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

                                   FORM 10-KSB

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                        Commission File Number 000-27847

                      JACOBSON RESONANCE ENTERPRISES, INC.

           NEVADA                                           65-0684400
 --------------------------                              ----------------
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                         Identification Number)

    8200 Jog Road, Suite 100, Boynton Beach, Florida     33437
    ------------------------------------------------    -------
       (Address of principal executive offices)         (Zip Code)

  Company's telephone number, including area code:     (561) 752-4141

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:   NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                          COMMON STOCK, $.001 PAR VALUE

Check whether the Company (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 Company was required to file such
reports), and (2) has been subject to filing requirements for the past 90 days.
Yes [X] No [ ]

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained herein, and will not be contained, to the best of the Company's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
[ ]

The Company's revenues for fiscal year 2001 were $182,030.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the Company is $36,309,237 based on the closing price of
$0.225 as of April 1, 2002.*

As of April 1, 2002, the Company had a total of 60,440,838 shares of common
stock outstanding.

-----------------------
*Affiliates for the purpose of this item refer to the officers, directors,
and/or persons  or firms owning 5% or more of the Company's common stock, both
of record and beneficially.


                       DOCUMENTS INCORPORATED BY REFERENCE

The following documents are incorporated by reference:   None





                                  SPECIAL NOTE
                           FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS CONTAINED IN THIS REPORT, INCLUDING, WITHOUT LIMITATION,
STATEMENTS CONTAINING THE WORDS "BELIEVES," "ANTICIPATES," "EXPECTS" AND WORDS
OF SIMILAR IMPORT CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES.

THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN
THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THE
SUCCESS AND SUBSEQUENT ACCEPTANCE OF NEW MEDICAL RESEARCH AND DEVELOPMENT; THE
REGULATORY FRAMEWORK OF THE HEALTH CARE INDUSTRY; THE COMPANY'S ABILITY TO
CREATE, SUSTAIN, MANAGE OR FORECAST ITS GROWTH; ITS ABILITY TO ATTRACT AND
RETAIN KEY PERSONNEL; ITS ABILITY TO PROTECT TECHNOLOGY; CHANGES IN ITS BUSINESS
STRATEGY OR DEVELOPMENT PLANS; COMPETITION; DEMOGRAPHIC CHANGES; BUSINESS
DISRUPTIONS; ADVERSE PUBLICITY; AND INTERNATIONAL, NATIONAL AND LOCAL GENERAL
ECONOMIC AND MARKET CONDITIONS.







                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

SUMMARY

EXECUTIVE OFFICES

     Our corporate offices are located at 8200 Jog Road, Suite 100, Boynton
Beach, Florida 33437. We can be reached by telephone at (561) 752-4141, by fax
transmission to (561) 752-3939 or via e-mail at jacobsonres@aol.com.

INTRODUCTORY

     Jacobson Resonance Enterprises, Inc., (the "Company," "we" or "us), is a
Nevada corporation incorporated on March 6, 1988 and was originally known as
Pioneer Services International, Ltd. On June 4, 1996, the Company acquired
Jacobson Resonance Machines, Inc., a closely held Florida corporation founded
Dr. Jerry I. Jacobson, in exchange for 57,220,000 shares of the Company's common
stock, or a 92% equity interest at that time in the Company. On July 30, 1998,
we changed our name to Jacobson Resonance Enterprises, Inc.

     Our company is in the developmental stage. We are developing
electromagnetic resonance technology ("Jacobson Resonance") focusing initially
on healthcare. Our patented Jacobson Resonance technology is licensed from the
Company's founder, Chairman of the Board and Chief Science and Technology
Officer, Dr. Jerry I. Jacobson.

     We are planning to use Jacobson Resonance for the reduction of chronic and
acute pain, commencing with magnetotherapy for the knee.

     Jacobson Resonance utilizes extremely weak physiologic (like those found in
the human heart, brain and other organs), low frequency electromagnetic fields
to beneficially alter molecular characteristics. We plan to use joint venture
and licensing arrangements, as well as our own resources, to develop,
manufacture, distribute and market various applications of Jacobson Resonance.

PRODUCTS

     We have developed four different clinical models of the Jacobson Resonator
for the alleviation of chronic and acute pain. These models include 18-inch
(expandable), 22-inch (expandable), 4-foot and 7-foot resonators and are now
being sold or leased in Canada and Spain, and in Mexico (on a cost-recovery
basis as authorized by the U.S. Food and Drug Administration ("FDA") for the
following therapeutic uses: magnetotherapy for a steomuscular pain (and soft
tissue pain, including connective tissue such as ligaments and tendons). These
resonators have been marketed in other European countries, Latin America, the
Pacific Rim and Australia commencing with the last quarter of 2001. Royalty and
usage revenues began arriving from Canada in September 2001. Revenues began
arriving from European and worldwide distribution during the last quarter of
2001. In 2001, we placed and sold 23 Jacobson Resonators in Europe and five in
Canada. Royalty and usage revenues from Canada in 2001 were $23,350 (plus
$70,000 for parts and equipment), and revenues from European and worldwide
distribution in 2001 were $133,697 (plus $23,000 for parts and equipment). Upon
clearance from the FDA these resonators would be marketed in the U.S. primarily
through distributors by sales, leasing and participation in proprietary clinical
settings.


OUR OPERATING RESULTS

Our operations have never been profitable. We have incurred net losses from the
beginning of our development through December 31, 2001, of $10,871,443; and it
is expected that we will continue to incur operating losses in the future. In
2001, we generated revenues of $182,030 and incurred operating expenses of
$1,850,474 and had a net loss of $1,771,605. As of March 15, 2002, we had
$83,400 of cash on hand to fund operations. There is no assurance that we will
continue to be able to be able to fund our operations with investments by third
parties or that we will operate profitably in the future.


REGULATORY CLEARANCES

     We have received regulatory clearances, and are marketing our products, in
Europe, Canada and Mexico (the latter being in accordance with FDA cost recovery
guidelines). The clinical resonators require FDA clearance before they can be
commercially used in the United States of America. See "Government Regulation."
We have not yet received FDA clearance for the commercialization of our clinical
resonators in the United States of America. We anticipate FDA clearance of our
18-inch clinical Jacobson Resonator for treatment of chronic pain from
osteoarthritis of the knee by the end of the second quarter of 2002. There is no
assurance that FDA clearance will be granted then, if at all.

     Full approval and clearance for manufacturing of all model resonators have
been received from Spain under the same CE-Mark license. Additionally, Spain has
granted permission to treat all musculo-skeletal pain from the neck down. On
November 27, 2000, we received notification of licensing rights from the
Therapeutic Products Section of the Canadian Ministry of Health (Health Canada)
for commercialization and use of Jacobson Resonators in Canada and in other
countries, which have reciprocity licenses and active trade agreements. The
license issued covers osteoarthritic conditions and a broad spectrum of
pain-related musculo-skeletal injuries. On September 27, 2001, Health Canada
granted extended licensing rights to treat "all types of pain" no matter the
cause. During the past two years Jacobson Resonators have been used in Mexico
for the treatment of chronic and acute pain.

After FDA clearance, we plan to distribute the clinical models of the Jacobson
Resonators in the U.S. primarily through existing medical device distributors.


RISK FACTORS

     An investment in our common stock involves a significant degree of risk.
You should not invest in our common stock unless you can afford to lose your
entire investment. You should consider carefully the following risk factors and
other information in this prospectus before deciding to invest in our common
stock.

We have only a limited operating history and have not operated profitably since
commencement of operations. We will be required to raise substantial amounts of
capital.

     Our operations have never been profitable. We have incurred net losses from
the beginning of our development through December 31, 2001, of $10,871,443; and
it is expected that we will continue to incur operating losses in the future. In
2001, we generated revenues of $182,030 and incurred operating expenses of
$1,850,474 and had a net loss of $1,711,605. As of March 15, 2002, we had
$83,400 of cash on hand to fund operations. There is no assurance that we will
operate profitably in the future.

     We will be required to raise substantial amounts of capital to continue
development and commercialization of our existing and proposed products, and
there is no assurance that we will be able to raise this additional required
capital.

     We have been the subject of a going concern opinion from our independent
auditors, which means that we may not be able to continue operations unless we
obtain additional funding.

     Our independent auditors have added an explanatory paragraph to their audit
opinions, issued in connection with our financial statements, which states that
our ability to continue as a going concern is uncertain due to our continued
operating losses, the excess of our liabilities over our assets and uncertain
conditions we face in our day-to-day operations. Our financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
We only have funds on hand sufficient to carry us through the end of the second
quarter of 2002, and the audit opinion could impact adversely our ability to
obtain financing.

We have a significant obligation as a result of settlement of a lawsuit against
Dr. Jerry I. Jacobson, our founder.

We have an obligation, pursuant to the settlement of a lawsuit filed by two
plaintiffs regarding ownership of certain patents licensed to us by Dr. Jerry I.
Jacobson, to pay the plaintiffs the sum of $1,000,000, which obligation is
currently due and payable. This obligation is owed both by Dr. Jacobson and by
us, and we intend to pay this amount to the plaintiffs when we have available
funds. Up to this point, the plaintiffs have not attempted to enforce payment of
this amount through the courts; however, there is no assurance that they will
not so pursue their legal remedies and obtain a judgment against us, which at
this point would force us to file for bankruptcy. See "Legal Proceedings".

Our future revenues are unpredictable.

     As a result of our limited operating history and the emerging nature of the
market in which we compete, we are unable to accurately forecast our revenues.
Revenues and operating results generally depend on regulatory approvals, the
volume of, timing of and ability to fulfill orders received, and competitive
conditions, which are difficult to forecast. We may be unable to adjust spending
in a timely manner to compensate for any unexpected revenue shortfall.
Accordingly, any significant shortfall in revenues in relation to our planned
expenditures would have an immediate adverse effect on our business, prospects,
financial condition and results of operations.

There is no assurance that we will be able successfully to develop and
commercialize our technology.

     Commercialization of our technology will require regulatory clearances,
substantial additional capital and a successful commercial product. There is no
assurance that we will be able to develop a successful commercial product. If we
are not successful in so commercializing our product or products, and your
investment in the Company will be lost.

Our products may not be eligible for insurance reimbursement.

At this time, our products are not eligible for insurance reimbursement,
although reimbursement for use of our products is being considered by insurance
companies in Europe and Canada. Overall, we expect reimbursement to be approved
in Europe and Canada, and later in the United States following FDA clearance.
However, if insurance reimbursement is not available, sales and usage of our
products would be adversely affected.

Even if we and our licensees are successful in developing our proposed
technology, there is no assurance that we and our licensees will be able to
market the technology commercially.     

     We are not experienced in marketing our type of proposed technology to the
intended market and, even assuming we successfully develop the product or
products targeted for this intended market, there is no assurance that this
market will accept these product or products. In this case, you could lose your
entire investment in the Company.

We will need to raise substantial additional capital to complete development of
our proposed technology and to commercialize the technology. There is no
assurance that we will be able to secure the additional capital investments
required to complete product development and commercialize the technology.

     Substantial additional capital, which we estimate to be in the range of $5
million to $10 million will be required to complete development (including
possible redesign and enhancement of existing products, for example, water
immersion products, which product enhancements would require separate FDA
clearance) and regulatory clearances of our proposed commercial products and to
bring those products to market. There is no assurance that, even if our initial
commercial products perform as intended, we will be successful in attracting
this amount of additional capital. If we are not successful in attracting this
additional capital, an investment in us may be lost.

If our proposed products do not achieve market acceptance, we will not be able
to generate the revenue necessary to support our business.

     Our proposed products represent a fundamentally new way of relief of pain
and therapy for certain types of injuries, diseases or other medical conditions.
If our proposed products fail to achieve market acceptance, potential users will
not purchase our products and we will not be able to generate the revenue
necessary to support our business.

Our proposed products are subject to a lengthy and uncertain domestic regulatory
process. If we do not obtain and maintain the necessary domestic regulatory
approvals, we will not be able to market and sell these products in the United
States.

     Our proposed products are subject to regulation in the United States by the
FDA. See "Government Regulation". The FDA regulates the research, testing,
manufacturing, safety, labeling, storage, record keeping, promotion,
distribution and production of medical devices in the United States. Our
products have not been approved by the FDA for any therapeutic procedures. On
March 27, 2002, in connection with our pending application for clearance, we
received two additional questions from the FDA, and the FDA notified us that
they would conduct an on-site audit of our original data in Marbella, Spain, at
the Costa del Sol hospital. We expect that this audit will be scheduled to take
place in April. We anticipate FDA clearance of our 18-inch clinical Jacobson
Resonator for treatment of chronic pain from osteoarthritis of the knee by the
end of the second quarter of 2002. However, there is no assurance that FDA
clearance will be granted then, if at all. If we fail to obtain FDA approval for
the use of those products requiring such approval, our business could be harmed
and we would not be able to market and sell those products in the United States.

Our proposed products are also subject to various international regulatory
processes and approval requirements. If we do not obtain and maintain the
necessary international regulatory approvals, we will not be able to market and
sell these proposed products in foreign countries.

     To be able to market and sell our proposed products in other countries, we
must obtain regulatory approvals and comply with the regulations of those
countries. These regulations, including the requirements for approvals, and the
time required for regulatory review vary from country to country. Obtaining and
maintaining foreign regulatory approvals are expensive, and we cannot be certain
that we will receive regulatory approvals in any foreign country in which we
plan to market our products. If we fail to obtain regulatory approval in any
foreign country in which we plan to market one or more of our proposed products,
our ability to generate revenue would be harmed.

If we are unable to protect the intellectual property contained in our products
from use by third parties, our ability to compete in the market would be harmed.

     Our commercial success will depend in part on obtaining patent and other
intellectual property protection for the technologies contained in our products,
and on successfully defending our patents and other intellectual property
against third party challenges. We have in excess of 20 patents issued in the
U.S. and around the world. We have not licensed for our use any other person's
patents.

     We could be required to incur substantial costs in obtaining patents and,
if necessary, defending our proprietary rights. The patent positions of medical
device companies, including ours, could be highly uncertain and involve complex
and evolving legal and factual questions. We cannot assure you that we will
obtain the patent protection we seek, or that the protection we do obtain will
be found valid and enforceable if challenged. We also cannot assure you that we
will be able to develop additional patentable proprietary technologies. If we
fail to obtain adequate protection of our intellectual property, or if any
protection we obtain is reduced or eliminated, others could use our intellectual
property without compensating us, resulting in harm to our business. We may also
determine that it is in our best interests to voluntarily challenge a third
party's products or patents in litigation or administrative proceedings,
including patent interferences or reexaminations. In addition, the laws of
certain foreign countries do not protect intellectual property rights to the
same extent as do the laws of the United States.

Others may assert that our products, if developed, infringe their intellectual
property rights, which may cause us to engage in costly disputes and, if we are
not successful in defending ourselves, could also cause us to pay substantial
damages and prohibit us from selling our proposed products.

     In addition to the issued patents of which we are aware, other parties may
have filed, and in the future are likely to file, patent applications covering
diagnostic products that are similar or identical to ours. We cannot assure you
that any patents issuing from applications filed by a third party will not cover
our products or will not have priority over our patent applications.

     The medical device industry has been characterized by extensive litigation
and administrative proceedings regarding patents and other intellectual property
rights, and companies have employed such actions to gain a competitive
advantage. If third parties assert infringement or other intellectual property
claims against us, our technical and management personnel will experience a
significant diversion of time and effort and we will incur large expenses
defending ourselves. If third parties in any patent action are successful, our
patent portfolio may be damaged, we may have to pay substantial damages,
including treble damages, and we may be required to stop selling our products or
obtain a license which, if available at all, may require us to pay substantial
royalties. We cannot be certain that we will have the financial resources or the
substantive arguments to defend our patents from infringement or claims of
invalidity or unenforceability, or to defend against allegations of infringement
of third-party patents. Our recently settled litigation (see "Legal Proceedings"
involved the clam by the plaintiffs that they had an aggregate one-third
ownership interest in creation patents. We settled this case for a cash payment
(still owing) of $1,000,000, by transferring 12,000,000 shares of our common
stock from Dr. Jacobson's personal holdings, at the issuance of warrants to
purchase 3,000,000 shares of common stock. All alleged rights of the plaintiffs
in these patents were assigned to us in connection with this settlement.


The rights and measures we rely on to protect the intellectual property
underlying our products may not be adequate to prevent third parties from using
our technology which could harm our ability to compete in the market.

     In addition to patents, we plan to rely on a combination of trade secret,
copyright and trademark laws, nondisclosure agreements and other contractual
provisions and technical security measures to protect our intellectual property
rights. Nevertheless, these measures may not be adequate to safeguard the
technology underlying our products. If they do not protect our rights
adequately, third parties could use our technology, and our ability to compete
in the market would be reduced. In addition, employees, consultants and others
who participate in developing our products may breach their agreements with us
regarding our intellectual property, and we may not have adequate remedies for
the breach. We also may not be able to effectively protect our intellectual
property rights in some foreign countries. We also realize that our trade
secrets may become known through other means not currently foreseen by us.
Notwithstanding our efforts to protect our intellectual property, our
competitors may independently develop similar or alternative technologies or
products that are equal or superior to our technology and products without
infringing any of our intellectual property rights, or may design around our
proprietary technologies. For further information on our intellectual property
and the difficulties in protecting it, see "Business -- Intellectual Property."

Neither we nor our licensees have experience in manufacturing our proposed
products and may encounter manufacturing problems or delays that could adversely
affect our success.

     We may be unable to establish or maintain reliable, high-volume
manufacturing capacity. Even if this capacity can be established and maintained,
the cost of doing so may increase the cost of our proposed products and reduce
our ability to compete.

If our licensees' proposed manufacturing facilities do not meet federal or state
manufacturing standards, we may be required to temporarily cease all or part of
our manufacturing operations, which would result in product delivery delays and
lost revenue.

     Our or our licensees manufacturing facilities would be subject to periodic
inspection by regulatory authorities and our operations would continue to be
regulated by the FDA for compliance with Good Manufacturing Practice
requirements. We would also be required to comply with the ISO 9000 series
standards in order to produce products for sale in Europe. If we fail to comply
with Good Manufacturing Practice requirements or ISO 9000 series standards, we
would be required to cease all or part of our operations until we complied with
these regulations. We cannot be certain that our facilities would be found to
comply with Good Manufacturing Practice requirements or the ISO 9000 series
standards in future audits by regulatory authorities.

The use of our proposed products could result in product liability claims that
could be expensive, divert management's attention and harm our business.

     Although our technology has been recognized as safe by the FDA, there is no
assurance that product liability claims would not be filed against us. If we
decide to enter the area of diagnostics, in which we do not now participate, the
analytical device industry has historically been litigious, and we would face
financial exposure to product liability claims if the use of our products were
alleged to result in a misdiagnosis or cause injury or death and a court agreed
with those allegations. There is also the possibility that defects in the design
or manufacture of our products might necessitate a product recall. Although we
plan to maintain product liability insurance, the coverage limits of these
policies may not be adequate to cover future claims. A product liability claim,
regardless of its merit or eventual outcome, could result in significant legal
defense costs. A product liability claim or any product recalls could also harm
our reputation or result in a decline in revenues.

If we lose our key personnel or are unable to attract and retain additional
personnel, our ability to compete would be harmed.

     We are highly dependent on the principal members of our management and
scientific staff, in particular Dr. Jerry I. Jacobson, our Chairman of the Board
and Chief Science Officer, and Alfonso Serrato, our President and Chief
Executive Officer. In order to pursue our product development, marketing and
commercialization plans, we will need to hire additional qualified personnel
with expertise in research and development, clinical testing, government
regulation, manufacturing, sales and marketing, and finance. Our product
development plans depend in part on our ability to attract and retain engineers
with experience in mechanics, software and optics. Attracting and retaining
qualified personnel will be critical to our success, and competition for
qualified personnel is intense. We may not be able to attract and retain
personnel on acceptable terms given the competition for such personnel among
technology and healthcare companies, and universities. The loss of any of these
persons or our inability to attract and retain qualified personnel could harm
our business and our ability to compete.

We do not intend to pay dividends.

     It is unlikely that we will pay any dividends in the foreseeable future due
to our anticipated substantial cash requirements for future operations. We
anticipate using any proceeds of investments in us and any earnings received
from operations, to complete the development and to obtain the requisite
regulatory approvals for our proposed products, for the marketing, development
and expansion of our proposed business, for operating capital and for corporate
development and expansion activities.

Our common stock is regulated as a "penny stock" by the Securities and Exchange
Commission.

     We are subject to additional regulation by the Securities and Exchange
Commission under its rules regulating broker-dealer practices in connection with
transactions in "penny stocks." This type of regulation may reduce the level of
trading activity or your ability to sell the common stock. Penny stocks
generally are equity securities with a price of less than $5.00 that are not
registered on certain national securities exchanges or quoted on the NASDAQ
system. The penny stock rules require a broker-dealer, prior to a transaction in
a regulated penny stock, to deliver a standardized risk disclosure document that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer must also provide information concerning
his compensation for the penny stock purchase, current prices of the penny
stock, and a special written determination that the penny stock is a suitable
investment for the purchaser.

     Our founding stockholders control us and will continue to be able to elect
our entire board of directors.

     Our principal stockholders presently hold 49% of the voting rights for our
Common Stock (including the voting rights of the preferred stock held by Dr.
Jacobson). Our stockholders do not have the right of cumulative voting for the
election of directors. Accordingly, it is reasonable to assume that the existing
stockholders will continue to be able to elect all of our directors and control
our corporate affairs.

