SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  FORM 10-KSB/A

(Mark One)

     [X]  Annual Report under Section 13 or 15(d) of the Securities Exchange Act
          of 1934

     For the fiscal year ended December 31, 2001.

     [ ]  Transition report under section 13 or 15(d) of the securities
          exchange act of 1934

     For the transition period from ________________ to _______________

     Commission file number: 000-33263

                          Worldwide Medical Corporation
                          -----------------------------
                 (Name of Small Business Issuer in Its Charter)

                    Delaware                              33-0601331
                    --------                              ----------
        (State or Other Jurisdiction of                (I.R.S. Employer
         Incorporation or Organization)               Identification No.)

13 Spectrum Pointe Drive, Lake Forest, California           92630
-------------------------------------------------           -----
    (Address of principal executive offices)             (Zip Code)

                                 (949) 598-8378
                                 --------------
                (Issuer's Telephone Number, including area code)

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

    Title of Each Class          Name of Each Exchange On Which Registered
    -------------------          -----------------------------------------
           None

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

                          Common Stock, $0.01 par value
                          -----------------------------
                                (Title of Class)


                          -----------------------------
                                (Title of Class)

                                        1
<PAGE>


     Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

Yes  [X]          No  [ ]

     Check if there is no disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

     State issuer's revenues for its most recent fiscal year. $2,867,000.

     State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked prices of such common equity, as
of April 3, 2002: $3,459,304.44.

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. On April 3, 2002, there were
14,810,069 shares of the Registrant's Common Stock outstanding.

                                        2
<PAGE>


                                TABLE OF CONTENTS

ITEM                                                                        PAGE
----                                                                        ----


     PART I

1.   Description of Business . . . . . . . . . . . . . . . . . . . . . . . .   6

2.   Description of Property . . . . . . . . . . . . . . . . . . . . . . . .  26

3.   Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . .  27

4.   Submission of Matters to a Vote of Security Holders . . . . . . . . . .  29

     PART II

5.   Market for Common Equity and Related Stockholder Matters. . . . . . . .  29

6.   Management's Discussion and Analysis of Financial Condition
        and Results of Operations. . . . . . . . . . . . . . . . . . . . . .  31

7.   Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . .  39

8.   Changes in and Disagreements with Accountants on Accounting
        and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . .  39

     PART III

9.   Directors, Executive Officers, Promoters and Control Persons;
        Compliance With Section 16(a) of the Exchange Act. . . . . . . . . .  40

10.  Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . .  43

11.  Security Ownership of Certain Beneficial Owners and Management
        and Related Stockholder Matters. . . . . . . . . . . . . . . . . . .  44

12.  Certain Relationships and Related Transactions. . . . . . . . . . . . .  47

13.  Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . .  52



                                        3
<PAGE>

                                     PART I

     This Annual Report on Form 10-KSB contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, and Section 21E
of the Securities Exchange Act of 1934. These statements relate to future events
or the Company's future financial performance. The Company has attempted to
identify forward-looking statements by terminology including "anticipates,"
"believes," "expects," "can," "continue," "could," "estimates," "expects,"
"intends," "may," "plans," "potential," "predicts," "should" or "will" or the
negative of these terms or other comparable terminology. These statements are
only predictions, and forward-looking statements, and involve known and unknown
risks, uncertainties and other factors, including the risks outlined under "Risk
Factors" contained in Part I of this Annual Report that may cause the Company's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels or activity, performance or
achievements expressed or implied by these forward-looking statements. For all
of these predictions and forward-looking statements, we claim the protection of
the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.

     Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance, or achievements. The Company's
expectations are as of the date this Form 10-KSB is filed, and the Company does
not intend to update any of the forward-looking statements after the date this
Annual Report on Form 10-KSB is filed to conform these statements to actual
results, unless required by law.


CAUTIONARY  STATEMENT  CONCERNING  FORWARD-LOOKING  STATEMENTS.

     Certain statements we make in this Annual Report on Form 10-KSB (as well as
in other public filings, our web site, press releases, and oral statements made
by Company management and/or representatives,) constitute forward-looking
statements, which are subject to risks and uncertainties. Forward-looking
statements include information concerning:

-    our belief concerning future sales and net earnings growth;

-    our belief concerning the growth of our cash flow;

-    our ability to reduce selling, general and administrative expenses as a
     percentage of net sales;

-    our belief that we have sufficient positive cash flow to support our
     working capital needs and debt service requirements;

-    our belief that we can improve inventory turnover; and

-    our future results of operations, including sales and earnings per share
     growth.

                                        4
<PAGE>


     You should understand that the following important factors, in addition to
those discussed elsewhere in this Annual Report and in the documents that are
incorporated by reference (and in our other public filings, press releases, and
oral statements made by Company management and/or representatives), could cause
actual results to differ materially from those expressed in the forward-looking
statements:

WHAT FACTORS COULD AFFECT THE OUTCOME OF OUR FORWARD-LOOKING STATEMENTS?

INDUSTRY AND MARKET FACTORS

-    changes in economic conditions generally or in the markets served by us;

-    future federal and/or state regulatory and legislative actions affecting
     Worldwide and/or our markets;

-    consumer preferences and spending patterns; and

-    competition from others, and from alternative distribution channels.

OPERATING  FACTORS

-    our ability to continue to implement new information technologies;

-    our ability to continue to purchase inventory on favorable terms;

-    adverse determinations with respect to litigation or other claims;

-    our ability to attract, hire, and retain suitable management personnel; and

-    our ability to establish effective advertising, marketing and promotional
     programs, including pricing strategies, in the different geographic markets
     in which we sell our products.


     Significant variability in orders during any period may have a material
adverse impact on the Company's cash flow, and any significant decrease in
orders could have a material adverse impact on the Company's results of
operations and financial condition. As a result, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as any indication of future
performance. Fluctuations in the Company's operating results could cause the
price of the Company's Common Stock to fluctuate substantially.

                                        5
<PAGE>


ITEM 1. DESCRIPTION OF BUSINESS.

     Worldwide Medical Corporation ("Worldwide," the "Company," or "we"), is
engaged in the marketing and distribution of accurate and confidential
diagnostic tests that deliver immediate and preliminary results for detection of
drugs of abuse and other medical conditions in humans, including, but not
limited to, hidden blood in the stool, alcohol breath scans, and home screening
for cholesterol. Products are sold under our trademark "First Check(R)" and
promoted with our motto: "When the need to know is NOW." Our other diagnostic
assays include fertility tests to detect pregnancy and ovulation and assays for
certain infections and sexually transmitted diseases. In medicine, an "assay" is
the means of measuring a substance of clinical interest. The results of the
measurement are either qualitative, "yes/no," or quantitative, i.e. the number
of an item, for example, red blood cells, in a sample. Sales of our ovulation
and infectious disease diagnostic products have not been significant to, date;
primarily because of the limited resources we have available to market the
products, competitive market-place issues, and the current lack of required
governmental approval for those products. See "Products" and "Marketing and
Sales."

     We introduced our First Check family of diagnostic tests at the American
Association of Clinical Chemistry annual convention in August of 1995.
Commercial sales were first generated in December of 1995, and we were
considered a development-stage enterprise prior to 1996.

     Historically, we have generated substantially all of our net revenues from
our drugs of abuse tests. For our 2001 and 2000 fiscal years, our drugs of abuse
tests were responsible for approximately 82 percent and 87 percent, of our net
revenues, our alcohol breath tests were responsible for approximately 3 percent
and 4 percent of our net revenues, our colorectal screening tests were
responsible for approximately 14 percent and 4 percent of our net revenue, our
cholesterol tests were responsible for approximately 1 percent and 0 percent of
our net revenue, and our infectious disease tests were responsible for
approximately 1 percent and 5 percent of our net revenue, respectively.
Commencing late in our 2000 fiscal year, the colorectal portion of the net
revenues increased because we began to increase our marketing attention on this
product during the year ended December 31, 2001.

     The development, manufacture, and marketing of medical diagnostic products
are subject to regulation by the United States Food and Drug Administration (the
"FDA") and other federal, state, and local entities. The FDA regulates
pre-clinical and clinical testing, manufacturing, labeling, distribution, and
promotion of medical devices under the Federal Food, Drug and Cosmetic Act
("FFDCA") and regulations promulgated thereunder Section 510(k) of the FFDCA
requires certain medical device manufacturers to notify FDA, at least 90 days in
advance, of their intent to market a medical device. This is known as
"Pre-market Notification," also called PMN or 510(k). The notification allows
the FDA to determine whether the specific device is equivalent to a device
already placed into one of three classification categories. A "new" device, that
is, one not in commercial distribution prior to May 28, 1976, that has not been
so classified, can be properly identified. Specifically, a medical device
manufacturer is required to submit a pre-market notification if it intends to
introduce a device into commercial distribution for the first time or to
reintroduce a device that will be significantly changed or modified to the
extent that its safety or effectiveness could be affected. Such change or
modification could relate to the design, material, chemical composition, energy
source, manufacturing process, or intended use.

                                        6

<PAGE>


     Thus, 510(k) clearance is an FDA designation that indicates that the test
results are reliable and correlate to the claims made by the manufacturer and
that permits the sale of the device by the manufacturer to professionals. A
510(k) "over-the-counter" ("OTC") clearance is a separate FDA designation that
indicates not only that the test results are reliable and correlate to the
claims by the manufacturer, but also that the packaging, instructions, and
language, as reviewed by the FDA, can be readily understood by a
non-professional consumer, and that the sale of the device by the manufacturer
is also permitted to the general public.

     All of the products that we currently offer, both for professional and for
consumer use, have been deemed by the FDA to be "substantially equivalent" to
other devices placed into commercial distribution prior to May 28, 1976, by
other entities and all of our products have received the relevant 510(k)
clearance from the FDA for distribution in the United States. All of our First
Check family of products has also received 510(k) over-the-counter clearance
from the FDA. On June 23, 2000, the Company received its OTC clearance from the
FDA for three of our First Check urine-based tests for drugs of abuse: "panel
one" for marijuana, "panel two" for marijuana and cocaine, and "panel three" for
marijuana, cocaine, and methamphetamines. Final 510(k) OTC clearance from the
FDA of our "panel four" test, which screens for marijuana, cocaine,
methamphetamines, and opiates, was received in October 2000. In 2001, the FDA
provided our supplier, V-Tech, Inc., with 510(k) OTC clearance for our
five-panel integrated cup-testing product for marijuana, cocaine, amphetamines,
opiates, and phencyclidine ("PCP"). We have decided to market this five-panel
test to the professional, rather than the consumer, market. Accordingly, we have
incorporated an adulterant strip that detects masking agents in human urine. See
"Products" and "Governmental Regulation," below.

     Under the FDA's new product clearance guidelines for home testing for drugs
of abuse, the consumer, in addition to securing an accurate and confidential
preliminary test result, also must be provided with the option to request a
confirmatory laboratory test. Management believes that the category of home
screening test products is emerging rapidly as a growth opportunity for major
drug, discount, and supermarket retailers. Our 510(k) OTC clearance provides us
with an opportunity to be early to market with our First Check rapid tests that
deliver unmasked, drug-specific, accurate, and confidential preliminary results
in the privacy of the user's home or work place.

     On January 1, 2001, the Company, Dr. Francisco Rojas, our Chief Scientific
Officer and one of our Directors, and Dr. Ines Moretti formed Spectrum
Analytics, Inc. ("Spectrum"), a California corporation, that provides gas
chromatography/mass spectrometry ("GC/MS") confirmatory analysis for our First
Check customers. GC/MS is a combination of sophisticated instrumentation and
techniques that can accurately confirm the presence of and identify a drug of
abuse in a biological specimen. Until April 2, 2002, 50 percent of Spectrum's
equity was owned by the Company and 50 percent was owned by Drs. Rojas and
Moretti. Effective that date, the Company purchased the equity owned by Drs.
Rojas and Moretti for the following consideration: (i) the Company forgave a $58
thousand obligation from Pyxis Laboratories, Inc., a company wholly owned by Dr.
Moretti, through which she held her ownership of Spectrum; and (ii) the Company
issued 50,000 shares of its common stock to Dr. Rojas, which shares were valued
at an aggregate of $20,250. At Spectrum's inception, Drs. Rojas and Moretti
contributed $50 thousand in equipment to Spectrum and the Company contributed
$50 thousand in capital. Thereafter, Drs. Rojas and Moretti have provided


                                        7

<PAGE>

on-going laboratory services and the Company has provided necessary operating
capital to Spectrum. During the year ended December 31, 2001, the Company
allocated $85 thousand in expenses to Spectrum, consisting of salary, rent,
utilities, and other operating costs, advanced $171 thousand to Spectrum and its
vendors, and paid $30 thousand to Spectrum for confirmatory tests performed for
the benefit of purchasers of the Company's Drugs of Abuse tests. The net
financial impact to the Company for all of such activities was a net investment
of $236 thousand in Spectrum.

     In conjunction with our FDA OTC clearance, the Company re-designed its
First Check product packaging. The re-design includes new artwork, new labeling,
and a more comprehensive instruction booklet, as well as a transport box to be
utilized to send the urine sample to Spectrum for GC/MS analysis. Management
believes that the new product packaging will increase the products' on-the-shelf
awareness and sales.

     The Company contracts with various manufacturers to provide us with
components for our First Check family of products. We limit our production
activities to assembly, packaging, labeling, and shipping. Since inception, our
strategic plan has been to build an efficient domestic and international
distribution network for our products. Our First Check family of products is
primarily sold to laboratories, medical providers, employers, law enforcement
agencies, educators, concerned parents, and the general public.

     The Company's long term goals include (i) commencing significant research
and development activities to develop proprietary home testing products, (ii)
diversifying our marketing and distribution channels, and (iii) entering
long-term manufacturing agreements to secure lower cost, secure sources of
supply for components of our products.

     The Company was incorporated in Delaware in 1983, and is the successor to a
California corporation of the same name formed in 1994 ("Worldwide California")
as a result of the September 1997 merger of Worldwide California with our
wholly-owned subsidiary (the "Merger"). The Merger was accounted for as a
reverse acquisition, with Worldwide California treated as the acquirer and no
step-up recorded in the basis of its assets. Since the parent Delaware
corporation was essentially a "public shell" with no assets, liabilities, or
business operations prior to the Merger, the effect of the Merger was similar to
a reincorporation. Our address is 13 Spectrum Pointe Drive, Lake Forrest,
California 92630. Our telephone number is (949) 598-8378; our facsimile number
is (949) 598-8757; and our web address is www.wwmed.com.

IMMUNOASSAY TECHNOLOGY BACKGROUND

     The Company's diagnostic tests are solid-phase enzyme immunoassays -- in
vitro medical diagnostic procedures based upon the interaction of antigens and
antibodies. An enzyme is a protein that facilitates or induces a specific
chemical reaction. An immunoassay is the means of measuring a substance of
clinical interest by using antigen-antibody reactions. In general, an "antigen"
is a foreign substance, such as a drug complex, an infectious bacterium, or a
virus, that stimulates the immune system to produce antibodies. An "antibody" is
a protein that is a natural part of the human immune system that is produced by
specialized cells to neutralize antigens and protect the body from foreign
substances. Each type of antibody has a unique molecular structure that enables

                                        8
<PAGE>

it to bind to, and eliminate one specific antigen to form an antigen-antibody
complex. "Immunodiagnostic" testing makes use of the known characteristics of
antigen-antibody binding to determine the concentration of a particular
substance in a body by means of testing small samples of body fluid, such as
urine, serum, or whole blood. The primary advantage of immunoassay testing in
diagnostic medicine is its high degree of sensitivity and specificity.
Sensitivity is the ability of an assay to detect and measure small quantities of
a substance, while specificity is the ability of an assay to distinguish between
similar materials.

     Commercial development and use of immunoassay tests in diagnostic medicine
commenced in the mid-to-late 1960's. Immunoassay tests initially used a minute
radioactive tracer to enable instruments to read test results. Subsequent
developments use enzymes to produce a measurable color change. Commercial test
kits incorporating the use of enzymes on a solid surface, such as a membrane,
were first introduced in 1984. Membrane-based technology is particularly well
suited for the development of accurate, economical, and rapid in vitro
immunodiagnostic tests, referring to tests performed outside of the body.
Membranes allow a test to eliminate interfering substances automatically,
concentrate components, perform selected chemical steps sequentially, and
determine sample sizes accurately, all without user involvement.

     These newer techniques advanced previous immunoassay technology by
eliminating the need for instrumentation to measure color development.
Variations of this technology form the basis for most of the rapid immunoassay
test-systems that are currently manufactured and sold by numerous companies. An
immunoassay test process typically involves introducing a patient specimen
sample to the test system, which is normally enclosed in a small plastic shell,
to allow an antigen-antibody reaction to occur. If the "analyte" is present,
specifically bound "reagents," or chemicals added to the sample in order to
cause a chemical or biological reaction that will enable measurement or
identification of a target substance, remain in the area and other compounds in
the system cause a color change. An analyte is a substance that is the subject
or "end-point" of a diagnostic test, i.e., the substance to be detected or
determined to be either absent or in a lower concentration than necessary to
yield a positive result. A lack of color indicates that the patient sample did
not contain detectable quantities of the target analyte. Rapid enzyme
immunoassays are especially well suited for on-site "yes/no" diagnostic tests
not requiring laboratory equipment; positive results can be confirmed by more
extensive laboratory testing if desired under the particular circumstances.

     Management believes the market for in vitro diagnostic testing has
experienced rapid growth due to growing public awareness of health and safety
issues; recognition by physicians that regular diagnostic testing can result in
earlier detection, diagnosis, and effective treatment; increased alcohol and
drug-related screening by employers and other institutions; and the introduction
of cost-effective and accurate products. On-site rapid diagnostic testing
offered by enzyme immunoassay provides a fast, cost-effective, and accurate
alternative to conventional clinical laboratory testing.

     Currently, the majority of diagnostic testing is done in centralized
laboratories. Laboratory testing usually involves skilled technicians, who
measure and process a specimen, add reagents, and use sophisticated instruments
to read and calculate the results. Typically, results are not available for 24

                                        9
<PAGE>

to 72 hours. By contrast, on-site rapid enzyme immunoassay tests at the
workplace or in other remote locations permit the user to obtain quantitative
results, usually within minutes. On-site testing also eliminates the time, cost,
shipment, and handling of specimen samples associated with utilizing remotely
located laboratories. Management expects the market for on-site rapid
immunodiagnostic testing to continue to grow, creating market opportunities for
the Company.

PRODUCTS

     Set forth below is a list of our First Check rapid home screening tests and
the current FDA status of each test:

-    Currently sold and FDA 510(k) cleared for professional use in the United
     States.

Drugs of Abuse:
     THC  -  tetrahydrocannabinol, or marijuana
     COC  -  cocaine
     OPI  -  opiates/morphine/heroin
     AMP  -  amphetamines
     MET  -  methamphetamines
     BAR  -  barbituratesBZO  -  benzodiazepines
     PCP  -  Phencyclidine
     MTD  -  methadone

Infectious Diseases:
     Mononucleosis
     Rubella, or German measles
     Strep A (streptococcus bacterial throat infection)

-    Currently sold and FDA 510(k) OTC cleared for professional and consumer use
     in the United States.

Drugs of Abuse:
     Panel  I    -  THC
     Panel  II   -  THC and COC
     Panel  III  -  THC, COC, and MET
     Panel  IV   -  THC, COC, MET, and OPI
     Panel  V    -  THC, COC, AMP, OPI, and PCP

Fertility Testing:
     human Chorionic Gonadotropin, or hCG
     lutenizing hormone, or LH

-    Offered in the United States for research purposes only, and sold in small
     quantities outside the United States for professional and consumer use.
     Currently in clinical trials prior to preparation of an FDA application,
     the successful completion, preparation, or approval of any of which cannot
     be assured.

                                       10
<PAGE>


Infectious Diseases:

     Helicobacter pylori; an infectious agent causing peptic and duodenal ulcers

Sexually Transmitted Diseases:
     Chlamydia

-    Offered in the United States for research purposes only. Currently in
     pre-clinical studies prior to clinical trials and an FDA application, the
     successful completion, preparation, or approval of any of which cannot be
     assured.

Sexually Transmitted Diseases:
     human immunodeficiency virus, or HIV 1 / 2

Drugs of Abuse

     We sell test kits that react to the following drugs of abuse: marijuana,
cocaine, and opiates, such as morphine and heroin, amphetamines, PCP, Ecstasy,
and methamphetamine, and barbiturates and benzodiazepines.

Cholesterol Testing

     We sell kits that test for high cholesterol, or hypercholesterolemia, a
risk factor for coronary heart disease and currently, the leading cause of death
in the United States. The liver naturally produces cholesterol. When cholesterol
rises above the desirable level, it may be stored in the body and may increase
the risk for heart disease or stroke. Current medical data indicate that
aggressive cholesterol reduction techniques decrease the risk of coronary heart
disease.

