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

                                   Form 10-QSB

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

For the quarter ended: March 31, 2000

Commission file no.  000-30317

                                  Cartis, Inc.
                  --------------------------------------------
                 (Name of small business issuer in its charter)

Florida                                                         65-0737412
-------------------------------                          -----------------------
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                               Identification No.)

277 Royal Poinciana Way, PMB 155, Palm Beach, FL                   33480
-------------------------------------                           ----------
(Address of principal executive offices)                        (Zip Code)

Issuer's telephone number: (230) 211-6825

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

                                                    Name of each exchange on
   Title of each class                                    which registered

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

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

                         Common Stock, $0.0001 par value
                       -----------------------------------
                                (Title of class)

Copies of Communications Sent to:         Mintmire & Associates
                                          265 Sunrise Avenue, Suite 204,
                                          Palm Beach, FL 33480
                                          Tel: (561) 832-5696
                                          Fax: (561) 659-5371


<PAGE>



           Indicate by Check  whether the issuer (1) filed all reports  required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such  shorter  period  that the  registrant  was  required  to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.
                     Yes        X         No
                               --                ---

           As of March 31, 2000, there are 13,437,019  shares of voting stock of
the registrant  issued and  outstanding and 142,980 yet to be issued pursuant to
recent subscriptions.




<PAGE>



                                     PART I

Item 1. Financial Statements






                          INDEX TO FINANCIAL STATEMENTS


Consolidated Balance Sheets..................................................F-2

Consolidated Statements of Operations and Comprehensive Income (Loss)........F-3

Consolidated Statements of Stockholders' Equity..............................F-4

Consolidated Statements of Cash Flows........................................F-5

Notes to Consolidated Financial Statements...................................F-6



















                                       F-1

<PAGE>


<TABLE>
<CAPTION>
                                  Cartis, Inc.
                           Consolidated Balance Sheets


                                                                   June 30, 1999            March 31, 2000
                                                             ------------------------- ------------------------
                                                                                             (unaudited)
<S>                                                          <C>                       <C>
                         ASSETS
CURRENT ASSETS
  Cash                                                       $                       0 $                 38,356
  Accounts receivable                                                           70,698                  126,173
  VAT tax receivable                                                            18,824                    4,386
  Inventory                                                                          0                  367,607
  Prepaid expenses                                                                 618                      309
                                                             ------------------------- ------------------------
          Total current assets                                                  90,140                  536,831
                                                             ------------------------- ------------------------


PROPERTY AND EQUIPMENT
   Furniture and fixtures                                                       18,557                   17,463
   Automobiles                                                                  15,581                   14,411
   Leasehold improvements                                                      106,254                   98,275

        Less accumulated depreciation                                          (12,623)                 (22,467)
                                                             ------------------------- ------------------------

          Net property and equipment                                           127,769                  107,682
                                                             ------------------------- ------------------------

OTHER ASSETS
   Deposits                                                                      3,779                    3,495
                                                             ------------------------- ------------------------

          Total other assets                                                     3,779                    3,495
                                                             ------------------------- ------------------------
Total Assets                                                 $221,688                  $                648,008
                                                             ========================= ========================

            LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Cash overdraft                                            $                      57 $                      0
   Accounts payable                                                              2,734                  201,250
   Accounts payable - related party                                             75,103                  251,883
   Accrued Expenses
       Trade                                                                     9,118                    4,379
       Payroll and payroll taxes                                                 9,561                   14,480
   Deferred revenue                                                             30,389                        0
   Current portion of long-term debt                                             4,509                    5,077
                                                             ------------------------- ------------------------

          Total current liabilities                                            131,471                  477,069

LONG-TERM DEBT
   Note payable                                                                  4,702                      133
                                                             ------------------------- ------------------------

          Total long-term debt                                                   4,702                      133
                                                             ------------------------- ------------------------
Total Liabilities                                                              136,173                  477,202
                                                             ------------------------- ------------------------
Minority interest in consolidated subsidiary                                       467                        0
                                                             ------------------------- ------------------------

STOCKHOLDERS' EQUITY
 Preferred stock, $0.0001 par value, authorized
   10,000,000 shares; 0 issued and outstanding shares                              0                        0
 Common stock, $0.0001 par value, authorized
   50,000,000 shares; 9,350,000 and 13,437,019
   issued and outstanding shares                                                 935                    1,344
 Additional paid-in capital                                                  302,675                  597,228
 Accumulated comprehensive income (loss)                                     (11,332)                 (49,860)
 Deficit                                                                    (207,230)                (377,906)
                                                             ------------------------- ------------------------

          Total stockholders' equity                                            85,048                  170,806
                                                             ------------------------- ------------------------
Total Liabilities and Stockholders' Equity                   $                 221,688 $                648,008
                                                             ========================= ========================
</TABLE>