The market for our common stock is poorly developed. Purchasers of our
securities should anticipate a thin and volatile market. Investors that purchase
our common stock may not be able to sell their securities.

     There are many days when our common stock does not trade at all in the
over-the-counter market. The spread between the quoted bid and ask prices is
usually great. The stock has never traded above $5, the price required to remove
certain trading requirements imposed on Bulletin Board "penny stocks." Until
these trading requirements are removed, many brokerage firms will not allow
their brokers to recommend our stock for purchase by their customers. Investors
that purchase our common stock may not be able to sell their securities.


BUSINESS

     Our Company is in the developmental stage. We are developing
electromagnetic resonance technology ("Jacobson Resonance") focusing initially
on healthcare. Our patented Jacobson Resonance technology is licensed from the
Company's founder, Chairman of the Board and Chief Science and Technology
Officer, Dr. Jerry I. Jacobson.

     We are planning to use Jacobson Resonance for the reduction of chronic and
acute pain, commencing with magnetotherapy for the knee. Osteoarthritis,
rheumatoid arthritis, lower back injuries, tendonitis, muscle spasms, sports
injuries, carpal tunnel and tarsal tunnel syndromes, neuropathy, fibromyalgia
and migraine, tension, cluster, sinus and menstrual headaches all cause chronic
pain. Based on data developed by the National Chronic Pain Outreach Association,
an estimated 34 million people in the United States of America suffer from
chronic pain and approximately 50 million work-days are lost annually because of
chronic pain.

     Jacobson Resonance utilizes extremely weak physiologic (like those found in
the human heart, brain and other organs), low frequency electromagnetic fields
to beneficially alter molecular characteristics. We are currently negotiating,
and plan to continue to use joint venture and licensing arrangements, as well as
our own resources, to develop, manufacture, distribute and market various
applications of Jacobson Resonance.

PRODUCTS

     We have developed four different clinical models of the Jacobson Resonator
for the alleviation of chronic and acute pain. These models include 18-inch
(expandable), 22-inch (expandable), 4-foot and 7-foot resonators and are now
being sold or leased in Canada, Spain and Mexico for the following therapeutic
uses: magnetotherapy for a steomuscular pain (and soft tissue pain, including
connective tissue such as ligaments and tendons). These resonators have been
marketed in other European countries, Latin America, the Pacific Rim and
Australia commencing with the last quarter of 2001 and marketing in these
regions will increase significantly in 2002. Royalty and usage revenues began
arriving from Canada in September 2001. We have a 16% royalty for Jacobson
Resonators sold in Canada, a flat annual fee of $6000 for each 18" Resonator
placed for usage or leased, of $6300 for each 22" Resonator so placed or leased
and of $7000 for each 7' Resonator so placed or leased, and per unit
manufacturing royalties of $1500 on the 4' and 7' Resonators and of $1200 for
the 18" and 22" Resonators. Revenues began arriving from European and worldwide
distribution during the last quarter of 2001. Upon clearance from the FDA in the
U.S. these resonators will be marketed through sales, leasing and participation
in proprietary clinical settings.

o      The 18-inch and seven-foot resonators have been the standard-bearers for
much of the in-vitro, in-vivo, animal and human clinical studies in the USA and
abroad during the past four years. These models are being used in Mexico and
Spain for the alleviation of pain in human limbs and joints.

o      The 22-inch expandable resonator is being manufactured in Mississippi and
in Spain. This flexible delivery system is not only used for human limbs but can
expand and be used for the shoulders, neck, hips, and other locations in humans
and animals.

o      The 4-foot model is being used in Canada, Spain and Mexico. This system
can be adjusted horizontally and parallel to the human body and focus the
electromagnetic field on any specific area desired.

o      The 7-foot resonator is also being used in coordination with other models
to produce quicker and more thorough relief from pain. Because this resonator
provides full body exposure, we plan to use this model for research on systemic
disorders.

     We have nine different models of the Jacobson Resonator. The four models
above are designated for clinical use. The largest clinical model is comprised
of a pair of Helmholtz coils that are seven feet in diameter and placed on a
common axis three and a half feet apart (to encompass a full human frame).
Helmholtz coils are flat, parallel, circular metal electrically conductive coils
equal in diameter and separated by a distance equal to the radius of each coil,
connected in series to create a magnetic force field of uniform strength in
between the coils. The next largest clinical model is comprised of a pair of
Helmholtz coils that are four feet in diameter (to treat patients who are lying
down.). A third clinical model is comprised of a pair of Helmholtz coils that
are 22 inches in diameter and placed on a common axis eleven inches apart, which
can be expanded to 16 inches or 20 inches. The fourth clinical model is
comprised of a pair of Helmholtz coils that are 18 inches in diameter and placed
on a common axis nine inches apart. The latter two models can encompass a human
head, joint or portion of a limb. Two additional models of the nine, a variable
spaced solenoid and a 10-foot resonator are being used in veterinary research in
horses; two others are being used in cardiovascular research in dogs; and a nine
inch prototype is being used in human clinical research of small joints.

     All of these models are being used to alleviate pain. Upon FDA clearance
these resonators will be marketed in the U.S., consistent with the FDA
clearance, to treat chronic and acute pain sufferers. See discussion under
"United States of America" immediately below.

APPROVAL STATUS IN HEALTHCARE & MEDICAL THERAPEUTICS

EUROPE

     On January 10, 2001, we received the CE-Mark by the Health Authorities of
the European Union in conjunction with the Spanish Health Ministry for medical
use, distribution, manufacturing, and sale of the 18-inch Jacobson Resonators
for the treatment tri-compartmental arthrosis pain of the knee throughout the
nation members of the European Union. This approval covers tri-compartmental
arthrosis of the knees. In addition, full approval and clearance for
manufacturing of two models of resonators have been received by the Spanish
Ministry of Spain under the same CE-Mark license. Additionally, Spain is
expected to grant permission to treat all musculo-skeletal pain from the neck
down. Clinics, hospitals and sports complexes are now treating and alleviating
pain from hundreds of Spanish patients and sports enthusiasts. Through Serrato
Europe, we sell or lease Jacobson Resonators to these facilities and receive 16%
of usage fees, payable quarterly, in addition to $1500 per unit manufacturing
royalties for the 4' and 7' models and $1200 for the 18" and 22" models.
Clinical Studies have been recently completed in Spain for the treatment of
cervico-arthrosis with CE-Mark approval expected by the third quarter of 2002.

CANADA

     On November 27, 2000, we received notification of licensing rights from the
Therapeutic Products Section of the Canadian Ministry of Health (Health Canada)
for commercialization and use of Jacobson Resonators in Canada and in other
countries, which have reciprocity licenses and active trade agreements. The
license issued covers osteoarthritic conditions and a broad spectrum of
pain-related musculo-skeletal injuries. On September 27, 2001 Health Canada
granted extended licensing rights to treat "all types of pain" no matter the
cause.

MEXICO

     During the past two years Jacobson Resonators have effectively been used in
Mexico for the treatment of chronic and acute pain and the palliation of
symptoms covering a wide variety of disorders and diseases. The Resonators being
used in Mexico have been placed in accordance with FDA guidelines with medical
institutions and pain management facilities for research purposes on a fully
allocated cost basis, covering our research, engineering and equipment
development costs.

UNITED STATES OF AMERICA

     The clinical resonators require U.S. Food and Drug Administration (FDA)
clearance before they can be commercially used in the United States of America.
See "Government Regulation." We have not yet received FDA clearance for the
commercialization of our clinical resonators in the United States of America.

     The results of the clinical studies submitted to the FDA demonstrate that
the 18-inch Jacobson Resonator is safe and effective in the palliation of pain
secondary to tri-compartmental arthrosis of the knee.

     FDA has determined that the pico Tesla and nanogauss force-fields generated
by the Jacobson Resonator are of non-significant risk for the knee joint, which
determination permits us to conduct studies on human subjects while gathering
data on safety and effectiveness. (Microgauss, pico Tesla and nanogauss force
fields are extremely weak magnetic force fields; for example, a pico Tesla force
field is 50 million times weaker than the earth's magnetic field, and the
nanogauss force field is 500 million times weaker.) We completed double blind
and randomized clinical studies in early 1999 and submitted to the FDA on May
27, 1999, our pre-market notification report for the 18-inch Jacobson Resonator
in the treatment of osteoarthritic pain of the knee. At the request of the FDA,
we filed an addendum to the report on September 17, 1999. Additional data was
submitted to the FDA in June 2001. On March 27, 2002, we received two additional
questions from the FDA, and the FDA notified us that they would conduct an
on-site audit of our original data in Marbella, Spain, at the Costa del Sol
hospital. We expect that this audit will be scheduled to take place in April. We
anticipate FDA clearance of our 18-inch clinical Jacobson Resonator for
treatment of chronic pain from osteoarthritis of the knee by the end of the
second quarter of 2002. There is no assurance that FDA clearance will be granted
then, if at all. We have entered into two consulting agreements to help guide
the Company in FDA regulatory compliance and reimbursement issues with
Quintiles, Inc. and Regulatory Insights, Inc. The agreements with these two
consulting firms cover clinical trial services, research and other services
including, in the case of the Quintiles agreement, investigation of FDA
regulatory requirements and, in the case of the Regulatory Insights agreement,
submission of premarket notification (510(k)).

     Reimbursement for use of our products is being considered by insurance
companies in Europe and Canada. Overall, we expect reimbursement to be approved
in Europe and Canada, and later in the United States following FDA clearance.

TECHNOLOGY VISION

     Since the Earth is a magnet, a very large magnet with North and South
poles, every person exists within and is influenced by this omnipresent magnetic
field of 0.5 gauss (gauss being the standard term of reference for a unit of
magnetic force--one gauss equals one line of magnetic flux per square
centimeter).

     For decades in Asia and more recently in Europe and the United States,
medical benefits have been documented through exposure of patients to low-level
localized magnetic fields, usually produced by assemblages of small permanent
magnets. This technology is generically referred to as bioelectromagnetics. The
proprietary Jacobson Resonators (the delivery system) is, we believe, a
technological breakthrough providing a means of producing a precise,
controllable, targeted and uniform electromagnetic field (physiologic, and
natural to the body like to those found in the human brain, heart, liver and
other organs) through a region of space large enough to envelop a human joint,
limb, head, etc., as desired, permitting a focussed exposure of such an area to
any desired magnetic field. These fields are millions of times weaker than the
Earth's own geomagnetic field. They are generally delivered by Helmholz coils.
The Jacobson Resonators were originally fabricated at the Stennis Space Center
by NASA subcontractors and emit extremely weak microgauss, pico Tesla and
nanogauss force-fields. These force-fields emit physiologic and benign
non-ionizing electromagnetic radiation, causing no impairment to atoms or their
surrounding electrons. Most human patients do not feel or sense the force-fields
during treatment and, to date, attendant effects have been limited to occasional
tingling sensations or mild warmth.

     The principles of bioelectromagnetics represent the bases of operation of
the now-common MRI (Magnetic Resonance Imaging) diagnostic machines. In this
device, magnetic fields are used to specifically orient the normally randomly
positioned "atoms" in the part of a person's body under study. When this
condition has been achieved by tuning the frequency of the magnetic field, radio
wave "pictures" can be taken, precluding the need to use potentially harmful
x-rays and greatly enhancing the results. The major differences of operation of
an MRI and the Jacobson Resonator are that the magnetic fields of the MRI are
billions of times stronger than those of the Resonator, and the Resonator does
not employ any radio waves or x-rays, but rather a non-ionizing extremely
low-frequency form of radiant energy. As a result, the Resonator is totally safe
and noiseless to operate and is open and non-confining for the patient.

     Our technology vision is to design and develop these medical and
therapeutic bioelectomagnetic delivery systems for non-invasive, treatments of
disease and musculo-skeletal injury, with a non-significant level of risk.
Recognizing that atoms are essentially magnets, Jacobson Resonators can be
utilized to establish low-level magnetic fields which we believe can be "tuned"
to appropriate resonant strengths and frequencies which manipulate the atoms in
a person's arthritic knee, for example, to return balance, or homeostasis of
function to that member, which in turn can ameliorate unnatural symptoms, in
this case pain. With respect to disease, the Resonator magnetic fields are
believed to interact in harmony with the body's natural magnetic field producing
atomic and molecular vibrations which render viruses and bacteria incapable of
invading healthy cells and normalizing infected cells.

     Magnetotherapy can provide cells with the stimulation necessary to promote
healing. In treating musculo-skeletal injury, Jacobson Resonance attempts to
give the body's natural healing process a push, by altering the electromagnetic
force-field of a patient to increase the rate of production of regenerative
tissues. The natural process of musculo-skeletal tissue healing involves a
complex interaction of several physiological processes, which include the
stimulation of specific cells such as osteoblasts (cells that regenerate bone),
fibroblasts (cells that regenerate muscle and connective tissue) and endothelial
cells (cells that regenerate linings of soft tissues such as intestine and blood
vessels mucosal linings). When an injury occurs, growth factors are produced at
the healing site, which stimulate selected cells to initiate the healing
cascade. In most cases, these cells are able to initiate repair in response to
an injury and restore the musculo-skeletal tissue to its original strength and
structure. Cell stimulation is a necessary component of tissue regeneration and
is dependent upon certain triggering events that activate the production of
connective tissue and bone.

     While we are one of many engaged in magnetotherapy, our approach to
magnetotherapy is substantially different from our competitors in that Jacobson
Resonance uniquely utilizes weak force-fields. Most of our competitors,
including Biomagnetics, the Biomet division of Electro-biology, Dipulse
Corporation of America, Electropharmacology, Exogen, Orthofix and Orthologic,
produce electromagnetic devices, which utilize magnetic fields more than one
million times the strength of the Jacobson Resonance fields. By contrast,
Jacobson Resonance uses magnetic force-fields that are normal to the human body,
utilizing very weak force-fields involving pico Tesla fields, nanogauss fields
and even weaker force-fields. Pico Tesla and nanogauss fields are equivalent to
the normal magnetic profiles of the brain, the heart and other organs of the
human body. Pico Tesla fields are about 50,000,000 times weaker than the earth's
geomagnetic field, and nanogauss fields are about 500,000,000 times weaker. To
place this in proper perspective, MRI systems routinely use magnetic
force-fields that are 20,000 times stronger than the earth's geomagnetic field.

     Currently, in treating human patients, the selection of the appropriate
electromagnetic field for a particular type of disorder involves a mathematical
calculation and requires trial based upon theory. Achieving resonance has
required time and patience because various critical molecules must be identified
for a particular disorder in order to reorder electrophysiological states back
to normalcy.

COMMERCIALIZATION INITIATIVES IN THE PAIN TREATMENT MARKET

     The clinical resonators require Food and Drug Administration clearance
before they can be commercially used in the United States of America. See
"Government Regulation." We have not yet received FDA clearance for the
commercialization of our clinical resonators in the United States of America.
However, the FDA has determined that the pico Tesla and nanogauss force-fields
generated by the Jacobson Resonator are of non-significant risk, which
determination permits us to conduct studies on human subjects while gathering
data on safety and effectiveness. A large number of questions to which we
responded. In March 1999, the FDA determined that the Jacobson Resonator does
not meet the definition of a significant risk device for the knee.

     We plan to distribute the clinical models of the Jacobson Resonators in the
United States of America through existing medical device distributors.

     Quantum Resonance Technologies, Inc. ("QRTI"), builds the prototypes of our
resonators. Benvenutti Electrical Apparatus & Repair, Inc. ("B.E.A.R."), an
electrical apparatus manufacturer in Gulfport, Mississippi, collaborates with
QRTI and manufactures our clinical resonators . QRTI is supplying the delivery
systems for Canada. Upon FDA clearance QRTI would supply the Jacobson Resonators
to be leased and sold in the United States.

     We contracted with Compania Aeronautica, S.A., a Spanish aircraft
manufacturer, (also contracted by the European Union in the aero-space arena)
for the partial manufacture of Jacobson Resonators, with final calibration and
assembly completed by Serrato Enterprises-Serrato Europe SARL. To date, the
Company has entered into the following agreements with Serrato
Enterprises-Serrato Europe SARL.

     Alfonso Serrato is leading our European initiative. Mr. Serrato is a
director and our transitional President and CEO and a former executive officer
of Medtronic, Inc., a New York Stock Exchange company that is a leading
manufacturer and distributor of medical devices around the world. Mr. Serrato
worked for Medtronic, Inc., in various capacities, including Vice President of
Worldwide Manufacturing and Vice President of Pacing Operations, for nearly 18
years until 1996. In February 1999, we executed a ten-year license agreement
with Serrato Enterprises for the marketing and distribution of our chronic pain
reduction products in Europe, Africa and the Middle East, excluding Israel and
the nations that formerly constituted the Union of Soviet Socialist Republics.
We have a 16% royalty for Jacobson Resonators sold in Canada, a flat annual fee
of $6000 for each 18" Resonator placed for usage or leased, of $6300 for each
22" Resonator so placed or leased and of $7000 for each 7' Resonator so placed
or leased, and per unit manufacturing royalties of $1500 on the 4' and 7'
Resonators and of $1200 for the 18" and 22" Resonators.

     In January 2000, we further executed a ten-year manufacturing agreement
with Serrato Enterprises-Serrato Europe, SARL, under which we will receive
manufacturing royalties based on type and production volume of resonators
manufactured by Serrato Enterprises.

     The manufacturing agreement provides that Serrato Enterprises has the right
to manufacture Jacobson Resonators for approved distributors in Europe, North
Africa and the Pacific Rim countries, but only for approved medical devices. The
flat fee royalty per manufactured resonator is $1500 for 4' and 7' Resonators
and $1200 for the 18" and 22" expandable models.

     In June 2001, Serrato Enterprises-Serrato Europe SARL entered into a
worldwide marketing and distribution agreement with EKINSA of Spain, which will
include Latin America, The Pacific Rim and all other regions of the world not
mentioned or excluded above. This privately held conglomerate would market and
sell Jacobson Resonators worldwide (save the USA & Canada) in hospitals,
clinics, doctors offices, spas, and more. We began receiving revenues from these
European/Worldwide initiatives in the last quarter of 2001.

     The commercialization initiative in Canada is being spearheaded by Bio
Resonance Technology, Inc. Currently two treatment centers, one in Winnipeg and
one in Calgary, are helping decrease chronic and acute pain in patients. Bio
Resonance Technology plans to open additional pain-treatment centers in major
metropolitan areas in Canada. We began to receive revenues from this initiative
in August 2001.

OTHER PLANNED MEDICAL APPLICATIONS OF JACOBSON RESONANCE.

     In addition to chronic pain treatment applications, we plan to develop
Jacobson Resonance for other medical applications. Other, secondary medical
applications, which are currently under research and development, include the
treatment of neurodegenerative disease and cardiac pacing. Basic science studies
have been initiated in cancer.

     Researchers are also currently investigating the effects of Jacobson
Resonance on cardiac function (University of Oklahoma), fibromyalgia, rheumatoid
arthritis, osteoarthritis, lower back pain, soft tissue pain, nerve regeneration
(Weill Medical College, Cornell University and Fairleigh Dickinson University)
and cancer (in vitro, at the University of Mississippi). In addition, we are
examining the potential application of Jacobson Resonance to veterinary
medicine, including the treatment of leg and back pain in horses. At the
University of Oklahoma, Jacobson Resonance has been used to study autonomic
nervous system functions of the dog heart.

     We, based on an issued United States patent, hold the worldwide rights to
the use of Jacobson Resonance in ameliorating the aging process. Some research
over the last four years in this area with respect to nerve growth and repair
has been done at Cornell University and Fairleigh Dickinson University.

     We have not filed for regulatory clearance for any of the above planned
medical applications.


POTENTIAL NON-MEDICAL APPLICATIONS OF JACOBSON RESONANCE

     In addition to medical applications, we have developed and plan to continue
developing Jacobson Resonance for use in other commercial arenas including food
and beverage and construction and the environment. We believe that Jacobson
Resonance can restructure water molecules to create greater inter-atomic
communication and improve absorption, coherence, cooperativity and harmony
between systems, and stability.

     In January 2000, we executed a licensing agreement with RealPure Beverage
Group, LLC, of Jackson, Mississippi, for the use of Jacobson Resonance in
multiple water and beverage products lines, including marketing and
distribution. Previously, Benvenutti Electrical Apparatus & Repair built a new
industrial model of the Jacobson Resonator for us consisting of three coils,
each ten feet in diameter, placed vertically and connected in series for water
resonation. RealPure will use this machine to resonate its water products. The
beverages scheduled for resonation include RealPure spring water, as well as a
new pediatric beverage, a new geriatric beverage and the new "Real Pro"
hi-energy sport drink. The spokesman for these RealPure products is the All Pro
and MVP quarterback of the Green Bay Packers, Brett Favre. Our agreement with
RealPure gives RealPure the exclusive license in the U.S. to use our resonance
technology for beverages and the right to sublicense these rights, in exchange
for a royalty of $.30 per case for resonated water, $.50 per case for resonated
sports drinks, $.60 per case for resonated pediatric drink, and of $.45 per case
for resonated geriatric drink. Through December 31, 2001, we had received
$29,283 in royalties from RealPure under this license agreement.

     Resonated water might also lead to the development of energy-efficient
home water purification systems by providing a cleaner, less toxic environment
and preventing calcium and other mineral deposits which restrict pipes and
damage appliances.

     Preliminary research testing at the University of Oklahoma has shown that
resonated water may enhance the rate of growth of mung beans and soy beans.
Other potential agricultural applications include enhancing the health and
growth cycles of fish and shellfish, rice farming, forestry and lumber
operations, greenhouse facilities, citrus production, wine production and
landscaping.