Colorectal Disease

     We sell kits that test for colon cancer, the third most commonly diagnosed
cancer in the United States and the second leading cause of cancer death.
Prevention and early detection are key factors in controlling and curing
colorectal cancer. Current medical practice suggests that individuals with
average risk for colorectal cancer, that is, those with no personal or family
history of colon cancer, should begin annual fecal occult blood testing at age
50.

Alcohol

     We sell kits that test alcohol levels. Alcohol, like sedatives, depresses
the central nervous system and impairs performance on many levels, ranging from
reaction time and eye-hand coordination to lapses of judgment and inability to
perform several tasks simultaneously. In the United States, alcohol plays a part
in half of the automobile fatalities and nearly half of all industrial
accidents. Generally, 0.1 percent and 0.08 percent blood alcohol levels have
been used as the benchmark for the regulation of negative behaviors related to
alcohol.

FIRST CHECK TEST FORMAT AND PROCEDURES


                                       11
<PAGE>


     The Company's First Check rapid tests for drugs of abuse are enclosed in an
oval-shaped plastic container, as well as an integrated cup. Our First Check
rapid tests for drugs of abuse can be administered at home and in the workplace
by non-certified technicians. All of the reagents, chemistry, and a membrane
system for the test to function automatically are enclosed in the plastic case.
Therefore, the user need not mix or add reagents, but only introduce a small
sample of the fluid specimen into an opening in the plastic case. In the
industry, tests requiring only this step are generally called "one-step" tests.

     The First Check plastic case contains two openings on one side, a round
orifice into which the patient fluid sample is introduced and a larger opening
or window in which test results, indicated by the presence or absence of colored
lines, can be seen in approximately eight minutes. This window in turn is
comprised of two sections, a larger area or "test window," and a smaller area or
"control window." In panel tests for drugs of abuse, the side of the "test
window" is further marked into subsections to show the places where test results
for each drug in the panel are viewed. If colored lines appear in both the
control window and the test window, a positive result is indicated. If a colored
line appears in the control window and no line appears in the "test window," a
negative result is indicated, that is, the test did not show the presence of the
drug or medical condition. If a colored line does not appear in the "control
window," the test was invalid for some reason, such as the failure to use the
type of fluid sample required. At the user's option, a laboratory using GC/MS
analysis, at no additional cost, can confirm the test results of our products.

     The First Check pregnancy and ovulation tests are one-step, solid-phase
immunoassays. Three types of pregnancy tests are offered: one for use with
urine; one for use with either urine or serum; and the mid-stream stick format
for use with urine without the necessity of handling the urine sample. Each
produces test results within one to three minutes. The ovulation test is
designed for use with a urine sample and produces results within three to eight
minutes. These tests may be stored at room temperature and have a shelf life of
18 months.

MARKETING AND SALES

     The Company primarily provides its First Check family of confidential
screening tests to its intended end-users through distributors and retail
outlets. Currently, we have established relationships with a variety of
large-scale, well-known distributors, such as Bergen Brunswig Drug Company,
"AmerisourceBergen," a wholly-owned subsidiary of AmerisourceBergen Corporation,
the nation's largest pharmaceutical services company dedicated solely to the
pharmaceutical supply chain; Cardinal Health, Inc., "Cardinal," one of the
nation's leading providers of products and services supporting the health-care
industry; and McKesson Corporation, "McKesson," the world's leading healthcare
services company; and retail outlets, such as Eckerd Corporation, "Eckerd," the
nation's fourth largest drugstore chain; Longs Drug Stores Corp. "Longs," one of
the top 10 drug chains in the nation; The Kroger Co., "Kroger," one of the
nation's largest grocery retailers; and Rite Aid Corporation, "Rite Aid," one of
the nation's leading drugstore chains. Our distributors purchase our products
and resell and deliver them to retail drug stores, supermarkets, and healthcare
facilities and providers, to the extent that we do not supply them directly.
Management views the distribution of our products to be national in scope and
our products are available in 44 states. Our products are also available on our
website, although we do not actively promote direct-to-consumer sales.


                                       12
<PAGE>

     Certain of our customers are serviced directly by us; others are serviced
through TKR Investments, Inc. ("TKR"), a sales and marketing organization; and
the balance of our customers are serviced by five independent, commissioned
sales representatives. We also distribute our First Check products and our
professional products through our website, www.wwmed.com.

     In January of 2001, we entered into a sales agreement with TKR that
provided for a monthly retainer of eight thousand dollars and a commission rate
that varies between 2.5 percent and 4 percent, depending on incremental net
sales. TKR is a sales and marketing organization that specializes in the retail
drug, mass merchandise, and supermarket channels of distribution. For Worldwide,
its function is to establish direct contacts between the upper levels of
purchasing management of national or super-regional retail outlets or
distributors and Daniel G. McGuire. The agreement is terminable by TKR or us
upon 120 days' written notice. Thomas Ramstead, a former director of Worldwide,
owns TKR.

     TKR's functions were performed by Worldwide Sales Management Corporation
("Worldwide Sales"), an enterprise jointly owned by Mr. Ramstead and Daniel G.
McGuire through December of 2000. When Mr. McGuire became our President in April
of 2000, he divested himself of his interest in Worldwide Sales. At that time,
we also began to service certain of our customers directly. During the remaining
nine months of 2000, we halved the commission rate that we paid to Worldwide
Sales, from 15 percent to 7.5 percent.

     Our independent, commissioned sales representatives represent our products,
as well as those of other companies or brands, in certain local geographic areas
where management has deemed it to be a more cost-effective distribution method
than direct sales efforts or sales through the Company's distributors.

     Cyber Marketing, Inc. ("Cyber Marketing") is responsible for the design and
maintenance of the Company's website. Our two-year agreement with Cyber
Marketing, effective August 9, 2000, provides it with the exclusive right to
market our products on the Internet, both through our website and through any
other e-commerce sites that Cyber Marketing may determine to use. Consumers, or
medical professionals, can enter our website to order our products directly.
Cyber Marketing is responsible for processing the orders and delivering the
products. We sell our products to Cyber Marketing at our standard distributor
prices and provide it with the same advertising incentives and promotional
allowances that we accord to our other major customers. We do not compensate
Cyber Marketing for their support of our website or their distribution of our
products; Cyber Marketing generates its revenues and margins based on the
difference between its purchase and sales prices for our products. The agreement
is terminable by Cyber Marketing or us upon 180 days' written notice. Cyber
Marketing is owned by one of our directors, James G. Barrons.

     To date, the Company's marketing efforts have been focused on cooperative
advertising programs designed to build category and brand awareness. In our 2000
fiscal year, two of our customers, Rite Aid and Eckerd, each accounted for more
than 10 percent of our revenues. For our 2001 fiscal year, three of our
customers, Rite Aid, Eckerd, and AmerisourceBergen, each accounted for more than
10 percent of our revenues. In each of such fiscal years, international sales to
Australia and Japan represented less than 1 percent of our total revenues and
were achieved by sales representatives.

                                       13
<PAGE>


     Through the efforts and contacts of Mr. McGuire, with the assistance of Mr.
Ramstead on an as-needed basis, under the auspices of the Company's agreement
with TKR, the Company intends to continue to increase the number of distributors
and wholesalers, similar to AmerisourceBergen, Cardinal, and McKesson, and
retailers, similar to Eckerd, Longs, Kroger, and Rite Aid, with which it
currently has established relationships, both to increase domestic and to
commence meaningful international distribution. Management cannot provide any
assurance that the Company will be presented with any such new agreements on
terms acceptable to it or at all. Further management cannot provide any
assurance that such agreements will result in increased revenues or generate
profits for the Company.

     The Company also intends to engage additional regional, independent sales
representatives to represent its products in various markets that are currently,
and are expected to remain, unserved or underserved by our distributors and
retailers. Independent sales representatives can provide an alternative,
cost-effective method for a manufacturer to distribute its products, without the
economic investment in direct sales personnel or in reduced sales margins that
often result from the discounts provided to a company's distributors. Further,
in certain local markets, sales representatives may have greater market
knowledge of those local areas and may be able to leverage that knowledge and
their sphere of influence in those locales more economically than a company's
direct sales personnel. Sales representatives are especially cost-effective when
a company's products are relatively inexpensive and are not sold in high volume
in any specific region.

                                       14
<PAGE>


Sales Percentage Attributable to Market Segment

                      Fiscal Year Ended    Fiscal Year Ended
                      December 31, 2001    December 31, 2000
Retail Sales. . . .                 73%                  75%
                     ------------------   ------------------
  Subtotal. . . . .                 73%                  75%
                     ------------------   ------------------

Labs. . . . . . . .                  3%                   2%
Hospitals . . . . .                  5%                   2%
Police Departments.                  7%                  10%
Educational . . . .                  3%                   4%
Government. . . . .                  5%                   5%
Employer. . . . . .                  1%                   *
Direct-to-Consumer(1)                3%                   2%
                     ------------------   ------------------
  Subtotal. . . . .                 27%                  25%

    Total . . . . .                100%                 100%
                     ==================   ==================


     *    Represents less than one percent.

     (1) The Company does not market directly to consumers. However, a consumer
     may purchase the Company's products directly by visiting the Company's
     website.

     There can be no assurance that we will enter any additional distribution
agreements or engage any additional independent sales representatives on terms
acceptable to us, or at all. Further, if we enter any such agreements, there can
be no assurance that we will generate incremental revenues or profits therefrom.

RESEARCH AND DEVELOPMENT

     To date, the Company's research and development activities relate to the
initial development in 1994 and 1995 of test kits for diagnostic products and
research and development of fertility assessment tests since January 1997. Since
our receipt of a warning letter from the FDA with respect to the consumer
versions of our First Check Drugs of Abuse Home Screening Tests, substantially
all of our research and development activities have been focused on the clinical
research and consumer surveys required by the FDA for our 510(k) OTC clearances.
Research and development expenses were $72 thousand in our 2001 fiscal year, and
$73 thousand in our 2000 fiscal year.

SOURCES OF SUPPLY

     The Company contracts with various manufacturers to provide us with
components for our First Check products. We limit our production activities to
assembly, packaging, labeling, and shipping. Since inception, our strategic plan
has been to build an efficient domestic and international distribution network.
Our First Check products are primarily sold to laboratories, medical providers,
employers, law enforcement agencies, educators, concerned parents, and the
general public.

                                       15
<PAGE>


     We purchase each active component for our First Check drugs of abuse
products and our colorectal and cholesterol products from a separate supplier.

     We purchase our Drugs of Abuse tests from Applied BioTech, Inc. ("Applied
BioTech"), a division of Apogent, Inc., located in San Diego, California. We
place unit-price purchase orders approximately every 12 weeks with Applied
BioTech to custom manufacture our First Check Drugs of Abuse Tests. We own the
FDA 510(k) clearance for these products, and are not restricted from entering
into a secondary manufacturing agreement with other suppliers. Management
believes that several alternative manufacturers would be able to manufacture
these products for us in the event that Applied BioTech were unable to continue
to supply us and that such a change of supplier would not have a material effect
on our ability to supply our customers.

     We purchase, on an as-needed basis, our Cholesterol tests from AccuTech,
LLC ("AccuTech"), located in Vista, California. We have a private label
agreement with AccuTech, that allows us to market their product under the First
Check brand trademark. AccuTech, owns the FDA 510(k) clearance on this test.
However, AccuTech is one of three manufacturers of home cholesterol tests and we
are not contractually precluded from purchasing products from any of them.
Management believes that any of the alternative manufacturers would be able to
manufacture this product for us in the event that AccuTech were unable to
continue to supply us at all or on substantially current terms and conditions
and that such a change of supplier would not have a material effect on our
ability to supply our customers.

     During our 2001 fiscal year, we purchased our Colorectal tests from Helena
Laboratories Corp. ("Helena Labs") in Beaumont, Texas. Helena Labs is one of
three manufacturers of home colon tests and we are not contractually precluded
from purchasing products from any of them. During our 2002 fiscal year, we
contracted to commence the purchase of our Cholorectal tests from Biomerica,
Inc. ("Biomerica"), located in Newport Beach, California, one of the other two
manufacturers of home colon tests referenced above. We have a private label
agreement with Helena Labs and Biomerica that allows us to market their products
under the First Check brand trademark. Each of them has received FDA 510(k)
clearance for these tests. Management believes that each of the manufacturers
would be able to manufacture this product for us on acceptable terms and
conditions and that a change of supplier would not have a material effect on our
ability to supply our customers.

     We purchase our fertility, ovulation, and infectious disease tests from
V-Tech, Inc. ("V-Tech"), located in Pomona, California. We have a private label
agreement with them that allows us to market their various tests under the
Company's First Check brand trademark. V-Tech is one of several manufacturers of
these tests in the United States and we are not contractually precluded from
purchasing products from any of them. Management believes that any of the
alternative manufacturers would be able to manufacture these products for us in
the event that V-Tech were unable to continue to supply us at all or on
substantially current terms and conditions and that such a change of supplier
would not have a material effect on our ability to supply our customers.


                                       16
<PAGE>


     Management believes that the Company would be able to secure alternative
sources for any of their test products if the need arose. However, if our supply
of active components were reduced or discontinued, or if our cost of such
products were materially increased, unless and until we were able to establish
such alternative sources of supply at historical costs, our sales and gross
margins would be materially adversely affected. We cannot assure you that we
would be able to obtain such active components for our products, or reasonable
substitutes thereof, from other manufacturers timely, on terms acceptable to us,
or at all. In the event that the Company is unable to replace its suppliers, the
Company may not be able to produce and sell its products as anticipated.

COMPETITION

     Several companies compete with us in our various product categories, many
of which have more experience and greater human and financial resources than we.
With respect to alcohol and cholesterol tests, the companies that manufacture
our tests also produce and distribute their own tests under their own brand
name. The home screening test industry has not matured, such that management
believes that no accurate measurement of any company's market share is
available. However, with the exception of Eckerd, none of the Company's
competitors' products is distributed by our distributors or are available in
retail outlets that we directly supply. Such exclusivity is not based on
contract, but on historical conduct. The Company's ability to increase its
revenues is highly dependent upon its ability to finance an increase in the
production of its products to increase the number of outlets that stock and sell
its products.

     Our current supplier of Drugs of Abuse Tests, Applied BioTech, does not
currently market or sell its own over-the-counter product. Our main competitor
for these tests is Phamatech, Inc. ("Phamatech"), a private diagnostic
manufacturer located in San Diego, California. Their products, marketed under
the brand name "At Home," require the user to mail the urine sample and test
cassette to their laboratory. They provide results to the user in 10 days.
Management believes that the Company's products are superior to Phamatech's not
only because the Company's products are less expensive, but also because the
Company's tests provide "unmasked" results, or results that are readable by the
consumer, and Phamatech's test results are provided only by Phamatech.

     Princeton BioMeditech Corporation ("PBM"), a former supplier to us and a
major stockholder of ours, both directly and through its owner and one of our
Directors, Dr. Jemo Kang, distributes products similar to our products and
claims a significant international market presence for its drugs of abuse tests
for the professional market. Management has been advised by representatives of
PBM that its marketing and the distribution of its products does not compete
with ours and that PBM's distribution through the channels that we currently use
is limited; accordingly, as of the date of this Annual Report, the Company and
PBM do not consider themselves to be competitors. However, in the event that
either PBM or we modify or expand our distribution channels, we could become
competitors with each other.

     Our current supplier of Cholesterol tests, AccuTech, dominates the
over-the-counter market with its product, which is the same as ours. Management
believes that our packaging is superior because it is more attractive, takes up
less shelf space than the AccuTech packaging, and is one of a series of
available tests.

                                       17
<PAGE>


     Our historical supplier of Colorectal tests has been Helena Labs. Helena
Labs does not currently have an over-the-counter product. However, they do
market a professional test, "Colocare," which has captured 50 percent of the
professional market share. Biomerica is a small diagnostic company with one
over-the-counter-colon test and one professional test, both marketed as
"EZ-Detect." Biomerica's over-the-counter test is a single test, retailing for
$7.99. Our test is sold in a package of three tests at a retail price of $12.99
and management believes that the Company's attractive pricing makes its product
highly competitive. The Company does not market a Colorectal test to the
professional market. See "Sources of Supply."

     The Company is not currently a prominent figure in the over-the-counter
fertility/ovulation market, which is dominated by two companies: Pfizer, Inc.,
Warner-Lambert Healthcare ("Warner Lambert"), headquartered in New York, whose
brand name is "EPT" and Abbott Laboratories ("Abbott"), located in Abbott Park,
Illinois.

GOVERNMENTAL REGULATION

     The development, manufacture, and marketing of medical diagnostic products
are subject to regulation by the FDA and other federal, state, and local
entities. The FDA regulates pre-clinical and clinical testing, manufacture,
labeling, distribution, and promotion of medical devices under the Federal Food,
Drug and Cosmetic Act ("FFDCA") and regulations promulgated thereunder. Section
510(k) of the FFDCA requires certain medical device manufacturers to notify FDA,
at least 90 days in advance, of their intent to market a medical device. This is
known as "Pre-market Notification," also called PMN or 510(k). The notification
allows the FDA to determine whether the specific device is equivalent to a
device already placed into one of three classification categories. A "new"
device (i.e., one not in commercial distribution prior to May 28, 1976) that has
not been so classified can be properly identified. Specifically, a medical
device manufacturer is required to submit a Pre-market Notification if it
intends to introduce a device into commercial distribution for the first time or
to reintroduce a device that will be significantly changed or modified to the
extent that its safety or effectiveness could be affected. Such change or
modification could relate to the design, material, chemical composition, energy
source, manufacturing process, or intended use.

     Thus, 510(k) clearance is an FDA designation that indicates that the test
results are reliable and correlate to the claims made by the manufacturer and
that permits the sale of the device by the manufacturer to professionals. A
510(k) OTC clearance is a separate FDA designation that indicates not only that
the test results are reliable and correlate to the claims by the manufacturer,
but also that the packaging, instructions, and language, as reviewed by the FDA,
can be readily understood by a non-professional consumer, and that the sale of
the device by the manufacturer is also permitted to the general public. The sale
of our products outside of the United States is subject to foreign regulatory
requirements that vary widely from country to country.

     Finally, the manufacturing site for the products must operate using device
Good Manufacturing Practices ("GMP") and pass an FDA Pre-Approval Inspection
before product commercialization. A company that manufactures devices subject to
510(k) clearance must also comply with device GMP and will be subject to
periodic inspections by the FDA to confirm compliance. With the exception of

                                       18
<PAGE>


the supplier of our HIV 1 / 2 test, our suppliers have advised us that they hold
all requisite licenses and are compliant with the GMP requirements for the
manufacture and marketing of products currently supplied to us in the United
States. There can be no assurance that our suppliers will continue to comply
with GMP.

     If our suppliers or we fail to comply with applicable requirements of the
FDA under the FFDCA, we may be subject to fines, injunctions, civil penalties,
product recalls or seizure of products, total or partial suspension of
production, withdrawal of marketing clearances or approvals, and the possibility
of criminal prosecution. As of the date of this Annual Report, all of the
products that we offer have been deemed by the FDA to be "substantially
equivalent" to other devices placed into commercial distribution prior to May
28, 1976, by other entities and all of our products have received the relevant
510(k) clearance from the FDA for distribution in the United States. All of our
First Check products have also received 510(k) OTC clearance from the FDA. On
June 23, 2000, the Company received its OTC clearance from the FDA for three of
our First Check urine-based tests for drugs of abuse: "panel one" for marijuana,
"panel two" for marijuana and cocaine, and "panel three" for marijuana, cocaine,
and methamphetamines. Final 510(k) OTC clearance from the FDA of our "panel
four" test, which screens for marijuana, cocaine, methamphetamines, and opiates,
was received in October 2000. In 2001, the FDA provided our supplier, V-Tech,
Inc. with 510(k) OTC clearance for our five panel integrated cup testing product
for marijuana, cocaine, amphetamines, opiates, and phencyclidine ("PCP").

     In July of 1999, we received a warning letter from the FDA with respect to
the consumer versions of our drugs of abuse tests. Although we thereafter
applied for and received all relevant 510(k) clearances, on February 2, 2001,
the FDA chose to initiate a proceeding against the Company, H. Thad Morris,
Patti A. Evanoff, and Daniel G. McGuire in an administrative complaint, styled
In the Matter of Worldwide Medical Corporation, a corporation, and Daniel G.
McGuire, H. Thad Morris, and Patti A. Evanoff, individuals, FDA Docket Number
01-H-0065. The FDA alleged that the Company, Mr. Morris, Ms. Evanoff, and Mr.
McGuire committed 138, 82, 56, and 30 violations, respectively, of 21 U.S.C.
Section 331(a) of the Federal Food Drug and Cosmetic Act. The allegations relate
to First Check test products that the Company shipped prior to receipt of the
510(k) OTC clearances from the FDA. The FDA sought to assess civil penalties of
$15 thousand per alleged violation against the respondents. The Company believes
that the allegations are without merit, responded on behalf of Ms. Evanoff, Mr.
McGuire, and itself, and defended such parties vigorously.