     The accompanying notes are an integral part of the financial statements


                                       F-2



<PAGE>


<TABLE>
<CAPTION>
                                                             Cartis, Inc.
                                Consolidated Statements of Operations and Comprehensive Income (Loss)
                                                     Nine Months Ended March 31,



                                                                  2000                       1999
                                                          ---------------------     ----------------------
                                                               (unaudited)               (unaudited)
<S>                                                       <C>                       <C>

REVENUES
Sales                                                     $             248,983     $            1,454,247
Cost of sales                                                          (117,256)                (1,401,867)
                                                          ---------------------     ----------------------

      Gross Profit                                                      131,727                     52,380

OPERATING EXPENSES
    Salaries                                                             66,486                     24,858
    Depreciation                                                         13,421                      9,216
    General and administrative                                          221,781                    269,083
    Research and development, net of reimbursements                           0                    (66,647)
                                                          ---------------------     ----------------------

          Total operating expenses                                      301,688                    236,510
                                                          ---------------------     ----------------------

Loss from operations                                                   (169,961)                  (184,130)
                                                          ---------------------     ----------------------

OTHER INCOME AND EXPENSE
    Interest income                                                         882                          0
    Interest expense                                                     (1,595)                    (2,742)
                                                          ---------------------     ----------------------

          Total other income and expense                                   (713)                    (2,742)
                                                          ---------------------     ----------------------

Income before minority interest                                        (170,674)                  (186,872)
Minority interest share of income                                             0                       (269)
                                                          ---------------------     ----------------------

Net loss                                                               (170,674)                  (187,141)

Other comprehensive income (loss):
     Foreign currency translation gain (loss)                           (38,528)                    22,604
                                                          ---------------------     ----------------------
            Comprehensive loss                            $            (209,202)    $             (164,537)
                                                          =====================     ======================
Net loss per common share                                 $               (0.02)    $                (0.02)
                                                          =====================     ======================

Weighted average number of common shares outstanding                 10,244,682                  9,350,000
                                                          =====================     ======================
</TABLE>





     The accompanying notes are an integral part of the financial statements


                                       F-3

<PAGE>



<TABLE>
<CAPTION>
                                  Cartis, Inc.
                 Consolidated Statements of Stockholders' Equity




                                                                             Additional     Accumulated                  Total
                                                 Number of      Common        Paid-In        Comprehensive             Stockholders'
                                                   Shares       Stock        Capital        Income (Loss)    Deficit     Equity
                                                 ------------   --------   ------------   --------------   ----------   ----------
<S>                                              <C>            <C>        <C>            <C>              <C>          <C>
BEGINNING BALANCE, June 30, 1997                            0   $      0   $          0   $            0   $        0   $        0

Year Ended June 30, 1998
4th qtr. - founders stock issued for services       2,000,000        200              0                0            0          200
4th qtr. - stock issued for cash                    1,000,000        100         49,900                0            0       50,000

Net loss                                                    0          0              0                0       (3,318)      (3,318)
                                                 ------------   --------   ------------   --------------   ----------   ----------

BALANCE, June 30, 1998                              3,000,000        300         49,900                0       (3,318)      46,882

Year Ended June 30, 1999
9/98 - stock issued for cash                        3,000,000        300        149,700                0            0      150,000
11/98 - stock contributed to company               (2,000,000)      (200)           200                0            0            0
11/98 - reverse merger                              5,000,000        500         85,410              (95)     (26,143)      59,672
1/99 - stock issued for services                      350,000         35         17,465                0            0       17,500
Other comprehensive income (loss)                           0          0              0          (11,237)           0      (11,237)

Net loss                                                    0          0              0                0     (177,769)    (177,769)
                                                 ------------   --------   ------------   --------------   ----------   ----------

BALANCE, June 30, 1999                              9,350,000        935        302,675          (11,332)    (207,230)      85,048

9 Mos. Ended March 31, 2000
7/99-11/99 - stock issued for cash                     87,019          9        294,186                0            0      294,195
2/00 - shares issued for equipment                  3,000,000        300              0                0            0          300
2/00 - shares issued for minority interest in
          subsidiary                                1,000,000        100            367                0            0          467
Other comprehensive income (loss)                           0          0              0          (38,528)           0      (38,528)

Net loss                                                    0          0              0                0     (170,676)    (170,676)
                                                 ------------   --------   ------------   --------------   ----------   ----------

BALANCE, March 31, 2000 (unaudited)                13,437,019   $  1,344   $    597,228   $      (49,860)  $ (377,906)  $  170,806
                                                 ============   ========   ============   ==============   ==========   ==========
</TABLE>





     The accompanying notes are an integral part of the financial statements


                                       F-4

<PAGE>




<TABLE>
<CAPTION>
                                  Cartis, Inc.
                      Consolidated Statements of Cash Flows
                           Nine Months Ended March 31,


