2001.

         In September 1999, the Board of Westdeutsche Landesbank Girozentrale
(WestLB) of Dusseldorf issued its conditional approval to underwrite a U.S.
$157.5 million loan facility for the first Offshore Shuttle. Based on such
approval, the Company has mandated WestLB to act as sole arranger and
underwriter for the financing. WestLB's commitment is subject to several
material conditions, including satisfactorily completing its

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<PAGE>


due diligence, the Company's obtaining European government guarantees to secure
a significant portion of the loan facility, and its completing of an additional
equity financing. The Company is seeking to fulfill these conditions.

         There can be no assurance that the conditions to the WestLB financing
will be satisfied or, if satisfied, that the WestLB financing will be
consummated on reasonable terms or at all. If it is not completed, the Company
may be required to significantly curtail or cease its proposed activities.
Although the Company believes that the proceeds from the WestLB financing, if
completed, will enable it to construct the first Offshore Shuttle, there can be
no assurance in that regard. Moreover, even if the WestLB financing is
consummated, the Company's future capital requirements could vary significantly
and will depend on certain factors, many of which are not within its control.
Such factors include:

         o        the need for cash to fund the construction of additional
                  Offshore Shuttles;
         o        greater than anticipated expenses; and
         o        longer engineering, development, and construction times than
                  now contemplated.

         If the Company is successful in completing the first Offshore Shuttle,
it believes it will be able to fund the construction of additional Offshore
Shuttles from its future operating cash flows and/or short or medium term debt
financing. There can be no assurance, however, that the Company's beliefs will
prove to be accurate.

International Operations

         The Company intends to market its services in international markets.
International operations entail various risks, including:

        o         political instability;
        o         economic instability and recessions;
        o         exposure to currency fluctuations;
        o         difficulties of administering foreign operations generally;
        o         reduced protection for intellectual property rights;
        o         potentially adverse tax consequences; and
        o         obligations to comply with a wide variety of foreign laws and
                    other regulatory requirements.

Forward-looking Statements

         The information set forth herein includes certain forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934. These forward-looking statements include, without limitation, statements
regarding the Company's anticipated operations, market size, the capabilities of
the Offshore Shuttle, the dates on which construction of the Offshore Shuttles
will commence and be completed, the number of Offshore Shuttles to be
constructed, the WestLB financing and the Company's ability to satisfy the
conditions precedent to the WestLB financing, and the Company's ability to fund
the construction of additional Offshore Shuttles. Actual results could differ
materially from those anticipated in such forward-looking statements as result
of various known and unknown factors including, without limitation, future
economic, competitive, regulatory and market conditions, future business
decisions, the receipt of financing, construction delays, demand for the
Company's services and those risks discussed in Amendment No. 1 to the Company's
Registration Statement on Form S-1 filed with the Securities and Exchange
Commission on May 8, 2001, and in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000. Words such as "believes," "anticipates,"
"expects," "intends," "may," and similar expressions are intended to identify
forward-looking statements but are not the exclusive means of identifying such
statements. Readers are cautioned not to put undue reliance on these
forward-looking statements. The Company undertakes no obligation to revise any
of these forward-looking statements.


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<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

         The Company's exposure to market risk for changes in interest rates
relates primarily to the Company's notes payable and long-term debt. The Company
believes its exposure to interest rate risk is not material since its current
notes payable consist of fixed rate indebtedness, and the long-term variable
rate debt obligation is not material. The fair value of the fixed rate notes
payable approximates its carrying value due to its short-term maturity.

         Interest rate risk may arise if the Company is successful in obtaining
debt financing to finance the building of the first Offshore Shuttle. In such an
event, the Company will assess the extent of its interest rate risk and may
enter into hedging transactions to reduce its exposure and to ensure its ability
to service its debt.

Foreign Exchange Risk

         Foreign exchange risk may arise if the Company is required to use
different currencies for various aspects of its operations. Although the
principal currency used in the offshore decommissioning industry in the U.S.
dollar, the local expenditures of MSOAS (e.g., rent, telephone, payroll, etc.)
are likely to be paid in Norwegian kroner, and it is possible that the contract
for construction of the first Offshore Shuttle will be denominated in a currency
other than the U.S. dollar or the Norwegian kroner. The Company currently has no
foreign exchange contracts.

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<PAGE>


                                     PART II


                                OTHER INFORMATION


ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

          In January 2001, the $1,450,000 that had been advanced to the Company
by a foreign person under a loan agreement, plus $42,396 in interest thereon,
was converted into 3,730,990 shares of common stock. The shares were issued
pursuant to Regulation S.

         In January 2001, the Company sold 1,000,000 shares of common stock to a
foreign investor, pursuant to Regulation S, for gross proceeds of $200,000.

         In February and March 2001, the Company sold 5,000,000 shares and
warrants to purchase 5,000,000 shares exercisable at $0.10 per share to various
foreign persons, pursuant to Regulation S, for aggregate gross proceeds of
$505,000. The warrants expire on July 1, 2001.

         In February and March 2001, the Company sold a total of 650,000 shares
to various of its officers, directors and employees, pursuant to Regulation S,
for aggregate gross proceeds of $65,000.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits.

                  None

         (b)      Report on Form 8-K.

                  The Company did not file any reports on Form 8-K during the
                  three month period ended March 31, 2001.


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<PAGE>




                                   SIGNATURES

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



Date:  May 10, 2001                    MARINE SHUTTLE OPERATIONS INC.


                                       By:  /s/ Iqbal Akram
                                           -------------------------------
                                           Iqbal Akram, Chief Financial Officer
                                           (Principal Financial and Accounting
                                            Officer)



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