     Commencing in January of 2002, the FDA and our management engaged in
discussions to resolve the FDA's administrative complaint. In April of 2002, the
terms to the final draft of the settlement agreement of all allegations set
forth in the administrative complaint were approved by all parties ("Settlement
Agreement"). As of the date of this Annual Report, such agreement is in the
process of being executed by all parties. None of the parties admitted liability
or that any violations had occurred; however, as a matter of settlement only,
the Company agreed to tender the sum of $150 thousand to the FDA on the
following schedule:

-    $50 thousand on or before 45 days after the filing of the Settlement
     Agreement with the Dockets Clerk of the FDA, which payment date is expected
     to be in May of 2002;

                                       19
<PAGE>


-    $50 thousand on or before the first anniversary of the filing of the
     Settlement Agreement with the Dockets Clerk of the FDA, which payment date
     is expected to be in April of 2003; and

-    $50 thousand on or before the first anniversary of the filing of the
     Settlement Agreement with the Dockets Clerk of the FDA, which payment date
     is expected to be in April of 2004.

     Also, as a matter of settlement only, Mr. Morris agreed to tender the sum
of $100 thousand to the FDA on the following schedule, which payments the
Company has guaranteed:

-    $20 thousand on or before the first anniversary of the filing of the
     Settlement Agreement with the Dockets Clerk of the FDA, which payment date
     is expected to be in April of 2004; and

-    $80 thousand on or before the first anniversary of the filing of the
     Settlement Agreement with the Dockets Clerk of the FDA, which payment date
     is expected to be in April of 2005.

     With the exception of the Company's initial payment, interest, on all
unpaid payments of the Company and Mr. Morris, accrues at the rate equal to the
weekly average one-year constant maturity treasury yield for the first calendar
week preceding the date of the filing of the Settlement Agreement with the
dockets clerk of the FDA. In the event that a payment is not timely made, the
interest rate thereon doubles. The FDA has retained jurisdiction and would
deduct any paid amounts from the amount it would be seeking if it were to decide
to proceed with its administrative complaint. Neither Mr. McGuire nor Ms.
Evanoff is obligated to tender any payments under the Settlement Agreement. Upon
the FDA's receipt of all payments described above, the FDA will dismiss the
administrative complaint with prejudice in its entirety against all respondents
and will vacate the "Initial Decisions and Order of Default and Imposition of
Civil Money Penalties Upon Respondent H. Thad Morris," which decision and order
became final on April 26, 2001.

PATENTS, TRADEMARKS, AND TRADE SECRET PROPRIETARY RIGHTS

     The Company presently does not hold any patents related to the products
that it currently sells; further, its products are not licensed under any
patents. The Company holds a federally registered trademark on its First Check
in vitro diagnostic reagents and assays for medical use, serial number 75047865.
This trademark expires on December 17, 2006.

     The Company does not expect that, in respect of their technology utilized
in our products, it or its suppliers will file any patent application for the
foreseeable future.

     The Company also relies on trade secrets and proprietary know-how with
respect to the products that it currently sells. The Company has been and will
continue to be, required to disclose its trade secrets and proprietary know-how
not only to certain employees and consultants, but also to contract
manufacturers. There can be no assurance that the Company's trade secrets and
proprietary know-how will not become known or be independently discovered by
competitors.

                                       20
<PAGE>


     The Company requires each of its technical employees and most of its
consultants to execute a confidentiality agreement upon the commencement of an
employment or a consulting relationship. These agreements generally provide that
all trade secret information will be kept confidential and not disclosed to
third parties except with the Company's consent.

PRODUCT LIABILITY

     The nature of the Company's business exposes the Company to potential
product liability risks that are inherent in the marketing and sale of medical
diagnostic products. Accordingly, the Company carries commercial general
liability insurance with a policy limit of two million dollars, limited to one
million dollars per occurrence. Although the Company carries product liability
insurance, there can be no assurance that claims exceeding the policy limits may
not be made, potentially causing a material adverse effect on the Company's
operations and/or financial position. To date, the Company has not experienced
materially adverse product liability claims.

EMPLOYEES

     As of December 31, 2001, the Company employed four full-time employees and
20 part-time employees on a regular basis. Management does not anticipate any
difficulty in locating and engaging employees to meet expansion plans, as
needed. To expand capabilities for larger assembly and packaging projects
temporarily, the Company also engages third-party employment agencies. The
Company currently engages five independent sales representatives, on a
commission basis, for specified product categories.

     The Company has no collective bargaining or similar agreement with its
employees, but does have an employment agreement with its President and Chief
Executive Officer. See Item 10. Executive Compensation.

RISK FACTORS

     Ownership of our common stock involves a high degree of risk. You should
consider carefully the factors set forth below, as well as other information
contained in this Annual Report.

RISKS RELATED TO OUR BUSINESS AND OUR MARKETPLACE

     We have a limited history as a provider of confidential diagnostic tests
for drugs of abuse and other medical conditions. We introduced our First Check
family of diagnostic tests at the American Association of Clinical Chemistry
annual convention in August of 1995. Commercial sales were first generated in
December of 1995. We were considered a development-stage enterprise prior to
1996. We received our FDA 510(k) OTC clearances between June and October of
2000. As a result, it is difficult to evaluate our business and prospects.

                                       21
<PAGE>


     We have never generated an annual profit. We cannot be certain that we can
generate a profit on a quarterly or annual basis. If we do not achieve
profitability, we cannot be certain that we can continue to operate as a going
concern. Although management believes that our business plan is now generating
revenues in an amount sufficient to generate "operational profitability," our
"overall profitability," and our cash flow, continued to be adversely affected
by certain historical items, e.g., obtaining 510(k) OTC clearance for certain of
our products from the FDA, settlement of the FDA's administrative complaint,
payment of certain sums to Costco Wholesale Corporation, and the PBM Note.

     We depend on sales of a limited number of products for our revenues.
Historically, we have generated substantially all of our net revenues from our
drugs of abuse tests. For our 2001 and 2000 fiscal years, our drugs of abuse
tests were responsible for approximately 82 percent and 87 percent,
respectively, of our net revenues, with the balance allocated between our
alcohol breath scan and colorectal screening tests. Commencing late in our 2000
fiscal year, we began to increase our marketing attention for our colorectal
screening test. As a result, that test was responsible for approximately 14
percent of our net revenues during the year ended December 31, 2001.

     Our revenues are generated from a limited number of customers; our customer
base is concentrated; and the loss of one or more of our customers could cause
our business to suffer. A substantial portion of our revenues has been, and is
expected to continue to be, generated from a limited number of customers with
large financial commitments. Two of our customers accounted for 75 percent and
74 percent of our sales for the years ended December 31, 2001 and 2000,
respectively. Two of our customers accounted for 87 percent and one customer
accounted for 86 percent of our accounts receivable balances at December 31,
2001, and 2000, respectively. No other customers of ours individually accounted
for 10 percent or more of our total revenues in 2001 and 2000 or our accounts
receivable balances at the end of such years. As a result, if a large contract
is canceled or deferred or an anticipated contract does not materialize, our
business would be harmed.

     We face substantial competition. Many of our competitors may have
advantages over us, including:

-    longer operating histories;

-    larger customer bases;

-    manufacturing capabilities;

-    substantially greater financial, technical, sales and marketing resources
     and infrastructure; and

-    greater name recognition.

If we fail to provide our customers with compelling business reasons to purchase
products from us, rather than from our competitors, some of who are also our
suppliers, our business and financial performance will suffer.

                                       22
<PAGE>


     We may need additional financing. Increases in our sales and the related
expansion of our production will require significant expenditures. In addition,
we will require significant funds to conclude the payment of our obligations to
the FDA and certain of our other creditors. If we are not able to generate such
capital thorough operating cash flow, we may seek to obtain such additional
funds through public or private equity or debt financings. Such financings may
result in dilution to current stockholders. There can be no assurance that such
additional financings, if required, can be obtained on terms acceptable to us,
if at all. If additional funds are not available, we may be required to curtail
significantly or to eliminate some or all of our marketing programs and expected
revenue growth. Currently, we have a limited receivable-based financing
arrangement, but no other established bank credit arrangements. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

     Our revenues and operating results may vary significantly from period to
period due to a number of factors. In future periods, our operating results may
be below the expectations of public market analysts, if any, and of our
investors, and the price of our common stock may fall. We believe that
period-to-period comparisons of our overall and operating results may not
provide an accurate indication of our future performance. Factors that could
cause periodic fluctuations include:

-    the timing and volume of orders for our products;

-    changes in our pricing policies or in our cost of goods;

-    the timing of releases of new products or pricing policies by competitors;
     and

-    the entry into the market of new competitors.

     We purchase the components for our products from outside vendors. Any
significant interruption in the availability of the components for our products,
or a significant increase in their cost, could harm our sales or adversely
affect our margins unless and until we can secure alternative sources. However,
management believes that each of the components utilized in our products will be
available from alternative sources on acceptable terms and conditions.

     We depend on our intellectual property, and litigation regarding our
intellectual property could harm our business. Unauthorized use or
misappropriation of our intellectual property could seriously harm our business.
Our major intellectual property consists of our trademarks, which are important
to the protection of our company and product names. These trademarks discourage
unauthorized use of our product names and provide us with a method to enforce
our rights in the event that an unauthorized use were to occur. However, third
parties may infringe upon our intellectual property rights, and we may be unable
to detect this unauthorized use or effectively enforce our rights. In addition,
any legal action that we may bring to protect our intellectual property rights
could be expensive and distract management from day-to-day operations of our
business.

                                       23
<PAGE>


     Claims by others that we infringe upon their intellectual property could
divert our resources, result in unexpected license fees, and harm our business.
We purchase all of the proprietary components of our products and have received
assurances from our suppliers that such components do not infringe any otherwise
unaffiliated third-party's intellectual property. Nevertheless, a third-party
claim that our current or future products or technology infringes their
proprietary rights could seriously harm our business and could distract our
management from the operation of our business even if the claim is invalid.
Furthermore, a judgment against us, even if we have indemnification claims
against our suppliers, could require us to pay substantial damages and could
also include an injunction or other court order that could prevent us from
selling our products. If we faced a claim relating to proprietary technology, we
might seek to license such technology, or develop our own, but we might not be
able to do so. Our failure to obtain the necessary licenses or other rights or
to develop non-infringing technology could prevent us from selling our products
and could seriously harm our business.

RISKS RELATED TO OWNING OUR STOCK

     We have received a "going concern" opinion from our auditor. Kelly & Co.,
in its independent auditors' report, has expressed "substantial doubt" as to our
ability to continue as a going concern. The going concern qualification is also
described in the notes to our Consolidated Financial Statements. We have
negative working capital, our current liabilities are approximately $1.3 million
larger than our current assets, and our total liabilities are approximately $1.8
million larger than our total assets. Since the change in management in the
first half of 2000, the Company initially focused on to solving the issues
raised in the FDA warning letter, negotiating term agreements with its
customers, and stabilizing the distribution network of its products. Further,
management attended to obtaining availability of term and revolving debt.
Finally, management attempted to increase the number of distributors and retail
channels that sold the Company's products. As a result of these efforts,
management believes that the stability of the Company's financial affairs and
the outlook for its business prospects has improved. However, the Company
currently does not have any material, additional sources of liquidity available,
whether from internal or external sources.

     Future sales of our common stock may depress our stock price. A significant
number of shares of our common stock are freely tradable. If any of our
stockholders sell substantial amounts of our common stock in the public market,
the market price of our common stock could fall. In addition, such sales could
create the perception in the public of difficulties or problems with our
software products and services. As a result, these sales also might make it more
difficult for us to sell equity or equity-related securities in the future at a
time and price that we deem appropriate.

     We do not intend to pay dividends; you will not receive funds without
selling shares. We have never declared or paid any cash dividends on our capital
stock and do not intend to pay dividends in the foreseeable future. We intend to
invest our future earnings, if any, to fund our growth. Therefore, you will not
receive any funds without selling your shares.

     Our management controls a substantial percentage of our common stock. Our
executive officers and directors beneficially own or control, directly or
indirectly, outstanding shares of common stock, which in the aggregate represent
approximately 21.7 percent of the outstanding shares of common stock, or 30.3

                                       24
<PAGE>

percent of shares outstanding if all currently vested warrants and options and
all presently convertible securities are exercised or converted. As a result, if
some of these persons or entities act together, they may have the ability to
control all matters submitted to our stockholders for approval, including the
election and removal of directors and the approval of any business combination.
This may delay or prevent an acquisition or cause the market price of our stock
to decline. Some of these persons or entities may have interests different than
yours. For example, they may be more interested in selling the Company to an
acquirer than other investors or may want us to pursue strategies that are
different from the wishes of other investors.

     Provisions in our charter documents and Delaware law may delay or prevent
an acquisition of the Company. Our charter documents contain provisions that
could make it harder for a third party to acquire us without the consent of our
board of directors. An acquirer would not be able to cumulate votes at a
meeting, which would require the acquirer to hold more shares to gain
representation on the board of directors than if cumulative voting were
permitted. In addition, Section 203 of the Delaware General Corporation Law
limits business combination transactions with 15 percent stockholders that have
not been approved by the board of directors. These provisions and other similar
provisions make it more difficult for a third party to acquire us without
negotiation. Furthermore, our board of directors could choose not to negotiate
with an acquirer that it did not feel was in our strategic interests. If the
acquirer were discouraged from offering to acquire us or prevented from
successfully completing a hostile acquisition by the anti-takeover measures, you
could lose the opportunity to sell your shares at a favorable price.

     Our common stock is quoted in the Pink Sheets and one of our market makers
has applied to quote our common stock on the OTC bulletin Board. For more than
the preceding two years, prices for our common stock have been quoted by market
makers in the Pink Sheets, which through its Electronic Quotation Service,
provides an Internet-based, real-time quotation service for OTC equities and
bonds for market makers and brokers. The Pink Sheets is separate and distinct
from the OTC Bulletin Board, the Nasdaq Stock Market, or any other stock
exchange. We are not required to meet or maintain any listing standards for our
common stock to be quoted in the Pink Sheets.

     On April 1, 2002, one of our market makers applied to NASD Regulation,
Inc., for permission to commence priced quotations of our common stock on the
OTC Bulletin Board. The OTC Bulletin Board is a regulated quotation service
operated by the National Association of Securities Dealers, Inc. ("NASD") that
displays real-time quotes, last sale prices, and volume information in
over-the-counter equity securities like our common stock. The OTC Bulletin Board
is also separate and distinct from the Nasdaq Stock Market or any other stock
exchange. We will not be required to meet or maintain any qualitative or
quantitative standards for our common stock to be quoted on the OTC Bulletin
Board.

     Our common stock does not presently meet the minimum listing standards for
listing on the Nasdaq Stock Market or any national securities exchange, which
could affect our stockholders' ability to access trading information about our
common stock.

     Our common stock is subject to penny stock rules, which may make it more
difficult for our stockholders to sell their common stock. Broker-dealer
practices in connection with transactions in "penny stocks" are regulated by

                                       25
<PAGE>

certain penny stock rules adopted by the Securities and Exchange Commission.
Penny stocks generally are equity securities with a price of less than $5.00 per
share. The penny stock rules require a broker-dealer, prior to a purchase or
sale of a penny stock not otherwise exempt from the rules, to deliver to the
customer a standardized risk disclosure document that provides information about
penny stocks and the risks in the penny stock market. The broker-dealer also
must provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction, and monthly account statements showing the market value of each
penny stock held in the customer's account. In addition, the penny stock rules
generally require that prior to a transaction in a penny stock the broker-dealer
make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to
the transaction. These disclosure requirements may have the effect of reducing
the level of trading activity in the secondary market for a stock that becomes
subject to the penny stock rules.

ITEM 2. DESCRIPTION OF PROPERTY

FACILITIES

     We lease approximately 10,000 square feet of space at 13 Spectrum Pointe
Drive, Lake Forest, California 92630, where we maintain our offices and
production operations. The five-year lease of these facilities expires October
15, 2005, and provides for a monthly rental of approximately $10,500 per month,
including common expenses. We sublease approximately 388 square feet under three
short-term agreements for a total of approximately $900 per month, of which one
subtenant is Cyber Marketing, who made rental payments during the year ended
December 31, 2001, in the amount of $5,400. See Item 12. Certain Relationships
and Related Transactions -- Cyber Marketing Concepts, Inc. / James G. Barrons.
During our 2001 fiscal year, Spectrum's operations were also conducted from our
facility under a separate sublease. The Company believes these facilities are
adequate to accommodate its requirements for the foreseeable future.

     We do not own any real property.

                                       26
<PAGE>


ITEM 3. LEGAL PROCEEDINGS

     On February 2, 2001, the Company, H. Thad Morris, Patti A. Evanoff, and
Daniel G. McGuire were named in an administrative complaint, styled In the
Matter of Worldwide Medical Corporation, a corporation, and Daniel G. McGuire,
H. Thad Morris, and Patti A. Evanoff, individuals, by the FDA, FDA Docket Number
01-H-0065. The FDA alleged that the Company, Mr. Morris, Ms. Evanoff, and Mr.
McGuire committed 138, 82, 56, and 30 violations, respectively, of 21 U.S.C.
Section 331(a) of the Federal Food Drug and Cosmetic Act. The allegations relate
to First Check test products that the Company shipped prior to receipt of 510(k)
clearances from the FDA. The FDA sought to assess civil penalties of $15
thousand per alleged violation against the respondents. The Company responded on
behalf of Ms. Evanoff, Mr. McGuire, and itself, and defended such parties
vigorously. In April of 2002, the terms of the final draft of the Settlement
Agreement of all allegations set forth in the administrative complaint were
approved by all parties. As of the date of this Annual Report, such agreement is
in the process of being executed by all parties. None of the parties admitted
liability or that any violations had occurred; however, as a matter of
settlement only, the Company agreed to tender the sum of $150 thousand to the
FDA on the following schedule:

-    $50 thousand on or before 45 days after the filing of the Settlement
     Agreement with the Dockets Clerk of the FDA, which payment date is expected
     to be in May of 2002;

-    $50 thousand on or before the first anniversary of the filing of the
     Settlement Agreement with the Dockets Clerk of the FDA, which payment date
     is expected to be in April of 2003; and

-    $50 thousand on or before the first anniversary of the filing of the
     Settlement Agreement with the Dockets Clerk of the FDA, which payment date
     is expected to be in April of 2004.

     Also, as a matter of settlement only, Mr. Morris agreed to tender the sum
of $100 thousand to the FDA on the following schedule, which payments the
Company has guaranteed:

-    $20 thousand on or before the first anniversary of the filing of the
     Settlement Agreement with the Dockets Clerk of the FDA, which payment date
     is expected to be in April of 2004; and

-    $80 thousand on or before the first anniversary of the filing of the
     Settlement Agreement with the Dockets Clerk of the FDA, which payment date
     is expected to be in April of 2005.

     With the exception of the Company's initial payment, interest, on all
unpaid payments of the Company and Mr. Morris, accrues at the rate equal to the
weekly average one-year constant maturity treasury yield for the first calendar
week preceding the date of the filing of the Settlement Agreement with the
Dockets Clerk of the FDA. In the event that a payment is not timely made, the
interest rate thereon doubles. The FDA has retained jurisdiction and would
deduct any paid amounts from the amount it would be seeking if it were to decide

                                       27
<PAGE>

to proceed with its administrative complaint. Neither Mr. McGuire nor Ms.
Evanoff is obligated to tender any payments under the Settlement Agreement. Upon
the FDA's receipt of all payments described above, the FDA will dismiss the
administrative complaint with prejudice in its entirety against all respondents
and will vacate the "Initial Decisions and Order of Default and Imposition of
Civil Money Penalties Upon Respondent H. Thad Morris," which decision and order
became final on April 26, 2001.

     On August 2, 2000, the Company was named in an action, styled Vivian
Younger, an individual, vs. Worldwide Medical Corporation, a California
corporation, and Does 1 through 20, Orange County Superior Court, Case Number
00CC09177. Plaintiff alleged that she was wrongfully terminated as the Company's
chief financial officer in August of 1999. Plaintiff has requested monetary
damages, costs, and such other relief as the Court deems just and proper. The
Company believes that the allegations are without merit, has filed a responsive
pleading, and intends to defend itself vigorously. The parties have settled the
litigation and plaintiff will receive $184 thousand in cash and stock.