                                                                                        2000                    1999
                                                                                --------------------     -------------------
                                                                                    (unaudited)              (unaudited)
<S>                                                                             <C>                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                        $           (170,674)    $          (187,141)
Adjustments to reconcile net loss to net cash used by operating activities:
     Depreciation                                                                             11,563                   7,223
     Minority interest share of income                                                             0                     269
     Stock issued for services                                                                     0                  17,500
Changes in operating assets and liabilities:
     (Increase) decrease in accounts receivable                                              (65,126)                (72,206)
     (Increase) decrease in VAT receivable                                                    13,956                 (12,871)
     (Increase) decrease in inventory                                                       (393,884)                 (3,782)
     (Increase) decrease in deposits and other assets                                            282                  (4,155)
     Increase (decrease) in accounts payable - trade                                         212,926                  98,467
     (Increase) decrease in accounts payable - related party                                 195,456                      69
     Increase (decrease) in accrued expenses                                                  (4,344)                  6,199
     Increase (decrease) payroll and taxes                                                     6,040                   5,318
     Increase (decrease) deferred revenue                                                     30,116                  33,410
                                                                                --------------------     -------------------
Net cash used by operating activities                                                       (163,689)               (111,700)
CASH FLOW FROM INVESTING ACTIVITIES:
     Purchase of property and equipment                                                            0                (122,772)
                                                                                --------------------     -------------------
Net cash used by investing activities                                                              0                (122,772)
                                                                                --------------------     -------------------
CASH FLOW FROM FINANCING ACTIVITIES:
     Increase (decrease) in cash overdraft                                                  (100,052)                  4,873
     Payments on automobile loan                                                              (3,546)                 (3,683)
     Issuance of common stock for cash                                                       294,195                 219,246
                                                                                --------------------     -------------------
Net cash provided by financing activities                                                    190,597                 220,436
                                                                                --------------------     -------------------
Effect of exchange rates on cash                                                              11,448                  14,036
                                                                                --------------------     -------------------
Net increase (decrease) in cash                                                               38,356                       0
CASH, beginning of period                                                                          0                       0
                                                                                --------------------     -------------------
CASH, END OF PERIOD                                                             $             38,356     $                 0
                                                                                ====================     ===================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Payment of interest in cash                                                     $              1,595     $             2,742
                                                                                ====================     ===================
Non-Cash Financing Activities:
Fixed asset acquisition through issuance of common stock                        $                300     $                 0
                                                                                ====================     ===================
</TABLE>




     The accompanying notes are an integral part of the financial statements


                                       F-5

<PAGE>



                                  Cartis, Inc.
                   Notes to Consolidated Financial Statements
 (Information with respect to the nine months ended March 31, 2000 is unaudited)

(1) Summary of Significant Accounting Principles
      The  Company Cartis, Inc. is a Florida chartered corporation that conducts
           business from its offices in Palm Beach,  Florida,  Orleans,  France,
           Lyon, France and Port Louis, Mauritius.  The Company was incorporated
           on March 5, 1997,  1997, as Cobalter,  Inc.,  and changed its name to
           Cartis,  Inc.  on  November  18,  1998.  The  Company is  principally
           involved in the  development of water  treatment  systems through its
           French  subsidiary,  S.A.R.L.  CEFCA  ("CEFCA"),  and the sale of the
           systems through its Mauritius subsidiary,  Cartis International.  The
           following  summarize the more  significant  accounting  and reporting
           policies and practices of the Company:

           a)  Use  of  estimates  In  preparing  the   consolidated   financial
           statements,  management is required to make estimates and assumptions
           that affect the reported  amounts of assets and liabilities as of the
           date of the  statements  of  financial  condition,  and  revenues and
           expenses  for  the  year  then  ended.   Actual  results  may  differ
           significantly from those estimates.

           b)  Significant  acquisition  In October 1998,  Cartis,  Inc.  issued
           5,000,000  shares of common  stock to acquire  substantially  all the
           issued and outstanding  shares of the common stock of CEFCA, a French
           company,  and 80% of the  issued  and  outstanding  shares  of Cartis
           International  ("CIL"), a Mauritius company,  in a reverse merger. In
           February 2000, the Company issued 1,000,000 shares of common stock to
           acquire the 20% of Cartis International it did not previously own. In
           January  2000,  the Company and A.S.A.P.,  LLC formed Cartis  France,
           S.A.,  (CF). The Company owns 49% of CF and A.S.A.P.  owns 51% of CF.
           This  Company  was formed to  distribute  the  Company's  products in
           France.

           c) Principles of consolidation  The consolidated financial statements
           include the accounts of Cartis, Inc. and  its wholly owned subsidiary
           and majority owned subsidiary.Inter-company balances and transactions
           have been eliminated.