     Jacobson Resonance also has potential industrial applications. Resonated
water may have potential to increase adhesion and bonding between mixtures of
sawdust, sand and cement. A licensing agreement was consummated on August 27,
2000 between us and Enviro Wood Fibre Block & Brick, Inc. ("Enviro-Block"), a
Canadian manufacturer of patented composite cement building blocks which when
resonated are lighter, stronger and cheaper to produce than normal blocks. They
plan to sell these patented composite blocks, and other products in Canada and
throughout the USA. Under our agreement with Enviro-Block, we granted
Enviro-Block the exclusive right to sell, market and distribute, for an initial
period of ten years, our technology relating to use of resonated water and
bio-electric magnetic resonance for use and application in the building and
construction industries, as well as environmental and conservation industries
inclusive of waste management and pollution by means of resonators. The
territory granted to Enviro-Block under this license is comprised of North
America, Latin America, the Middle East, Africa, the Caribbean Basin, Australia,
Japan, Taiwan and current European Union members. Under our license agreement
with Enviro-Block, we receive a royalty fee of $.0005 for each resonated patio
block, building block, decorative item or the like manufactured or sold by
Enviro-Block or one of its licensees. With respect to environmental, waste
management and pollution projects utilizing our technology, the minimum royalty
fee is three percent of the gross value of the project contract.


GOVERNMENT REGULATION

UNITED STATES OF AMERICA

     In the United States of America, our four clinical Jacobson Resonators for
reduction of chronic pain and future clinical products, if any, are extensively
regulated as medical devices by the FDA. The FDA regulates the clinical testing,
manufacturing, labeling, distributing, and promoting of medical devices. Prior
to commercial sale in the United States, each of our clinical products must
undergo an extensive regulatory approval process conducted by the FDA under the
Food, Drug and Cosmetic Act (the "FDC Act"). Noncompliance with applicable
requirements can result in failure to receive regulatory clearance or approval
of devices, total or partial suspension of production, fines, injunctions, civil
penalties, recall or seizure of products, and criminal prosecution.

     Under the FDC Act, all medical devices are classified into three classes:
Class I, II or III. Classification identifies the level of regulatory control
that is necessary to assure the safety and effectiveness of a medical device, as
well as the marketing process (either pre-market notification under 510(k) or
pre-market approval ("PMA")) the manufacturer must complete, unless exempt, in
order to obtain FDA clearance for marketing. In connection with the clearance of
a medical device, the FDA is required to make a finding as to efficacy of the
device.

     Class I devices are subject to the least regulatory control because they
present minimal potential for harm to the user and are often simpler in design
than Class II or Class III devices. They are subject only to "general controls,"
which require adherence to the requirements of (a) registration, (b) medical
device listing, (c) Good Manufacturing Practices, (d) labeling and (e)
pre-market notification. Class II devices are those for which general controls
alone are insufficient to assure safety and effectiveness, but for which
existing methods are available to provide such assurances, such as special
labeling requirements, mandatory performance standards and post-market
surveillance. Class III devices are subject to the most stringent regulatory
controls because insufficient information exists to assure safety and
effectiveness solely through general or special controls. They must satisfy the
PMA requirements.

     We consider the portable models of the Jacobson Resonator as Class I
devices because they are battery-operated, are of "non-significant risk" and
have no medical claims associated with them. As a result, they would not be
subject to FDA approval before marketing, distribution and sale.

     After consultation with the FDA and subject to demonstration of
effectiveness through human clinical trials, we believe that our clinical
Jacobson Resonators will be classified as Class II devices. As Class II devices,
the clinical Jacobson Resonators will not be subject to PMA as required of Class
III devices, but will be subject to general controls and special controls,
including pre-market notification under 510(k). A 510(k) is a pre-marketing
submission made to the FDA to demonstrate that the device to be marketed is as
safe and effective as, or "substantially equivalent" to, a legally marketed
device that is not subject to PMA. Applicants must compare their 510(k) device
to one or more similar devices currently on the U.S. market and make and support
their substantial equivalency claims. The legally marketed device(s) to which
equivalence is drawn is known as the "predicate" device(s). A device is deemed
substantially equivalent to a predicate device if (a) it has the same intended
use as the predicate device, and (b) either has the same technological
characteristics as the predicate device, or has different technological
characteristics that do not raise new questions of safety and effectiveness, and
(c) the sponsor demonstrates that the device is as safe and effective as the
legally marketed device.

     Investigational Device Exemptions ("IDE") allow manufacturers to ship and
use unapproved medical devices intended solely for investigational use involving
human subjects. The IDE regulation applies to most clinical studies in the U.S.
that are undertaken to gather safety and effectiveness data about a medical
device. There are two categories of devices covered by the IDE regulation: (1)
Significant Risk devices and (2) Non-Significant Risk ("NSR") devices.
Significant Risk devices require both FDA and Institutional Review Board ("IRB")
approval prior to initiation of a clinical study. NSR devices require only IRB
approval prior to initiation of a clinical study. Clinical studies are often
conducted to support pre-market notification or PMA. Thus, an investigational
device is one that has not been given 510(k) clearance or PMA for marketing in
the U.S. but is exempted from these requirements in order to collect safety and
effectiveness data. Investigational use also includes clinical evaluation of
certain modifications or new intended uses of legally marketed devices. The FDA
requires that all clinical evaluations of investigational devices, unless
exempt, have an approved IDE before the study is initiated.

     We have not yet received FDA clearance for the commercialization of our
clinical resonators in the United States. In 1997, we filed our submission with
the FDA seeking a determination that the 18-inch clinical Jacobson Resonator
qualified as an NSR device for the treatment of osteoarthritis pain of the knee.
On March 4, 1999, the FDA determined that our clinical study of the 18-inch
clinical Jacobson Resonator to demonstrate effectiveness was an NSR device study
because the resonator did not meet the definition of a Significant Risk device
under the applicable  provision of the IDE. This  determination  in effect means
that the resonator meets the FDA requirements as to safety.

     In 1999, we completed double blind and randomized and placebo-controlled
clinical studies to demonstrate effectiveness of the 18-inch Jacobson Resonator
in the treatment of osteoarthritis pain of the knee, and submitted our
pre-market notification report (510(k)) to the FDA on May 27, 1999. At the
request of the FDA, we filed an addendum to the report on September 17, 1999,
and another 510(k) de novo study with additional clinical data in November 2001.
On March 27, 2002, we received two additional questions from the FDA, and the
FDA notified us that they would conduct an on-site audit of our original data in
Marbella, Spain, a the Costa del Sol hospital. We expect that this audit will
scheduled to take place in April. We anticipate FDA clearance of our 18-inch
clinical Jacobson Resonator for treatment of chronic pain from osteoarthritis of
the knee by the end of the second quarter of 2002. There is no assurance that
FDA clearance will be granted then, if at all.

     We have also entered into two consulting agreements to help and guide us in
FDA regulatory compliance and reimbursement issues with Quintiles, Inc. and
Regulatory Insights, Inc.

     We will be required to obtain FDA approval of a new pre-market application
or pre- market application supplement before making any change to the Jacobson
Resonators affecting the safety or effectiveness of the device including, but
not limited to, new indications for use of the device, changes in the device's
performance or design specifications and device modifications and future
generation products. New pre-market applications and pre-market application
supplements generally require submission of information needed to support the
proposed change and often require additional clinical data. We may decide, or
may have to, obtain PMA's and PMA supplements for its future products or other
uses. A PMA application must be supported by extensive data, including
pre-clinical and clinical trial data, to demonstrate the safety and
effectiveness of the device for the uses specified in the PMA application. We
cannot guarantee that any PMA application relating to the Jacobson Resonator
that is filed will be granted. If we obtain a PMA, it may be required to file
PMA supplements for new or expanded uses of the Jacobson Resonator and for any
material modifications to it. If a PMA supplement is not accepted by the FDA for
a new or expanded use or material modification of the Jacobson Resonator, we
must commence and complete the entire pre-market approval process with respect
to such use or modification. We cannot guarantee that any PMA supplement that we
file will be accepted.

     Any products manufactured or distributed by us pursuant to FDA clearance or
approval are subject to pervasive and continuous regulation by the FDA,
including record-keeping requirements, reports of adverse experience with the
use of the device, post-market surveillance, post- market registry, and other
actions as deemed necessary by the FDA. The FDA actively enforces regulations
prohibiting marketing of products for non-indicated uses. We and our agents may
promote products only for the products' approved indications. The labeling and
advertising of most FDA-regulated products, including the Jacobson Resonators,
are also subject to the jurisdiction of the Federal Trade Commission, the
Occupational Safety and Health Administration and other governmental entities.
We cannot guarantee that the FDA will not impose regulations that could
adversely affect our ability to market, sell, or be reimbursed for the Jacobson
Resonator. In addition, we cannot guarantee that we will not become subject to
FDA actions should physicians prescribe the Jacobson Resonator for unapproved
uses.


     As a medical device manufacturer registered with the FDA whose products are
listed with the FDA, our products and facilities will be subject to inspection
on a routine basis by the FDA with regard to product designs, manufacturing,
testing, control, process validation and similar activities. Future inspections
could result in adverse findings and harm our ability to manufacture and market
our Jacobson Resonators, which in turn would significantly adversely affect our
business.

     The process of obtaining FDA and other required regulatory approvals is
lengthy, expensive and uncertain. Regulatory approvals may include regulatory
restrictions on the indicated uses for which a product may be marketed. We
cannot guarantee that the FDA will approve its current or future products in a
timely manner, if at all. If we experience delays or failure in obtaining such
approvals, or if previously granted approvals are rescinded, or if we fail to
comply with existing or future regulatory requirements, then our business,
financial condition, results of operations and cash flows will be materially and
adversely affected. Furthermore, even if such approvals are granted, we cannot
guarantee that we will be successful in commercializing or achieving market
acceptance of the Jacobson Resonators for the treatment of chronic pain or any
other applications. Our inability to commercialize successfully the Jacobson
Resonators will severely harm our business.

     We are also subject to numerous federal, state, and local laws relating to
such matters as safe working conditions, manufacturing practices, environmental
protection, fire- hazard control, and disposal of hazardous or potentially
hazardous substances. We cannot guarantee that we will not be required to incur
significant costs to comply with such laws and regulations in the future, or
that such laws or regulations will not have a material adverse effect upon our
business, financial conditions, results of operations, or cash flows.

EUROPE

     In order to market and sell the Jacobson Resonator or any future products
in foreign markets, we must comply with foreign government regulations. These
laws differ substantially from country to country. In order to market and sell
the Jacobson Resonators in the European Union, the resonators must bear CE
Marking, which has been done effective January 10, 2001. The actual CE Marking
consists of the letters "CE" which a manufacturer affixes to its products for
access to the European market; the letters "CE" are an abbreviation of the
French phrase "Conformite Europeene." CE Marking on a medical device indicates
that a manufacturer has complied with all of the requirements of the Medical
Device Directive, which requires technical homologation of the device (proper
functioning of all components), safety and efficacy. Our CE Marking license is
2001-01-0303 CP, and it relates to the 18" and 22" models of the Jacobson
Resonator, manufactured in Europe, solely for use in therapy of arthrosis of the
knee.

     The Essential Requirement requires every non-European medical device
manufacturer exporting to Europe to appoint an Authorized European Address, or
agent, to ensure that the responsibility for compliance with Medical Device
Reporting is delegated to a party who resides in Europe and is subject to
European law. The authorized European agent serves as an interface between a
manufacturer and governmental authorities and must verify whether the
manufacturer is in compliance with the European vigilance system, which covers
both post-market surveillance and adverse-incident reporting. The selection of
an authorized European agent by a manufacturer is significant because the agent
is required to have access to all confidential product documentation and master
files of the manufacturer. We have selected Serrato Enterprises, LLC of Spain
and Serrato Europe, located in Geneva, Switzerland, entities controlled by
Alfonso Serrato, our Chief Executive Officer and a director of the Company, to
function as our authorized representative, manufacturer and licensee.

     The Medical Device Directive classifies all medical devices into one of
four classes, based upon a risk analysis which considers the design, method of
manufacturing and intended use of a medical device. Class I is comprised of the
least dangerous devices, and is subject to less restrictions than Class III,
which is comprised of the most dangerous devices. Between Classes I and III are
Class IIa and Class IIb. The Class of a medical device determines "Conformity
Assessment Procedure," or the procedure by which conformity with Essential
Requirements will be assessed. A procedural option for minimal risk devices
includes self-certification, where the manufacturer itself prepares a
"Declaration of Conformity" to the Essential Requirements and self-affixes the
CE Marking to the device. Higher risk devices, on the other hand, require that
the assessment be performed and certified for "quality assurance" in
collaboration with a recognized European "notified body." The clinical Jacobson
Resonators are considered Class IIb, which is a moderate risk classification. As
such, limited third-party assessment is required.

     Members of the European Union must accept CE Marking for marketing medical
devices without imposing further requirements related to product safety and
performance. However, National Competent Authorities, which are required to
enforce compliance with the requirements of the Medical Device Directive, can
restrict, prohibit, and recall devices with CE Marking if considered unsafe.
Such a decision must be confirmed by the European Commission to be valid. Member
countries may impose additional requirements as long as they do not violate the
Medical Device Directive or constitute technical barriers to trade.

     We cannot say with certainty that the European Union or any foreign
regulatory authority will grant CE Marking privileges to our future products in
a timely manner, if at all. If we experience delays or failure in obtaining such
approvals, or if previously granted approvals are rescinded, or if we fail to
comply with existing or future regulatory requirements, then our business,
financial condition, results of operations and cash flows will be materially and
adversely affected.

RESEARCH AND DEVELOPMENT

     Current university studies of the effects of Jacobson Resonance upon
biological systems are listed below. All of these studies are preliminary and
require substantial additional funding and development.

     1. Nerve repair, growth and regeneration - Cornell University Medical
College in New York City has completed in vitro sciatic nerve studies in mice.

     2. Nerve regeneration - A study on the effect of Jacobson Resonance upon a
chemically induced motor neuropathy model in mice is ongoing at Farleigh
Dickinson University.

     3. Cardiac Pacing/Cardiac Arrhythmias - The Cardiac Arrhythmia Institute of
the University of Oklahoma Health Sciences Center is conducting studies in dogs
and specifically cardiac arrhythmia in dogs.

     4. Angina Pectoris (heart pain) - Initial studies (cardiac afferent
nuciceptive stimulation) of aging pectoris model in rats have been conducted at
the University of Oklahoma Medical School.

     5. Vegetable growth enhancement - The Vegetable Improvement Center of Texas
A&M University conducted a pilot study in late 1998 of the effects of resonated
spring water on growth and fruiting of yellow crookneck squash and a second
study involving cucumber, radish and squash in 1999.

     6. Epilepsy - A double blind and randomized clinical pilot study was
recently completed at the University of Oklahoma Health Sciences Center to
determine whether Jacobson Resonance can reduce the frequency and severity of
epileptic seizures.

     7. Cancer - In early October 1999, we announced that the Veterinary
Pharmacology Research Laboratory at Mississippi State University has begun in
vitro cancer research using the 22-inch clinical model of the Jacobson
Resonator. The research will evaluate the influence of electromagnetic fields in
the pico Tesla range of strength upon cancer cells.

     8. Osteoarthritis - Clinical case studies are ongoing at Mississippi State
University.

     9. Osteoarthritis, Osteoporosis and Wound Healing - A basic science study,
entitled "Analgesic Effect of Low Level Electromagnetic Fields on Osteoarthritic
Knees: Determination of Underlying Biological Mechanisms," is ongoing at
Mississippi State University, in vitro, to examine the effects of Jacobson
Resonance on chondrocytes and other molecules significant to osteoarthritis,
osteoporosis and wound healing.

     10. Ongoing chronic pain clinical case studies are being conducted under
Institutional Review Board Approval by Mississippi State University.

     11. Resonated water studies, at the University of Oklahoma, have been
conducted on resonated distilled water transport across membranes, as compared
with transport of non-resonated distilled water.

     12. Veterinary studies on lameness in horses are ongoing at Mississippi
State University.

     During the years ended December 31, 2001 and 2000, we spent $256,449 and
$190,895, respectively, on research and development activities. Since our
inception on June 4, 1996 through December 31, 2001, we have spent a total of
$1,208,830 on research and development activities.


INTELLECTUAL PROPERTY

     We are the exclusive licensee of Jacobson Resonance from Dr. Jacobson, who
is the sole owner of all patents issued or pending. Dr. Jacobson is also the
majority owner of all relevant Jacobson Resonance intellectual property. We have
the exclusive rights to pursue whatever applications of Jacobson Resonance that
we want. In return, we are obligated to pay Dr. Jacobson, pursuant to his
employment agreement, a royalty on revenues, depending upon the application.

     We have over 20 patents issued or approved, and six additional patents
pending in the United States and worldwide. Dr. Jacobson had licensed these
patents exclusively to us. Dr. Jacobson's license agreements provide for a
royalty equal to 2%-3% (net of the 1% royalty payable as described below) of
gross sales of our products utilizing Jacobson Resonance. In settlement of the
litigation referred to under "Legal Proceedings", the plaintiffs in that case
negotiated as a part of the settlement a 1% royalty of gross sales on all
patents licensed by Dr. Jacobson to us involving Jacobson Resonance.

     Legal standards relating to the validity of patents covering medical
devices and biotechnological inventions and the scope of claims made under such
patents are still developing. For this reason, we cannot guarantee any of the
following:

     1.   that patent applications will result in the issuance of patents in
          foreign countries;

     2.   that any patents licensed to us will be free from challenge and that
          if challenged, they would be held to be valid;

     3.   that any such patents will provide commercially significant protection
          to our technology, products, and processes; or

     4.   that others will not develop substantially equivalent proprietary
          information that is not covered by patents to which we have rights, or
          that others will not otherwise obtain access to our know-how.

     We have not received any notices alleging, and are not aware of, any
infringement by us of any other entity's patents. However, because of the volume
of patents issued and patent applications filed relating to medical devices, we
cannot guarantee that current and potential competitors and other third parties
have not filed or will not file patent applications, or have not received or
will not receive patents, relating to materials or processes we use or propose
to use. Accordingly, we cannot guarantee that our products do not infringe any
patents or proprietary rights of third parties.

     If another party claims subject matter identical to or overlapping with
subject matter Dr. Jacobson has claimed in a United States patent or patent
application, we may decide or be required to participate in interference
proceedings in the United States Patent and Trademark Office to determine
priority of invention. Loss of such an interference proceeding would deprive us
of patent protection sought or previously obtained by Dr. Jacobson.
Participating in such proceedings could result in substantial costs, regardless
of whether the eventual outcome is favorable.

     In addition to patent protection, we rely on trade secrets, proprietary
know-how, and confidentiality and assignment of invention agreements with our
consultants and medical advisors to protect our intellectual property. We cannot
say with certainty that any intellectual property that we have will provide us
with a competitive advantage or will not be challenged or circumvented by our
competitors. We cannot say with certainty that our confidentiality and
assignment of invention agreements will not be breached or that we would have
adequate remedies for any such breach. Finally, we cannot say with certainty
that our proprietary know-how and intellectual property will not become known or
be independently discovered by others.

     Litigation may be necessary to defend against claims of infringement, to
enforce patents and copyrights issued or licensed to us, or to protect trade
secrets. If we must litigate such issues, we may be forced to incur substantial
costs and to devote substantial resources and time. We furthermore cannot
guarantee that we would prevail in such litigation, should it arise. In
addition, if any relevant claims of third-party patents are upheld as valid and
enforceable, we could be prevented from selling our products or otherwise be
required to obtain licenses from the owners of such patents. We cannot guarantee
that such licenses would be available, or, even if available, would be on
acceptable terms to us. If we are forced to incur substantial costs in
litigation or fail to obtain a license, our business, financial condition,
results of operations, and cash flows may be materially and adversely affected.

COMPETITION

     The development of electromedical and electrotherapeutic medical devices
that can emit a weak electromagnetic field in resonance with the human body's
electromagnetic field is in its infancy. To our knowledge, there are only two
groups of scientists in the world that are dealing with the pico Tesla magnetic
fields.

     One group is at Democrition University of Trace, Alexandroupolis, Greece.
They are primarily engaged in research, but some treatment is being performed
for epilepsy and Parkinson's Disease. The supervising professor is Dr. Photios
Anninos, the Director of Medical Physics for Democrition University, who is also
a member of our Scientific Advisory Board.

     The only other known party working on force-fields this weak is Dr. Reuven
Sandyk, a medical physician in Long Island, New York. Dr. Sandyk is a
neurologist and he has been treating patients with Parkinson's, Alzheimer's and
Multiple Sclerosis. To our knowledge, Dr. Sandyk has not secured an FDA
registration number for his resonator device and does not appear to be inclined
to go into commercial production with this apparatus. His resonator is merely an
extension of his neurological practice .

     Both Dr. Sandyk and Dr. Anninos engage in exploratory research as an
extension of their respective practices. Dr. Sandyk, the only U.S.-based group,
does not appear to be inclined to navigate the time-consuming and expensive
route of securing FDA approval for his apparatus, which is a mandatory
precondition for pursuing commercial production of the device. Dr. Anninos, on
the other hand, limits his focus predominantly to epilepsy. Both Dr. Sandyk and
Dr. Anninos employ devices with multiple small coils producing heterogeneous
fields which, in our opinion, is not the correct approach.

     Dr. Richard Markoll has established around the world about 150 clinics
focusing primarily on the treatment of osteoarthritis using magnetic
force-fields that are approximately one million to ten million times more
powerful than the force-fields emitted by the Jacobson Resonator. Dr. Markoll
seems to be content with limiting himself to this area. These clinics have been
in operation for many years. Dr. Markoll has secured a CE Mark but he has not
obtained FDA approval.