     On September 4, 2001, the Company was named in an action, styled Michael W.
and Penny D. Niccole, Trustees of the Niccole Family Trust, Dated 11/13/95 vs.
Worldwide Medical Corporation, a California corporation; and Does 1-25,
inclusive, Orange County Superior Court, Case Number 01CC11335. Plaintiffs
allege that the Company breached its contract in its sale of shares of its
common stock to Plaintiffs or that the Company misrepresented the tradability of
such shares. Plaintiffs have requested "monetary damages in an amount to be
proven at trial, together with interest thereon at the rate of 10 percent per
annum according to proof at trial," punitive and exemplary damages, reasonable
costs and attorneys' fees, and such other relief as the Court deems just and
proper. The Company believes that the allegations are without merit. The parties
have settled the litigation and plaintiffs will receive an aggregate of $35
thousand is cash for their claims.

     On November 29, 2001, the Company was named in an action, styled
Interactive Business Channel, Inc. vs. Worldwide Medical Corporation; and Does
1-50, inclusive, Orange County Superior Court, Case Number 01CC15277.
Plaintiff's complaint is for breach of contract, account stated, open book
account, and unjust enrichment. Plaintiffs allege that the Company breached its
contract for promotional services and has failed to pay an indebtedness of $60
thousand, together with interest. Plaintiffs have requested compensatory and
consequential damages "in a sum to be established according to proof"; the
principal sum of $60 thousand and attorneys' fees; the "reasonable value of
services rendered in the minimum sum of $60 thousand with the precise amount to
be established according to proof at the time of trial"; a decree compelling the
Company to disgorge "ill-gotten gains"; reasonable attorneys' fees and costs of
suit, interest at the maximum permitted rate and such other relief as the Court
deems just and proper. The Company believes that the allegations are without
merit. The parties have settled the litigation and plaintiff will receive an
aggregate of $55 thousand in cash for its claims.

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

     No matters were submitted to a vote of the Company's security holders
during the fourth quarter of our fiscal year ended December 31, 2001.

                                       28
<PAGE>


                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Price Range of Common Stock and Dividend Policy.

     The Company's Common Stock is quoted on the Pink Sheets under the symbol
"WMED." The following table indicates quarterly high and low bid price per share
of the Common Stock. These prices represent quotations among dealers without
adjustments for retail mark-ups, markdowns or commissions, and may not represent
actual transactions.

                                      HIGH     LOW
                                     -------  -----
FISCAL YEAR ENDED DECEMBER 31, 2000
-----------------------------------

First Quarter . . . . . . . . . . .  $1.4375  $0.68
Second Quarter. . . . . . . . . . .  $  0.68  $0.25
Third Quarter . . . . . . . . . . .  $ 0.375  $0.24
Fourth Quarter. . . . . . . . . . .  $  0.45  $0.18

FISCAL YEAR ENDED DECEMBER 31, 2001
-----------------------------------

First Quarter . . . . . . . . . . .  $  0.41  $0.18
Second Quarter. . . . . . . . . . .  $  0.60  $0.28
Third Quarter . . . . . . . . . . .  $  0.76  $0.76
Fourth Quarter. . . . . . . . . . .  $  0.81  $0.23


     The closing price of the Company's Common Stock as of April 3, 2002, was
$0.40. At April 3, 2002, the Company had approximately 236 stockholders of
record of its Common Stock.

     To date, the Company has not declared or paid any dividends. Payment of
dividends, if any, on our Common Stock, is dependent upon the amounts of future
after-tax earnings, if any, of the Company and is subject to the discretion of
our Board of Directors. The Board of Directors is not legally obligated to
declare dividends, even if the Company is profitable. The Company intends to
employ all available funds to finance the growth of its business and,
accordingly, does not intend to declare or pay any dividends in the foreseeable
future.

Recent Sales of Unregistered Securities.

     In May 2001 we granted to Dr. Kang warrants to purchase an aggregate of
656,000 shares of our common stock at exercise prices ranging from $.20 per
share to $.40 per share. In December of 2001, Dr. Kang exercised a warrant to
purchase 164,000 shares of our common stock granted to him in connection with
the PBM Agreements. The exercise price of the warrants was $0.20 per share, or
an aggregate $32 thousand. Exemption from registration for such transaction is
claimed under Section 4(2) of the Securities Act.

                                       29
<PAGE>


     In October of 2001, we certificated the July and August sale and issuance
of 597,244 shares of our restricted common stock to 30 persons in connection
with the exercise of warrants granted to them concurrently with their purchase
of our debentures in 2000. The aggregate exercise price of the warrants was
approximately $200 thousand, or $0.20 per share. Exemption from registration for
each such transaction is claimed under Section 4(2) of the Securities Act.

     In September of 2001, we granted a warrant to purchase 100,000 shares of
our common stock at a exercise price of $.20 per share to Citadel Capital
Management Corporation ("Citadel"), in connection with their accepting our
promissory note in the amount of $250 thousand. The exercise price of the
warrants was $.20 per share. In October of 2001, Citadel exercised such warrant
through an offset of $20 thousand of our promissory obligations to them.
Exemption from registration for such transaction is claimed under Section 4(2)
of the Securities Act.

     In October of 2001, we privately issued and sold an aggregate of 129,613
shares of our common stock to two individuals for $.20 a share or an aggregate
of $25,922.60. Exemption from registration for each such transaction is claimed
under Section 4(2) of the Securities Act.

     In March of 2002, we privately sold two and a half units of our securities,
each unit consists of an aggregate of 12,500 shares of our common stock and one
or more convertible debentures in the aggregate principal amount of $25
thousand, convertible into an aggregate of 50,000 shares of the Company's common
stock. The initial term of each debenture is six months, subject to an extension
of six months, at an annual interest rate of 10 percent. The conversion ratio
for each debenture is initially set at $0.50 per share. Exemption from
registration for each such transaction is claimed under Rule 504 under
Regulation D of the Securities Act.

     In March of 2002, we privately sold one unit of our securities; such unit
consists of an aggregate of 250 thousand shares of our common stock and one
convertible debenture in the principal amount of $250 thousand, convertible into
an aggregate of 500,000 shares of the Company's common stock. The initial term
of the debenture is six months, subject to an extension of six months, at an
annual interest rate of 10 percent. The conversion ratio for the debenture is
initially set at $0.50 per share. Exemption from registration for such
transaction is claimed under Rule 504 under Regulation D of the Securities Act.

2001 Stock Plan.

     The Company's 2001 Stock Plan (the "2001 Plan") permits the Company to
grant options to purchase our common stock and to grant shares of our common
stock with restrictions. The aggregate number of common stock underlying the
options granted and the common stock otherwise subject to grant shall not exceed
500,000. Incentive stock options may be granted to employees at 100 percent of
the fair value of the Company's common stock at the date of grant; nonqualified
stock options may e granted at a value determined by the our Board of Directors
at the grant date and shares of our common stock with restrictions may be
granted at a value determined by our Board of Directors at the grant date.
However, incentive stock options granted to the employees owning more than 10
percent of all classes of stock of the Company at the grant date are to be
priced at no less than 110 percent of the fair market value of the Company's
common stock. All options granted have a maximum term of 10 years, except

                                       30
<PAGE>

incentive stock options granted to employees owning more than 10 percent of all
classes of stock of the Company at the grant date have maximum term of five
years. All options are subject to a 36-month vesting schedule, whereby one-third
(1/3) of such options vest 12 months after grant, one-third (1/3) vest at 24
months after grant, and one-third (1/3) vest 36 months after grant, subject to
acceleration upon sale of the Company. Such vesting is subject to continued
employment with the Company. The grant of shares of our common stock with
restrictions is subject to a 36-month schedule whereby restrictions in respect
of one-third (1/3) of such shares shall lapse 12 months after grant, one-third
(1/3) of such restrictions shall lapse 24 months after grant and one-third (1/3)
of such restrictions shall lapse 36 months are grant. No options or stock
purchase rights have been granted as of April 3, 2002.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The following discussion should be read in conjunction with our
Consolidated Financial Statements and related notes and the other financial
information included elsewhere in this Annual Report.

A NOTE ABOUT FORWARD-LOOKING STATEMENTS

     The statements, other than statements of historical fact, included in this
Annual Report are forward-looking statements. Forward-looking statements
generally can be identified by the use of forward-looking terminology such as
"may," "will," "expect," "intend," "estimate," "anticipate," "plan," "seek," or
"believe." We believe that the expectations reflected in such forward-looking
statements are accurate. However, we cannot assure you that such expectations
will occur. Our actual future performance could differ materially from such
statements. You should not unduly rely on these forward-looking statements,
which speak only as of the date of this Annual Report. Except as required by
law, we are not obligated to release publicly any revisions to these
forward-looking statements to reflect events or circumstances occurring after
the date of this Annual Report or to reflect the occurrence of unanticipated
events.

     Certain information contained in this Management's Discussion and Analysis
of Financial Condition and Results of Operations includes forward-looking
statements (as defined in Section 27A of the Securities Act and Section 21E of
the Exchange Act) that reflect the Company's current views with respect to
future events and financial performance. Certain factors such as competitive
pressures, regulatory issues, changes in customer mix, changes in our suppliers'
pricing and distribution policies, changes in U.S. Government policies, customer
insolvencies, or the loss of one or more key customer or supplier relationships
could cause actual results to differ materially from those in forward-looking
statements.

RESULTS OF OPERATIONS

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

     The following discussion sets forth our historical results of operations
and financial condition for the years ended December 31, 2001 and 2000. The
information contained in following table has been derived for the periods
indicated from our Consolidated Financial Statements that have been examined by
Kelly & Co., independent accountants.

                                       31
<PAGE>

                                                    YEAR ENDED DECEMBER 31,
                                                    2001              2000
                                               ---------------------------------
                                                         (As Restated)
                                               $(000S)     %     $(000S)     %
------------------------------------------------------  -------  -------  ------

GROSS SALES
  Gross Sales . . . . . . . . . . . . . . . . . 3,510    100.0    2,528   100.0
  Discount, Returns and Allowances. . . . . . .  (659)   (18.8)    (256)  (10.1)
                                               -------  -------  -------  ------
    Net Sales . . . . . . . . . . . . . . . . . 2,851     81.5    2,272    89.9
                                               -------  -------  -------  ------
COST OF SALES . . . . . . . . . . . . . . . . . 1,317     37.5      535    21.2
                                               -------  -------  -------  ------
GROSS PROFIT. . . . . . . . . . . . . . . . . . 1,534     43.7    1,737    68.7
                                               -------  -------  -------  ------

OPERATING EXPENSES
  Selling . . . . . . . . . . . . . . . . . . .   927     26.4      800    31.6
  General and Administrative. . . . . . . . . .   554     15.8      723    28.6
  Professional Fees . . . . . . . . . . . . . .   500     14.3      361    14.3
  Bad Debt Expense. . . . . . . . . . . . . . .    22      0.6      118     4.7
  Depreciation. . . . . . . . . . . . . . . . .    68      1.9       45     1.8
  Settlement Expenses . . . . . . . . . . . . .   518     14.8      505    20.0
  Settlement Expense - related party. . . . . .   157      4.5       --
                                               -------  -------  -------  ------
  Beneficial Conversion Expense . . . . . . . .    --       --      206     8.1
                                               -------  -------  -------  ------
  Total Operating Expenses. . . . . . . . . . . 2,746     78.3    2,757   109.1
                                               -------  -------  -------  ------

(LOSS) FROM OPERATIONS. . . . . . . . . . . . .(1,212)   (31.4)  (1,020)  (40.3)
                                               -------  -------  -------  ------
  Interest Expense. . . . . . . . . . . . . . .   (79)    (2.3)    (131)
  Interest Expense - related parties. . . . . .   (51)    (1.5)      (3)   (0.1)
  Equity in Losses of Spectrum Analytics, Inc..  (236)    (6.7)      --      --
  Provision for Income Tax. . . . . . . . . . .    (1)      (0)      (1)     (0)
  Extraordinary Gain on Settlement of Debt, . .    68      1.9       46     1.8
                                               -------  -------  -------  ------
    Net (Loss). . . . . . . . . . . . . . . . .(1,511)   (43.1)  (1,109)  (43.9)
                                               =======  =======  =======  ======

Gross Sales

     In July of 1999, we received a warning letter from the FDA with respect to
the consumer versions of our drugs of abuse tests, and, as a result, we chose
not to pursue additional distribution channels for our consumer products and
ceased all advertising for them. Orders from our consumer-oriented customers did
not begin to recover until we received the 510(k) OTC clearances those tests
from the FDA in July and October of 2000. Management believes that, during the
second half of our 1999 fiscal year (upon our receipt of the FDA warning letter)
and the first half of our 2000 fiscal year, certain of our customers minimized
their sales efforts for our drugs of abuse products, others reduced the amount
and frequency of their reorders or completely stopped reordering those products,
and certain others returned their inventory for partial or full credit.
Accordingly, management believes that a comparison of our 2001 to our 2000
fiscal years is not useful for an understanding of our business and its
operation, unless the effect of the FDA warning letter is taken into account.

                                       32
<PAGE>


     Our gross sales increased by 39 percent from $2.5 million in our 2000
fiscal year to $3.5 million in our 2001 fiscal year. Our net sales increased by
27 percent from 2.2 million in our 2000 fiscal year to 2.8 million in our 2001
fiscal year. Management believes that the main cause of the increase in sales is
a resumption of normal, recurring sales and promotional activity for our drugs
of abuse tests following our receipt of 510(k) OTC clearances from the FDA, as
well as the acquisition of new retail customers for our drugs of abuse tests and
the increased number of retail outlets distributing our Colorectal screening
tests.

     Management believes that the percentage increase in our gross sales in our
2001 fiscal year was greater than the percentage increase in our net sales
primarily because we offered an increase in discounts, returns, and allowances,
as follows:

-    $70 thousand (representing 2% of our gross sales) of discounts provided to
     our customers in accordance with our standard payment terms: We provide our
     customers early payment discounts on each invoice, which discount policy
     management believes is equivalent to the early payment discounts provided
     by substantially all other vendors who supply products through the same
     distribution channels that we use.

-    $116 thousand (representing 3.3% of our gross sales) of defective or
     damaged products:

Certain of our products, as received by our retailers, or their customers, have
minor packaging defects or may be slightly damaged. Substantially of such
products are returned to us through industry-standard, third party collection
centers. Our returned goods policy, which management believes is equivalent to
the policies of substantially all other vendors who supply products through the
distribution channels that we use, permits our retailers to return such
defective or damaged products for credit.

-    $263 thousand (representing 7.4% of our gross sales) of FDA-related
     voluntary returns:

In connection with our negotiations with the FDA to obtain 510(k) OTC
clearances, we agreed to provide a mechanism for our customers to obtain
confirmatory tests of the results indicated by our Drugs of Abuse tests.
Inclusion of confirmatory test materials required that we repackage all of our
Drugs of Abuse tests. We and the FDA agreed upon a reasonable schedule for the
introduction of "new packaged" products. To comply with our agreement with FDA,
we authorized our retailers to return the "old packaged" products to us for
credit. $205 thousand of this sum reflects the product returned by our customers
directly to us. $58 thousand of this sum reflects the product returned by our
customers through industry-standard, third party collection centers and
forwarded to us.

-    $130 thousand of FDA-related (representing 3.7% of our gross sales)
     reductions in invoices:

This sum reflects additional cash discounts provided to certain of our
customers, in lieu of providing to them credit for FDA-related voluntary returns
of products.

-    $73 thousand (representing 2.1% of our gross sales) of discounts for
     broadening the market for our products:

This sum represents incremental discounts that we granted to acquire new retail
customers for our drugs of abuse tests and an increased number of retail outlets
distributing our Colorectal screening tests.

     By way of comparison, the $256 thousand of discounts, returns, and
allowances that comprise the difference between our gross sales and our net
sales for our 2000 fiscal year are comprised of the following:

-    $50 thousand (representing 2% of our gross sales) of discounts provided to
     our customers in accordance with our standard payment terms.

-    $124 thousand (representing 4.9% of our gross sales) of defective or
     damaged products.

-    $82 thousand of FDA-related (representing 3.1% of our gross sales)
     reductions in invoices.

                                             Gross Sales by Product $(000S)
                                                      December 31,
                                                     --------------
                                                       2001    2000
                                                     ------  ------

Drugs of Abuse Tests - FDA 510(k), Professional Use  $   88  $   39
Drugs of Abuse Tests - FDA 510(k) OTC . . . . . . .   2,778   2,303
Alcohol Tests . . . . . . . . . . . . . . . . . . .     106      97
Colorectal Tests. . . . . . . . . . . . . . . . . .     496      89
Cholesterol Tests . . . . . . . . . . . . . . . . .      42       0
                                                     ------  ------
  Total . . . . . . . . . . . . . . . . . . . . . .  $3,510  $2,528
                                                     ======  ======

Gross Profit

     Our gross profit decreased from $1.7 million in our 2000 fiscal year to
$1.5 million in our 2001 fiscal year. During our 2001 fiscal year, our gross
profit margin was 43.7 percent, as compared to 68.7 percent in our 2000 fiscal
year. Management believes the primary reason for the decrease in gross profit
margin was a temporary reduction in cost of goods sold in our 2000 fiscal year,
which was indirectly related to the FDA warning letter. Certain of our retail
customers returned our drugs of abuse tests for partial credit in response to
the FDA warning letter, which tests we were able to repackage and resell in our
2000 fiscal year at a cost less than our standard cost. Further, one of our
major customers was selling our drugs of abuse tests on consignment in our 2000
fiscal year. For all of our 2001 fiscal year, our sales were in accordance with
standard terms and conditions.

Selling Expenses, Including Sales Commissions to a Related Party

     Our selling expenses, including sales commissions to a related party
increased by $127 thousand from $800 thousand in our 2000 fiscal year to $927
thousand in our 2001 fiscal year. Management believes the increase is primarily

                                       33
<PAGE>


attributable to: (i) an increase of $60 thousand in laboratory confirmation
costs (attributable to new FDA guidelines that require us to make confirmatory
tests available to our consumers at no additional cost to them), and (ii) an
increase of $67 thousand in promotional expenses. Our sales commissions to a
related party increased by $27 thousand from $223 thousand in our 2000 fiscal
year to $250 thousand in our 2001 fiscal year. The commissions increased in
proportion to our sales increases, subject to a decrease in the commission rate
payable. See also Item 12. Certain Relationships and Related Transactions
--Worldwide Sales Management Corporation and TKR Investments, Inc. / Daniel G.
McGuire and Thomas K. Ramstead.

General, and Administrative Expenses

     Our general, and administrative expenses decreased $169 thousand from $723
thousand in our 2000 fiscal year to $554 thousand in our 2001 fiscal year.
Management believes the decrease is primarily attributable to: (i) a decrease of
$96 thousand of salaries and payroll expenses, (ii) a decrease of $24 thousand
resulting from the impairment of intangible assets; (iii) a decrease of $32
thousand in Spectrum expenses related to its pre-organization; (iv) a decrease
in rent expense of $22 thousand attributable to the allocation of a portion of
the rent expense to Spectrum; and (v) a decrease of $33 thousand in various
expenses, partially offset by an increase of $32 thousand in travel and related
miscellaneous expenses.

Professional Fees

     Our professional fees increased by $139 thousand from $361 thousand in our
2000 fiscal year to $500 thousand in our 2001 fiscal year. The increase is
directly attributable to expenses incurred in connection with our recent
registration of our common stock under Section 12(g) of the Securities Exchange
Act of 1934, as amended, which resulted in our becoming a "fully reporting
company." Related legal expenses incurred by us were $159 thousand and
consulting expenses were $72 thousand. Our expenditures for FDA-related legal
expenses decreased by $43 thousand in our 2001 fiscal year.

Bad Debt Expense

     Our bad debt expense decreased by $96 thousand dollars from $118 thousand
in our 2000 fiscal year to $22 thousand in our 2001 fiscal year. Following our
change of management in early 2000, we adopted a policy to reduce uncollectible
receivables by reducing our sales to non-consumer oriented retailers.
Accordingly, management has not provided for a reserve for uncollectible
receivables on our balance sheet.

                                       34
<PAGE>


Settlement Expenses

     Our settlement expenses increased by $170 thousand from $505 thousand in
our 2000 fiscal year to $675 thousand in our 2001 fiscal year. The primary
component of our 2000 fiscal year settlements was our settlement with Costco
Wholesale Corporation ($400 thousand) that related to their return of our drugs
of abuse tests following receipt of the FDA warning letter. The primary
components of 2001 fiscal year settlements were our settlements with Vivian
Younger ($184 thousand, in a combination of cash [$76 thousand] and shares of
our common stock [valued $108 thousand]), PBM ($157 thousand non cash charge, as
a result of certain warrants granted to Dr. Kang in connection with the PBM
Agreement), and the FDA ($250 thousand, 60 percent of which is to be paid by us
and 40 percent of which is to be paid by Mr. Morris, but has been guaranteed by
us). See Legal Proceedings. See also Note 12 to the Consolidated Financial
Statements for further description of these claims.