           d) Net loss per  common  share  Basic net loss per  weighted  average
           common  share is computed by  dividing  the net loss by the  weighted
           average number of common shares outstanding during the period.

           e) Property and  equipment All property and equipment are recorded at
           cost and  depreciated  over their estimated  useful lives,  using the
           straight-line method. Upon sale or retirement,  the costs and related
           accumulated   depreciation   are  eliminated  from  their  respective
           accounts,  and the resulting  gain or loss is included in the results
           of operations.  Repairs and maintenance charges which do not increase
           the useful lives of the assets are charged to operations as incurred.
           Depreciation expense was $13,421,  $9,216, $2,193 and $12,532 for the
           periods  ended  March 31,  2000 and 1999 and June 30,  1998 and 1999,
           respectively.

           f) Cash and equivalents  The company  considers  investments  with an
           initial maturity of three months or less as cash equivalents.

           g) Inventories Inventories are stated at the lower of cost (first-in,
           first-out method) or market.

           h) VAT tax  receivable  In France,  as in many other  countries,  the
           government  charges a Value  Added  Tax,  (VAT),  that is  similar in
           nature to sales tax in the U.S.  There are three  major  differences.
           First is that VAT is charged  at each  point of sale.  Second is that
           there are no exemptions  from the  collection of VAT.  Finally,  each
           company files a VAT return with the government monthly reflecting the
           gross VAT collected and VAT paid. If the VAT paid is greater than the
           amount  collected,  the Company receives a refund from the government
           approximately five months later.

                                       F-6

<PAGE>



                                  Cartis, Inc.
                   Notes to Consolidated Financial Statements


(1) Summary of Significant Accounting Principles (Continued)

           i)  Revenue  recognition  The  Company  recognizes  revenue  when the
purchaser accepts the goods.

           j) Royalties  Cartis  International  acquired the Cartis  patents and
           Cartis  trademark  from a founder  for a royalty of 5% of gross sales
           relating to products and services from the use of the patent, payable
           monthly beginning January 1, 2001.

           k) Interim  financial  information  The financial  statements for the
           nine months ended March 31, 2000 and 1999 are  unaudited  and include
           all adjustments  which in the opinion of management are necessary for
           fair presentation, and such adjustments are of a normal and recurring
           nature.  The results for the nine months are not indicative of a full
           year results.

(2)        Stockholders' Equity The Company has authorized  50,000,000 shares of
           $0.0001 par value common stock and  10,000,000  shares of $0.0001 par
           value preferred  stock.  Rights and privileges of the preferred stock
           are to be determined by the Board of Directors prior to issuance. The
           Company has  9,350,000  and  9,437,019  (unaudited)  shares of common
           stock issued and outstanding at June 30, 1999 and December 31, 1999.

           In April 1998,  the Company  issued  2,000,000  to its  officers  for
           services  rendered to the Company.  In April 1998, the Company issued
           under  Regulation D Rule 540  Placement  for 1,000,000 for $50,000 in
           cash. In September 1998, 3,000,000 shares were issued for $150,000 in
           cash. In November 1998, the 2,000,000 shares issued for services were
           donated  to  the  Company.  In  November  1998,  the  Company  issued
           5,000,000 shares for 4,000 of the 4,000 shares issued and outstanding
           of S.A.R.L.  CEFCA, a French company,  and 1.6 shares of the 2 shares
           issued and outstanding of Cartis International,  a Mauritius company.
           In January 1999,  the company  issued 350,000 shares to third parties
           for services  rendered.  From July 1999 through  December  1999,  the
           Company issued 87,019 (unaudited) shares for cash.

           In February 2000, the Company issued  1,000,000 shares for the 20% of
           Cartis International it previously did not own. In February 2000, the
           Company issued 3,000,000 shares to purchase certain fixed assets from
           a related  party.  Until such time as this  related  party is able to
           fully document the historical cost of this equipment, the Company has
           elected to value the transaction  based on the par value of the stock
           issued, or $300.

(3)        Income  Taxes  Deferred  income  taxes  (benefits)  are  provided for
           certain income and expenses which are recognized in different periods
           for  tax  and  financial  reporting  purposes.  The  Company  had net
           operating   loss  carry-   forwards   for  income  tax   purposes  of
           approximately  $378,000,  which  expire  $29,000  on June  30,  2018,
           $178,000 on June 30, 2019 and $171,000 on June 30, 2020.

           The amount  recorded as a deferred tax asset,  cumulative  as of June
           30, 1999 and March 31, 2000, is  approximately  $67,000 and $126,000,
           respectively, which represents the amount of tax benefits of the loss
           carry-forwards. The Company has established a valuation allowance for
           this deferred tax asset of $67,000 and  $124,000,  as the Company has
           no history of profitable operations.