     Finally, the Japanese company Nikken produces permanent magnets. These are
very strong magnets which emit force-fields that are millions and even billions
of times stronger than the force-fields emitted by the Jacobson Resonator. These
magnets claim to improve circulation or to treat pain. To our knowledge, these
claims have not been medically substantiated and the FDA has never passed on the
validity of these treatments. We do not regard these permanent magnets as truly
competitive products.

     In sum, the Jacobson Resonator does not appear to face direct competition
at this time in either the United States or abroad. There is no assurance, of
course, that we will not be subject to competition from other companies,
including large medical device manufacturers with substantially greater
resources than us.

EMPLOYEES

     We have five full-time employees, four of whom are executive officers. They
are Dr. Jerry I. Jacobson, Ms. Debra Jacobson, Mr. Frank Chaviano and Mr. Harvey
Grossman. The Company also has four part-time sales, marketing and financial
consultants. There are no collective bargaining agreements and no employment
contracts in force.





ITEM 2.  DESCRIPTION OF PROPERTY

     We are currently leasing office space in Boynton Beach, Florida, on an
annual basis, under a lease expiring in March, 2005, and in Juno Beach, Florida,
pursuant to a lease that will expire in May 2002. The Boynton Beach office has
4,300 square feet of space and a current annual rent of approximately $73,000.
The Juno Beach office has 350 square feet of space and a current annual rent of
approximately $14,000. The Boynton Beach office is our headquarters and research
facility, and the Juno Beach office is used for record storage and for Dr.
Jacobson's private office.


ITEM 3.  LEGAL PROCEEDINGS

     On March 9, 2001, the intellectual property six year dispute and litigation
between Dr. Jerry Jacobson, our Chairman of the Board and our largest
stockholder, and Messieurs Eric Hewko and Patrick Casey has concluded. The basis
for Messrs. Hewko and Casey's claim was an oral agreement in 1988, followed by a
written agreement in 1990, with Dr. Jacobson, pursuant to which the plaintiffs
paid for certain attorneys' fees for three U.S. and nine foreign patents, in
exchange for a 1/3 ownership in the intellectual property. Messrs. Hewko and
Casey had other obligations under these agreements that they did not perform.
Dr. Jacobson had no other relationships with Messrs. Hewko and Casey. An outside
settlement was reached on March 2, 2001. Dr. Jacobson had filed for personal
bankruptcy and on December 6, 2000, this case was dismissed. Under the terms of
the settlement agreement, Dr. Jacobson continued to retain controlling and
majority interest in the Company, and exclusive licensing rights on any pending,
issued or in progress patents are to go to us. However, under the terms of the
settlement, Messrs. Hewko and Casey are entitled to a 1/3 ownership interest in
any of Dr. Jacobson's patents involving Jacobson Resonance and the 1%
participation in royalties on those patents paid by us to Dr. Jacobson. In
addition, Dr. Jacobson was required to give an aggregate of 12 million shares
and agree to a payment of one million dollars to Messrs. Hewko and Casey; we
also issued to Messrs. Hewko and Casey in connection with this settlement
warrants expiring April 6, 2008 to purchase 3,000,000 shares of our common stock
at a price of $.30 per share. (The million dollars is both our responsibility
and responsibility of Dr. Jacobson. We also assumed responsibility for this
payment since, in this settlement, we obtained the exclusive license to all
intellectual property relating to Jacobson Resonance, whereas prior to the
settlement we did not have these rights.) Messrs. Hewko and Casey also assigned
any and all intellectual property rights of a patent (Therapeutic Treatment of
Mammals) in perpetuity to us for an aggregate of three million warrants issued
as payment consideration (value) of their one third ownership interest. Dr.
Jacobson received six million warrants under the same terms for his two-thirds
ownership interest. The warrants are exercisable at a price of $0.30 until April
6, 2008 at which time the warrants will expire if not exercised. The warrants
are subject to certain anti-dilution provisions which shall cause the warrants
to be adjusted. Such dilution events include merger, consolidation,
recapitalization, reorganization, reclassification, stock split or stock
dividend. As of the date hereof, none of these events have occurred so as to
cause an adjustment to the warrants issued pursuant to the Stock Warrant
Agreement. Additionally, we further received from Dr. Jacobson and Messrs. Hewko
and Casey an exclusive license in perpetuity any and all additional indications
and methodologies relating to the Jacobson Resonance patents worldwide,
including U.S. Patent 5,198,181 from Dr. Jacobson which relates to the use of
resonance technology to control Thermo Nuclear Fusion power has also been
granted to us. Dr. Jacobson's license agreements with us provide for a royalty
equal to 2%-3% (net of the 1% royalty payable as described below) of gross sales
of our products utilizing Jacobson Resonance. In settlement of this litigation,
Messrs. Hewko and Casey negotiated as a part of the settlement a 1% royalty of
gross sales on all patents licensed by Dr. Jacobson to us involving Jacobson
Resonance.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     During the fourth quarter of the fiscal year covered by this report, no
matters were submitted to a vote of security holders through the solicitation of
proxies or otherwise.








                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

     Our Common Stock is traded on the OTC Bulletin Board(R) under the Symbol
"JRSEOB." The following table sets forth the range of the high and low sales
prices for the Common Stock on the OTC Bulletin Board(R) for each calendar
quarter of 2001 and 2000. The source of the following information is America
Online (AOL) quotation services. These prices reflect inter-dealer prices,
without retail markup, mark-down or commission and may not represent actual
transactions.

           QUARTER ENDING                HIGH      LOW
           --------------------         -------  -------
           March 31, 2002                $0.31    $0.18

           December 31, 2001             $0.62    $0.16
           September 30, 2001            $0.97    $0.37
           June 30, 2001                 $2.06    $0.59
           March 31, 2001                $3.62    $1.37

           December 31, 2000             $0.34    $0.13
           September 30, 2000            $1.56    $0.23
           June 30, 2000                 $3.12    $1.53
           March 31, 2000                $2.60    $0.21

     As of April 1, 2002, we had 736 shareholders of record.

     The Company has not declared or paid any dividends on its Common Stock. The
Company currently intends to retain future earnings to fund the development and
growth of its business, and therefore does not anticipate paying any cash
dividends in the foreseeable future. Any future determination to declare and pay
dividends will be made by the Board of Directors of the Company in light of the
Company's earnings, financial position, capital requirements, credit agreements
and such other factors as the Board of Directors deems relevant.

Recent Sales of Unregistered Securities

     The following provides information of all sales of outstanding stock which
were not registered under the Securities Act of 1933 (the "Act").

-------------------- -------------------------------- --------------- ---------------- -----------------------
Date                 Title and Amount                   Purchasers      Principal         Total Offering
                                                                        Underwriter     Price/Underwriting
                                                                                             Discounts
-------------------- -------------------------------- --------------- ---------------- -----------------------
January, 1999        291,305 shares of common stock      Private            NA         $60,000/NA
                     issued upon conversion of          Investors
                     principal amount and accrued
                     interest of $60,000
                     convertible note due November
                     30, 1999
-------------------- -------------------------------- --------------- ---------------- -----------------------
July through         $1,000,000 convertible              Private            NA         $1,000,000/NA
November, 1999       subordinated debentures due        Investors
                     June, 2004, were issued and
                     converted into an aggregate of
                     1,562,876 shares of common
                     stock, together with 900,000
                     shares of common stock issued
                     upon the exercise of warrants
                     at a price of $.001 per share
-------------------- -------------------------------- --------------- ---------------- -----------------------
December, 1999       500,000 shares of common stock      Private            NA         $100,000/NA
                                                        Investors
-------------------- -------------------------------- --------------- ---------------- -----------------------
December, 1999       1,313,903 shares of common        Consultants          NA         Consulting services
                     stock                                                             valued at $.35 to
                                                                                       $.45 per share
-------------------- -------------------------------- --------------- ---------------- -----------------------
April , 2000         Units consisting of                 Private            NA         $1,017,618/NA
                     1,670,867shares of common          Investors
                     stock and options expiring
                     December 31, 2004, to purchase
                     1,242,117 shares of common
                     stock, 307,693  $.85 per
                     share, and 933,424 at $.90 per
                     share
-------------------- -------------------------------- --------------- ---------------- -----------------------
February, 2000       335,342 shares of common stock    Consultants          NA         Consulting services
                                                                                       valued at $118,000
-------------------- -------------------------------- --------------- ---------------- -----------------------
February, 2000       40,000 shares of common stock       Private            NA         $16,000/NA
                                                         Investor
-------------------- -------------------------------- --------------- ---------------- -----------------------
May, 2000            100,000 shares of common stock      Private            NA         $34,775
                                                         Investor
-------------------- -------------------------------- --------------- ---------------- -----------------------
August, 2000         199,032 Units, each Unit            Private            NA         $89,564
                     comprising one share of common     Investors
                     stock, and one Class A Warrant
                     to purchase one share of
                     common stock at an exercise
                     price of $.63 per share,
                     expiring December 31, 2004
-------------------- -------------------------------- --------------- ---------------- -----------------------
September, 2000      165,232 shares of common stock      Private            NA         $69,397/NA
                                                        Investors
-------------------- -------------------------------- --------------- ---------------- -----------------------
October, 2000        150,000 shares of common stock      Private            NA         $20,000/NA
                                                         Investor
-------------------- -------------------------------- --------------- ---------------- -----------------------

-------------------- -------------------------------- --------------- ---------------- -----------------------
January, 2001        210,112 shares of common stock     Consulting          NA         $71,148/NA
                                                           Firm
-------------------- -------------------------------- --------------- ---------------- -----------------------
March, 2001          598,032 shares of common stock      Private            NA         $167,048/NA
                                                        Investors
-------------------- -------------------------------- --------------- ---------------- -----------------------

-------------------- -------------------------------- --------------- ---------------- -----------------------
October, 2001        1,075,759 shares of common          Private            NA         $125,000/NA
                     stock                              Investors
-------------------- -------------------------------- --------------- ---------------- -----------------------
October, 2001        560,000 shares of common stock     Consulting          NA         Consulting Services
                                                          Firms                        valued at $120,243
-------------------- -------------------------------- --------------- ---------------- -----------------------
October/             260,000 shares of common stock    Note Holders         NA         Interest on Notes
November, 2001                                                                         payable valued at
                                                                                       $59,102; purchase of
                                                                                       stock $2,600
-------------------- -------------------------------- --------------- ---------------- -----------------------
November 2001        650,000 shares of common stock    Officer/             NA         Fair value of
                                                       Director                        research and
                                                                                       development expenses
                                                                                       - $149,500
-------------------- -------------------------------- --------------- ---------------- -----------------------
December, 2001       $75,000 principal amount  6%        Private            NA         $ 75,000/ $13,000
                     Convertible Debenture,              Investor                      paid as finder's and
                     convertible into shares of                                        legal fees
                     common stock, with warrants
                     expiring December 31, 2004, to
                     purchase 75,000 shares of
                     common stock
-------------------- -------------------------------- --------------- ---------------- -----------------------

Securities Authorized for Issuance under Equity Compensation Plans

     The following table sets forth information with respect to our common stock
issued and available to be issued under outstanding options, warrants and
rights.

------------------------------ --------------------- --------------------- --------------------------
                               (a)                    (b)                   (c)
------------------------------ --------------------- --------------------- --------------------------
Plan category                  Number of securities  Weighted-average      Number of securities
                               to be issued upon     exercise price of     remaining available for
                               exercise of           outstanding options,  future issuance under
                               outstanding options,  warrants and rights   equity compensation plans
                               warrants and rights                         (excluding securities
                                                                           reflected in column (a))
------------------------------ --------------------- --------------------- --------------------------
Equity compensation plans
approved by security holders     19,281,000           $.35                   15,719,000
------------------------------ --------------------- --------------------- --------------------------
Equity compensation plans not
approved by security holders
------------------------------ --------------------- --------------------- --------------------------
Total                            19,281,000           $.35                   15,719,000
------------------------------ --------------------- --------------------- --------------------------


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     Certain statements contained in this report, including, without limitation,
statements containing the words "believes," "anticipates," "expects" and words
of similar import constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks and uncertainties. The Company's
actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including the success
and subsequent acceptance of new medical research and development; the
regulatory framework of the health care industry; the Company's ability to
create, sustain, manage or forecast its growth; its ability to attract and
retain key personnel; its ability to protect technology; changes in its business
strategy or development plans; competition; demographic changes; business
disruptions; adverse publicity; and international, national and local general
economic and market conditions.

We are in the development stage and have received some royalty revenues from
Real Pure Beverage Group, LLC, Bio Resonance Technology, Inc., Canada, Palmer
Natural Products, Inc., San Juan Capistrano, California, and Serrato Europe,
SARL, Geneva, Switzerland, during the year ended December 31, 2001, and
primarily during the third and fourth quarters of 2001 which have amounted to
approximately $182,000. We have incurred losses of approximately $1,550,000 for
the year ended December 31, 2001. We have incurred losses of approximately
$10,709,000 since our inception. Of that amount, approximately $4,769,000
represents the non-cash expense resulting from the issuance of common stock and
options to purchase common stock to members of our management and third parties
for services rendered and interest.


2001 OPERATIONS COMPARED TO 2000

     The net loss decreased from approximately $3,940,000 in 2000, to
approximately $1,710,000 for the twelve months ended December 31, 2001.

     The significant item relating to the decrease in the loss was a charge in
2000 of $1,870,000 relating to litigation involving our majority stockholder,
Dr. Jacobson. The charge represents a $1,000,000 award to the plaintiffs and the
value of warrants ($870,000) issued to the plaintiffs. We received licensing
rights to patents and we determined that it was in our best interst to bear such
costs.

     While we are in the late stages of our development, during the latter part
of 2001 we began to receive royalties based on agreements we had completed. In
2001, we received approximately $29,000 in royalties from beverage sales of
resonated water and $153,000 from international agreements. This increase of
$151,000 over the previous year is a result of marketing efforts by the
licensees.

     We on occasion sell resonators for testing purposes and other uses. The
profit on such sales increased by approximately $26,000 from the previous year.

     In past years we earned interest as a result of having the proceeds from
private sales of equity. During 2001, interest expense (net) was $130,000
(includng non-cash charges relating to stock issuances of $59,000) compared to
interst income of $49,000 in 2000 for additional costs in 2001 relating to
interest of $179,000.

     We continue to incur costs for research and development including costs for
clinical trials. These costs increased by $66,000, primarily to accommodate the
European market.

     General and administrative expenses decreased by approximately $428,000
from 2000 to 2001. In 2000 we charged to bad debts $200,000 of advances to Dr.
Jacobson. In 2001, there were $18,000 in bad debts accounting for a decrease of
$182,000. Legal fees decreased by $114,000. In 2000, costs for licensing
agreements and for litigation relating to Dr. Jacobson's lawsuit represented
costs not incurred in 2001. Salaries decreased by $272,000 from 2000 to 2001
primarily as a result of stock issuances in 2000 for employee services and the
values attributable to those issuances. Other valuing operating costs increased
by approximately $140,000.

     The following is a summary of the factors resulting in the decrease in the
loss from 2000 to 2001:
     Decrease relating to Jacobson litigation          $     1,870,000
     Increase in royalty revenue                               151,000
     Increase in profit on resonator sales                      26,000
     Increase in interest cost                                (179,000)
     Increase in research and development expenses             (66,000)
     Decrease in general and administrative expenses           428,000
                                                       ----------------
     Decrease in loss                                  $     2,230,000
                                                       ================


PLAN OF OPERATION

     Since early May 2000, we jointly launched our marketing campaign with Real
Pure Beverage Group, LLC, for promoting resonated high energy sport drink (Real
Pro). Brett Favre is the official spokesperson for Real Pro sports drink
produced and bottled by Real Pure Beverage Group, LLC. These marketing and
national distribution initiatives continue and have expanded during 2001.

     In addition, we have received approval and a CE-Mark issuance from the
European Union, thus allowing distribution and commercialization of our medical
resonators in 2001. Marketing and distribution plans through EKINSA are
currently ahead of schedule. We have also received approval by Health Canada
licensing authorities for commercialization and distribution of medical
resonators and said license has now expanded not only to cover all medical
resonator models but also licensing clearance by Health Canada covering "all
types of pain" instead of being limited to arthritic pain. Bio Resonance
Technology, Inc., now operates two medical centers (Calgary and Winnipeg) and a
third center under planning and construction for southeast Canada.

     Serrato Europe, SARL, Geneva, Switzerland, is currently under a global
expansion through its worldwide sub-license EKINSA of Madrid, Spain. Plans are
currently underway to expand distribution, marketing and sales into Germany,
Portugal and France as well as key countries in Latin America such as Mexico,
Venezuela and Argentina during 2002 thus generating a royalty stream for us.
Additional health clearances and approvals have been granted in Australia,
Finland and Norway. Currently, Serrato Europe, SARL, is developing additional
distribution and marketing plans to cover these and other countries expected to
receive clearances in 2002.

     We expect FDA clearance of our 18" clinical resonator sometime before the
end of the second quarter of 2002. We currently have on file a 510-k submission
to the Radiological Division of FDA which is under review. In December 2001, we
met with FDA management personnel and authorities in order to discuss our
submission and other pending matters dealing with the clearance, development,
future research studies, and submissions of the Jacobson Resonator and resonance
technology advancements.

     We further expect to receive a broad "pain spectrum" clearance sometime in
late 2002 or early 2003 as further research and clinical trials are completed
and presented to FDA for additional clearances.

     Our agricultural, environmental and building licensing initiatives continue
to show tremendous potential and interest particularly in the Pan Asian and
Pacific Rim countries. As a result, we continue to investigate licensing and
joint venture opportunities in the region, from which we expect to generate
additional revenues. Research at Texas A&M University, Mississippi State
University and the University of Oklahoma have shown positive results that
Jacobson Resonance Technology can beneficially affect the growth cycle of
vegetables, fruits and liquids. The foregoing combination of events is also
expected to generate ongoing revenues even though it is not our primary focus.
These revenues from non-medical initiatives are expected to grow during 2002.

Other possible sources of revenue for us during fiscal 2002 include the
following:

1.   Licensing revenue from a larger medical products company for the
development, marketing and distribution rights in connection with the use of
Jacobson Resonance in the treatment of cardiac arrhythmia. Results thus far in
cardiac pacing research at the University of Oklahoma Health Science Center have
attracted interest by several major international medical device corporations.

2.   Licensing revenue from existing licensee for building, construction and
the environment from Enviro Brick and Block Ltd. and Enviro Products, Ltd. We
have had in effect with this company an exclusive licensing agreement since
August 2000. Royalty revenues from new and existing Canadian and U.S.
manufacturing plants are expected to commence by late second quarter or early
third quarter of 2002.

3.   Additional revenues from pending non-medical resonance licensing
agreements which are currently under negotiations, legal review, and board
approval which have not been made public as of the end of third quarter, but
could substantially contribute in royalty revenues to us during 2002 and 2003.

4.   Expansion of global marketing and distribution services by EKINSA,
Serrato Europe and Serrato Medical in Latin America, Middle East and Pacific Rim
countries in addition to the European Union.

     We will continue both use and product research and development for Jacobson
Resonance as a key ingredient in having numerous proven applications and uses of
our resonance technology to provide revenue stream in medical as well as
targeted non-medical areas through 2002 and 2003. We anticipate continued
prototyping of additional models of the Jacobson Resonator for varying uses as
funding becomes available for that purpose. We estimate approximately $40,000
was spent in prototyping in 2001 and approximately $110,000 will be spent
additionally in 2002 for a combined total of $150,000 in prototyping design.

LIQUIDITY AND CAPITAL RESOURCES AS OF DECEMBER 31, 2001

     Through December 31, 2001, we received approximately $225,000, from the
sale of securities and $250,000 from the proceeds of several notes payable. We
anticipate that our existing resources will be sufficient to fund our plan of
operation through mid-2002. By the end of 2002, and following the completion of
the equity line offering, we expect to be generating sufficient revenue to fund
our plan of operation. However, if we by that time are not generating any
revenue or are generating insufficient revenue for such funding, then we may
have to seek additional funds through either debt or equity financing. Our
year-end financial statements include an explanatory paragraph about our ability
to continue as a going concern.

     In April 2001, we entered into a consulting agreement with Regulatory
Insight, Inc., of Lakewood, Colorado for healthcare consulting services in
addition to having a service healthcare consulting agreement for FDA since
September 2000 with Quintiles Inc. and the Lewin Group.

     We have also entered into three agreements during third quarter 2001 with a
communications company (EquityLink), public relations consultant (CFC
Enterprises, Inc.) and market consulting financial firm (1st Source
Communications) for the purpose of enhancing education and knowledge about our
technology, applications, and opportunities to the investment community at
large.

     Note 5 of the financial statements refers to the fact that we received
$250,000 from the proceeds of several promissory notes which have 60 days terms
and pay interest at 5% per annum. Note 5 reflects that we are in default.
Management and the parties mutually understood that the 60 days term would not
be met prior to execution of the notes. Although management agrees that the
payment is late, management maintains the default is only technical since the
contemplated late penalty provision entitles us to a roll over extension
provision and entitles the holders to receive options to purchase shares of our
common stock. Both parties have agreed upon entering this note that the roll
over provision would be used.


ITEM 7.  FINANCIAL STATEMENTS

     Financial Statements contained in this report reflect no change from the
preceding year in any accounting principles or practices or in the method of
application of those principles or practices.