Equity in Losses of Spectrum Analytics, Inc.

     Until April 2, 2002, 50 percent of Spectrum's equity was owned by the
Company and 50 percent was owned by Drs. Rojas and Moretti. Effective that date,
the Company purchased the equity owned by Drs. Rojas and Moretti. During the
year ended December 31, 2001, the Company allocated $85 thousand in expenses to
Spectrum, consisting of salary, rent, utilities, and other operating costs,
advanced $171 thousand to Spectrum and its vendors, and paid $30 thousand to
Spectrum for confirmatory tests performed for the benefit of purchasers of the
Company's Drugs of Abuse tests. The net financial impact to the Company for all
of such activities was a net investment of $236 thousand in Spectrum.

Interest Expense

     Our aggregate interest expense, including the beneficial conversion feature
of convertible debentures that we issued in 2000 and the amortization of the
value ascribed to warrants issued in connection with the convertible debentures,
decreased by $205 thousand. Such debentures were converted during 2000 into
3,195,177 shares of our common stock. The primary components of our interest
expense included $79 thousand to Camel and other parties for operating interest
and $51 thousand of non-cash expense to PBM in connection with PBM Note. See
Note 6 to the Consolidated Financial Statements.

Discussions of Certain Events

     Management believes that the presentation of our operating results, as set
forth above, requires a brief discussion of certain events that occurred during
our 2001 fiscal year for a meaningful analysis of the results of our operations
for that year. During our 2000 fiscal year, management continued the efforts
that it commenced when it took office in the first half of our 2000 fiscal year.
These efforts included defending and settling certain litigation arising from
events that occurred in our 1999 fiscal year or earlier, addressing regulatory
issues with the FDA and the impact on our business therefrom, and registering
our common stock with the Securities and Exchange Commission in preparation for
commencement of its quotation on the OTC Bulletin Board.

     The impact on our Statement of Operations generated by the settlement of
litigation during our 2001 fiscal year was $675 thousand. Included in that
figure is $76 thousand of cash to be paid during the next fourteen months to one

                                       35
<PAGE>


of our former executive officers. Also included in that figure is $108 thousand
of non-cash expense, related to shares of our common stock. The remaining $73
thousand represents cash settlements for two other pre-2000 fiscal year
disputes. Further, our Statement of Operations provides for $157 thousand of
settlement expense to a related party, such sum represents a non-cash item
generated by the PBM Agreements, and we had a related interest charge of $51
thousand of non-cash expense to PBM in connection with the PBM Note. Management
believes that the financial exposure faced by the Company was mitigated through
each of these settlements.

     We settled the administrative complaint brought by the FDA, which action
was commenced shortly after we received our 510(k) OTC clearances from the FDA
for our Drugs of Abuse tests. The FDA process commenced with our receipt of
warning letters in July of 1999. It was, and remains, management's belief that
we were in full compliance with the then current laws and administrative
regulations. The effect of the FDA's warning letters on our business and our
ability to collect our accounts receivable and increase our sales was material.
As discussed elsewhere in this Annual Report, we were unable to conduct our
business in accordance with our business plan. The effects of the FDA issues in
our 2001 fiscal year were as follows: (i) we entered into a Settlement Agreement
that provided for cash payments by us in the amount of $150 thousand and a
Guaranty by us of Mr. Morris' cash payments in the additional amount of $100
thousand; (ii) we incurred $89 thousand in legal fees directly attributable to
defending and settling the issues raised in the FDA administrative complaint,
(iii) we authorized the return and the destruction of $263 thousand of our drugs
of abuse tests, and (iv) we paid an aggregate of $40 thousand more in
commissions on certain sales of our Drugs of Abuse tests -- we paid commissions
at our 1999 commission rate rather than at our 2001 commission rate because the
Drugs of Abuse tests that were the subject of the commissions had been shipped
to a major customer of ours in our 1999 fiscal year; however, as a direct result
of the FDA's June 1999 warning letter, the customer modified our payment terms
to a consignment sale payment. Certain of the Drugs of Abuse tests that we had
shipped to it during our 1999 fiscal year were not sold until our 2000 fiscal
year and we did not reach an agreement on the commission rate until our 2001
fiscal year.


     We registered our common stock under Section 12(g) of the Securities
Exchange Act of 1934, as amended. This registration was a prerequisite to the
commencement of our market-makers quoting bid and asked prices for our common
stock on the OTC Bulletin Board. We incurred $219 thousand in legal, accounting,
consulting, and printing fees in that endeavor. On April 1, 2002, Equitrade
Securities filed a Form 211 with NASD Regulation, Inc. Once the Form has been
approved, as to which approval we can give no assurance, our common stock will
no longer be quoted on the Pink Sheets and will commence to be quoted on the OTC
Bulletin Board.

LIQUIDITY AND CAPITAL RESOURCES

     To date, we have financed our activities principally through cash flow from
operations, debt financing and equity issuances, and advances from related
parties. Our auditor's report for our 2000 and 2001 fiscal years contains a
"going concern" opinion. We have negative working capital, our current
liabilities are approximately $1.3 million larger than our current assets, and
our total liabilities are approximately $1.8 million larger than our total
assets. Since the change in management in the first half of 2000, the Company
initially focused on solving the issues raised in the FDA warning letter,
negotiating term agreements with its customers, and stabilizing the distribution
network of its products. Further, management attended to obtaining availability
of term and revolving debt, as discussed below. Finally, management attempted to
increase the number of distributors and retail channels that sold the Company's
products. As a result of these efforts, management believes that the stability
of the Company's financial affairs and the outlook for its business prospects
have improved during the preceding two years. However, the Company currently
does not have any material, additional sources of liquidity available, whether
from internal or external sources.

                                       36
<PAGE>


     In July of 2000, we entered into a line of credit agreement with Citadel
and Larry Osaki. The agreement provided us with a line of credit in an amount up
to $250 thousand. In September of 2001, and in substitution therefor, we also
executed our $250 thousand promissory note in favor of Citadel Capital
Management Group, the name Citadel adopted in April of 2001. Interest accrues on
the promissory note at the rate of 10 percent simple interest per annum and we
may prepay any or all of the obligation without penalty. In September of 2001,
we granted a warrant to purchase 100,000 shares of our common stock at a
exercise price of $.20 per share to Citadel in connection with their accepting
our promissory note in the amount of $250 thousand. The exercise price of the
warrants was $.20 per share. In October of 2001, Citadel exercised such warrant
through an offset of $20 thousand of our promissory obligations to them. As of
the date of this Annual Report, we owe Citadel approximately $330 thousand
pursuant to the terms of the note and a consensual $80 thousand over-advance,
without penalty. See Item 12. Certain Relationships and Related Transactions --
Citadel Capital Management Corporation; New World Capital Markets, Inc. / G.
Wendell Birkhofer.

     On February 20, 2001, we entered into a Loan and Security Agreement with
Camel Financial, Inc. ("Camel"), and a Subordination Agreement with Citadel and
Camel. The Loan and Security Agreement initially provided us with up to $250
thousand of advances against our available accounts receivable. During our 2001
fiscal year, Camel verbally amended the Loan and Security Agreement to increase
our line of credit to $275 thousand. The Loan and Security Agreement expired on
March 1, 2002, subject to automatic annual renewals, unless otherwise terminated
in writing by either Camel or us not later than 30 days prior to the end of an
annual term. For outstanding balances under $100 thousand, interest accrues at
the rate of three percent per month; for outstanding balances in excess of $100
thousand, interest accrues at the rate of two and one-half percent per month; in
no event shall the monthly interest be less than $2,500. The interest rate is
subject to change by an amount equivalent to a change in the prime rate, as
published in the Wall Street Journal. As of December 31, 2001, the interest rate
was two and one-quarter percent per month and our outstanding balance due to
Camel was $274 thousand. Our eligible domestic accounts receivable balance as of
such date was $204 thousand; accordingly, we were consensually over-advanced by
$71 thousand, which resulted in an interest surcharge of 1/30 of one percent per
day for each day of such advance. As of the date of this Annual Report, we are
in compliance with the advance schedule. In connection with the Loan and
Security Agreement, Camel, Citadel, and we executed a Subordination Agreement,
on February 20, 2001, pursuant to which Citadel subordinated its first position
security interest in our assets to Camel.

     As of December 31, 2001, we had cash and cash equivalents of $1,500 and
negative working capital of $1.3 million.

     Cash used by operating activities for the year ended December 31, 2001,
amounted to $397 thousand. Cash used in investing activities for the year ended
December 31, 2001, amounted to $254 thousand and consisted of $17 thousand used
to purchase equipment and $237 thousand invested in and advanced to Spectrum.
Cash provided by financing activities for the year ended December 31, 2001,
amounted to $637 thousand and consisted primarily of issuances of notes payable,
net of repayments.

                                       37
<PAGE>


     We have sustained significant losses during our 2001 and 2000 fiscal years,
have experienced negative cash flows from operations since inception, have had
difficulties generating sufficient cash flow to meet obligations and sustain our
operations, and have a stockholders' capital deficiency that raises substantial
doubt about our ability to continue as a going concern. Our ability to meet our
obligations in the ordinary course of business is dependent upon our ability to
raise additional financing through public or private equity or debt financings
and to operate profitably. While management believes that such funding will be
available, the ability to obtain and the adequacy of such funding, if any, are
uncertain. Further, the terms of our May 2001 debt settlement with PBM restrict
our ability to borrow from banks or other institutional lenders, as PBM is not
obligated to subordinate its priority to such lenders for our obligations in
excess of $300 thousand.

     The Company's plan for its 2002 fiscal year includes an increased level of
sales, both to our current customers and to certain additional, similarly
situated customers. Management believes that the Company's relations with its
current customers, and the results of management's meaningful discussions with
various additional potential customers, warrants that level of optimism. Of
course, no assurance can be provided that such additional sales will occur, that
they will provide sufficient margins to provide positive cash flow, or that the
Company will be able to afford to produce and ship that increased level of our
products. The Company also believes that the sales and debt trends established
by current management subsequent to the receipt of the 510(k) OTC clearances
from the FDA will provide the Company with the flexibility to reduce the current
level of its debt or to re-finance such debt on terms that are more favorable to
the Company, such as an increased level of credit availability and lower costs.
No assurance can be provided that the Company's lenders will agree with
management on the Company's potential prospects or that the lenders will provide
such expanded financial availability. As discussed above, if we are unable to
increase our levels of equity or debt and to operate profitably, we will face
difficulties in continuing our business operations.

SEASONALITY AND INFLATION

     Management does not believe that our business is subject to material
seasonal fluctuations. Our results of operations and financial position are
presented based upon historical cost. Although management cannot accurately
anticipate the effect of inflation on our operations, they do not believe
inflation is likely to have a material adverse effect on our revenues or results
of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

     Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," as amended, was effective
for us beginning December 31, 2001. SFAS No. 133 requires that an entity
recognize all derivatives as either assets or liabilities measured at fair
value. Management continues to evaluate the effect that implementation of the
new standards will have on our results of operations and financial position.
However, due to our limited use of derivative instruments, adoption of SFAS No.
133 did not have a significant effect on our consolidated balance sheets,
statements of operations, or statements of cash flows.

                                       38
<PAGE>


     SFAS No. 141, "Business Combinations," was effective July 1, 2001, and
established accounting and reporting standards to reflect only the purchase
method of accounting for business combinations. The adoption of SFAS No. 141 did
not have a material impact on our financial statements, as we do not have any
business combinations in process or planned as of the date of this Annual
Report.

     SFAS No. 142, "Goodwill and Other Intangible Assets," is effective for all
fiscal years beginning after December 15, 2001, and establishes accounting and
reporting standards for goodwill and other intangible assets. We are not
required to adopt the new statement until the year ending December 31, 2002.
Management is currently evaluating the effect that implementation of the new
standard will have on our results of operations and financial position. However,
adoption of SFAS No. 142 is not expected to have a significant effect on our
consolidated balance sheets, statements of operations, or statements of cash
flows.

ITEM 7. FINANCIAL STATEMENTS

                          WORLDWIDE MEDICAL CORPORATION
                 INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001



Report of Independent Auditors. . . . . . . . . . . . . . . . . . .  F-1

Consolidated Financial Statements of Worldwide Medical Corporation:
Consolidated Balance Sheets as of December 31, 2001 and 2000. . . .  F-2
Consolidated Statements of Operations for Each of the Two Years
 in the Period Ended December 31, 2001. . . . . . . . . . . . . . .  F-4
Consolidated Statements of Shareholders' Deficit for Each of the
 Two Years in the Period Ended December 31, 2001. . . . . . . . . .  F-5
Consolidated Statements of Cash Flows for Each of the Two Years
 in the Period Ended December 31, 2001. . . . . . . . . . . . . . .  F-6

Notes to Consolidated Financial Statements. . . . . . . . . . . . .  F-9


                                       39
<PAGE>



                         REPORT OF INDEPENDENT AUDITORS


To the Board of Directors
Worldwide Medical Corporation

We have audited the accompanying consolidated balance sheets of Worldwide
Medical Corporation as of December 31, 2001 and 2000, and the related
consolidated statements of operations, shareholders' deficit and cash flows for
each of the two years in the period ended December 31, 2001. These consolidated
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 consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated 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 consolidated financial statements referred to above, revised
as described in note 23, present fairly, in all material respects, the financial
position of Worldwide Medical Corporation as of December 31, 2001 and 2000, and
the results of its operations and cash flows for each of the two years in the
period ended 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 12, Commitments
and Contingencies, Managements' Plan, to the financial statements, the Company
has suffered recurring losses from operations, has entered several settlement
agreements resolving disputes, litigation and regulatory matters, which require
a significant commitment of funds, has difficulties generating sufficient cash
flow to meet its ongoing obligations and sustain its operations, and has a
stockholders' capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note12, Commitments and Contingencies, Managements' Plan.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.



/s/ Kelly & Company
-------------------
Kelly & Company
Newport Beach, California
April 16, 2002, except as to note 23 to which the date is May 16, 2002

                                        F-1
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2001 AND 2000



ASSETS
                                                            2001        2000
                                                       (As Restated)
                                                        ----------  ----------
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . .  $    1,584  $   15,824
Accounts receivable - trade, net of allowances of
73,323 and 0 in 2001 and 2000, respectively . . . . .      254,498     271,564
Inventories. . . . . . . . . . . . . . . . . . . . . .     644,656     446,781
Inventories on consignment . . . . . . . . . . . . . .           -      64,735
Prepaid expenses . . . . . . . . . . . . . . . . . . .      45,366       2,062
Receivable from officer. . . . . . . . . . . . . . . .           -       7,807
Other receivables:
Note receivable from former officer. . . . . . . . . .       7,749      35,870
Due from Pyxis . . . . . . . . . . . . . . . . . . . .      57,940      30,000
Other. . . . . . . . . . . . . . . . . . . . . . . . .         824           -
                                                        ----------  ----------
Total current assets . . . . . . . . . . . . . . . . .   1,012,617     874,643
Property and equipment, net. . . . . . . . . . . . . .     197,890     249,715
Investment in and advance to Spectrum Analytics, Inc..       1,108           -
Other assets . . . . . . . . . . . . . . . . . . . . .      28,126      23,838
                                                        ----------  ----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . .  $1,239,741  $1,148,196
                                                        ==========  ==========


    The accompanying notes are an integral part of the financial statements.

                                      F-2

<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                         AS OF DECEMBER 31, 2001 AND 2000



LIABILITIES AND SHAREHOLDERS' DEFICIT
                                                          2001          2000
                                                     (As Restated)
                                                      ------------  ------------
Current liabilities:
Lines of credit - financial institutions. . . . . . . $   603,821             -
Accounts payable - trade. . . . . . . . . . . . . . .     740,260   $   524,038
Accounts payable, related party . . . . . . . . . . .           -       656,513
Accrued payroll and payroll taxes . . . . . . . . . .      44,376        45,950
Accrued commissions - related party . . . . . . . . .     156,793        76,501
Accrued promotional  and other expense. . . . . . . .      49,211       122,688
Accrued expenses. . . . . . . . . . . . . . . . . . .      83,889        36,902
Accrued interest. . . . . . . . . . . . . . . . . . .       4,103             -
Accrued interest, related parties . . . . . . . . . .      22,604        19,484
Accrued settlement obligations, current portion . . .     483,650       400,000
Capital lease obligations - financial institutions,
 current portion. . . . . . . . . . . . . . . . . . .      21,449        17,736
Notes payable, related parties, current portion . . .     207,000        20,000
Note payable. . . . . . . . . . . . . . . . . . . . .           -        35,000
                                                      ------------  ------------
Total current liabilities . . . . . . . . . . . . . .   2,417,156     1,954,812
Capital lease obligations - financial institutions,
net of current portion. . . . . . . . . . . . . . . .      62,483        83,110
Note payable - related party, net of current portion.     319,524             -
Accrued settlement obligations, noncurrent. . . . . .     350,000             -
                                                      ------------  ------------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . .   3,149,163     2,037,922
                                                      ------------  ------------
Commitments and contingencies
Shareholders' deficit:
Common stock ($0.01 par value, 30,000,000 shares
authorized, 14,777,558 and 11,807,701 shares issued
and outstanding at December 31, 2001 and 2000,
respectively) . . . . . . . . . . . . . . . . . . . .     147,775       118,077
Additional paid-in capital. . . . . . . . . . . . . .   4,221,331     3,763,619
Accumulated  deficit. . . . . . . . . . . . . . . . .  (6,197,154)   (4,685,917)
Common stock receivables - officers . . . . . . . . .     (62,572)      (60,000)
Common stock receivables - others . . . . . . . . . .     (18,802)      (25,505)
                                                      ------------  ------------
TOTAL SHAREHOLDERS' DEFICIT . . . . . . . . . . . . .  (1,909,422)     (889,726)
                                                      ------------  ------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT . . . . . $ 1,239,741   $ 1,148,196
                                                      ============  ============


    The accompanying notes are an integral part of the financial statements.

                                        F-3
<PAGE>


                          WORLDWIDE MEDICAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


                                                    2001         2000
                                               (As Restated)
                                               ------------  ------------
Net sales . . . . . . . . . . . . . . . . . .  $ 2,851,499   $ 2,271,857
Cost of sales . . . . . . . . . . . . . . . .    1,316,935       534,827
                                               ------------  ------------
Gross profit. . . . . . . . . . . . . . . . .    1,534,564     1,737,030
                                               ------------  ------------
Operating expenses:
Selling . . . . . . . . . . . . . . . . . . .      927,135       799,967
General and administrative. . . . . . . . . .      553,945       723,156
Professional fees . . . . . . . . . . . . . .      499,737       360,701
Bad debt expense. . . . . . . . . . . . . . .       21,913       118,210
Depreciation and amortization . . . . . . . .       68,442        44,626
Settlement expense. . . . . . . . . . . . . .      517,515       505,000
Settlement expense - related party. . . . . .      157,440             -
Beneficial conversion expense . . . . . . . .            -       205,647
                                               ------------  ------------
Total operating expenses. . . . . . . . . . .    2,746,127     2,757,307
                                               ------------  ------------
Loss from operations. . . . . . . . . . . . .   (1,211,563)   (1,020,277)
                                               ------------  ------------
Other expense:
Interest expense. . . . . . . . . . . . . . .      (79,429)     (130,938)
Interest expense, related parties . . . . . .      (51,117)       (2,867)
                                               ------------  ------------
                                                  (130,546)     (133,805)
                                               ------------  ------------
Equity in losses of Spectrum Analytics, Inc..     (236,432)            -
                                               ------------  ------------
Loss before provision for income taxes and
extraordinary item: . . . . . . . . . . . . .   (1,578,541)   (1,154,082)
Provision for income taxes. . . . . . . . . .         (800)         (800)
                                               ------------  ------------
Loss before extraordinary item. . . . . . . .   (1,579,341)   (1,154,882)
Extraordinary gain on settlement of debt, net
of taxes effect of $0 and $0, respectively. .       68,104        46,334
                                               ------------  ------------
NET LOSS. . . . . . . . . . . . . . . . . . .  $(1,511,237)  $(1,108,548)
                                               ============  ============
NET LOSS PER SHARE, BASIC AND DILUTED . . . .  $     (0.11)  $     (0.11)
                                               ============  ============


    The accompanying notes are an integral part of the financial statements.