                                       F-7

<PAGE>



                                  Cartis, Inc.
                   Notes to Consolidated Financial Statements


(3) Income Taxes  (Continued) The significant  components net deferred tax asset
are:


                                June 30, 1999             March 31, 2000
                           -----------------------    -----------------------
                                                          (unaudited)
Net operating losses       $                67,000    $               126,000
Valuation allowance                        (67,000)                  (126,000)
                           -----------------------    -----------------------
Net deferred tax asset     $                     0    $                     0
                           =======================    =======================

(4)        Going  Concern As shown in the  accompanying  consolidated  financial
           statements, the Company incurred net losses totaling $177,000 for the
           year ended June 30, 1999 and $171,000 for the nine months ended March
           31,  2000 and  reflects  positive  working  capital of  approximately
           $60,000  as of March 31,  2000,  (unaudited).  This  working  capital
           includes  approximately  $368,000 of inventory.  The Company also has
           had only one  customer  historically,  see Note 8.  These  conditions
           raise  substantial doubt as to the ability of the Company to continue
           as a going concern. The ability of the Company to continue as a going
           concern is dependent upon increasing  sales and obtaining  additional
           capital and  financing.  The financial  statements do not include any
           adjustments  that  might be  necessary  if the  Company  is unable to
           continue as a going  concern.  The Company is  currently  negotiating
           with several parties for an infusion of capital.

(5)        Related Party Transactions In October 1998, the Company's subsidiary,
           CEFCA,  received an exclusive  license from its current president and
           chairman  to  manufacture  CARTIS  products,  in both France and in a
           country of its  choice.  In  exchange  for such  rights,  the Company
           agreed  to pay  royalties  in the  amount  of 3% of gross  sales  and
           services,  payable monthly.  The term of the license is 20 years. The
           patent was assigned to the Company in February 2000. (See Note 10.)

           In October  1998,  the Company  entered  into a  five-year  exclusive
           service and supply  contract  with Advanced  Technology  Development,
           Ltd., ("ATD"), a company primarily owned and managed by the Company's
           president,  whereby ATD will be the  exclusive  supplier of machinery
           and production  supplies necessary to manufacture the CARTIS product.
           The contract was canceled in February 2000 (see Note 10).

           In October 1998, ATD entered into an exclusive distribution agreement
           with   Cartis   International   whereby  ATD  will   provide   Cartis
           International  with all Cartis  products  necessary to the commercial
           needs of Cartis  International,  based on an agreed  upon  price.  In
           addition, the Company's subsidiary, Cartis International, received an
           exclusive  right to use the  brand  name  CARTIS  and to sell  CARTIS
           products  worldwide.  The term of these contracts was for a period of
           three years.  These contracts were canceled in February 2000.  Cartis
           International owed ATD $75,105 as of June 30, 1999 and $336,378 as of
           December 31, 1999 for products received.

           The Company received advances from shareholders  during November 1999
           in the amount of $15,334. These advances are non interest bearing and
           are due on demand.

(6)        Long-Term  Debt In  1999,  S.A.R.L.  CEFCA  purchased  an  automobile
           through a bank loan. The loan bears approximately 6.6% interest, with
           monthly payments in the amount of approximately $440 per month. Under
           the loan  agreement,  the Company is obligated  to pay  approximately
           $4,800 and $4,400 in 2000 and 2001, respectively.




                                       F-8

<PAGE>



                                  Cartis, Inc.
                   Notes to Consolidated Financial Statements


(7)        Commitments  In  September  1998,  S.A.R.L.  CEFCA  entered  into two
           operating  leases,  one for its  office  space  and the  other  for a
           security  service.  The office  lease  expires  2017 and the security
           lease expires 2003. Minimum lease payments are as follows:


2000             $                24,724
2001                              24,724
2002                              24,724
2003                              23,186
2004                              22,674
Thereafter                        71,800
                 -----------------------
                 $               191,832
                 =======================

           In August 1999, the Company entered into an employment agreement with
           its general manager, who is also a stockholder. This contract carries
           no termination  clause and pays him  approximately  $27,000 in salary
           and $8,000 in living  expenses per year. In January 1999, the Company
           entered into an employment  agreement  with its  part-time  CFO. This
           agreement  carries no termination  clause and pays him  approximately
           $4,000 per year.

(8)        Concentration  of Customers and  Suppliers  The  Company's  source of
           revenue to date has been one  customer  under a  marketing  agreement
           with Cartis  International.  This customer purchased a portion of its
           contractual  minimum  required  in 1998  and  1999.  It  subsequently
           unilaterally  canceled the agreement due to its inability to complete
           its obligations under the agreement. The Company is currently seeking
           another  party to act as a  distributor  or,  alternatively,  seeking
           funding  to allow the  Company  to market  the  product  to end users
           itself.

(9)        Government  Grants The Company has  received a  government  grant for
           research  and  development.  The  grant  was in the  total  amount of
           $46,427 and was received in the fiscal years ending June 30, 1998 and
           1999 and is applied to reduce research and development expenses.