                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)


                                                                      CONTENTS
--------------------------------------------------------------------------------

Independent Auditor's Report                                         F-2 - F-3

Financial Statements:

   Balance Sheet                                                        F-4
   Statement of Operations                                              F-5
   Statement of Changes in Stockholders' Equity (Deficiency)         F-6 - F-8
   Statement of Cash Flows                                              F-9
   Notes to Financial Statements                                     F-10 - F-25








INDEPENDENT AUDITOR'S REPORT



To the Board of Directors
Jacobson Resonance Enterprises, Inc.



We have audited the accompanying balance sheet of Jacobson Resonance
Enterprises, Inc. (a development stage company) as of December 31, 2001, and the
related statements of operations, stockholders' equity (deficiency), and cash
flows for each of the two years in the period then ended and the amounts
included in the cumulative column in the statements of operations and cash flows
for the period from January 1, 1999 to December 31, 2001. The amounts in the
cumulative column in the statements of operations and cash flows and the
statement of stockholders equity for the period June 4, 1996 (inception) to
December 31, 1998 were audited by other auditors whose report, dated January 29,
1999 includes an explanatory paragraph concerning the Company's ability to
continue as a going concern. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.


We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Jacobson Resonance Enterprises,
Inc. as of December 31, 2001 and the results of its operations and its cash
flows for each of the two years in the period then ended and the amounts
included in the cumulative column in the statements of operations and cash flows
for the period from January 1, 1999 to December 31, 2001 in conformity with
accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses and has no
significant revenue from operations which raise substantial doubt about its
ability to continue as a going concern. Management's plan in regard to these
matters is also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


GOLDSTEIN GOLUB KESSLER LLP
New York, New York

March 21, 2002  except for Note 12, as to which the date is April 17, 2002


                                      F-2




To The Board of Directors
Jacobson Resonance Enterprises, Inc.
Boca Raton,  Florida

                          INDEPENDENT AUDITORS' REPORT

We have audited the accompanying statements of operations, stockholders' equity
(deficiency), and cash flows of Jacobson Resonance Enterprises. Inc. (a
development stage company) for the period from June 4, 1996 (inception) to
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits or obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations, shareholders' equity, and cash
flows of Jacobson Resonance Enterprises, Inc. (a development stage company) for
the period from June 4, 1996 (inception) to December 31, 1998 in conformity with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses and has no
significant revenue from operations which raise substantial doubt about its
ability to continue as a going concern. Management's plan in regard to these
matters is also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


Millward & Co., CPA's
Ft. Lauderdale, FL
January 29, 1999

                                      F-3


                      JACOBSON RESONANCE ENTERPRISES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                                  BALANCE SHEET
                                December 31, 2001

                                     ASSETS

CURRENT ASSETS
    Accrued Interest Receivable                                        4,786
    Prepaid Expenses and Other                                        54,706
                                                                      ------
        Total Current Assets                                          59,492
                                                                      ------

Property and Equipment, at Cost,
 (Net of Accumulated Depreciation of $90,946)                        127,858
                                                                     -------

OTHER ASSETS
Deferred Offering Costs                                               75,250
Deferred Financing Costs, Net of
  Accumulated Amortization of $174                                    12,326
Deposits                                                               1,395
Due from Officers/Shareholders, Net of
  Allowance for Doubtful Amounts of $200,000                          50,000
Deferred Income Tax Asset, Net of Valuation
  Allowance of $2,176,000                                                -
                                                                     -------
        Total Other Assets                                           138,971
                                                                     -------

                                                                   $ 326,321
                                                                   =========

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
    Accounts Payable and Accrued Expenses                          $ 403,475
    Litigation Settlement Payable                                    995,000
    Deposits on Common Stock to be Issued                             56,775
    Notes Payable                                                    250,000
                                                                     -------
        Total Current Liabilities                                  1,705,250
                                                                   ---------

LONG-TERM DEBT
    Debentures Payable, Face Value of $75,000
       (Net of Beneficial Conversion Feature
       and Costs of $ 65,138)                                          9,862
                                                                       -----

        Total Liabilities                                          1,715,112
                                                                   ---------

Commitments and Contingencies

STOCKHOLDERS' DEFICIENCY
    Preferred Stock $.001 Par Value, 5,000,000
        Shares Authorized;
        Issued and Outstanding, 30,000 Shares                             30
    Common Stock, $.001 Par Value, 300,000,000
        Shares Authorized;
        Issued and Outstanding, 58,169,239                            58,169
    Additional Paid in Capital                                     9,469,127
    Deficit Accumulated During the Development Stage             (10,871,443)
                                                                 -----------
                                                                  (1,344,117)
                                                                 -----------

    Common  Stock in Treasury, at cost (600,000 Shares)                 (600)
    Subscriptions Receivable                                         (44,074)
                                                                    --------

        Stockholders' Deficiency                                  (1,388,791)
                                                                  ----------

        Total Liabilities and Stockholders' Deficiency             $ 326,321
                                                                   =========


   The accompanying notes and independent auditors' report should be read in
                   conjunction with the financial statments.

                                      F-4


                      JACOBSON RESONANCE ENTERPRISES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENTS OF OPERATIONS

                                                                       For the Period
                                                                            From
                                                                        June 4, 1996
                                                                        (Inception)
                                                For the Year Ended           To
                                                   December 31,       December 31, 2001
                                               2001           2000

REVENUE                                     $ 182,030      $ 31,590       $ 360,773
                                            ---------     ---------      ----------

COSTS AND EXPENSES:
    General and Administrative              1,594,025     2,020,186       6,248,617
    Research and Development                  256,449       190,895       1,208,830
    Settlement Costs                             -        1,870,000       1,870,000
    Financing Costs                              -            1,196       2,095,704
                                            ---------     ---------       ---------

        Total Operating Expenses            1,850,474     4,082,277      11,423,151
                                            ---------     ---------      ----------

Other Income(Expense)
    Interest Income                             8,262        48,601         103,643
    Interest Expense                         (138,256)         -           (138,256)
    Gain of Sales of Resonance Equipment       86,833        60,134         225,548
                                            ---------     ---------      ----------

        Total Other Income (Expense)          (43,161)      108,735         190,935
                                            ---------     ---------      ----------

NET LOSS                                  $(1,711,605)  $(3,941,952)  $ (10,871,443)
                                          ============  ============  ==============

PER SHARE INFORMATION:

Net Loss Per Share:
    Basic                                    $ (0.03)      $ (0.08)
                                             ========      ========
    Diluted                                  $ (0.03)      $ (0.08)
                                             ========      ========

Shares Used to Compute Net Loss Per Share
    Basic                                  56,021,715    48,449,884
                                          ===========    ==========
    Diluted                                56,021,715    48,449,884
                                          ===========    ==========

   The accompanying notes and independent auditors' report should be read in
                   conjunction with the financial statments.

                                      F-5



                      JACOBSON RESONANCE ENTERPRISES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
            STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
               For the Period from Inception to December 31, 2001

                                                                            DEFICIT
                                                                          ACCUMULATED
                                                               ADDITIONAL    DURING                         STOCKHOLDERS'
                           COMMON STOCK        PREFERRED STOCK  PAID-IN   DEVELOPMENT SUBSCRIPTION TREASURY   EQUITY
                        ISSUED       AMOUNT    ISSUED   AMOUNT  CAPITAL      STAGE     RECEIVABLE   STOCK   (DEFICIENCY)
                       ----------   --------  -------  ------- ---------- ----------- ------------ -------- ------------
Issuance of Founders
  Stock at
  Par $.001            57,220,000   $ 57,220     -       $ -   $ (57,220) $     -      $    -        $ -     $     -

Recapitalization -
  June 4, 1996          4,905,000      4,905     -         -      (4,905)       -           -          -           -

Issuances of Common
  Stock at $.10
  Per Share            10,000,000     10,000     -         -     990,000        -        (526,550)     -       473,450

Issuances of Common
  Stock at $1.750
  Per Share                18,857         19     -         -      32,981        -           -          -        33,000


Purchase of Treasury
  Stock at Cost              -          -        -         -        -           -           -         (600)       (600)

Conversation of
  Common Stock to     (45,000,000)   (45,000)  45,000       45    44,955        -           -          -           -
  Preferred Stock


Net Loss                     -          -        -         -        -       (292,325)       -          -      (292,325)
                       ----------   --------  -------    ----- ---------- -----------  -----------  -------  ----------

Balance,
  December 31, 1996    27,143,857   $ 27,144   45,000     $ 45 $1,005,811 $ (292,325)  $ (526,550)  $ (600)  $ 213,525

Issuance of Common
  Stock for Services
  Rendered at Prices
  Between $.15 and
  $1.75 Per Share          40,114         40     -         -      12,744        -           -          -        12,784

Issuances of Common
  Stock from Private
  Placement at Prices
  Between $.15 and
  $.25 Per Share          760,000        760     -         -     139,240        -           -          -       140,000

Issuances of Common
  Stock out of
  Proceeds of
  Subscription
  Receivable                 -          -        -         -        -           -           5,000      -         5,000

Net Loss                     -          -        -         -        -       (315,319)       -          -      (315,319)
                       ----------   --------  -------    ----- ---------- -----------  -----------  -------  ----------

Balance,
  December 31, 1997    27,943,971   $ 27,944   45,000     $ 45 $1,157,795 $ (607,644)  $ (521,550)  $ (600)  $  55,990


Continued on Page F-7

   The accompanying notes and independent auditors' report should be read in
                   conjunction with the financial statments.

                                      F-6



                      JACOBSON RESONANCE ENTERPRISES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
            STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
               For the Period from Inception to December 31, 2001

                                                                            DEFICIT
                                                                          ACCUMULATED
                                                               ADDITIONAL    DURING                         STOCKHOLDERS'
                           COMMON STOCK        PREFERRED STOCK  PAID-IN   DEVELOPMENT SUBSCRIPTION TREASURY   EQUITY
                        ISSUED       AMOUNT    ISSUED   AMOUNT  CAPITAL      STAGE     RECEIVABLE   STOCK   (DEFICIENCY)
                       ----------   --------  -------  ------- ---------- ----------- ------------ -------- ------------
Balance,
  December 31, 1997    27,943,971   $ 27,944   45,000  $    45 $1,157,795 $ (607,644)  $ (521,550) $  (600)  $  55,990

Reacquisition of
  Common Shares and
  Collection of
  Subscription
  Receivable           (3,000,000)    (3,000)     -         -    (450,000)      -         450,000      -        (3,000)

Cash Collection of
  Subscription
  Receivable                 -          -         -         -        -          -          27,476      -        27,476

Issuance of Common
  Stock from Private
  Placement at a
  Price of $.15 per
  Share                 4,675,850      4,676      -         -     659,294       -            -         -       663,970

Issuance of Common
  Stock from Private
  Placement at a
  Price of $.35 per
  Share                 2,017,999      2,018      -         -     690,156       -            -         -       692,174

Issuance of Common
  Stock for Services
  Rendered at Prices
  between $.15 and
  $.35 per Share          663,223        663      -         -     176,415       -            -         -       177,078


Fair Value of Options
  Issued to
  Consultants                -          -         -         -       2,063       -            -         -         2,063

Net Loss                     -          -         -         -        -      (952,276)        -         -      (952,276)
                       ----------   --------  -------  ------- ---------- ----------- ------------ -------- ------------

Balance,
  December 31, 1998    32,301,043     32,301   45,000       45  2,235,723 (1,559,920)     (44,074)    (600)    663,475

Issuance of Common
  Stock for Services
  Rendered at Prices
  between $.18 and
  $2.69 per Share       1,313,903      1,314      -         -     420,375       -            -         -       421,689

Issuance of Common
  Stock for Repayment
  of Debt                 291,305        291      -         -      60,883       -            -         -        61,174

Issuance of Common
  Stock for
  Conversion of
  Warrants                900,000        900      -         -   1,754,100       -            -         -     1,755,000

Sales of Shares at
  $.20 per Share          500,000        500      -         -      99,500       -            -         -       100,000

Beneficial Conversion
  Feature on
  Convertible Debentures     -          -         -         -     333,332       -            -         -       333,332

Issuance of Common
  Stock for
  Conversion of
  Debentures            1,862,876      1,863      -         -     902,194       -            -         -       904,057

Net Loss                     -          -         -         -         -   (3,657,966)        -         -    (3,657,966)
                       ----------   --------  -------  ------- ---------- ----------- ------------ -------- ------------
Balance,
   December 31, 1999   37,169,127     37,169   45,000       45  5,806,107 (5,217,886)     (44,074)    (600)   580,761

Issuance of Common
  Stock for Services
  Rendered at Prices
  between $.21 and
  $1.52 per Share         385,342        385      -         -     378,555       -            -         -      378,940

Sales of Shares at
  $.13 to $.65 per
  Share                 2,120,867      2,121      -         -   1,095,497       -            -         -     1,097,618

Fair Value of Options
  Issued to
  Consultants                -          -         -         -     242,031       -            -         -       242,031

Fair Value of Options
  Issued on Settlement       -          -         -         -     870,000       -            -         -       870,000

Issuance of Common
  Stock for Exercise
  of Options              140,000        140      -         -      50,635       -            -         -        50,775

Issuance of Common
  Stock Upon
  Conversion of
  Preferred Stock      15,000,000     15,000  (15,000)     (15)   (14,985)      -            -         -          -

Net Loss                     -          -         -         -        -    (3,941,952)        -         -    (3,941,952)
                       ----------   --------  -------  ------- ---------- ----------- ------------ -------- ------------
Balance
  December 31, 2000    54,815,336     54,815   30,000       30  8,427,840 (9,159,838)     (44,074)    (600)   (721,827)


Continued on Page F-8

   The accompanying notes and independent auditors' report should be read in
                   conjunction with the financial statments.

                                      F-7




                      JACOBSON RESONANCE ENTERPRISES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
            STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
               For the Period from Inception to December 31, 2001

                                                                            DEFICIT
                                                                          ACCUMULATED
                                                               ADDITIONAL    DURING                         STOCKHOLDERS'
                           COMMON STOCK        PREFERRED STOCK  PAID-IN   DEVELOPMENT SUBSCRIPTION TREASURY   EQUITY
                        ISSUED       AMOUNT    ISSUED   AMOUNT  CAPITAL      STAGE     RECEIVABLE   STOCK   (DEFICIENCY)
                       ----------   --------  -------  ------- ---------- ----------- ------------ -------- ------------
Balance,
  December 31, 2000    54,815,336   $ 54,815   30,000  $    30 $8,427,840 $(9,159,838)  $ (44,074) $ (600)  $ (721,827)

Issuance of Common
  Stock for Services
  Rendered at Prices
  between $.17 and
  $.35 per Share        1,420,112      1,420      -         -     339,471       -             -        -       340,891

Issuance of Common
  Stock from Private
  Placements at
  Prices between $.11
  and $.42 per Share    1,673,791      1,674      -         -     290,374       -             -        -       292,048

Fair Value of Options
  Issued to
  Consultants                -           -        -         -     249,750       -             -        -       249,750

Warrants Issued for
  Offering Costs             -           -        -         -      75,250       -             -        -        75,250

Issuance of Common
  Stock For Interest
  on Notes Payable        260,000        260      -         -      61,442       -             -        -        61,702

Beneficial Conversion
  Feature on
  Convertible
  Debentures                 -           -        -         -      25,000       -             -        -        25,000

Net Loss                     -           -        -         -         -    (1,711,605)        -        -    (1,711,605)
                       ----------   --------  -------  ------- ---------- ----------- ------------ -------- ------------

Balance,
  December 31, 2001    58,169,239   $ 58,169   30,000  $    30 $9,469,127 $(10,871,443) $ (44,074)  $(600)  $(1,388,791)
                       ==========   ========  =======  ======= ========== ============= ==========  ======= ============

   The accompanying notes and independent auditors' report should be read in
                   conjunction with the financial statments.

                                      F-8




                      JACOBSON RESONANCE ENTERPRISES, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENTS OF CASH FLOWS

                                                                                     For the Period From
                                                                                        June 4, 1996
                                                     For the Year Ended                 (Inception)
                                                        December 31,                        To
                                                  2001                 2000           December 31, 2001
                                            ------------         ------------         -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net Loss                                  $ (1,711,605)        $ (3,941,952)        $ (10,871,443)
  Adjustments to Reconcile Net Loss
   to Net Cash Flows Used in
   Operating Activities:
     Depreciation                                 39,789               34,990                96,227
     Amortization                                  1,091                 -                    8,833
     Allowance for Doubtful Amounts
       Due from Officer/Shareholder                  -                200,000               200,000
     Write off of Licensing Costs                    -                   -                  126,582
     Fair Value of Common Stock
       Issued for Services Rendered              340,891              378,940             1,331,600
     Fair Value of Common Stock
       Issued for Interest Expense                59,102                  -                  65,883
     Stock Issued for Conversion of
       Warrants Attributed to Interest               -                    -               1,754,100
     Beneficial Conversion Feature
       of Debentures                                 -                    -                 333,332
     Fair Value of Options Issued                325,000            1,112,031             1,439,094
     Disposition of Property and
       Equipment                                  31,238                  -                  31,238

  Changes is Operating Assets and
   Liabilities:
     Accounts Receivable                          21,688              (21,688)                 -
     Accrued Interest Receivable                  (4,786)                 -                  (4,786)
     Prepaid Expenses and Other                  (12,469)             (10,920)              (54,706)
     Accounts Payable and Accrued
       Expenses                                  228,125               27,196               403,475
     Litigation Settlement Payable                (5,000)           1,000,000               995,000
     Deposits                                        -                    -                  (1,395)
                                            ------------         ------------         -------------

Net Cash Used in Operating Activities           (686,936)          (1,221,403)           (4,146,966)
                                            ------------         ------------         -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------
  Purchases of  Property and Equipment           (10,055)            (107,135)             (255,323)
  Advances to Officers                               -               (250,000)             (250,000)
  Payment for Licensing Costs                        -                    -                (126,582)
                                            ------------         ------------         -------------

Cash Used in Investing Activities                (10,055)            (357,135)             (631,905)
                                            ------------         ------------         -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------
  Purchase of Treasury Stock                                                                  (600)
  Proceeds from Notes Payable                    250,000                  -                 310,000
  Proceeds from Issuance of Debentures            62,500                  -                 952,990
  Deferred Offering Costs                        (75,250)                 -                 (75,250)
  Proceeds from Exercise of Warrants                 -                    -                     900
  Proceeds from Exercise of Options                  -                 50,775                50,775
  Proceeds from Common Stock to be Issued         15,720               69,397                85,117
  Proceeds from Issuance of Common Stock
        From Subscription Receivable                 -                    -                 653,976
  Proceeds from Issuance of Common Stock         225,251            1,097,618             2,800,963
                                            ------------         ------------         -------------

Net Cash Provided by Financing Activities        478,221            1,217,790             4,778,871
                                            ------------         ------------         -------------

Net Increase (Decrease) in Cash and
  Cash Equivalents                              (218,770)            (360,748)                   (0)

Cash and Cash Equivalents - Beginning
  of Period                                      218,770              579,518                   -
                                            ------------         ------------         -------------

Cash and Cash Equivalents - End of Period   $         (0)        $    218,770         $          (0)
                                            ============         ============         =============
NONCASH INVESTING AND FINANCING ACTIVITIES:

  Issuance of Common Stock for
     Repayment of Debt                      $        -           $        -           $      60,000
                                            ============         ============         =============

  Issuance of Common Stock for Deposits     $     69,397         $        -           $      69,397
                                            ============         ============         =============

  Subscriptions Receivable for Issuance
     of Common Stock                        $        -           $        -           $     698,050
                                            ============         ============         =============

  Conversion of Debentures into
     Common Stock                           $        -           $        -           $   1,000,000
                                            ============         ============         =============

   The accompanying notes and independent auditors' report should be read in
                   conjunction with the financial statments.

                                      F-9



                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1. OPERATION AND    The Company was incorporated on March 6, 1988 in the state
   SUMMARY OF       of Nevada as Pioneer Services International, Ltd.
   SIGNIFICANT      ("Pioneer"). The Company is in the development stage and its
   ACCOUNTING       purpose was to locate suitable business ventures to acquire.
   POLICIES         On June 4, 1996, the board of directors of Pioneer voted to
                    acquire 100% of the outstanding shares of Jacobson Resonance
                    Machines, Inc. in exchange for the issuance of 57,220,000
                    shares of its common stock. The Company and Jacobson
                    Resonance Machines, Inc. had no activity prior to the
                    acquisition. In 1998, the Company changed its name to
                    Jacobson Resonance Enterprises, Inc.

                    As a result of the exchange of stock, the former
                    stockholders of Jacobson Resonance Machines, Inc. owned
                    57,220,000 restricted common shares or 92% after the
                    recapitalization of the Company. Accordingly, this
                    transaction was treated, for financial reporting purposes,
                    as a reverse acquisition in which Jacobson Resonance
                    Machines, Inc. was recapitalized by providing 4,905,000
                    shares of Pioneer Services International, Ltd. common stock
                    to Pioneer's existing stockholders. The 1996 stockholders'
                    equity section reflects the change in the capital structure
                    due to the reverse acquisition. As a result, $4,905 was
                    transferred to common stock from additional paid-in capital.

                    The Company is a bio-tech and bio-medical enterprise
                    involved in the development of resonance and
                    electro-magnetic equipment, process and applications.
                    Applications for the use of resonance technology in the
                    medical, food, agricultural, recreational, pharmaceutical,
                    and environmental industries are currently being pursued.