                                       F-4
<PAGE>
<TABLE>
<CAPTION>

                                               WORLDWIDE MEDICAL CORPORATION
                                      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
                                          AS OF DECEMBER 31, 2001 AND 2000 AND FOR
                                EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001
                                                        (AS RESTATED)


                                                                        Additional                 Common
                                                  Common      Common     Paid-in      Accumulated   Stock
                                                  Shares      Stock      Capital      Deficit       Receivable    Total
                                                  ------      -----      -------      -------       ----------    -----
<S>                                              <C>          <C>        <C>          <C>           <C>        <C>
BALANCE, DECEMBER 31, 1999. . . . . . . . . . .   8,524,428   $ 85,245   $2,580,950   $(3,577,369)         -   $  (911,174)
  Shares issued upon conversion of debentures .   3,195,177     31,951      766,842             -   $(85,505)      713,288
  Shares issued for services. . . . . . . . . .     132,511      1,325       73,675             -          -        75,000
  Shares returned and canceled resulting from
  the settlement of litigation. . . . . . . . .     (11,904)      (119)         119             -          -             -
  Shares repurchased and cancelled. . . . . . .     (32,511)      (325)     (11,675)            -          -       (12,000)
  Amortization of deferred compensation for
  services. . . . . . . . . . . . . . . . . . .           -          -       34,889             -          -        34,889
  Warrants issued with debentures . . . . . . .           -          -      113,172             -          -       113,172
  Beneficial conversion feature related
  to debentures . . . . . . . . . . . . . . . .           -          -      205,647             -          -       205,647
  Net loss. . . . . . . . . . . . . . . . . . .           -          -            -    (1,108,548)         -    (1,108,548)
                                                 -----------  ---------  -----------  ------------  ---------  ------------
BALANCE, DECEMBER 31, 2000. . . . . . . . . . .  11,807,701    118,077    3,763,619    (4,685,917)   (85,505)     (889,726)
  Shares issued in private placement. . . . . .     129,613      1,296       24,626             -          -        25,922
  Shares issued on exercise of warrants . . . .   1,025,244     10,252      194,796             -    (33,300)      171,748
  Payments received and services
   provided on common stock receivables . . . .           -          -            -             -     37,431        37,431
  Shares issued for prepaid interest on note
  payable arising from settlement of litigation     300,000      3,000       96,000             -          -        99,000
  Shares issued and held in escrow as
  collateral for a note payable issued in
  settlement of litigation. . . . . . . . . . .   1,515,000     15,150      (15,150)            -          -             -
  Warrants issued in settlement of litigation .           -          -      157,440             -          -       157,440
  Net loss. . . . . . . . . . . . . . . . . . .           -          -            -    (1,405,657)         -    (1,405,657)

                                                 -----------  ---------  -----------  ------------  ---------  ------------
BALANCE, DECEMBER 31, 2001, AS PREVIOUSLY
 REPORTED . . . . . . . . . . . . . . . . . . .   14,777,558   $147,775   $4,221,331   $(6,091,574)  $(81,374)  $(1,803,842)
PRIOR PERIOD ADJUSTMENTS (note 23). . . . . . .           -          -            -       (105,580)        -       (105,580)

BALANCE, DECEMBER 31, 2001, AS RESTATED           14,777,558  $147,775   $4,221,331   $(6,197,154)  $(81,374)  $(1,909,422)
                                                 ===========  =========  ===========  ============  =========  ============


                           The accompanying notes are an integral part of the financial statements.

                                                            F-5
<PAGE>


                           WORLDWIDE MEDICAL CORPORATION
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                     AS OF DECEMBER 31, 2001 AND 2000 AND FOR
            EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


                                                            2001         2000
                                                        (As Restated)
                                                        ------------ ------------
Cash flows provided by (used in) operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . .  $(1,511,237) $ (1,108,548)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . .       68,442        44,626
Extraordinary gain on settlement of debt . . . . . . .      (68,104)      (46,334)
Interest expense arising from beneficial conversion
features on issuance of convertible debt . . . . . . .            -       205,647
Loss on disposal of equipment. . . . . . . . . . . . .            -         5,980
Loss on asset impairment . . . . . . . . . . . . . . .            -        24,255
Amortization of deferred compensation for services . .            -        34,889
Amortization of debt discount. . . . . . . . . . . . .            -       123,089
Amortization of prepaid interest . . . . . . . . . . .       49,317             -
Common shares issued for services. . . . . . . . . . .            -        75,000
Warrants issued as settlement of litigation. . . . . .      157,440             -
Equity in losses of Spectrum Analytics, Inc. . . . . .      236,432             -
Decrease (increase) in assets:
Accounts receivable - trade. . . . . . . . . . . . . .       17,066       (69,912)
Inventories. . . . . . . . . . . . . . . . . . . . . .     (197,875)     (128,644)
Inventories on consignment . . . . . . . . . . . . . .       64,735        97,879
Prepaid expense. . . . . . . . . . . . . . . . . . . .       (7,952)        2,938
Receivable from officer. . . . . . . . . . . . . . . .        7,807        (7,807)
Note receivable from former officer. . . . . . . . . .       28,121        26,030
Due from Pyxis . . . . . . . . . . . . . . . . . . . .      (27,940)      (30,000)
Other receivables. . . . . . . . . . . . . . . . . . .         (824)            -
Intangible asset . . . . . . . . . . . . . . . . . . .            -        (2,341)
Other assets . . . . . . . . . . . . . . . . . . . . .       10,043       (16,802)
Increase (decrease) in liabilities:
Accounts payable - trade . . . . . . . . . . . . . . .      284,326      (348,446)
Accrued expenses . . . . . . . . . . . . . . . . . . .       46,987         7,502
Accrued payroll and payroll taxes. . . . . . . . . . .       (1,574)      (30,194)
Accrued commissions, related party . . . . . . . . . .       80,292         1,657
Accrued and promotional and other expenses . . . . . .      (73,477)      122,688
Accrued interest, related parties. . . . . . . . . . .        3,120         7,860
Accrued interest . . . . . . . . . . . . . . . . . . .        4,103             -
Accrued litigation settlements . . . . . . . . . . . .      433,650       400,000
                                                        ------------  ------------
NET CASH USED IN OPERATING ACTIVITIES. . . . . . . . .     (397,102)     (608,988)
                                                        ------------  ------------


    The accompanying notes are an integral part of the financial statements.

                                        F-6
<PAGE>

                            WORLDWIDE MEDICAL CORPORATION
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                      AS OF DECEMBER 31, 2001 AND 2000 AND FOR
             EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


                                                                         2001        2000
                                                                     (As Restated)
                                                                      ----------  ----------
Cash flows provided by (used in) investing activities:
Purchase of property and equipment . . . . . . . . . . . . . . . . .  $ (16,617)  $ (69,378)
Investment in and advance to Spectrum Analytics, Inc.. . . . . . . .   (237,540)          -
Proceeds on disposition of property and equipment. . . . . . . . . .          -       4,095
                                                                      ----------  ----------
NET CASH USED IN INVESTING ACTIVITIES. . . . . . . . . . . . . . . .   (254,157)    (65,283)
                                                                      ----------  ----------
Cash flows provided by (used in) financing activities:
Increase in amount due on lines of credit. . . . . . . . . . . . . .    603,821           -
Repayment of notes payable . . . . . . . . . . . . . . . . . . . . .   (184,989)    (15,000)
Repayment on capital leases. . . . . . . . . . . . . . . . . . . . .    (16,914)     (4,651)
Collection of stock subscription receivable. . . . . . . . . . . . .     37,431           -
Shares repurchased and canceled. . . . . . . . . . . . . . . . . . .          -     (12,000)
Proceeds from the issuance of convertible debt . . . . . . . . . . .          -     600,116
Proceeds from the issuance of detachable warrants. . . . . . . . . .          -     113,172
Proceeds from exercise of warrants . . . . . . . . . . . . . . . . .    171,748           -
 Proceeds from issuance of stock . . . . . . . . . . . . . . . . . .     25,922           -
                                                                      ----------  ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . . . . . . . . .    637,019     681,637
                                                                      ----------  ----------
NET INCREASE (DECREASE) IN CASH. . . . . . . . . . . . . . . . . . .    (14,240)      7,366
CASH AT BEGINNING OF PERIOD. . . . . . . . . . . . . . . . . . . . .     15,824       8,458
                                                                      ----------  ----------
CASH AT END OF PERIOD. . . . . . . . . . . . . . . . . . . . . . . .  $   1,584   $  15,824
                                                                      ==========  ==========

Supplemental Disclosure of Cash Flow Information
Cash paid during the fiscal
year for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  69,583   $   2,840
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     800   $     800

Supplemental Schedule of Non-Cash Investing and Financing Activities
Conversion of convertible notes:
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . .          -   $ 798,793
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .          -   $ (31,951)
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . .          -   $(766,842)

Purchase of property and equipment:
Property and equipment . . . . . . . . . . . . . . . . . . . . . . .          -   $ 105,497
Capital lease obligations. . . . . . . . . . . . . . . . . . . . . .          -   $(105,497)


         The accompanying notes are an integral part of the financial statements.

                                         F-7
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR


                                                            2001      2000
                                                         ---------    ----

Conversion of related party accounts payable
note payable:
Accounts payable - related party. . . . . . . . . . . .  $ 656,513      -
Note payable - related party. . . . . . . . . . . . . .  $(656,513)     -

Issuance of shares for prepaid interest on note payable
arising from settlement of litigation:
Prepaid interest expense. . . . . . . . . . . . . . . .  $  99,000      -
Common stock. . . . . . . . . . . . . . . . . . . . . .  $  (3,000)     -
Additional paid-in capital . . . . . . . . . . . . . .   $ (96,000)     -

Issuance of shares and held in escrow as collateral
for note payable arising from settlement of litigation:
Additional paid-in capital. . . . . . . . . . . . . . .  $  15,150      -
Common stock. . . . . . . . . . . . . . . . . . . . . .  $ (15,150)     -


    The accompanying notes are an integral part of the financial statements.

                                        F-8
</TABLE>
<PAGE>


                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


1. DESCRIPTION OF BUSINESS
--------------------------

Worldwide Medical Corporation (the "Company") markets and distributes,
principally in the United States, a family of easy-to-use, rapid screening
products that provide preliminary results in five medical disciplines: (1)
pregnancy and fertility, (2) infectious diseases, (3) sexually transmitted
diseases, (4) drugs of abuse, and (5) health screening. The Company's products
are subject to governmental regulation in the United States by the Food and Drug
Administration.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------

     Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
Worldwide Medical Corporation (a Delaware corporation) (the "Company") and its
wholly owned subsidiary Worldwide Medical Corporation (a California
corporation). All significant intercompany transactions have been eliminated.

     Recognition of Revenue

Revenue is recognized on non-retailer sales for 2001 and 2000 and for retailer
sales for 2001 when the products are shipped to the Company's customer.
Provisions for discounts and rebates to customers, estimated returns and
allowances, and other adjustments are provided for in the same period the
related revenues are recorded. In 2000, the Company granted its retailer
customers the right to return unsold products and credit terms that did not
require payment for products purchased until they were ultimately sold at
retail. Accordingly, the Company recorded the products shipped to those retailer
customers in 2000 as consigned inventory until the receipt of payment when the
sale was then recorded.

     Cash and Equivalents

The Company invests portions of its excess cash in highly liquid investments.
Cash and equivalents include time deposits and commercial paper with original
maturities of three months or less. The Company has no requirements for
compensating balances. The Company maintains cash balances in bank accounts,
which did not exceed the federally insured limits at December 31, 2001 and 2000.

     Inventories and Inventories on Consignment

Inventories are stated at the lower of cost or market with cost being determined
using the first-in, first-out method. Substantially all inventory consisted of
finished goods held for sale. The Company's management monitors inventories for
excess and obsolete items and makes necessary valuation corrections when such

                                        F-9
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------

     Inventories and Inventories on Consignment, Continued

adjustments are required. In 2000, products shipped to retail customers were
recorded as consigned inventories until their payments were remitted to the
Company.

     Equity Method of Accounting

The equity method of accounting is used when the Company has a 20% to 50%
interest in other entities. Under the equity method, original investments are
recorded at cost and adjusted by the Company's share of undistributed earnings
or losses of these entities. Nonmarketable investments in which the Company has
less than 20% interest and in which it does not have the ability to exercise
significant influence over the investee are initially recorded at cost and
periodically reviewed for impairment.

     Property and Equipment

Property and equipment are recorded at cost and are depreciated using the
straight-line method over an expected useful life of 3 to 5 years. Expenditures
for normal maintenance and repairs are charged to income, and significant
improvements are capitalized. Upon the sale or retirement of property and
equipment, the accounts are relieved of the cost and the related accumulated
depreciation with any resulting gain or loss included in the statement of
operations.

     Long-Lived Assets

Long-lived assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The estimated undiscounted cash flows
associated with the assets are compared to the carrying amounts to determine if
a writedown to fair value is required. In fiscal 2000, management decided that
the Company would no longer pursue utilization of the intangible assets,
consisting of patent and patent application costs and recognized an impairment
loss of $24,255, which is included in selling, general and administrative
expenses.

     Accrued Confirmatory Testing Expense

The Company provides for estimated confirmatory testing costs related to the
sales of its home drug testing kits. The Company has accrued for these costs in
the period in which sales are made.

     Accounting for Income Taxes

The Company accounts for income taxes under the liability method. Under the
liability method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax basis of assets and liabilities.
They are measured using the enacted

                                        F-10
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------

     Accounting for Income Taxes, Continued

tax rates and laws that will be in effect when the differences are expected to
reverse. The Company is required to adjust its deferred tax liabilities in the
period when tax rates or the provisions of the income tax laws change. Valuation
allowances are established to reduce deferred tax assets to the amounts expected
to be realized.

     Debt Issued with Stock Purchase Warrants

Proceeds from debt issued with stock purchase warrants are allocated between the
debt and the warrants based on their relative fair values. The value ascribed to
the warrants, based on the Black-Scholes Option Pricing Model, is accounted for
as a discount on the debt and amortized to interest expense over the term of the
related debt using the effective interest method.

     Stock-Based Compensation

Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for
Stock-Based Compensation, ("SFAS No. 123") established accounting and disclosure
requirements using a fair-value-based method of accounting for stock-based
employee and nonemployee compensation plans. As permitted by SFAS No. 123, the
Company has elected to account for stock-based employee compensation using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees ("APB No. 25"). In accordance with APB
No. 25, compensation cost for stock options is recognized as the excess, if any,
of the market price of the Company's stock at the date of grant over the amount
an employee must pay to acquire the stock. Generally, the exercise price for
stock options granted to employees equals or exceeds the fair market value of
the Company's common stock at the date of grant, thereby resulting in no
recognition of compensation expense by the Company. Any compensation cost that
does arise is amortized over the requisite vesting periods. The Company accounts
for stock-based compensation to nonemployees in accordance with SFAS No. 123.

     Research and Development Costs

Research and development costs are expensed when incurred and include costs for
the production of device prototypes, validation specimens, and other design
costs. Research and development costs incurred during 2000 were $72,337. There
were no research and development costs incurred during 2001. However, $73,052 of
research and development expense was incurred by Spectrum Analytics, Inc. and
included in its loss from operations.


                                      F-11
<PAGE>


                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------

     Advertising Costs

The Company expenses the production costs of advertising the first time the
advertising program is used and upon payment to retailers for use in cooperative
advertising. Advertising expense was $458,685 and $465,886 for the years ended
December 31, 2001 and 2000, respectively.

     Loss Per Common Share

Basic and diluted loss per common share are computed by dividing loss available
to common shareholders by the weighted average number of common shares
outstanding during the period. Diluted loss per share does not consider the
effect of potentially dilutive securities, as their inclusion would be
anti-dilutive.

     Use of Estimates

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

     Financial Statement Classification

Certain amounts within the 2000 consolidated financial statements have been
reclassified in order to conform to the 2001 consolidated financial statement
presentation. These changes had no impact on previously reported results of
operations or shareholders' equity.

     New Accounting Pronouncements

In June 2001, the FASB issued SFAS No. 141, Business Combinations, which
addresses financial accounting and reporting for business combinations. SFAS No.
141 supercedes Accounting Principles Board ("APB") Opinion No. 16, Business
Combinations and amends or supercedes a number of interpretations of that
opinion. It also amends SFAS No. 38, Accounting for Preacquisition Contingencies
of Purchased Enterprises. SFAS No. 141 will apply to all business combinations
initiated after June 30, 2001. In 2002, the Company acquired all of a company it
had previously reported under the equity method of accounting. The Company is
currently evaluating the impact of SFAS No. 141 to determine the effect, if any,
it may have on the Company's results of operations, financial position or cash
flows.

                                      F-12
<PAGE>


                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
--------------------------------------------------------

     New Accounting Pronouncements, Continued

In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangibles,
which addresses financial accounting and reporting for goodwill and other
intangible assets subsequent to their acquisition. SFAS No. 142 supercedes APB
No. 17, Intangible Assets. Provisions of SFAS No. 142 will be effective for all
fiscal years beginning after December 15, 2001. As such, the Company is not
required to adopt the new statement until the year ending December 31, 2002. The
Company is currently evaluating the effect that implementation of the new
standard will have on its results of operations and financial position. However,
adoption of SFAS No. 142 is not expected to have a significant effect on the
Company's consolidated balance sheets, statements of operations, or statements
of cash flows.

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, which addresses the accounting requirements for retirement
obligations associated with tangible long-lived assets. This Statement requires
entities to record the fair value of a liability for an asset retirement
obligation in the period in which it is incurred. This Statement is effective
for the Company's 2003 fiscal year, and early adoption is permitted. The Company
is currently evaluating the impact of SFAS No. 143 to determine the effect, if
any, it may have on the Company's results of operations, financial position or
cash flows.

In October 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which excludes from the definition of long-lived
assets goodwill and other intangibles that are not amortized in accordance with
SFAS No. 142. SFAS No. 144 requires that long-lived assets to be disposed of by
sale be measured at the lower of carrying amount or fair value less cost to
sell, whether reported in continuing operations or in discontinued operations.
SFAS No. 144 also expands the reporting of discontinued operations to include
components of an entity that have been or will be disposed of rather than
limiting such discontinuance to a segment of a business. This Statement is
effective for the Company's 2003 fiscal year, and early adoption is permitted.
The Company is currently evaluating the impact of SFAS No. 144 to determine the
effect, if any, it may have on the Company's results of operations, financial
position or cash flows.

3. INVESTMENT
-------------

The Company has a 50% interest in Spectrum Analytics, Inc. ("Spectrum"), a
diagnostic testing laboratory, which has been accounted for on the equity method
since its inception in January 2001. Spectrum's only customer to date has been
the Company for which it has provided confirmatory testing for home drug tests.
The Company received credit for approximately $40,000 of the pre-organization
costs it incurred and contributed fixed assets with a book value of
approximately $10,000 for its 50% interest, while Drs. Rojas and Moretti each as
to 25% (the other 50% investors who are employees of Spectrum)

                                      F-13
<PAGE>


                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


3. INVESTMENT, CONTINUED
------------------------

contributed laboratory equipment with a fair value of $50,000. The Company
advanced additional funds to Spectrum during the year while the other 50%
investor was not obligated to nor did it provide additional financial support.
Therefore, the Company's 2001 operations include a loss of $236,432, which
represents 100% of the loss experienced by Spectrum for the year. The loss
reduced the Company's investment in and advances to Spectrum to $1,108. The
results of operations and financial position of the Company's equity basis
investment in Spectrum at December 31, 2001 is summarized below: Condensed
statement of operations information:

Net sales (related party)                                             $  29,500
                                                                      =========
Net loss                                                              $(236,432)
                                                                      =========
Company's equity in net loss of Spectrum                              $(236,432)
                                                                      =========

Condensed balance sheet information:

Current assets                                                        $     306
Noncurrent assets                                                        52,976
                                                                      ---------
Total assets                                                          $  53,282
                                                                      =========
Current liabilities:
     Related party                                                    $ 237,541
     Other                                                                2,174
                                                                      ---------
Total current liabilities                                               239,715
Deficit                                                                (186,433)
                                                                      ---------
Total liabilities and deficit                                         $  53,282
                                                                      =========

     Reconciliation of Spectrum Deficit to the Company's Investment

Spectrum deficit                                                      $(186,433)
Less: Other 50% investors portion of the deficit                         93,216
                                                                      ---------
Company's portion of the Spectrum deficit                               (93,217)
Plus:
Company funds advances or expenses incurred on behalf of Spectrum       237,541
Less: Other 50% investors portion of the loss                          (118,216)
      Fifty percent of fixed asset contribution by
      other investor                                                    (25,000)
                                                                      ---------
COMPANY'S INVESTMENT IN SPECTRUM                                      $   1,108
                                                                      =========


                                        F-14
<PAGE>


                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


3. INVESTMENT, CONTINUED
------------------------

Included in the operating results of Spectrum are allocations of $85,469 of
expenses incurred by the Company and payments made by the Company on Spectrum's
behalf of $170,979.