(10)       Subsequent  Events In April 2000,  the Company began efforts to raise
           additional capital via a Regulation D Rule 506 private placement. The
           Company has raised  $256,000 in cash and has  received  subscriptions
           for an additional $358,000.









                                       F-9

<PAGE>



Item 2. Management's Discussion and Analysis of Results of Operations.

General

           The Company's Form 10SB becomes effective on June 11, 2000.  Although
not  technically a reporting  company under the  Securities  and Exchange Act of
1934, as amended,  until such time, the Company is voluntarily  filing this Form
10QSB so that current  financial  information  is available to the public and so
that there is no gap between the reports in its Form 10SB and its report on Form
10KSB due for filing on September 28, 2000.

           In February 2000, Herve Gallion,  the Company's current President and
Chairman,  assigned  the  worldwide  patents  and  trademarks  on the  Company's
products to the Company. An assignment of these rights has yet to be recorded at
the Swiss  Institute of Industrial  Property.  Under the terms of the agreement,
Herve  Gallion is to receive a royalty of five  percent  (5%) of gross sales and
services, payable monthly beginning January 1, 2001.

           In February 2000,  the Company  purchased the machinery and equipment
necessary to  manufacture  the Company's  products  from  Advanced  Technologies
Development Company Limited ("ATD").  Herve Gallion is an officer,  director and
also  the  beneficial  owner of ATD.  For  such  products,  the  Company  issued
3,000,000  shares of its Common  Stock to ATD.  For such  offering,  the Company
relied upon Section 4(2) of the Act and no state exemption,  as ATD is a foreign
corporation.

           In February  2000,  the Company  purchased  the  remaining 20% of the
issued and outstanding common shares of Cartis International,  Ltd., a Mauritius
company  ("CIL").  As a result,  CIL  became a wholly  owned  subsidiary  of the
Company.  The remaining  shares were owned by Herve Gallion and Cyril  Heitzler,
each owning 10%. The Company  issued  500,000 shares of its Common Stock to each
person.  For such offering,  the Company relied upon Section 4(2) of the Act and
no state exemption, as Mr. Gallion and Mr. Heitzler are both foreign residents.

           In April and May 2000,  the Company sold 142,980 shares of its Common
Stock for a total of  $255,935  to twelve  (12)  investors.  Patrick  Martin,  a
current   director  of  the  Company,   purchased   9,486  shares  for  $16,980.
Additionally,  subscriptions to purchase shares have been received from nine (9)
more  investors,  although  the funds have yet to be  received  by the  Company.
Because the funds have yet to be received and the subscriptions will be paid for
in French Franks,  the currency  conversion cannot yet be made and the number of
shares  subscribed  for  determined.  For such  offering,  the Company relied on
Section 4(2) of the Act and Rule 506. No state  exemption was  required,  as all
purchasers were foreign residents.

           The  Company  relied  upon  Section  4(2) of the Act and Rule 506 for
several transactions regarding the issuance of its unregistered  securities.  In
each  instance,  such  reliance was based upon the fact that (i) the issuance of
the  shares  did not  involve a public  offering,  (ii)  there were no more than
thirty-five  (35)  investors  (excluding  "accredited  investors"),  (iii)  each
investor who was not an accredited  investor  either alone or with his purchaser
representative(s)  had such  knowledge and  experience in financial and business
matters  that  he  was  capable  of  evaluating  the  merits  and  risks  of the
prospective  investment,  or the issuer reasonably believed immediately prior to


                                       -1-

<PAGE>



making any sale that such  purchaser  came  within  this  description,  (iv) the
offers  and  sales  were made in  compliance  with  Rules  501 and 502,  (v) the
securities  were subject to Rule 144  limitations on resale and (vi) each of the
parties was a sophisticated  purchaser and had full access to the information on
the Company necessary to make an informed  investment  decision by virtue of the
due diligence  conducted by the purchaser or available to the purchaser prior to
the transaction.

Discussion and Analysis

           Cartis, Inc. (the "Company" or "Cartis") is incorporated in the State
of Florida. The Company was originally  incorporated as Cobalter,  Inc. on March
3, 1997 ("Cobalter").  The Company  subsequently changed its name to Cartis, Inc
in January  1999.  The Company is currently  quoted on the  National  Quotations
Bureau's  "Pink Sheets" under the symbol "CART" and has been since October 1999,
when it filed a 15c2-11 exemption request form due to phase-in implementation of
NASD  Rule  6530 (the  Eligibility  Rule).  The  Company  was  quoted on the OTC
Bulletin  Board under the symbol "CART" until October 1999,  but was  originally
quoted under the symbol "CBLT".  Its executive  offices are presently located at
277 Royal Poinciana Way, PMB 155, Palm Beach, FL 33480.  Its telephone number is
(230) 211-6825 and its facsimile number is (230) 210-2445.