                    The Company is in the development stage and its operations
                    are subject to all of the risks inherent in an emerging
                    business enterprise. The accompanying financial statements
                    have been prepared assuming the Company will continue as a
                    going concern. As shown in the financial statements, the
                    Company has incurred losses of $1,711,605 and $3,941,952 for
                    the years ended December 31, 2001 and 2000, and $10,871,443
                    since its inception in 1996. The Company has had limited
                    revenue during those years. There is no assurance that the
                    Company will not encounter substantial delays and expenses
                    related to financing the successful completion of its
                    product development and marketing efforts and/or other
                    unforeseen difficulties. The Company will be required to
                    expand its management and administrative capabilities in
                    order to manage the aforementioned  items as well as respond
                    to competitive conditions, and will require additional
                    funds. The Company may seek such funds through additional
                    equity financing, debt financing, collaborative arrangement
                    or from other sources. Such funds may not be available on
                    terms acceptable to the Company. These factors indicate that
                    the Company may not be able to continue as a going concern.
                    Based on the Company's current plans and assumptions, the
                    Company believes its cash on-hand and planned subsequent
                    financing described in Notes 6 and 12 will be sufficient to
                    fund its anticipated operations through fiscal 2002 and that
                    it will be successful in marketing related resonance
                    products. The financial statements do not include
                    adjustments relating to the recoverability and
                    classification of recorded assets from the outcome of this
                    uncertainty.

                    Net loss per common share is based upon the weighted-average
                    number of common shares outstanding during the year.
                    Potential common stock is excluded from the computation of
                    diluted net loss per share since their inclusion would be
                    antidilutive.


                                      F-10


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                    Property and equipment are stated at cost. Depreciation is
                    provided for by the straight-line method over the estimated
                    useful lives of the related assets.

                    Deferred offering costs are the costs associated with the
                    expected issuance of common stock.

                    Deferred financing costs are the costs associated with the
                    issuance of the 6% convertible debentures and are being
                    amortized over the term of the debentures.

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

                    Research and development costs are charged to operations
                    when incurred and are included in operating expenses.

                    The Company has elected to apply Accounting Principles Board
                    "APB" Opinion No. 25 and the related interpretations in
                    accounting for its common stock options issued to employees
                    and has adopted the disclosure only provisions of SFAS No.
                    123, "Accounting for Stock-Based Compensation".

                    Financial instruments which potentially subject the Company
                    to concentrations of credit risk are primarily cash and
                    accounts receivable. The Company invests its excess cash in
                    high quality short-term liquid money market instruments with
                    major financial institutions and the carrying value
                    approximates market value. The Company does not have
                    significant trade receivables. The Company maintains cash in
                    bank accounts which, at times, may exceed federally insured
                    limits. The Company has not experienced any losses on these
                    accounts.

                    Management does not believe that any recently issued, but
                    not yet effective, accounting standards if currently adopted
                    would have a material effect on the accompanying financial
                    statement.

                    Revenue from royalties and licenses is recognized when it is
                    earned.

                    Revenue from the sale of resonance equipment is recorded
                    when the equipment is shipped.

                    The Company has charged operations for costs representing
                    legal expenses associated with the application to obtain
                    certain patents awarded to the Company's principal
                    stockholder. The Company has a licensing agreement for the
                    use of the patents.


                                      F-11


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

2. PREPAID EXPENSES
   AND OTHER        At December 31, 2001, prepaid expenses and other consisted
                    of the following:

                    Prepaid consulting                            $    44,840
                    Prepaid rent                                        7,133
                    Other                                               2,733
                    ------------------------------------------------------------
                                                                  $    54,706
                    ============================================================

3. PROPERTY AND
   EQUIPMENT:       Property and equipment at December 31, 2001, at cost,
                    consists of:
                                                                  Depreciation/
                                                                  Amortization
                                                                    Period
                    ------------------------------------------------------------
                    Furniture and fixtures          $ 37,688       3 to 5 years
                    Resonance equipment              181,116            5 years
                    ------------------------------------------------------------
                                                     218,804
                    Less accumulated depreciation    (90,946)
                    ------------------------------------------------------------
                                                    $127,858
                    ============================================================

                    Depreciation expense for the years ended December 31, 2001
                    and 2000 amounted to $39,789 and $34,990, respectively.

4. SUBSCRIPTION     The Company has a note receivable in the amount of $44,074
   RECEIVABLE:      for the outstanding balance due for a subscription
                    receivable that has been treated as a reduction of
                    stockholders' equity.

5. NOTES PAYABLE:   In the second and third quarters of 2001, the Company
                    received $250,000 from the proceeds of several promissory
                    notes. Each of these notes were for a term of 60 days and
                    bear interest at a rate of 5% per annum. At December 31,
                    2001, the Company was in default on all $250,000 of these
                    notes.

                    Under the terms of the notes, in the event of default, the
                    note holder has the option to purchase 10,000 shares of the
                    Company's common stock for $100 for each $25,000 of
                    outstanding debt. Additionally, the notes state that the
                    note holders can continue to purchase common stock in the
                    Company at a rate of 5,000 shares of common stock for $50
                    for each $25,000 of outstanding debt for each 30 day period
                    until the notes are paid in full. At December 31, 2001, the
                    Company had received $2,900 for 290,000 shares of common
                    stock. The Company issued 260,000 shares of common stocks
                    during 2001 to satisfy the defaults. The remaining $300,
                    representing 30,000 shares of common stock is included in
                    the accompanying balance sheet as deposits on common stock
                    to be issued as the shares have not yet been issued.


                                      F-12


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                    The Company recorded interest expense of $ 86,874 for the
                    difference between the fair market value of the Company's
                    common stock and the exercise price of $.01 per common share
                    for any shares that the note holders have a right to
                    receive. The Company satisfied the interest accrual in the
                    amount of $59,102 on the day the 260,000 shares of common
                    stock were issued for $2,600. The remaining interest charge
                    of $27,772 is included in accrued expenses and will be
                    relieved when the remaining 115,000 shares of common stock
                    are issued in 2002. It is anticipated that an additional
                    85,000 shares will be issued in 2002 to satisfy this
                    transaction.

                    The fair value of the notes payable approximates the
                    carrying amount due to the short-term nature of the
                    instrument.

6. CONVERTIBLE      The Company has entered into an agreement with Tecinvest
   DEBENTURES:      Services, Inc. ("Tecinvest") for the issuance of an
                    aggregate of $250,000 of the Company's 6% convertible
                    debentures due December 18, 2004. $75,000 was issued on
                    December 18, 2001, $100,000 was issued in January 2002 and
                    $75,000 of which will be issued on the date the Company's
                    registration statement is declared effective by the
                    Securities and Exchange Commission. The convertible
                    debentures are convertible at the lesser of (I) one hundred
                    ten percent (110%) of the average closing bid price of the
                    Company's common stock for the five trading days immediately
                    preceding the closing date for the particular debenture, or
                    (II) 75% of the average of the six lowest closing bid prices
                    during the 20 days prior to conversion.

                    In connection with the debentures aggregating $75,000
                    purchased on December 18, 2001, the Company has incurred
                    costs of $12,500. The Company also recorded a beneficial
                    conversion feature of $25,000 in connection with this
                    convertible debenture. The beneficial conversion feature is
                    accounted for as a discount to the debentures and is
                    allocated to additional paid in capital. The discount is to
                    be amortized to interest expense through the maturity date
                    of the debt. Additionally, the Company will be required to
                    issue 178,500 shares of common stock as issuance costs.
                    These shares were not yet issued as of December 31, 2001.
                    The Company has recorded the fair market value of these
                    shares of $41,055 and has reduced the carrying value of the
                    convertible debentures by the unamortized amount of the
                    discount and the beneficial conversion feature.

                    The Company is also required to issue 78,000 shares of
                    common stock for costs relating to the $100,000 debenture
                    purchased in January 2002.

                    The Company also entered into an investment agreement with
                    Tecinvest whereby Tecinvest will acquire up to 10,000,000
                    common shares for an aggregate of up to $3,000,000. No
                    shares have been issued and issuances are subject to
                    registration, formula restrictions and limitations as to
                    monthly sales or proceeds. In 2002, the Company issued
                    80,000 shares to an attorney for legal services related to
                    this agreement. The Company also granted 500,000 warrants in
                    2001 to acquire stock and the warrants are exercisable at
                    110% of the average closing bid price for the thirty trading
                    days immediately preceding the execution date.


                                      F-13


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                    The fair value of the debentures approximates the face,
                    based on rates and terms available to the Company for
                    similar debt.

                    The fair value of these warrants amounted to $75,250 and is
                    included in deferred offering costs on the accompanying
                    balance sheet.

7. COMMITMENTS AND  The Company is currently leasing office space under a
   CONTINGENCIES    non-cancelable operating lease in Boynton Beach, Florida at
                    the rate of $6,100 per month through March 2005. Rent
                    expense for the years ended December 31, 2001 and 2000
                    amounted to $96,240 and $88,022, respectively.

                    The approximate minimum lease payments are as follows:

                    Year ending December 31,

                                   2002                      $         73,000
                                   2003                                73,000
                                   2004                                73,000
                                   2005                                18,000
                    ------------------------------------------------------------
                                                             $        237,000
                    ============================================================


                                      F-14


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

8. STOCK OPTION
   PLAN:            In November 1998, the Company's board of directors approved
                    the 1998 Stock Option Plan (the "Plan"). The Plan authorizes
                    the granting of both incentive stock options and
                    nonstatutory stock options up to a total of 10,000,000
                    shares. The Company's board of directors also approved the
                    2001 Stock Option Plan. The provisions under this plan are
                    similar to the 1998 Plan except that the 2001 Plan
                    authorizes the granting of both incentive stock options and
                    nonstatutory stock options up to a total of 25,000,000
                    shares. The option price for nonstatutory stock options may
                    be less than, equal to, or greater than the market price on
                    the date the option is granted, whereas for incentive stock
                    options, the price will be at least 100% of the fair market
                    value. Compensation expense, representing the difference
                    between the exercise price and the fair market price at date
                    of grant, is recognized over the vesting or service period.
                    For all the periods presented all of the options were
                    granted at an exercise price equal to the fair market value
                    of the Company's common stock at the date of grant. The
                    board of directors granted 19,291,000 options to eligible
                    persons under these plans. The right to exercise the options
                    vests annually as follows:

                    (1)  The right to exercise the options and to acquire 50% of
                         the shares of stock underlying the options vests at the
                         date granted.

                    (2)  The right to exercise the option and acquire 30% of the
                         shares of stock underlying the options vests one year
                         after the date it is granted.

                    (3)  The right to exercise the option and acquire 10% of the
                         shares of stock underlying the options vests two years
                         after the date it is granted.

                    (4)  The right to exercise the option and acquire 10% of the
                         shares of stock underlying the options vests three
                         years after the date it is granted.

                    A summary of the status of the Company's options under the
                    Plans as of December 31, 2001 and 2000, and changes during
                    the years then ended, is presented below:

                                                           2001                 2000
                    ----------------------------------------------------------------------
                                                              Weighted-            Weighted-
                                                    Number     Average     Number    Average
                                                      of      Exercise       of     Exercise
                                                    Shares     Price       Shares    Price
                    ----------------------------------------------------------------------
                    Outstanding at beginning
                    of year                        1,763,500    $.61      998,500     $.29

                    Granted                       17,387,500    $.26      905,000     $.92

                    Exercised                           -       $.--     (140,000)    $.35
                    ----------------------------------------------------------------------

                    Outstanding at end of year    19,151,000    $.29    1,763,500     $.61
                    ======================================================================

                    Options exercisable at
                    year-end                      10,237,250    $.31    1,172,150     $.56
                    ======================================================================


                                      F-15


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                    The weighted average fair value per share calculated using
                    the Black-Scholes method for options granted during the
                    years ended December 31, 2001 and 2000 amounted to $.21 and
                    $.48.

                    The following table summarizes information about fixed stock
                    options under the Plan outstanding at December 31, 2001:


                                                Options Outstanding              Options Exercisable
                                       -------------------------------------   -----------------------
                                                      Weighted-
                                                       Average     Weighted-                Weighted-
                                                      Remaining     Average                  Average
                       Range of          Number      Contractual   Exercise      Number     Exercise
                    Exercise Prices    Outstanding      Life         Price     Exercisable   Price
                    ----------------------------------------------------------------------------------

                      $.20 - $.24      1,550,000        4.50       $   .22       931,000    $  .22


                         $.25         11,820,000        5.00        $  .25     5,910,000    $  .25

                      $.27 - $.35      4,941,000        4.50        $  .30     2,724,250    $  .31


                         $.50            340,000        3.50         $ .50       272,000    $  .50

                        $1.28            500,000        3.50        $ 1.28       400,000    $ 1.28


                                      19,151,000                              10,237,250
                    ==================================================================================


                    In December 2000, in connection with the settlement
                    described in Note 10, the Company authorized the issuance to
                    the Company's major shareholder/officer of 6,000,000
                    warrants to purchase the Company's common stock at $.30 per
                    share. The warrants expire in 2008.

                    Had compensation expense for the Company's stock option
                    plans and the warrants issued to the shareholder/officer
                    been determined based on the fair value of the options at
                    the grant dates, consistent with SFAS No. 123 the Company's
                    net loss and net loss per share amounts would have been as
                    follows:

                    December 31,                  2001                  2000
                    ------------------------------------------------------------

                    Net loss:
                      As reported           $  (1,711,605)       $   (3,941,952)
                      Pro forma                (5,145,749)           (6,120,085)
                    ------------------------------------------------------------

                    Basic and diluted
                    loss per share:

                    As reported                     $(.03)                $(.08)
                    Pro forma                        (.09)                 (.13)
                    ------------------------------------------------------------


                    The fair value for these options was estimated at the date
                    of grant using a Black-Scholes option pricing model with the
                    following weighted-average assumptions for the years ended
                    December 31, 2001 and 2000, respectively, risk-free interest


                                      F-16


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                    rates of 5.0 - 6.0% and 6.0%, dividend yields of 0% and 0%,
                    volatility factors of the expected market price of the
                    Company's common stock of 87.38% - 183.97% and 142.85%, and
                    an expected life of the options of five years.

                    The Black-Scholes option pricing model was developed for use
                    in estimating the fair value of traded options which have no
                    vesting restrictions and are fully transferable. In
                    addition, option pricing models require the input of highly
                    subjective assumptions including the expected stock price
                    volatility. Because the Company's employee stock options
                    have characteristics significantly different from those of
                    traded options and because changes in the subjective input
                    assumptions can materially affect the fair value estimate,
                    in management's pinion the existing models do not
                    necessarily provide a reliable single measure of the fair
                    value of its employee stock options.

9. STOCKHOLDERS'
   EQUITY:          During May 1997, the Company's board of directors authorized
                    the conversion of 45,000,000 shares of its common stock into
                    45,000 shares of its Preferred Stock. These shares belonged
                    to the Company's president. The shares were converted at a
                    conversion rate of 1 share of Preferred stock for 1,000
                    shares of common stock. Each share of Preferred Stock is
                    convertible into 1,000 shares of common stock as follows:
                    1/3 at the option of the holder beginning three years from
                    issuance, 1/3 at the option of the holder, beginning four
                    years from issuance, and the final 1/3 beginning five years
                    from issuance. The May 1997 conversion has been accounted
                    for as if it had occurred as of December 31, 1996. On May
                    18, 2000, an officer of the Company converted 15,000 shares
                    of preferred stock into 15,000,000 shares of common stock.

                    In 1997, the Company issued 40,114 shares of common stock
                    for services with a fair value of $12,784. The Company
                    completed a private placement of 760,000 shares of common
                    stock for net proceeds of $140,000.

                    The Company completed two private placements during 1998. In
                    March 1998, the Company issued 4,404,663 shares of common
                    stock pursuant to a private placement for a price of $.15
                    per share. In connection with this private placement, the
                    Company also issued 271,187 shares for commissions.

                    In June 1998, there was a second private placement whereby
                    the Company issued 2,017,999 shares for a price of $.35 per
                    share. Each share includes a warrant to purchase additional
                    common shares at a price of $.45 per share for a four-year
                    period ending December 2002. Fees paid relating to this
                    private placement were $14,126 and have been charged to
                    additional paid-in capital. In addition, 40,360 warrants
                    were issued to purchase 40,360 common shares at $.35 per
                    share. The warrants expire December 2002 and were issued for
                    services relating to the private placement.

                    The Company reacquired 3,000,000 common shares issued in
                    1996 and cancelled a subscription receivable in the amount
                    of $450,000 for the purchase of such shares and received a
                    note receivable in the amount of $71,550. During the year
                    ended December 31, 1998, $27,476 was collected from the
                    note.


                                      F-17


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                    During 1998, the Company issued 663,223 common shares for
                    services. The services were charged to operations and have
                    been recorded at the quoted market value at the date of
                    issuance. Included in the shares are 140,000 shares pursuant
                    to a continuing agreement for endorsements at a quoted
                    market value of $.35 per share. The continuing agreement
                    requiring personality endorsements provided for the issuance
                    of 195,000 shares of common stock in 1999 and 205,000 shares
                    of common stock in 2000.

                    In addition, the Company issued an aggregate of 142,857
                    options to purchase common shares during the 1998 year at
                    $.35 per share (the quoted market value) for a three-year
                    period ended October 15, 2001. The value of the options
                    using the Black-Scholes formula amounted to $37,142 and was
                    charged to operations.

                    At various dates during the year ended December 31, 1999,
                    the Company issued 1,313,903 common shares for services. The
                    services for consultants and for officers' compensation were
                    charged to operations and have been recorded at the quoted
                    market value at the date of issuance which aggregated
                    $421,689.

                    On November 30, 1998, the Company received a short-term loan
                    in the amount of $60,000 from a related party. This loan was
                    due and payable on November 30, 1999 together with interest
                    which accrued at 7% per annum. The holder of the note was
                    given an option to convert the note and any accrued interest
                    at any time prior to maturity into fully-paid shares of the
                    Company's common stock, par value $.001 per share at a rate
                    of $.21 per share, the quoted market value at November 30,
                    1998. During 1999, the notes and accrued interest of $1,174
                    were converted into 291,305 common shares.

                    In 1999, the Company issued $1,000,000 in 2% convertible
                    debentures due June 2, 2004, and warrants to purchase
                    900,000 shares of its common stock at $.001 per share. The
                    Company received net proceeds of approximately $890,000
                    after costs which are being amortized over the term of the
                    debentures. As a result of the conversion feature (75% of
                    the quoted market of the common stock) and the beneficial
                    aspect to the recipient, the Company recognized an interest
                    charge of $333,332. The debentures were immediately
                    convertible and the $333,332 of interest has been charged to
                    operations in June 1999.

                    Additionally, the warrants to purchase 900,000 shares of the
                    Company's common stock were exercised for $900 when the
                    market price was $1.95 a share. As these warrants were
                    issued and exercised at the time of the issuance of the
                    debentures, the difference between the market value and the
                    warrant exercise  price was also considered a beneficial
                    conversion price for accounting purposes. Accordingly, this
                    transaction resulted in a $1,754,100 charge to interest
                    expense in June 1999.

                    On July 16, 1999, $100,000 of principal plus interest was
                    converted into 144,645 shares of common stock; on July 22,
                    1999, $225,000 of principal plus interest was converted into
                    363,892 shares of common stock; August 6, 1999, $549,280 of
                    principal plus interest was converted into 1,102,466 shares
                    of common stock and on November 12, 1999, the remaining
                    $124,280 of principal and interest were converted into
                    251,873 shares of the Company's common stock for an
                    aggregate of 1,862,876 shares.


                                      F-18


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                    In December 1999, the Company entered into an agreement to
                    sell 5,000,000 restricted shares of its common stock to an
                    investor at the price of $.20 per share. Payments for such
                    shares began in 1999 and were to continue to be made to the
                    Company at various times in 2000. As of December 31, 1999,
                    this investor had purchased 500,000 shares of common stock
                    for $100,000. In addition, the Company granted this investor
                    an option to purchase 2,222,222 shares of its common stock
                    at a price of $.45 per share. This option requires the
                    investor to advise the Company of his intent to exercise the
                    option by January 31, 2001, and exercise  and execute the
                    option on or before June 30, 2001 according to a defined
                    schedule. During February 2000, the  investor purchased
                    300,000 shares for an aggregate of $60,000. The investor did
                    not notify the Company of his intention to exercise the
                    options. Accordingly, the Company has cancelled the options.
                    In the Company's opinion, this investor has not met defined
                    terms of the agreement and the Company does not intend to
                    issue any additional shares under this agreement.

                    In addition to the foregoing, between January and April 2000
                    the Company sold 1,670,867 shares of common stock for an
                    aggregate of $1,017,618 pursuant to private placements. In
                    connection with certain of the sales, the Company granted an
                    aggregate of 1,241,117 options to purchase 1,241,117 shares
                    of which 307,693 options are exercisable at $.85 and 933,424
                    at $.90 per share.

                    Between, February and April 2000, the Company issued 335,342
                    shares of common stock to employees and consultants for
                    services. The Company has recorded a charge to operations
                    for the fair value of these shares on the dates of their
                    issuances, which amounted to $368,000.

                    On April 4, 2000 the Company issued options to purchase
                    599,000 shares of common stock to employees and consultants.
                    These options are exercisable at $1.28 per share. Of the
                    599,000 options issued, 99,000 have been granted to
                    non-employees and have been valued using the Black-Scholes
                    option pricing model which has resulted in a charge to
                    operations of $55,301.

                    On September 15, 2000, the Company issued options to
                    purchase 690,000 shares of common stock to employees and
                    consultants at an option price per share of $.50. Of the
                    690,000 options issued, 350,000 have been issued to
                    non-employees and have been valued using the Black-Scholes
                    option  pricing model which has resulted in a charge to
                    operations of $143,500.