4. PROPERTY AND EQUIPMENT
-------------------------

Property and equipment at December 31, 2001 and 2000 consists of the following:

                                                           2001           2000
                                                           ----           ----
Equipment                                                $230,661       $230,661
Office furniture and equipment                            145,661        131,104
Leasehold improvements                                     23,187         21,127
                                                         --------       --------
                                                          399,509        382,892
     Less: accumulated depreciation                       201,619        133,177
                                                         --------       --------
Property and equipment, net                              $197,890       $249,715
                                                         ========       ========

At December 31, 2001 and 2000, property and equipment includes $105,497 of
equipment recorded under capital leases, respectively. Depreciation expense was
$68,442 and $44,626 for the years ended December 31, 2001 and 2000. Depreciation
expense for the year ended December 31, 2001 includes $21,099 of depreciation
for assets recorded under capital leases.


5. LINES OF CREDIT - FINANCIAL INSTITUTIONS
-------------------------------------------

A line of credit was entered into in 2001 with a financial institution with a
maximum credit of $275,000 or 80% of the eligible domestic trade accounts
receivable, for working capital needs. Borrowings under the line of credit as of
December 31, 2001, were $273,821 and during the year bore a fluctuating annual
interest rate of 27.5% to 36% plus the increase or decrease in the Wall Street
Journal prime with the principal and unpaid interest due in full on March 1,
2003. The interest rates charged on the line of credit changed monthly based on
the average amount outstanding. The eligible domestic accounts receivable
balance as of December 31, 2001 was $203,598, which meant there was an
overadvance of the line of credit of $70,223 and resulted in a surcharge of
one-thirtieth of 1% per day for each day the overadvance existed with the
surcharge amount included in the unpaid balance. The line of credit had an
effective weighted average interest rate of 29.2% per annum for the year ended
December 31, 2001. As of this report date, the Company is in compliance with the
advance schedule per the loan agreement. The line of credit is collateralized by
all of the Company's assets with a financing statement on file with the
California Secretary of State dated February 23, 2001.


                                        F-15
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


5. LINES OF CREDIT, CONTINUED
-----------------------------

Line of credit with a financial institution with a maximum credit of $250,000 as
of December 31, 2001 for working capital needs. Borrowings under the line of
credit bear interest at a fixed rate of 10% per annum, with the principal and
unpaid interest due in full on July 5, 2002. The line of credit is eligible for
a one-year renewal subject to negotiation with the lender. At December 31, 2001,
the line was overadvanced and had a balance of $330,000. The line of credit
agreement does not have any negative covenants nor related remedies for the
overadvance. The lender is currently being administered by a federal
court-appointed receiver. The line of credit is collateralized by all of the
Company's assets with a financing statement on file with the California
Secretary of State dated September 25, 2000.

6. DEBT RESTRUCTURING
---------------------

The Company, in an earlier year, entered into an exclusive distributor and
supplier agreement with an entity owned by a major shareholder and director of
the Company. The agreement provided for the Company to act as an exclusive
distributor in specified markets for certain diagnostic products produced by
this related party. The agreement was prematurely terminated in 1998 and
disputes arose between the Company and the supplier over the amounts owed and
the payment thereof. In May 2001, to resolve the $656,513 related party account
payable, the Company made a cash payment of $25,000 and executed a convertible
secured promissory note payable to the supplier in the amount of $631,513. The
note is collateralized by all of the assets of the Company with a financing
statement on file with the California Secretary of State dated July 16, 2001,
and 1,515,000 shares of its common stock issued and held as collateral in trust
by the Company's legal counsel. The 1,515,000 shares will be retired if they are
not released from the escrow as part of the collateral requirements of the
convertible secured promissory note payable. The note payable itself is
non-interest bearing and requires weekly payments equal to certain specified
amounts per product unit sold for which payment was received during the week.
The per unit payment amounts range from $0.25 effective January 1, 2001, and
adjust every six months up to $1.00 starting July 1, 2003, and continue
thereafter at that rate until the note is fully paid. The terms of the note
payable also require the Company to make principal payments on cash proceeds
from the sale by the Company of its common stock. The amount of the required
principal payments is equal to 15% of an adjusted per share price (as defined)
up to $0.75 and 10% of an adjusted per share price of $0.76 and over. The note
is convertible at the holder's discretion at any time in whole or in part into
shares of the Company's common stock subject to the Company's right to prepay
such amount otherwise to be converted. The conversion price is $0.40 per share
subject to certain adjustments as specified arising from among other things any
stock splits, stock dividends, consolidations or mergers. The note also provides
it shall be junior and subordinate only to an amount not to exceed an additional

                                        F-16
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


6. DEBT RESTRUCTURING, CONTINUED
--------------------------------

$300,000 of bank or other institutional indebtedness in excess of that
outstanding as of the date of the note agreement. In order to induce the Company
to repay the note as quickly as possible, the Company agreed to the issuance and
escrow of an additional 300,000 shares of its common stock with its legal
counsel to be released to the note holder in specified increments. If the note
is not fully paid after one year and prior to the 18th, the 24th, the 30th
months, and then thereafter, the Company's attorney will cause the shares to be
released from the escrow in increments of 75,000, 75,000, 50,000 or 100,000
shares, respectively, to the note holder. The issuance of the 300,000 shares
resulted in the Company recognizing $99,000 of prepaid interest based on the
fair value of the shares as of the date of the agreement. In 2002, the first
$75,000 shares that had been escrowed were released to the entity. The prepaid
interest is being amortized, on an interest method with an effective rate of
9.7% over the expected life of the note payable. In connection with this
agreement, the Company issued three warrants to the same major shareholder and
director to purchase 164,000, 246,000 and 246,000 shares of the Company's common
stock at exercise prices of $0.20, $0.30 and $0.40, with expiration dates of
December 31, 2001, 2002, and 2003, respectively. During 2001, the major
shareholder and director exercised the 164,000 warrants. The Company recognized
a $157,440 settlement expense arising from the issuance of the warrants. These
warrants were valued at their fair value based on the Black Scholes Option
Pricing Model as of the date of the agreement. If the Company ceases to sell
test units (as defined); if during any three-month period annualized sales
volume is less than $1,000,000; or if the note holder receives payments during
any three-month period of less than $50,000; the note holder is entitled to
issue a demand for all the unpaid note principal and all of the remaining
unissued escrowed 300,000 common shares. The note payable is current as of the
report date.


                                        F-17
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


7. NOTES PAYABLE
----------------

Notes payable at December 31, 2001 and 2000 consist of the following:
                                                             2001       2000
                                                             ----       ----
     Uncollateralized  -  Related Party

Note payable to a major shareholder who is a director
   of the Company, with an interest rate of 9% per
   annum. The note matured in March 1996, has not been
   renewed or extended and is therefore treated as due
   on demand. The note and accrued interest is
   convertible at the option of the holder into shares
   of the Company's common stock at a conversion price
   of $.60 per share. The conversion feature is in
   effect as long as any portion of the note payable
   and the related accrued interest are unpaid.           $  20,000   $  20,000

     Collateralized - Related Party

Note payable to a company owned by a major shareholder
   who is a director of the Company. A total of 300,000
   shares of the Company's common stock are held in
   escrow to be released in certain increments over the
   period that there is an unpaid balance on the note.
   The value of these shares has been recorded as
   prepaid interest, which is being amortized on an
   interest method to interest expense at an effective
   rate of 9.7% per annum. The note requires weekly
   payments equal to certain specified amounts per
   product unit sold. The note is collateralized by all
   of the assets of the Company and 1,515,000 shares of
   its common stock issued and presently held in trust
   by the Company's legal counsel (Note 6).                 506,524       --
                                                          ---------   ---------

Total notes payable - related party                         526,524      20,000
Less: current maturities                                   (207,000)    (20,000)
                                                          ---------   ---------
LONG TERM PORTION OF NOTES PAYABL- RELATED  PARTY         $ 319,524       --
                                                          =========   =========

                                        F-18
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


7. NOTES PAYABLE, CONTINUED
---------------------------

     Uncollateralized  -  Other
                                                             2001       2000
                                                             ----       ----

Note payable to a shareholder with an interest rate of
   10% per annum. The note matured in April 2000, has
   not been renewed or extended and is therefore
   treated as due on demand. In connection with the
   note, the Company granted 25,000 warrants to
   purchase the Company's common stock at $1.00 per
   share, exercisable immediately and expiring on
   October 15, 2002 and recorded a discount of $17,000
   on the note based on the fair value of the warrants.
   Discount of $9,917 was amortized to interest expense
   during 2001. No discount was amortized to interest
   expense in 2000. The note was fully paid in 2001.           --     $  35,000
                                                          ----------  ---------
Total notes payable, related parties                           --        35,000
Less: current maturities                                       --       (35,000)
                                                          ----------  ---------
LONG TERM PORTION OF NOTES PAYABLE                             --          --
                                                          ==========  =========

Maturities of notes payable for the years ended December 31,

2002                              $     207,000
2003                                    250,000
2004                                     69,524
2005 and thereafter                        --

Interest expense during the years ended December 31, 2001 and 2000 was $130,546
and $133,805, respectively.

     Convertible Debentures

During 2000, the Company issued convertible debentures for total proceeds of
$798,794. The debentures were issued with a detachable warrant to purchase one
share of the Company's common stock for each dollar raised and have an exercise
price of $0.20. The warrants were immediately exercisable, and expired one year
from the date of issuance. They bore interest at a rate of 12% per annum, mature
one year from issuance and were convertible into the Company's common stock at
$0.25 per share. Proceeds from the borrowing were allocated between the debt and
the warrants based on their relative fair values. A discount of $113,172 was

                                        F-19
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


7. NOTES PAYABLE, CONTINUED
---------------------------

     Convertible Debentures, Continued

recorded on the note, which has been recognized as interest expense on a yield
basis over the life of the related debt. The debentures were determined to have
a beneficial conversion feature with intrinsic values totaling $205,647, which
was recorded as debt discount and an increase in additional paid-in-capital. The
corresponding discount was amortized to interest expense over the period from
issuance of the notes to the date they became first convertible. All the
debentures were convertible at any time, and accordingly, the total discount was
charged to interest expense at the date of issuance. The debentures were
immediately converted into the Company's common stock, and an aggregate of
3,195,177 shares were issued.

Subsequent to year-end, the Company issued units of convertible debentures and
common stock and received proceeds of $125,000. Each unit consists of $25,000
convertible note and 12,500 shares of the Company's common stock. The note bears
interest at 10% per annum and is due in six months with a six-month extension at
the option of the holder. The note is convertible into 50,000 shares of the
Company's restricted common stock and has certain registration rights.

In addition, the Company sold one unit consisting of a $250,000 note payable and
250,000 restricted common shares that have certain registration rights. The note
bears interest at 10% per annum and is due in six months with a six-month
extension at the option of the holder. The note is collateralized by 500,000
shares of the Company's common stock held in escrow by the Company's legal
counsel in the event of default.


8. CAPITALIZED LEASE OBLIGATIONS
--------------------------------

The Company leases equipment under long-term noncancellable capital leases.
Obligations under capital leases consist of the following:
                                                              2001      2000
                                                              ----      ----

Capital lease with a finance company with an interest
   rate of 14.25% per annum, with monthly principal and
   interest payments of $2,043, maturing in September
   2005                                                    $  71,688  $  83,716

Capital lease with a finance company with an interest
   rate of 21.94% per annum, with monthly principal and
   interest payments of $681, maturing in October 2003        12,244     17,130
                                                           ---------  ---------
Total  capitalized  lease  obligations                     $  83,932  $ 100,846
                                                           =========  =========


                                        F-20
<PAGE>


                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


8. CAPITALIZED LEASE OBLIGATIONS, CONTINUED
-------------------------------------------

Future minimum lease payments under capital leases are as follow for the year
ending December 31:

2002                                         $  32,688
2003                                            31,326
2004                                            24,516
2005                                            19,209
2006                                                 -
                                             ---------
Total minimum lease payments                   107,739
Less: amount representing interest
at the incremental borrowing                   (23,807)
                                             ---------
Total value of minimum lease payments           83,932
     Less: current portion                     (21,449)
                                             ---------
CAPITALIZED LEASE OBLIGATIONS
NET OF CURRENT PORTION                       $  62,483
                                             =========

9. EXTRAORDINARY ITEM
---------------------

During 2001 and 2000, the Company settled certain payables with an aggregate
balance of $106,478 and $70,335 for total cash payments of $38,347 and $24,000,
resulting in gains of $68,104 and $46,334, or $0.01 per common share,
respectively. The aggregate gain on the settlements is classified as an
extraordinary item in the statement of operations.

10. RELATED PARTY TRANSACTIONS
------------------------------

     Sales Agreement

The Company entered into an exclusive sales agreement with a company currently
owned by a former director and previously partially owned by an officer, who is
a current director. The agreement included a 15% commission on sales generated
by the related party in North America and Mexico. In April 2000, the commission
rate was amended to 7.5%. The related party agreed to reimburse the Company for
certain initial costs to establish customer account relationships. The Company
entered into a new agreement with this entity effective January 1, 2001, that
provides for commissions of 4.0%, 3.5%, 3.0%, and 2.75% on incremental annual
retail sales of the first $1,500,000, the next $1,000,000, the next $1,000,000,
and the next $1,500,000, respectively and 2.5% on retail sales over $5,000,000.
In addition, the agreement provides for commissions of 2.0% on the first
$5,000,000 of wholesale and distributor sales and 1.25% thereafter. For the
years ended December 31, 2001 and 2000, the related party commissions were
$240,671 and $223,131, respectively.

                                        F-21
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


11. INCOME TAXES
----------------

The components of the provision for income taxes for the years ended December
31, 2001 and 2000 are as follows:
                                                           2001             2000
                                                           ----             ----
Current expense:
     Federal
     State                                                 $800             $800
                                                           ----             ----
                                                            800              800
                                                           ----             ----
Deferred benefit:
     Federal                                                --               --
     State                                                  --               --
                                                           ----             ----
Total provision                                            $800             $800
                                                           ====             ====

Significant components of the Company's deferred income tax assets and
liabilities at December 31, 2001 and 2000 are as follows:

                                                      2001              2000
                                                      ----              ----
Deferred income tax asset:
     Accrued  expenses                            $     7,610       $    11,894
     Net operating losses                           2,149,510         1,633,388
     Other                                                272               272
                                                  -----------       -----------
Total deferred income tax asset                     2,157,392         1,645,554
Valuation allowance                                (2,147,576)       (1,635,556)
                                                  -----------       -----------
Total deferred income tax                               9,816             9,998
                                                  -----------       -----------
Deferred income tax liability:
     Depreciation                                       9,816             9,998
                                                  -----------       -----------
Total deferred income tax liability                     9,816             9,998
                                                  -----------       -----------
Net deferred income tax liability                        --                --
                                                  ===========       ===========

The Company has concluded that it is more likely than not that none of the net
deferred income tax assets will be realized through future taxable earnings and
has established a valuation allowance for them.


                                        F-22
<PAGE>


                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


11. INCOME TAXES, CONTINUED
---------------------------

Income tax expense differs from the expected amount by applying the federal
statutory rate as follows:
                                                        2001         2000
                                                        ----         ----
Federal statutory                                      (34.0)%      (34.0)%
State income taxes                                       0.1          0.1
Nondeductible expense                                    0.3         10.3
Increase in valuation allowance                         33.7         23.7
                                                        -----       -----
                                                         0.1%        0.1%
                                                        =====       =====

At December 31, 2001, the federal and state net operating loss carryforwards are
$5,785,706 and $2,063,016, respectively. The federal and state net operating
losses will begin to expire in 2016 and 2002, respectively.

12. COMMITMENTS AND CONTINGENCIES
---------------------------------

     Concentration of Suppliers

The Company made approximately 100% of its inventory purchases from three North
American vendors for the years ended December 31, 2001 and 2000. One vendor
accounted for 22% of the total accounts payable at December 31, 2001 and 2000,
respectively. Although there are other suppliers of these materials, a change in
suppliers could cause delays in the production process, which could ultimately
affect operating results.

     Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist primarily of trade accounts receivable. Exposure to
losses on accounts receivable is principally dependent on the individual
customer's financial condition, as credit sales are not collateralized. The
Company monitors its exposure to credit losses and writes off those accounts
receivable that it deems to be uncollectible. The Company had two customers that
accounted for 75% and 74% of the Company's sales for the years ended December
31, 2001 and 2000, respectively. Two customers accounted for 87% and one
customer accounted for 86% of the accounts receivable balance at December 31,
2001 and 2000, respectively.

     Management's Plan

Management plans include completion of the Company's development program and
attainment of profitable operations by achieving sufficient sales to support the
Company's cost structure. The future sales growth is planned to be achieved
through distributors selling to hospitals, laboratories, law enforcement, and
retail outlets. The Company's sales increased in the year 2001primarily due to

                                        F-23
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


12. COMMITMENTS AND CONTINGENCIES, CONTINUED
--------------------------------------------

     Management's Plan, Continued

the sale of its retail products. Management's plan includes the continued focus
on sales efforts within the retail markets, given their higher gross profit
margins, product and operating cost reductions, and the continued development of
the Company's own laboratory and laboratory testing business.

The Company has relied upon debt and equity funding from shareholders since
inception. The Company plans to raise additional equity by private placement
sales and a public offering of common stock to new and existing stockholders in
order to fund operations until the Company is consistently profitable. In
addition, the Company has entered several settlement agreements resolving
disputes, litigation and regulatory matters, which require a significant
commitment of funds. Management believes that such funding will be available,
but the ability to obtain and the adequacy of such funding, if any, are
uncertain. In addition, the Company is unable to assess the possible outcome and
the effect on the Company's operations and cash flows from the litigation and
related party dispute mentioned above.

     Operating Leases

The Company rents its facility under an operating lease agreement, which extends
through June 2005. The Company has the option to extend the lease for one
three-year period at the then current market rate.

Future minimum lease payments at December 31, 2001 are as follows:

2002                                     $ 125,941
2003                                       125,941
2004                                       125,941
2005                                       104,941
2006                                             -
                                         ---------
     TOTAL MINIMUM LEASE PAYMENTS        $ 482,764
                                         =========

Rent expense was $87,647 and $91,505 for the years ended December 31, 2001 and
2000, respectively.

     Co-operative Promotions

During 2001, the Company committed to provide two of its largest customers an
aggregate of approximately $245,000 for co-operative promotions and advertising
during 2002 and 2003.

                                        F-24
<PAGE>


                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


12. COMMITMENTS AND CONTINGENCIES, CONTINUED
--------------------------------------------

     Employment Taxes

The Company, in its fiduciary capacity as an employer, has the primary
responsibility for deducting and remitting both the employer and employee
portions of payroll related taxes to the appropriate governmental agencies.
During 1999, the Company paid compensation of $119,440 to two of its officers
from whom these taxes, approximating $30,000, were neither withheld nor remitted
to the governmental authorities involved. If, as a result of not withholding
employment taxes, the employees incur an income tax liability that ultimately
results in a deficiency, the Company becomes contingently responsible, if the
employees cannot or do not satisfy that liability. The Company is contingently
liable for these taxes, penalties, and interest. The employer portion of the
payroll-related taxes has been recorded as a liability by the Company and will
remain there until the federal and state statues of liability lapse.

     Settlement of Dispute

During 1999, disputes arose between the Company and its "then president" over
various matters. In February 2000, the Company's "then president" resigned and
in June, entered into a settlement agreement with the Company. The agreement
provided, among other things for the former president to issue a $310,000
interest-bearing note to the Company that is payable over a seven year period
and the pledge of all his shares of the Company's common stock as collateral for
the note. The Company recognized the note receivable only to the extent of the
value of the underlying collateral and concluded that income from the amounts
due under the note in excess of the receivable recorded should be recognized
only as payments are received. To date, payments of $10,000 have been received,
and the note receivable balance has decreased by the reduction in the fair value
of the shares held as collateral and by the fair value of the shares the former
officer agreed to liquidate for the benefit of the Company related to a
settlement with the former chief financial officer of $20,090. Amounts recorded
as due from the former officer were $7,749 and $35,870 at December 31, 2001 and
2000, respectively.

     Settlement of Litigation

In August 2000, a former chief financial officer of the Company filed suit
against the Company alleging breach of employment contract, wrongful
termination, failure to pay compensation when due and violation of a California
Labor Code Section. In October 2000, the Company filed a response denying the
allegations. In February 2002, the parties entered into a memorandum of
agreement to settle the lawsuit whereby the Company will pay the former employee
a total of $27,000 in four installments during the first 90 days following the
execution of the more formal settlement document. After the payment of the last
$6,750 of the $27,000, the Company will then make fourteen consecutive monthly
payments of $3,425.

                                        F-25
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


12. COMMITMENTS AND CONTINGENCIES, CONTINUED
--------------------------------------------

     Settlement of Litigation, Continued

The Company will also issue 88,500 restricted shares of its common stock to the
former employee. If the value of these shares in one year is not equal to
$88,500, such additional shares will be issued or shares will be returned as is
necessary until the then value of the shares equal this amount. In summary, the
Company recognized a litigation settlement expense of $183,540 in the year ended
December 31, 2001 including $20,090 related to the fair value of the shares
provided for the Company's benefit by the former officer (president) mentioned
in this note. As of this report date, the formal settlement document has not
been signed.