           The  Company is  principally  involved  in the  development  of water
treatment systems.  Current activities include: (i) marketing its Portable Water
System ("PWS 300")  product;  (ii)  researching  and further  developing its new
products; and (iii) continuing to improve the Cartis Process.

           Inventory  consists  mainly of filtration  system parts to be used in
the  assembly  of PWS 300  units  to be  sold to  customers.  Once  assembly  is
complete,  the  respective  part costs are charged to  inventory.  Inventory  is
valued at the lower of cost or market.  Cost is  determined  using the first-in,
first-out (FIFO) method.

           Equipment  consists  mainly of the  machinery  acquired from Advanced
Technologies  Development  Company  Limited ("ATD") in February 2000 in exchange
for 3,000,000 shares of the Company's Common Stock and other equipment purchased
by the Company for cash.  Herve  Gallion,  the Company's  current  President and
Chairman, is an officer, director and also a beneficial owner of ATD.

           While the  Company is  emerging  from its  development  stage,  it is
acquiring the necessary operating assets and is beginning its proposed business.
There is no  assurance  that any benefit will result from such  activities.  The
Company  will receive  limited  operating  revenues  and will  continue to incur
expenses during its development, possibly in excess of revenue.

           The  ability  of the  Company  to  continue  as a  going  concern  is
dependent upon increasing sales and obtaining  additional capital and financing.
The financial  statements do not include any adjustments that might be necessary
if the  Company  is  unable to  continue  as a going  concern.  The  Company  is
currently seeking financing to allow it to continue its planned operations.



                                       -2-

<PAGE>



Results of Operations - For the Three Months Ending March 31, 1999
                        and March 31, 2000

Financial Condition, Capital Resources and Liquidity

           For the 3rd  quarter  ended  March  31,  1999 and  2000  the  Company
recorded revenues of $1,454,000 and $249,000 respectively. For the third quarter
ended March 31,  1999 and 2000 the  Company  had salary  expenses of $25,000 and
$66,000.  This  increase  of  $41,000  was due to an  increase  in the number of
personnel employed by the Company.

           For the 3rd quarter ended March 31, 1999 and 2000, the Company had on
a consolidated unaudited basis total operating expenses of $237,000 and $302,000
of which  $41,000 is  attributable  to an increase  in  salaries  and $67,000 is
attributable to a decrease in research and development reimbursement.

Net Losses

           For the 3rd quarter ended March 31, 1999,  2000, the Company reported
a net loss from operations of $187,000 and $171,000 respectively.

           The  ability  of the  Company  to  continue  as a  going  concern  is
dependent upon increasing sales and obtaining  additional capital and financing.
The Company is currently  seeking  financing to allow it to continue its planned
operations.

Employees

           At March 30, 2000,  the Company  employed  two (2)  persons.  None of
these  employees  are  represented  by a labor union for purposes of  collective
bargaining.  The  Company  considers  its  relations  with its  employees  to be
excellent.  The  Company  plans to employ  additional  personnel  as needed upon
product rollout to accommodate its needs.

Research and Development Plans

           The Company  believes that research and  development  is an important
factor in its future growth. The water filtration  industry is closely linked to
technological advances, which produce more efficient, economical and better ways
to filter  water.  Therefore,  the Company  must  continually  invest in ongoing
research to appeal to the public and to effectively compete with other companies
in the industry.  No assurance can be made that the Company will have sufficient
funds  to  compete.  Additionally,  due to  the  rapid  advance  rate  at  which
technology  advances,  the  Company's  equipment  and  inventory may be outdated
quickly,  preventing or impeding the Company from  realizing its full  potential
profits.

Impact of the Year 2000 Issue

           The Company did not experience any material  impact to its operations
as a result of the Year 2000 calendar  change.  The Company does not  anticipate
any  material  disruption  in its  operations  as a result of any failure by the
Company to be in compliance.

                                       -3-

<PAGE>



Forward-Looking Statements

           This Form 10-QSB  includes  "forward-looking  statements"  within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the Securities  Exchange Act of 1934, as amended.  All statements,  other
than  statements of historical  facts,  included or incorporated by reference in
this Form 10-QSB which  address  activities,  events or  developments  which the
Company expects or anticipates  will or may occur in the future,  including such
things as future capital expenditures (including the amount and nature thereof),
expansion and growth of the Company's  business and  operations,  and other such
matters are  forward-looking  statements.  These statements are based on certain
assumptions  and analyses made by the Company in light of its experience and its
perception  of  historical  trends,   current  conditions  and  expected  future
developments  as well as  other  factors  it  believes  are  appropriate  in the
circumstances. However, whether actual results or developments will conform with
the Company's  expectations  and predictions is subject to a number of risks and
uncertainties,  general  economic market and business  conditions;  the business
opportunities  (or lack  thereof)  that may be  presented  to and pursued by the
Company;  changes in laws or regulation;  and other  factors,  most of which are
beyond the control of the Company.