                    On December 5, 2000, the Company issued options exercisable
                    at $.32 to purchase 215,000 shares of common stock to
                    employees and consultants. Of the total issued, 150,000 have
                    been issued to non-employees and have been valued using the
                    Black-Scholes option pricing model which has resulted in a
                    charge to operations of $43,230.


                                      F-19


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                    Additionally, the Company issued 40,000 shares of common
                    stock for an aggregate of $16,000 on February 16, 2000 and
                    100,000 shares of common stock for an aggregate of $34,775
                    on May 9, 2000 upon exercise of outstanding options.

                    In October 2000, the Company sold 150,000 shares of its
                    common stock for $20,000 pursuant to the terms of an
                    agreement.

                    Pursuant to a private placement memorandum, the Company
                    collected $69,397 in the third quarter of 2000 for 165,232
                    shares of common stock to be issued.

                    On December 18, 2000, the Company issued 50,000 shares of
                    common stock to employees and consultants for services
                    rendered. The Company has recorded a charge to operations
                    for the fair value of these shares on the date of issuance
                    which amounted to $10,940.

                    In January 2001, the Company issued 210,112 shares of common
                    stock at prices between $.30 and $.35 for services which
                    included 165,000 shares under a continuing agreement for
                    product endorsements. An aggregate of $71,148 was charged to
                    operations during the year ended December 31, 2001.

                    In March 2001, the Company issued common stock pursuant to
                    two private placements. In the first private placement, the
                    Company issued 198,032 shares of common stock at a price of
                    $.42 per share for an aggregate of $83,173 (Including
                    165,232 shares for $69,397 received in 2000). The Company
                    still owes 1,000 shares related to this private placement.
                    Under the terms of this private placement, investors
                    received one Class A warrant which are exercisable at $.63
                    per common share for a four-year period extending through
                    December 31, 2004 and potentially one Class B warrant which
                    will be issued when and if the Class A warrants are
                    exercised on or before December 31, 2001 which are
                    exercisable at $.84 per common share for a five-year period
                    extending through December 31, 2005 for each share of common
                    stock purchased. The warrants were not exercised as of that
                    date.

                    In March 2001, the Company issued 335,500 shares of common
                    stock at $.25 per share an aggregate of $83,875 under the
                    terms of the second private placement which has been closed.
                    In addition, 64,500 shares of common stock were issued to
                    the individual who helped arrange the private placement.

                    In April 2001, the Company granted options to purchase
                    4,392,500 shares of common stock to employees, directors and
                    consultants. These options are exercisable at $.30  per
                    share. Of the 4,392,500 options issued, 82,500 have been
                    granted to non-employees and have been valued using the
                    Black-Scholes option pricing model which has resulted in a
                    charge to operations of $23,793.

                    In July 2001, the Company granted options to purchase
                    11,045,000 shares of common stock to employees, directors
                    and consultants. These options are exercisable at $.25 per
                    share. Of the 11,045,000 options issued, 170,000 have been
                    granted to non-employees and have been valued using the
                    Black-Scholes option pricing model which has resulted in a
                    charge to operations of $30,753.

                    In September 2001, the Company entered into agreements to
                    sell 772,729 shares of common stock at prices between $.11
                    and $.15 per share for an aggregate of $92,000. The shares
                    were not issued until October 2001. In October 2001, the
                    Company sold an additional 303,030 shares of common stock at
                    $.11 per share for an aggregate of $33,000.


                                      F-20


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                    In September 2001, the Company entered into a consulting
                    agreement for marketing services for a term of six months.
                    Under the terms of this agreement, the Company issued the
                    consultant options to purchase 350,000 shares of the
                    Company's common stock at a price of $.19 per share. These
                    options are exercisable for a period of twenty-four months.
                    These options have been valued using the Black-Scholes
                    option pricing model which has resulted in a charge to
                    operations of $32,410. The agreement provides for a cashless
                    exercise.

                    In October 2001, the Company issued 560,000 shares of common
                    stock valued at prices between $.17 and $.23 per share of
                    common stock for an aggregate of $120,243 for financial
                    consulting and marketing services. Under the terms of the
                    consulting agreements, the Company also issued 100,000
                    options at $.25, 100,000 options at $.35, 75,000 options at
                    $.50 per share which are exercisable for a period of three
                    years. These options have been valued using the
                    Black-Scholes option pricing model which has resulted in a
                    charge to operations of $55,815.

                    In October 2001, the Company granted options to purchase
                    775,000 shares of common stock to consultants and a
                    director. These options are exercisable at $.25 per share.
                    Of the 775,000 options issued, 765,000 have been granted to
                    non-employees and have been valued using the Black-Scholes
                    option pricing model which has resulted in a charge to
                    operations of $103,659.

                    In October and November 2001, the Company issued 260,000
                    shares of common stock to satisfy defaults on notes payable.
                    See Note 5.

                    In November 2001, the President of the Company received
                    650,000 shares of common stock for research and development
                    services performed by a company owned by him. The fair value
                    of the shares determined by the quoted market price, of
                    $149,500 has been charged to operations. In addition, the
                    Company paid $105,000 to the President's Company for
                    research services.

                    In November 2001, the Company granted options to purchase
                    635,000 shares of common stock to employees and directors.
                    These options are exercisable at $.24 per share.

                    In December 2001, the Company granted options to purchase
                    15,000 shares of common stock at $.27 per share to a
                    consultant. These options were valued using the
                    Black-Scholes option pricing model which has resulted in a
                    charge to operations of $3,321.

                    See Note 8 for warrants granted to shareholder/officer and
                    Note 10 for warrants issued in conjunction with litigation
                    of principal shareholder.

                    The following is a summary of changes in outstanding
                    warrants and of options (not included under the Plan) issued
                    in connection with debt offerings and other services during
                    the period ended December 31, 2001 and December 31, 2000.


                                      F-21


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                                                              2001                     2000
                                                              ----                     ----
                                                                  Weighted-                Weighted-
                                                     Number        Average       Number     Average
                                                       Of         Exercise         of      Exercise
                                                     Shares         Price        Shares     Price
                    --------------------------------------------------------------------------------

                    Outstanding at beginning
                    of year                        13,041,333        $.39      4,423,438     $ .45

                    Granted                         1,398,032        $.32     10,840,117     $ .38

                    Exercised                             -                          -

                    Cancelled                             -          $  -     (2,222,222)    $ .36
                    --------------------------------------------------------------------------------

                    Outstanding at end of year     14,439,365        $.38     13,041,333     $ .39
                    ================================================================================

                    Of the total warrants outstanding at December 31, 2001,
                    5,439,365 expire on various dates from 2003 through 2006 and
                    9,000,000 expire in 2008.

10. DUE FROM
    OFFICER/
    SHAREHOLDER:    The majority stockholder and officer of the Company (Dr.
                    Jacobson) was involved in litigation. The litigation was
                    settled which required him to transfer 12,000,000 shares of
                    common stock of the Company to the plaintiffs. In addition,
                    the settlement required the stockholder and officer to
                    submit to the Company the licensing rights to patents owned
                    by this officer and the plaintiffs.

                    As part of the settlement, in 2000, the plaintiffs gave the
                    Company licensing rights to various patents. The Company was
                    also gave these plaintiffs warrants to purchase 3,000,000
                    shares of common stock at $.30 per share through April 2008.
                    The warrants have been valued using the Black-Scholes option
                    pricing model with the value of $870,000 attributable to the
                    warrants charged to operations.

                    The stockholder and the Company negotiated and the
                    stockholder received warrants to purchase 6,000,000 shares
                    of the Company's stock at $.30 per share. These warrants
                    have been valued at $1,740,000 using the Black-Scholes
                    pricing model and is reflected on a pro forma basis in Note
                    8. In connection with this settlement and based upon
                    approval of the Company's Board of Directors and the Agreed
                    Order Dismissing Case and Providing Relief from the
                    Automatic Stay (Dr. Jacobson's personal bankruptcy) both Dr.
                    Jacobson and the Company agreed to pay the plaintiffs the
                    sum of $1,000,000 by July 15, 2001 (as amended).
                    Accordingly, the Company who was not previously a party to
                    this litigation accrued and charged operations $1,000,000 at
                    December 31, 2000. The balance due at December 31, 2001, is
                    $995,000 and is payable on demand.


                                      F-22


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

                    In 2000, the Company loaned $200,000 to this officer. The
                    loan bears interest at the prime rate. The loan and any
                    interest accrued on the loan are due on May 13, 2002. The
                    officer had declared personal bankruptcy which the court
                    dismissed and accordingly at December 31, 2001 the Company
                    has recorded an allowance for doubtful accounts for the
                    entire balance.

                    In 2000, another officer received a loan of $50,000 from the
                    Company. This loan bears interest at the rate of 6.5% per
                    annum. The loan was due September 10, 2000 and has been
                    extended to January 6, 2002. The loan is secured by this
                    officer's common stock of the Company. The Company is
                    currently negotiating with this officer to extend the due
                    date.

                    See Note 9 for shares issued in 2001 to a company owned by
                    the President and for $105,000 in fees for research and
                    development. Other costs remitted to this company on behalf
                    of the Company  for expenses in Europe amounted to
                    approximately $179,000. Additionally, the Company received
                    approximately $118,000 in royalties from a company owned by
                    the President.


11. INCOME TAXES:   The Company has net operating loss carryforwards of
                    approximately  $6,400,000 available to reduce future taxable
                    income which expire in various years through 2021.

                    The utilization of the net loss carryforwards may be limited
                    as a result of cumulative changes in the Company's stock
                    ownership.

                    Deferred income taxes reflect the impact of net operating
                    loss carryforwards. In recognition of the uncertainty
                    regarding the ultimate amount of income tax benefits to be
                    derived from the Company's net operating loss carryforwards,
                    the Company has recorded a valuation allowance for the
                    entire amount of the deferred tax asset. The deferred income
                    tax asset is comprised of the following at December 31,
                    2001:

                    Gross deferred tax asset resulting from
                       net operating loss carryforwards           $  2,176,000
                    Valuation allowance                             (2,176,000)


                    ------------------------------------------------------------
                    Net deferred income tax asset                 $    - 0 -
                    ============================================================

                    The reconciliation of the effective income tax rate to the
                    federal statutory rate is as follows:

                    December 31,                           2001          2000
                    ------------------------------------------------------------
                    Federal income tax rate               (34.0)%        (34.0)%

                    Valuation allowance on net
                       operating loss carryforward         34.0           34.0
                    ------------------------------------------------------------
                    Effective income tax rate                0%             0%
                    ============================================================


                                      F-23


                                            JACOBSON RESONANCE ENTERPRISES, INC.
                                                   (a development stage company)

                                                   NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

12. SUBSEQUENT
    EVENTS:         In the first quarter of 2002 the Company issued 2,258,781
                    shares of its common stock as follows:

                                                                   No. of Shares
                                                                   -------------
                    (a) As described in Note 5 the Company was
                    required to issue 30,000 shares of common
                    stock due at December 31, 2001 pursuant to
                    provisions of a bridge loan. An additional
                    165,000 shares of common stock (85,000 of
                    such were issued as satisfaction of interest)
                    were issued relating to 2002 transactions
                                                                        195,000

                    (b) Pursuant to a continuing agreement for
                    product endorsements, referred to in Note 9,
                    on March 21, 2002 the Company issued 205,000
                    shares of common stock in satisfaction of
                    $71,148 of accrued liabilities at December 31,
                    2001.                                               205,000

                    (c) In connection with the Tecinvest funding
                    described in Note 6, the Company issued 178,500
                    shares,78,000 shares and 80,000 shares of common
                    stock (aggregating 336,500 shares) for services
                    relating to 2001 and 2002 funding transactions.
                    The fair value of the shares of common stock
                    issued for 2001 funding are being amortized over
                    the period the debt is outstanding                  336,500

                    (d) On February 20, 2002, the Company issued
                    283,333 shares of common stock at a price of
                    $.15 per share. In addition, in connection with
                    the sale, the Company granted the purchaser an
                    option to purchase 280,000 shares of common stock
                    at $.18 per share for an 18 month period.           283,333

                    (e) On March 21, 2002 the Company issued 250,000
                    shares of common stock to an entity providing
                    investor relations.                                 250,000

                    (f) As described in Note 9 pursuant to a
                    consulting agreement, an option holder exercised
                    the cashless exercise provision of options to
                    acquire 350,000 shares of common stock which
                    resulted in the holder receiving 128,948
                    shares of common stock.                             128,948

                    (g) The Company entered into a private sale
                    of 625,000 shares of common at $.16 per share
                    to the debenture holder referred to in Note 6.
                    In connection with this sale the Company issued
                    135,000 shares of common stock for services.        760,000

                    (h) Shares of common stock issued in 2002 in
                    exchange for proceeds received in 2001 pursuant
                    to a private sale of 100,000 shares of common
                    stock for an aggregate of $15,000                   100,000
                                                                        -------

                                                                      2,258,781
                                                                      =========

                                      F-24




                    The Company received $52,500 in February and March 2002 for
                    350,000 shares of common stock pursuant to a private
                    placement. At March 31, 2002 such shares have not been
                    issued.

                    On April 17, 2002, the board of directors cancelled
                    8,595,000 options to purchase common stock that were granted
                    to directors and officers during the year ended December 31,
                    2001.


                                      F-25



ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE

     There were no changes in nor disagreements with accountants.


                                    PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
             PERSONS: COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Executive Officers and Directors

     The following table sets forth the names and ages of the Directors and
Executive Officers of the Company, as well as the positions held by such
persons:

         Name                   Age            Position (1)

Dr. Jerry I. Jacobson (2)       55       Chairman of the Board,
                                         and Chief Science Officer

Alfonso Serrato                 56       President, Chief Executive Officer
                                         and Director

Debra M. Jacobson (2)           49       Senior Vice President,
                                         Secretary and Director

Sidney Paul Martin              49       Director

Michael P. Steigman             56       Director

Frank A. Chaviano               52       Senior Vice President and Chief
                                         Operating Officer

Harvey Grossman                 54       Vice President
-------------------

(1)  All Directors and Officers are elected for terms of one year and until
     their successors have been elected and qualified. Vacancies in the existing
     Board are filled by majority vote of the remaining Directors. Board members
     are serving  without compensation. Officers serve at the pleasure of the
     Board.

(2)  Dr. Jerry I. Jacobson and Debra M. Jacobson are husband and wife.

     DR. JERRY I. JACOBSON has acted as the Chairman, President and Chief
Executive Officer of the Company since June 1996 and of its privately-held
predecessor since March 1995. In June, 2001, Dr. Jacobson, coincident with the
appointment of Alfonso Serrato as Chief Executive Officer, Dr. Jacobson was
elected Chief Science Officer. Dr. Jacobson holds a Bachelor of Arts degree in
Philosophy from Brooklyn College of the City University of New York and D.D.S.
and D.M.D degrees from Temple University. He served as captain and emergency
oral surgeon at Fort Rucker, Alabama, as active service in the Army during the
Vietnam conflict. He has also received extensive informal training in physics
after auditing 30 courses at different universities in the New York City and
Philadelphia metropolitan areas. Dr. Jacobson was an active dentist and oral
surgeon in the New York City area from 1972 to the early 1980's, and was
involved in dental research in this period. Dr. Jacobson has also been a student
of Albert Einstein's work throughout his life. Since his discovery of the
equation of Jacobson Resonance relating to medicine and energy, Dr. Jacobson has
focused his research and technology, denoted as Jacobson Resonance, on medical
therapy for more than twenty years. His publishing credits include more than 70
articles, more than 30 abstracts, three book chapters and two books. He holds
five issued, one allowed or two pending United States patents, for which there
are currently patents issued or pending in numerous foreign countries.

     ALFONSO SERRATO has been a Director of the Company since June 1998, and has
acted as our Chief Executive Officer since June 2001. Mr. Serrato worked for
Medtronic, Inc., a New York Stock Exchange company that is a leading
manufacturer and distributor of medical devices around the world, from 1978
until 1996 in various capacities. His positions included Vice President of
Worldwide Manufacturing and Vice President of Pacing Operations. He is the
controlling person of Serrato Enterprises, L.L.C., a licensee of the Company and
the entity that is spearheading the Company's European initiatives.

     DEBRA M. JACOBSON has been a Director, the Treasurer and the Secretary of
the Company since August 1996 and Senior Vice President of the Company since
September 1999. She has been married to Dr. Jacobson and served as his private
secretary for approximately 25 years. As Dr. Jacobson has suffered from glaucoma
for over 20 years, Ms. Jacobson has been invaluable as a research assistant and
editor. Previously, Ms. Jacobson worked as a flight attendant for Eastern
Airlines and as a secretary. She is a graduate of the prestigious Katherine
Gibbs Secretarial School in New York, New York.

     FRANK A. CHAVIANO joined the Company as Vice President in 1997 and
subsequently became Senior Vice President and Chief Operating Officer.
Previously, Mr. Chaviano served from 1996 to 1997 as Senior Vice President of
American Healthcorp responsible for physician practice management and
development. From 1994 until 1996, he was Senior Vice President of Integrated
Health Services, Inc., and from 1992 until 1994, he was Senior Vice President of
Integracare, Inc. In those positions Mr. Chaviano assisted with the acquisition
and development of more than 100 medical practices.

     SIDNEY PAUL MARTIN has been a Director of the Company since January 8,
2001. Mr. Martin is a well-known and respected agric-business entrepreneur with
multiple farms and interests in timber, land and cattle. A former educator, he
holds Bachelor's and Master's degrees from Mississippi State University. Mr.
Martin's family farms have long been recognized for quality management and
conservation practices throughout the southeastern United States. Mr. Martin is
a registered securities dealer and has been associated with Carlton &
Associates, Inc., a registered broker dealer, for the last five years.

     MICHAEL P. STEIGMAN has served as a director since November 28, 2001, and
since 1995 has been the Controller and Assistant Treasurer for The Nevada Water
Company, Las Vegas, Nevada. Mr. Steigman resides in Las Vegas. Prior to 1995,
Mr. Steigman served as the General Manager for Embassy Suites Hotel Group,
Pittsburgh, Pennsylvania, and held various executive positions in The Marriott
Corporation. Mr. Steigman has chaired and participated as a member on numerous
convention and hospitality based boards of directors, including the Greater
Miami Hotel and Motel Association, N.Y. Visitors and Convention Bureau, multiple
local and state sponsored tourist boards and chambers of commerce. Additionally,
Mr. Steigman has served as a board member for The Children's Miracle Network.

     HARVEY GROSSMAN was appointed as Vice President in May 2001. He has been an
associate and friend of Dr. Jerry Jacobson for the past 12 years and, prior to
his joining us, he acted as a consultant to various companies in the
communications and media areas. His responsibilities include communications,
education, media and public relations. He also fulfills a supervisory role in
the training and operations of treatment centers and clinics worldwide. He has
been a public speaker and executive consultant in the for-profit and
not-for-profit arenas for the past twenty-five years. From 1990-1994 he was the
Executive Director of the American Committee for the Weizmann Institute of
Science in Palm Beach County, Florida and previous to that was the Campaign
Director for the South Palm Beach County Jewish Federation. Mr. Grossman lived
on Israel from 1968 to1976 where he worked as a Clinical Psychologist and Social
Worker.

     Each officer listed devotes full time to our business.






ITEM 10.  EXECUTIVE COMPENSATION


Executive Compensation

     The following table sets forth certain information regarding the annual
compensation for services in all capacities to us for the years ended December
31, 2000 and 1999:

Summary Compensation Table
--------------------------
                                                  Long-Term Compensation
                                            ---------------------------------
                      Annual Compensation            Awards           Payouts
-------------  ----  ---------------------  ------------------------  -------  ---------
(a)            (b)    (c)     (d)    (e)       (f)          (g)         (h)       (i)
Name                                Other   Restricted   Securities
and                                 Annual    Stock      Underlying    LTIP    All Other
Principal      Year  Salary  Bonus  Comp.    Awards(1)  Options/SARs  Payouts    Comp.
Position       (1)    ($)     ($)    ($)       ($)          (#)         ($)       ($)
-------------  ----  ------  -----  ------  ----------  ------------  -------  ---------

Dr. Jerry I.
Jacobson       2001   -0-                                 150,000/0
Chairman (2)

               2000   -0-                                 445,000/0

Alfonso        2001   -0-                               5,125,000/0
Serrato

(1)  Fiscal years ended December 31, 2001 and 2000.

(2)  Dr. Jacobson, the Company's Chief Executive Officer up to December 31,
2001, did not receive any cash compensation from the Company. However, Dr.
Jacobson and each of the other directors and executive officers of the Company
have received various stock issuances and stock option grants from the Company.
During 2000, we advanced $200,000 to Dr. Jacobson to cover expenses for the
Hewko and Casey litigation (See "Legal Proceedings"). The terms of the advance
were for Dr. Jacobson to repay the advance when it was financially possible for
him to do so; $50,000 of the advance was utilized to pay Dr. Jacobson's
bankruptcy attorney in connection with his bankruptcy filing and the termination
of the bankruptcy proceeding. Our determination to make this advance was to keep
Messrs. Hewko and Casey from involvement with us and to expedite our receipt of
the exclusive license in the litigation settlement to all Jacobson Resonance
patents.








1998 and 2001 Stock Option Plans

     Under the 1998 Stock Option Plan (the "1998 Option Plan"), 10,000,000
shares, and under our 2001 Stock Option Plan (the "2001 Option Plan"), approved
by our stockholders on November 28, 2001, 25,000,000 shares, of our common stock
are reserved for the grant of options which are intended to qualify as Incentive
Stock Options ("ISOs") under Section 422 of the Internal Revenue Code of 1986
(the "Code"), which are not ("Non-ISOs") intended to qualify as Incentive Stock
Options thereunder, or which are Reload Options ("Reload Options"), where the
holder of the Option pays the exercise price for the original Option with shares
of stock already owned by that holder and the holder receives a Reload Option (a
new option to purchase shares of stock equal in number to the tendered shares).

     The 1998 Option Plan and the 2001 Option Plan (the "Plans") are
administered by a committee (the "Committee") which is appointed by the Board of
Directors from those of its members who are "non-employees" of the Company as
defined in Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange
Act"). Following the November 28, 2001, Special Meeting of Stockholders, our
Board of Directors appointed Messrs. Sidney Paul Martin and Michael P. Steigman
as members of the Committee to administer the Plans. Subject to the provisions
of the 1998 Option Plan, the Board of Directors, or the Committee, if one is
appointed, has full authority to determine the persons to be granted options
under the Plan and the number and purchase price of the shares represented by
each option, the time or times at which the options may be exercised, and the
terms and provisions of each option, which need not be uniform for all options.

     Key employees of the Company or its subsidiaries, as determined by the
Board or Committee, and non-employee directors of the Company or its
subsidiaries are eligible to receive awards under the Plans. If any option
expires or is terminated prior to its exercise in full and prior to the
termination of either of the Plans, the shares subject to such unexercised
option shall again be available for the grant of new options under the
particular Plan. Further, any shares used as full or partial payment by an
optionee upon exercise of an option under one of the Plans may subsequently be
used by the Company to satisfy other options granted under the Plan, subject to
limitations on the total number of shares authorized to be issued under the
Plan. The Plans provides that the purchase price per share may not be less than
100% of the fair market value of the Common Stock at the time of grant.

     Options granted under the Plans may be exercised only during the
continuance of the Participant's employment with the Company or one of its
subsidiaries.






     The following table shows grants of options to our officers and directors
in our last fiscal year as adjusted on April 17, 2002.

Option/SAR Grants in Last Fiscal Year

Individual Grants
--------------------------------------------------------------------------------
(a)                        (b)              (c)           (d)         (e)
                           Number of        % of
                           Securities       Total
                           Under-           Options/
                           Lying            SAR's
                           Options/         Granted to    Exercise
                           SAR's            Employees     or Base
                           Granted          in Fiscal     Price       Expiration
   Name                    (#)              Year          ($/Sh)      Date
---------------------      ------------     -----------   ---------   ----------
Dr. Jerry I. Jacobson        150,000            1%(1)      $.22         1/2006


Alfonso Serrato              125,000        41.66%(1)      $.22         1/2006
                           1,000,000                       $.30         4/2006
                           4,000,000                       $.25         7/2006
                             200,000(2)                    $.24         7/2006

(1)  Percentages apply to all options granted to Dr. Jacobson and Mr. Serrato
     shown in table. The options are exercisable as to 50% of the shares covered
     by each option immediately upon grant of the option; become exercisable as
     to an additional thirty percent one year following the date of grant; and
     become exercisable as to an additional ten percent on each of the two and
     three year anniversaries of the date of grant.
(2)  This option was issued to Mr. Serrato's wife, Yvonne Serrato, for services
     performed by her for us.


     The following table summarizes the number and value of unexercised  options
held by our  Chairman and our Chief  Executive  Officer as of December 31, 2001.
The options shown below do not include  options held by Debra M.  Jacobson,  the
wife of Dr. Jerry I. Jacobson,  or Yvonne Serrato,  the wife of Alfonso Serrato,
but do include  options to purchase  100,000 shares of common stock held jointly
by Mr. and Mrs. Serrato.


FISCAL YEAR-END OPTION VALUES
--------------------------------------------------------------------------------------------------------------
                                                                Number of Securities     Value of Unexercised
                                                                Underlying Unexercised   in-the-Money Option/
                                                                Options/SARS At          SARs at Fiscal
                                                                Fiscal Year-End (#)      Year-End ($)
                                                                Exercisable/             Exercisable/
                       Shares Acquired on                       Unexercisable            Unexercisable
Name                   Exercise (#)        Value Realized ($)
---------------------- ------------------- ------------------- ------------------------ ----------------------
Dr. Jerry I. Jacobson                                             968,500/201,500               NA
Alfonso Serrato                                                 2,969,500/2,605,500             NA



     The above value has been calculated based on closing price of the common
stock as quoted on the OTC Bulletin Board on April 1, 2002.

     No officer or Director exercised any options in the fiscal year ended
December 31, 2001.


Compensation of Directors

The members of our Board of Directors are reimbursed for actual expenses
incurred in attending Board meetings.





ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
               MANAGEMENT

     The following table sets forth, as of April 4, 2002, the beneficial
ownership of the common stock of the Company by each person beneficially owning
more than 5% of such securities, by each of the directors and executive officers
of the Company, and by the directors and executive officers of the Company as a
group.


Beneficial Owner                                  Number        Percentage

Officers, Directors and 5% Beneficial Owners
Dr. Jerry I. Jacobson (3)                         47,610,146       48.85%
Alfonso Serrato (4)                                5,479,852        8.53%
Debra M. Jacobson (5)                              2,612,700        4.26%
Frank A. Chaviano (6)                              1,852,000        2.98%
Sidney Paul Martin (7)                               475,500          *
Michael P. Steigman                                   10,000          *
Harvey Grossman (10)                                 245,000          *
Eric and Vanessa Hewko (8)                         7,500,000       12.41%
761 Doris Road South
North Palm Beach, FL 33408
Hewko/Casey Investments (8)                        7,500,000       12.41%
515 N Flagler Drive, 19th Floor
West Palm Beach, FL 33401
All Directors and Officers as a Group (6          61,787,298       54.99%
persons)
Tecinvest Services, Inc. (9)                         913,295        1.51%
--------------------
*Less than 1%.

(1)  The address of each director or executive officers in the table is c/o
     Jacobson Resonance Enterprises, Inc., 8200 Jog Road, Suite 100, Boynton
     Beach, FL 33437.

(2)  For all entries in the table other than the one for Dr. Jerry I. Jacobson,
     the figures represent beneficial ownership of shares of the Company's
     common stock.

(3)  Includes 30,000,000 shares of common stock issuable upon conversion of
     30,000 shares of our Series A Convertible Preferred Stock held by Dr.
     Jacobson. Each share of the Series A Convertible Preferred Stock is
     entitled to 1,000 votes on all matters submitted to a vote of the Company's
     shareholders. The Series A Convertible Preferred Stock is not entitled to
     any dividends and has a liquidation preference equal to its par value,
     which is a total of $30.00. At the option of Dr. Jacobson, up to one-third
     of the outstanding shares of the Series A Convertible Preferred Stock can
     be converted into shares of the Company's common stock beginning in May of
     the years 2001 and 2002. The conversion ratio is 1,000 shares of common
     stock for each share of preferred stock. This figure includes 10,596,646
     shares of common stock owned of record by Dr. Jacobson. The number of
     shares shown does not include 700,000 shares which are owned by Dr.
     Jacobson's children (Jacqueline Jacobson-250,000;Faith Jacobson-250,000;
     Maria Jacobson-100,000; and Solomon Jacobson-100,000, the latter being the
     only one of the children that at this date is not a minor), 1,691,700
     shares owned by Debra M. Jacobson, Dr. Jacobson's wife, nor 1,170,000
     shares owned of record by the Perspectivism Foundation, of which  Dr.
     Jacobson is the founder and a director. Dr. Jacobson disclaims any
     beneficial interest in the shares owned by his children, his wife or the
     Perspectivism Foundation. In addition, Dr. Jacobson received 6,000,000
     warrants expiring April 2008, with an exercise price of $.30 per share (the
     "Warrants") for assignment of his two-thirds interest in a patent relating
     to Therapeutic Treatment of Mammals; the Warrants are reflected in the
     above table. The Warrants are subject to adjustment in the event of merger,
     consolidation, recapitalization, reorganization, stock split or stock
     dividend. No such event has occurred since the issuance of the Warrants.
     Dr. Jacobson's ownership shown in this table includes 1,013,500 shares
     issuable pursuant to presently exercisable options. Dr. Jacobson has been
     issued options to purchase an aggregate of 1,170,000 shares of our common
     stock issued under our Stock Option Plans, at per share exercise prices
     ranging from $.20 to $1.26, expiring at various dates from October 31, 2003
     to January 2, 2006.

(4)  This figures includes 1,670,495 shares owned of record by Mr. Serrato,
     542,857 shares subject to warrants held by Mr. Serrato, and 3,226,500
     shares subject to presently exercisable options granted to Mr. Serrato. Mr.
     Serrato holds options to purchase 5,575,000 shares of our common stock
     issued under our Stock Option Plans, at per share exercise prices ranging
     from $.25 to $1.26, expiring from November 12, 2003 to July 2, 2006, of
     which options to purchase 3,266,500 shares are presently exercisable. These
     figures also exclude 28,571 shares owned of record by Mr. Serrato's wife,
     28,571 shares subject to warrants held by her, and options issued under
     Stock Option Plans to purchase 200,000 shares of our common stock. Mr.
     Serrato disclaims any beneficial interest in those shares held directly by
     his wife or underlying the warrants or options held by her.

(5)  This figure includes 1,691,700 shares owned of record by Mrs. Jacobson and
     921,000 shares subject to presently exercisable options granted to Ms.
     Jacobson. Ms. Jacobson holds options to purchase an aggregate of 1,070,000
     shares of common stock issued under our Stock Option Plans, at per share
     exercise prices ranging from $.22 to $1.26 per share, expiring from October
     31, 2003 to January 2, 2006, 921,000 of which are presently exercisable.
     Ms. Jacobson's ownership shown does not include beneficial ownership of
     shares of the Company's common stock by Dr. Jerry I. Jacobson, the husband
     of Ms. Jacobson, as to which shares Ms. Jacobson disclaims any beneficial
     interest. This figure also excludes 1,170,000 shares owned of record by the
     Perspectivism Foundation, to which Ms. Jacobson donated the shares and of
     which Ms. Jacobson is a director. Ms. Jacobson disclaims any beneficial
     interest in those shares.

(6)  This figure includes 89,000 shares owned of record by Mr. Chaviano and
     1,763,000 shares subject to presently exercisable options granted to Mr.
     Chaviano. Mr. Chaviano holds options to purchase 2,315,000 shares of our
     common stock issued under our Stock Option Plans, at per share exercise
     prices ranging from $.20 to $1.26, expiring from October 31, 2003 to
     November 29, 2006, and of which options to purchase 1,763,000 shares of
     common stock are presently exercisable.

(7)  Mr. Martin owns 92,000 shares of common stock directly, and his wife, Nanda
     Martin owns 10,000 shares directly. Mr. Martin holds options to purchase
     485,000 shares of our common stock granted under our Stock Option Plans, at
     exercise prices ranging from 24 cents to 50 cents per share, expiring at
     various dates from August 12, 2004, to November 29, 2006, of which options
     to purchase 305,500 shares are presently exercisable. Mr. Martin holds
     warrants, expiring December 31, 2002, to purchase 48,000 shares of common
     stock at an exercise price of $.45 per share; and warrants, expiring
     December 31, 2004, to purchase 20,000 shares of common stock at an exercise
     price of $.63 per share.

(8)  Eric and Vanessa Hewko and Hewko/Casey Investments also own an aggregate of
     3,000,000 Warrants for a one-third interest in a patent relating to
     Therapeutic Treatment of Mammals. The Warrants must be adjusted in the
     event of merger, consolidation, recapitalization, reorganization, stock
     split or stock dividend. Such events have not occurred since the issuance
     of the Warrants.

(9)  Tecinvest Services, Inc. is the investor under the investment agreement,
     pursuant to which we have also filed a registration statement with the
     Securities and Exchange Commission to register 10,000,000 shares of our
     common stock for sale pursuant to the equity line provided for pursuant to
     the investment agreement. All investment decisions of Tecinvest are made by
     its director Jan Telander. Tecinvest holds warrants to purchase 500,000
     shares of our common stock, and $75,000 principal amount of our convertible
     debentures, convertible at the lesser of $0.1688 or 75% of the average of
     the six lowest closing bid prices during the 20 trading days prior to
     conversion. Based on the closing price for our common stock on January 7,
     2002, that convertible debenture would be convertible into 444,313 shares
     of our common stock. Tecinvest also holds warrants issued in connection
     with such convertible debentures to purchase 75,000 shares of our common
     stock at an exercise price of $0.275 per share, and has the right to
     receive a warrant to purchase an additional 75,000 shares subject to
     funding us an additional $75,000 (upon the date the registration statement
     is declared effective by the Securities and Exchange Commission).

(10) Includes 245,000 shares comprising the exercisable portion of options to
     purchase an aggregate of 475,000 shares under our Stock Option Plans. Mr.
     Grossman was awarded five year options under these Plans as follows: 25,000
     shares at a per share exercise price of $.30 on April 2, 2001; 300,000
     shares at a per share exercise price of $.25 on July 2, 2001; and 150,000
     shares at a per share exercise price of $.24 on November 29, 2001.







ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Party Transactions

     We are the exclusive licensee of Jacobson Resonance from Dr. Jacobson, who
is the majority owner of all patents issued or filed. Dr. Jacobson is also the
majority owner of all relevant Jacobson Resonance intellectual property. We have
extended the exclusive rights to pursue whatever applications of Jacobson
Resonance that it wants through 2007. In return, we are obligated to pay Dr.
Jacobson a 3% or 4% royalty on revenues, depending upon the application. During
2000, we advanced $200,000 to Dr. Jacobson to cover expenses for the Hewko and
Casey litigation (See "Legal Proceedings"). The terms of the advance were for
Dr. Jacobson to repay the advance when it was financially possible for him to do
so; $50,000 of the advance was utilized to pay Dr. Jacobson's bankruptcy
attorney in connection with his bankruptcy filing and the termination of the
bankruptcy proceeding.

     To date, we have entered into two agreements with Serrato Enterprises
L.L.C. ("Serrato Enterprises"), an entity controlled by Alfonso Serrato, a
director of the Company. In March 1999, we entered into a ten-year license
agreement with Serrato Enterprises for the marketing and distribution of our
chronic pain reduction products in Europe, Africa and the Middle East, excluding
Israel and the nations that formerly constituted the Union of Soviet Socialist
Republics. The stated term of the agreement runs through the year 2008 and
contains two automatic renewals thereafter of five years each, but is subject to
earlier termination by either party upon at least 90 days' prior written notice
to the other party. We are to receive a sales royalty of 16% of gross sales
payable on a quarterly basis within 30 days after the end of each calendar
quarter. We are also to receive a manufacturing license override fee of $1,000
for each 18" and 22" Jacobson Resonator and $1,500 for each seven foot Jacobson
Resonator ordered by and delivered to the licensee. These fees are payable
within 45 days of initial shipment of the product from the manufacturing
facility.

     In October 1999, we entered into an additional and separate ten-year
license agreement with Serrato Enterprises for the manufacturing (as opposed to
the marketing and distribution) of our chronic pain reduction products in
Europe, Africa and the Middle East, excluding Israel and the nations that
formerly constituted the Union of Soviet Socialist Republics. The stated term of
the agreement runs through the year 2009 and contains two automatic renewals
thereafter of five years each, but is subject to earlier termination by either
party upon at least 180 days' prior written notice to the other party. We are to
receive manufacturing royalties of $1,200 for each 18" and 22" Jacobson
Resonator, $1,500 for each 4' and 7' Jacobson Resonator and $2,000 for each
industrial and/or non-medical use Jacobson Resonator manufactured and delivered
by the licensee. These royalties are payable on a quarterly basis within 30 days
after the end of each calendar quarter.

     Mr. Serrato in November 1998 made a $60,000 one-year loan to us with
interest at 7% per annum. He had the option at any time to convert the loan and
any accrued interest into shares of our common stock at $0.21 per share, which
approximated the fair market value of our common stock at the time the loan was
made. In March 1999, he converted the loan and accrued interest into 291,305
shares of our common stock.

     The Company is the exclusive licensee of Jacobson Resonance from Dr.
Jacobson, who is the majority owner of all patents issued or filed. Dr. Jacobson
is also the majority owner of all relevant Jacobson Resonance intellectual
property. The Company has extended the exclusive rights to pursue whatever
applications of Jacobson Resonance that it wants through 2007. In return, the
Company is obligated to pay Dr. Jacobson a 3% or 4% royalty on revenues,
depending upon the application.


     From time to time since late 1997 on approximately a quarterly basis, the
Company has issued shares of its common stock to its executive officers either
in lieu of cash compensation or as bonuses. Debra Jacobson, a director as well
as an executive officer of the Company, has received stock in most of these
issuances. The following table sets forth pertinent information on the issuances
to Ms. Jacobson for the 2001 and 2000 fiscal years:

                    Number of    Value Per       Aggregate
     Date            Shares        Share           Value
     ----          -----------  -----------     -----------

February 2000        100,000      2.16           216,000


     See "Option/SAR Grants in Last Fiscal Year" and "Security Ownership of
Certain Beneficial Owners and Management" above for terms of options to purchase
150,000 shares of our common stock granted to Dr. Jerry I. Jacobson and options
to purchase 5,125,000 shares of common stock granted to Alfonso Serrato, our
Chief Executive.


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits: See Exhibit Index.

(b)  Reports on Form 8-K: The Company did not file any Current Reports on Form
8-K during the fiscal quarter ended December 31, 2001.


                                  EXHIBIT INDEX

Exhibit
Number         Description of Exhibit
-------------- -----------------------------------------------------------------
3.1            Articles of Incorporation, as amended*
3.2            By-Laws, as amended*
4.1            Specimen Common Stock Certificate*
4.2            Specimen Series A Convertible Preferred Stock Certificate *
4.3            Specimen 1998 Warrant Agreement*
4.4            Specimen 1998 Placement Agent Warrant Agreement *
4.5            Jacobson Resonance Enterprises, Inc. 1998 Stock Option Plan,
               as amended****
4.6            Jacobson Resonance Enterprises, Inc. 2001 Stock Option Plan****
4.7            Specimen 2% Convertible Debenture *
4.8            Investment Agreement, dated December 18, 2001, between the
               Company and Tecinvest Services, Inc. *****
4.9            Commitment Warrant issued to Tecinvest, dated December 18,
               2001 *****
4.10           Registration Rights Agreement,  December 18, 2001, between the
               Company and Tecinvest  Services,  Inc. *****
4.11           Escrow Agreement, dated December 18, 2001, by and among the
               Company, Tecinvest Services, Inc. and Joseph B. LaRocco *****
4.12           Convertible Debenture issued December 18, 2001, to Tecinvest
               Services, Inc. *****
4.13           Convertible Debenture Warrant issued December 18, 2001, to
               Tecinvest Services, Inc. *****
4.14           Registration Rights Agreement for the Tecinvest Services, Inc.
               Convertible Debentures and Convertible Debenture Warrants,
               between the Company and Tecinvest Services, Inc. *****
4.15           Subscription Agreement for the Tecinvest Services, Inc.
               Convertible Debentures, dated December 18, 2001, between the
               Company and Tecinvest Services, Inc. *****
10.1           Patent License Agreement Dated October 6, 1999, Between Dr.
               Jerry I. Jacobson and the Company *
10.2           License Agreement Dated February 23, 1999, Between the Company
               and Serrato Enterprises L.L.C. *
10.3           1998 Stock Option Plan *
10.4           License Agreement Dated October 15, 1999, Between the Company
               and Serrato Enterprises L.L.C. **
10.5           Distribution Agreement Dated December 29, 1999, Between the
               Company and Akron Bio-Medical Corporation **
10.6           License Agreement Dated December 29, 1999, Between the Company
               and ABM Manufacturing, Inc. **
10.7           License Agreement Dated December 31, 1999, Between the Company
               and REALPURE Beverage Group, LLC **
10.8           License Agreement Dated August 27, 2000, Between the Company and
               Enviro Wood Fibre Block & Brick, Inc. ***
21             List of Subsidiaries*
-------------------------------
*     Filed as Exhibits to the Company's Form 10-SB, filed on October 27, 1999.
**    Filed as Exhibits to the Company's Form 10K-SB, filed on April 24, 2000.
***   Filed as an Exhibit to the Company's Form 10K-SB, filed on April 17, 2001
****  Filed as Exhibits to the Company's Form S-8, filed January 11, 2002
***** Filed as Exhibits to the Company's Form SB-2, filed February 4, 2002






                                   SIGNATURES

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

Date: April 25, 2002                    JACOBSON RESONANCE ENTERPRISES, INC.
           (Registrant)

                                        By:  /s/ ALFONSO SERRATO
                                        Alfonso Serrato, Chief Executive Officer

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




        Signature                               Position

/s/ Dr. Jerry Jacobson          Dr. Jerry I. Jacobson, Chairman of the Board of
Date Signed: April 25, 2002         Directors and Chief Science Officer

/s/ Alfonso Serrato             Alfonso Serrato, President, Chief Executive
Date Signed: April 25, 2002        Officer and Director (Principal Executive
                                   Officer)

/s/ Debra Jacobson              Debra Jacobson, Senior Vice President, Secretary
Date Signed: April 25, 2002        and Director

/s/ Paul Martin                 Sidney Paul Martin, Director
Date Signed: April 25, 2002

/s/ Michael Steigman            Michael P. Steigman, Director
Date Signed: April 25, 2002

/s/ Frank Chaviano              Frank A. Chaviano, Senior Vice President and
Date Signed: April 25, 2002        Chief Operating Officer (Principal Financial
                                   and Accounting Officer)`