           Consequently, all of the forward-looking statements made in this Form
10-QSB  are  qualified  by  these  cautionary  statements  and  there  can be no
assurance  that the actual  results or  developments  anticipated by the Company
will be realized  or, even if  substantially  realized,  that they will have the
expected consequence to or effects on the Company or its business or operations.
The  Company   assumes  no  obligations  to  update  any  such   forward-looking
statements.

PART II

Item 1.  Legal Proceedings.

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

Item 2.  Changes in Securities and Use of Proceeds

           None.

Item 3.  Defaults in Senior Securities

           None

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

           No matter was  submitted  during the quarter  ending  March 31, 2000,
covered by this  report to a vote of the  Company's  shareholders,  through  the
solicitation of proxies or otherwise.



                                       -4-

<PAGE>



Item 5.              Other Information

           None.

Item 6.              Exhibits and Reports on Form 8-K

     (a)   The exhibits  required to be filed herewith by Item 601 of Regulation
           S-B,  as  described  in  the   following   index  of  exhibits,   are
           incorporated herein by reference, as follows:

<TABLE>
<S>                 <C>    <C>    <C>    <C>    <C>    <C>
Exhibit No.         Description
--------------      --------------------------------------------------------
3.(i).1    (1)      Articles of Incorporation of Cobalter, Inc. dated March 5, 1997.

3.(i).2    (1)      Articles of Amendment to Articles of Incorporation changing Company's name to
                    Cartis, Inc. dated January 27, 1999.

3.(ii).1   (1)      Bylaws of Cobalter, Inc. dated April 1, 1997.

4.1        *        Offering Memorandum dated March 10, 2000

10.1       (1)      Lease between CEFCA s.a.r.l. and Jacques Cottet dated July 16, 1998 in French.

10.2       (1)      Lease between CEFCA s.a.r.l. and Jacques Cottet dated July 16, 1998 translated into
                    English.

10.3       (1)      Acquisition Agreement between the Company, CEFCA s.a.r.l. and Cartis
                    International, Ltd. dated October 29, 1998.

10.4       (1)      Acquisition Contract for the CARTIS Patent and CARTIS Trademark between the
                    Company and Herve Gallion dated February 19, 2000 in French.

10.5       (1)      Acquisition  Contract for the CARTIS Patent and CARTIS
                    Trademark  between  the  Company  and Herve  Gallion  dated
                    February 19, 2000 translated into English.

10.6       (1)      Purchase Contract of Equipment CARTIS and the Production Rights of CARTIS
                    Process between the Company and Advanced Technologies Development Company
                    Limited dated February 21, 2000 in French.

10.7       (1)      Purchase Contract of Equipment CARTIS and the Production Rights of CARTIS
                    Process between the Company and Advanced Technologies Development Company
                    Limited dated February 21, 2000 translated into English.

10.8       (1)      Agreement of Sale of Cartis International, Ltd. Shares to Cartis, Inc. between the
                    Company, Herve Gallion and Cyril Heitzler dated February 18, 2000 in French.
</TABLE>


                                       -5-

<PAGE>


<TABLE>
<S>                 <C>    <C>    <C>    <C>    <C>    <C>
10.9       (1)      Agreement of Sale of Cartis International, Ltd. Shares to Cartis, Inc. between the
                    Company, Herve Gallion and Cyril Heitzler dated February 18, 2000 translated into
                    English.

10.10      (1)      Employment Contract between Steve Olivier and Cartis International, Ltd. dated
                    January 1, 1999 in French.

10.11      (1)      Employment Contract between Steve Olivier and Cartis International, Ltd. dated
                    January 1, 1999 translated into English.

10.12      (1)      Employment Contract between Cyril Heitzler and Cartis International, Ltd. dated
                    January 8, 1999 in French.

10.13      (1)      Employment Contract between Cyril Heitzler and Cartis International, Ltd. dated
                    January 8, 1999 translated into English.

27.1       *        Financial Data Sheet.
-----------------------------------------------------
</TABLE>
(1)  Incorporated herein by reference to the Company's Registration Statement on
     Form 10-SB.

*    Filed herewith

     (b) No Reports on Form 8-K were filed  during the  quarter  ended March 31,
2000.









                                       -6-

<PAGE>



                                   SIGNATURES


           In  accordance  with  the  requirements  of  the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                             Cartis, Inc.
                                   (Registrant)


Date:  June 12, 2000               By: /s/ Herve Gallion
                                   --------------------------------------
                                            Herve Gallion
                                   President & Chairman


                                   By: /s/ Cyril Heitzler
                                   -------------------------------------
                                   Cyril Heitzler
                                   Secretary, Treasurer and Director





                                       -7-