     Amendment to Settlement with Customer

In June 2001, the Company settled a claim with a customer wherein the Company
agreed to pay certain amounts followed by periodic payments over approximately
two years. Since then, the Company has been unable to make the agreed payments
as scheduled, and at December 31, 2001, the Company owed the customer $350,000.
As a result, in April 2002, the Company and the customer agreed to modify the
payment terms of the original agreement to provide for an interest charge and
the issuance of default warrants if the Company fails to make any of the
required monthly payments. The modification requires the Company to pay $50,000
on May 1, 2002, and the $12,500 per month starting May 1, 2002 until $300,000
has been paid. Each warrant will not reduce the amount owed by the Company and
expires two years after the date of issuance. These default warrants are
exercisable at 75% of the average closing share price of the Company's common
stock 10 days prior to the due date of the monthly payment in respect to which
the Company is in default. In addition, the Company agreed to replace the
stipulated judgment documentation with such other substitute documentation to
permit the customer to seek and obtain from the court a judgment for $517,500
less any payments made by the Company.

13. LEGAL EXPENSE
-----------------

The Company experienced legal expense for the each of two years in the period
ended December 31, 2001 as follows:

                                                           2001           2000
                                                           ----           ----
General and corporate securities matters                 $186,307       $ 97,236
Settlement related                                         95,387        163,091
                                                         --------       --------
TOTAL LEGAL EXPENSE                                      $281,694       $260,327
                                                         ========       ========

                                        F-26
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


14. STOCK COMPENSATION PLAN
---------------------------

The Company currently has a formal stock compensation plan that provides for the
granting of options to employees and consultants.

     Employees

The following summarizes information about stock options granted and outstanding
at December 31, 2001 and 2000, and changes during the years then ended:

                                                          Weighted
                                                          Average
                                                          Exercise
                                      Options               Price
                                      --------              -----
OUTSTANDING AT DECEMBER 31, 1999       254,000              $ 0.82
Granted                                 82,500                0.25
Exercised                                    -                   -
Cancelled                                    -                   -
Expired                               (100,000)               0.50
                                      --------              ------
OUTSTANDING AT DECEMBER 31, 2000       236,000                0.74
Granted                                      -                   -
Exercised                                    -                   -
Cancelled                                    -                   -
Expired                                      -                   -
                                      --------              ------
OUTSTANDING AT DECEMBER 31, 20         236,000              $ 0.74
                                      ========              ======

The 236,000 options outstanding at December 31, 2001, have an exercise price
range of $0.25 to $1.00 and a weighted average remaining life is two and a
one-half (2 ) years. At December 31, 2001 and 2000, 236,000 shares of common
stock, respectively, were reserved for exercise of outstanding options.

     Nonemployees

The Company accounts for stock-based compensation awards to nonemployees based
upon fair values at the grant dates in accordance with SFAS No. 123. The
consideration received for the granting of stock purchase warrants is based on
the fair value of the goods or services received or the value of the warrants
issued, whichever is more reliably measurable. The Black Scholes Option Pricing
Model is used to determine the fair value of the warrants when the value of the
services is based on the value of the warrants issued. The fair value of the
warrants is amortized over the periods the Company receives the goods or
services.

                                        F-27
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


14. STOCK COMPENSATION PLAN, CONTINUED
--------------------------------------

     Nonemployees, Continued

The following summarizes information about warrants granted to nonemployees and
outstanding at December 31, 2001 and 2000 and the changes during the years then
ended.
                                                                    Weighted
                                                                     Average
                                                                    Exercise
                                                     Warrants         Price
                                                     --------         -----
BALANCE AT DECEMBER 31, 1999                          371,500         $0.79
Granted                                                     -            -
Exercised                                                   -            -
Cancelled                                                   -            -
Expired                                              (100,000)       (0.50)
                                                     --------        ------
BALANCE AT DECEMBER 31, 2000                          271,500          0.90
Granted                                                     -            -
Exercised                                                   -            -
Cancelled                                                   -            -
Expired                                               (30,000)       (1.70)
                                                     --------       ------
BALANCE AT DECEMBER 31, 2001                          241,500       $ 0.80
                                                     ========       ======

Summary information about the 271,500 warrants outstanding at December 31, 2001
follows:
                                       Warrants            Weighted
                                      Outstanding           Average
     Range of Exercise Prices      December 31, 2001    Contractual Life
     ------------------------      -----------------     ---------------
     $0.30 to $0.60                     150,000            2.9  years
     $0.75 to $1.50                     106,500            2.0  years
     $2.00                               15,000            1.0  years
                                        -------            ----------
                                        271,500            2.4  years
                                        =======            ==========

15. DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS
----------------------------------------------------------

The estimated fair value amounts of all financial instruments on the Company's
December 31, 2001 and 2000 balance sheet have been determined by using available
market information and appropriate valuation methodologies. Fair value is
described as the amount at which the instrument could be exchanged in a current
transaction between informed willing parties, other than in a forced
liquidation. However, considerable judgment is necessarily required in
interpreting market data to develop the estimates of fair value.

                                        F-28
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


15. DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS, CONTINUED
---------------------------------------------------------------------

Accordingly, the estimates presented herein are not necessarily indicative of
the amounts that the Company could realize in a current market exchange. The use
of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts. The Company does not have
any off balance sheet financial instruments.

The Company in estimating fair value disclosures for the financial statements
used the following methods and assumptions:

     Current

     Cash and equivalents, accounts receivable, inventories, other current
     assets, lines of credit, accounts payable, accrued expenses and certain
     other current liability amounts approximate fair value due to the short
     term maturities of these instruments.

     Noncurrent

     The fair value of noncurrent notes payable is estimated by determining the
     net present value of future payments. The carrying amount on the balance
     sheet approximates the fair value or the interest rates approximate current
     market rates.

16. LOSS PER COMMON SHARE
-------------------------

The computation of basic and diluted loss per common share for the years ended
December 31, 2001 and 2000 is as follows:
                                                      2001             2000
                                                      ----             ----
                                                  (As Restated)
Net loss available to common shareholders:
     Net loss before extraordinary                  (1,579,341)    $ (1,154,082)
     Extraordinary gain                                 68,104           46,334
                                                  ------------     ------------
     Net loss available to
     common shareholders
             (numerator)                          $ (1,511,237)    $ (1,108,548)
                                                  ============     ============

Weighted-average shares outstanding
basic and diluted (denominator)                     12,995,088        9,576,079
                                                  ============     ============

Basic and diluted loss per common share:
     Net loss before extraordinary gain           $      (0.12)    $      (0.12)
     Extraordinary gain                                   0.01             0.01
                                                  ------------     ------------
BASIC AND DILUTED LOSS PER COMMON SHARE           $      (0.11)    $      (0.11)
                                                  ============     ============


                                        F-29
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


16. LOSS PER COMMON SHARE, CONTINUED
------------------------------------

The effect of the potentially dilutive securities listed below was not included
in the computation of diluted loss per share, because to do so would have been
anti-dilutive for the periods presented.
                                                       2001             2000
                                                       ----             ----
Shares of common stock issuable under:

     Employee stock options                           236,000          236,000
     Stock purchase warrants                          783,500        1,120,294

17. OUTSTANDING WARRANTS
------------------------

At December 31, 2001 and 2000, the Company had outstanding warrants to purchase
783,500 and 1,120,294 shares of the Company's common stock, respectively, at
exercise prices ranging from $0.30 to $1.50 and $0.20 to $2.00 per share,
respectively. The warrants expire at various dates through 2003. At December 31,
2001, all the warrants are exercisable.

At December 31, 2001 and 2000, 783,500 and 1,120,294 shares of common stock,
respectively, were reserved for exercise of outstanding warrants.

18. COMMON STOCK TRANSACTIONS
-----------------------------

     Shares Issued in Private Placement

In 2001, the Company issued 129,613 shares of its common stock at $0.20 per
share amounting to $25,922.

     Shares Issued on the Exercise of Warrants

In 2001, the Company issued 1,025,244 shares of its common stock upon exercise
of warrants with an exercise price of $0.20 per share. Of the proceeds, $33,300
was in the form of receivables, which are reflected as a reduction of
shareholders' equity.

     Shares Issued on Conversion of Debentures

In 2000, the Company issued 3,195,177 shares of common stock upon conversion of
debentures amounting to $798,793. Of the proceeds from the issuance of the
debentures, $85,505 was in the form of receivables, which upon the conversion of
the debentures, are reflected as a reduction of shareholders' equity. Of the
$85,505 of common stock receivables, $60,000 is due from an officer of the
Company.


                                        F-30
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


18. COMMON STOCK TRANSACTIONS, CONTINUED
----------------------------------------

     Shares Issued for Services

In 2000, the Company issued 100,000 shares of common stock for $25,000 for
financial consulting services based on the fair value of the Company's common
stock on the date of issuance.

In 2000, a former marketing consultant for the Company claimed $50,000 was owed
for services. The Company disputed the claim, but later agreed to issue 32,511
shares of common stock in full satisfaction of the $50,000 claim for such
services to avoid litigation. The number of the shares issued was determined
using the average fair value of the common stock for the period the disputed
services claimed to have been provided. Months later, the former marketing
consultant sold the 32,511 shares to the Company for a cash payment of $12,000,
and the shares were then canceled.

     Shares and Warrants Issued in Settlement of Litigation

In 2001, the Company issued shares as part of a settlement of an account payable
- related party (Note 7) whereby 300,000 shares were issued at the fair value as
of the date of the settlement agreement. These shares are being held by an
attorney in escrow for distributions in accordance with the terms of the
settlement agreement. The transaction resulted in the recognition of $99,000 of
prepaid interest by the Company. Effective January 1, 2002, 75,000 shares were
released from escrow in accordance with the terms of the agreement.

In 2001, the Company, as part of the same settlement issued 1,515,000 shares at
par value, which are being held by an attorney in escrow as part of a collateral
agreement. The transaction resulted in a reduction of additional paid-in capital
of $15,150.

In 2001, the Company issued warrants to purchase 656,000 shares of common stock
to the related party who is the sole owner of the entity involved in the
settlement (Note 7). The issuance of the warrants resulted in a settlement
expense of $157,440 based on the value calculated by the Black Scholes Option
Pricing Model as of the date of the agreement.

     Warrants Issued with Debentures

In 2000, the Company issued warrants to purchase 3,993,965 shares of common
stock at $0.20 per share in conjunction with the issuance of convertible
debentures. The proceeds from the sale of the debenture units was allocated
between the debt and warrants based on their relative fair values resulting in
the Company recognizing an interest expense of $113,172 in 2000. In 1999, the
Company entered into a transaction with an individual to sell 300,000 shares of
its restricted common stock for $150,000 in connection with its 1999 private
placement. Subsequently, disputes arose over the transaction. In an effort to
avoid litigation the

                                        F-31
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


18. COMMON STOCK TRANSACTIONS, CONTINUED
----------------------------------------

     Warrants Issued with Debentures, Continued

Company agreed to increase the number of shares acquired to 428,571 for the
consideration previously paid. However, in September 1999, the individual
brought suit against the Company. The individual claimed that the shares issued
were not according to the agreement. In 2000, the Company entered into a
settlement agreement with the individual. In this connection, the Company agreed
to pay the individual $105,000 and the individual agreed to return 11,904
previously issued shares to the Company for cancellation. The Company recognized
a settlement expense of $105,000 in 2000.

     Beneficial Conversion Feature Related to Debenture

In 2000, the Company's issuance of convertible debentures included a beneficial
conversion feature with an intrinsic values totaling $205,647. The value of the
beneficial conversion feature resulted in the recognition of a debt discount.

19. ACQUISITION OF SPECTRUM ANALYTICS, INC.
-------------------------------------------

On April 3, 2002, the Company acquired the other 50% interest of Spectrum
Analytics, Inc. owned by Drs. Rojas and Moretti. The Company gave 50,000 shares
of its common stock with an estimated fair market value of $21,500 and forgave
$57,940 due from an entity owned by Dr. Moretti through which she held her
ownership of Spectrum. As a result, Spectrum is a wholly owned subsidiary and
the transaction will be recorded at the value of the shares given and the amount
forgiven. Allocation of the purchase price has not yet been determined.

20. REGULATORY MATTERS
----------------------

In February 2001, the FDA filed an administrative civil penalties action against
the Company and certain of its current and former officers (the "individuals")
that sought penalties in the amount of $1,000,000 from the Company and a total
of $2,290,000 from the individuals. In April 2002, the Company, the individuals,
and the FDA agreed to enter into a settlement agreement (the "settlement") that
resolves all FDA claims concerning the introduction of the Company's drug test
products into interstate commerce during the period from July 1999 through June
2000. The settlement document has not been signed, as of the date of this
report, by any of the involved parties. The proposed settlement resolves all
known FDA actions currently pending against the Company. The settlement document
provides that none of its provisions shall be construed as an admission of
liability by the Company and the individuals.

The proposed settlement will require the Company to pay a total of $150,000 with
$50,000 due within 45 days of the filing of the settlement with the FDA. The
Company must make two additional payments of $50,000. The first of the payments

                                        F-32
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


20. REGULATORY MATTERS, CONTINUED
---------------------------------

is due no later than one year after the filing of the settlement, and the second
$50,000 payment is due no later than two years after the filing of the
settlement. In addition, the individual who is a former officer of the Company
must pay a total of $100,000 with $20,000 due within two years and the
additional $80,000 due within three years from the filing of the settlement.
Interest shall accrue and be paid on all settlement amounts, except for the
initial payment made by the Company, from the settlement filing date. The
interest rate will be equal to the weekly average one-year constant maturity
treasury yield for the first calendar week preceding the date of the filing of
the settlement. The settlement document has not been filed as of the report
date, and the applicable interest rate is currently at 2.61% per annum.

The proposed settlement provides for the Company to guarantee the payment
obligation of the former officer. Accordingly, the Company has recorded its
obligation along with the former officer's payment obligation as a liability.
The Company has not recorded an amount due from the same individual, as the
former officer's future payments are contingent. If the individual makes any
future payments on the FDA liability or repays the Company for payments it makes
on his behalf, the Company will recognize income at that time.

If the Company or the individual who have payment liabilities fails to make the
necessary payments as described in the settlement, the interest rate doubles
effective as of the settlement default date. Upon receipt of all payments under
the settlement, the FDA will dismiss the administrative complaint. The other two
individuals involved in the February 2001 FDA administrative penalties action
are not obligated to make any payments under the settlement.

21. RESTATEMENT OF INTERIM FINANCIAL STATEMENTS
-----------------------------------------------

In the unaudited balance sheet and related unaudited statements of operations,
shareholders' equity and cash flows of the Company as of September 30, 2001 and
for the nine-month period then ended, the Company had consolidated the results
of operations of Spectrum. This error was crrected when the financial
statements as of September 30, 2001 and for the nine month period then ended
were restated. The Company revised its financial statements and reported its 50%
interest in Spectrum under the equity method of accounting. The effects of the
correction of the error resulting in the restatement of the unaudited interim
period financial statements are as follows:

                                                   As  Issued    As  Restated
                                                   ----------    ------------
Income before extraordinary items                   $282,036       $245,822
                                                    ========       ========
Net income                                          $327,517       $291,303
                                                    ========       ========
Earnings (loss) per share                           $   0.03       $   0.02
                                                    ========       ========


                                        F-33
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


22. UNAUDITED QUARTERLY FINANCIAL DATA
--------------------------------------

The following is a reconciliation of the nine months ended September 30, 2001
results of operations, which were impacted by the effect of year-end
adjustments:
                              Original
                           As Reported In     As Restated In     Adjusted
                           Form 10SB/A-1      Form 10SB/A-2     As Restated
                           -------------      -------------     -----------

Net Sales                   $  2,624,729      $  2,624,729      $ 2,330,196(2)
                            ============      ============      ===========
Costs and expenses          $  2,297,212      $  2,333,426(1)   $ 2,667,323(3)
                            ============      ============      ===========

Net income  (loss)          $    327,517      $    291,303      $  (337,127)
                            ============      ============      ===========
Net income (loss)
per share - basic
and diluted                 $       0.03      $       0.02      $     (0.02)
                            ============      ============      ===========

The following is a reconciliation of the six months ended June 30, 2001 results
of operations, which were impacted by the effect of year-end adjustments:

                                              Original
                                            As Reported In          Adjusted
                                              Form 10SB           As Restated
                                              ---------           -----------

Net Sales                                  $      2,005,549       $ 1,767,524(2)
                                           ================       ===========
Costs and expenses                         $      1,763,185       $ 1,783,824(3)
                                           ================       ===========
Net income (loss)                          $        242,364       $   (16,300)
                                           ================       ===========
Net income (loss) per
share - basic and diluted                  $           0.02       $     (0.00)
                                           ================       ===========


(1) The costs and expenses increased as a result of a restatement requiring the
deconsolidation of Spectrum and the recognition of funds advanced on the
investment in Spectrum that were not recoverable.

(2) Net sales decreased due to adjustments relating to discounts, credits and
allowances

     Net sales decreased due to adjustments in the three months ended December
31, 2001 because of discounts, credits and allowances on sales of $136,776.

                                        F-34
<PAGE>

                          WORLDWIDE MEDICAL CORPORATION
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                    AS OF DECEMBER 31, 2001 AND 2000 AND FOR
           EACH OF THE TWO YEARS IN THE PERIOD ENDED DECEMBER 31, 2001


22. UNAUDITED QUARTERLY FINANCIAL DATA, CONTINUED
-------------------------------------------------

(3) Adjustments to the following costs and expenses increased as shown below for
the described periods:

                            Three Month           Nine Month         Six Month
                            Period Ended         Period Ended      Period Ended
                          December 31, 2001   September 30, 2001   June 30, 2001
                            (As Restated)        (As Restated)     (As Restated)
                            -------------        -------------     -------------

Increase in cost
of sales                     $   45,316            $ 313,336         $ 175,954
                             ==========            =========         =========
Increase (decrease)in
selling,
general, and
administrative
costs                        $  174,010            $(150,111)        $(283,488)
                             ==========            =========         =========
Increase (decrease) in
settlement
costs                        $  493,450            $   3,571         $  (3,571)
                             ==========            =========         =========
Increase (decrease) in
interest
expense                      $  (41,793)           $  49,478         $  30,435
                             ==========            =========         =========
Increase in
the loss in
Spectrum                     $   27,597            $ 136,686         $ 117,339
                             ==========            =========         =========

Increase in
gain on debt
settlement                   $     --              $ (19,063)        $ (16,030)
                             ==========            =========         =========

23.  RESTATED FINANCIAL DATA FOR FISCAL YEAR ENDING DECEMBER 31, 2001

The accompanying financial statements for the fiscal year ending December 31,
2001 have been restated to account for an additional $105,580 of expense
relating to fiscal 2001 which was not recognized by the Company due to data
which was (unknowingly at the time the financial statements were issued)
incomplete. The adjustments related to unaccrued legal fees amounting to
$82,080, unaccrued customer allowances of $15,500, and unaccrued director fees
of $8,000. The effect of the restatement was to increase the loss before
extraordinary gain and net loss to $1,579,341 and $1,511,237 from $1,473,761 and
$1,405,657 respectively. The restatement had no effect on the per share amounts
previously reported.

                                        F-35
<PAGE>


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

     There have been no events or conditions requiring reporting under the
requirements of this item.

                                    PART III

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

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Our executive officers and directors are:

Name                  Age  Office
--------------------  ---  ------

Daniel G. McGuire. .   48  President, Chief Executive Officer, and
                           Chairman of the Board of Directors
Francisco J. Rojas .   53  Chief Scientific Officer and Director
Jeffrey C. Burke . .   45  Chief Financial Officer
Jemo Kang. . . . . .   60  Director
James G. Barrons . .   62  Director
G. Wendell Birkhofer   70  Director
David M. Jeranko . .   42  Director
Jeffrey H. Nicholas.   48  Director


     Daniel G. McGuire joined us as a director in October of 2000 and as an
officer since April of 2000 when he was elected to serve as our President and
Chief Executive Officer. Mr. McGuire continues to serve in this capacity at the
present time. Mr. McGuire was the president of Worldwide Sales Management
Corporation ("Worldwide Sales"), an entity that provided sales, marketing, and
financial consulting services to consumer package goods manufacturers
specializing in the retail drug, mass and supermarket channels of distribution
from 1977 through 2000. See Item 12. Certain Relationships and Related
Transactions for information about our relationship with Worldwide Sales.

     Francisco J. Rojas, Ph.D., joined us in January of 1997 as our Director of
Research for Reproductive Endocrinology & Immunology and currently serves as our
Chief Scientific Officer. He also has served as one of our directors since May
of 2001. Dr. Rojas received his Ph.D. in Endocrinology in 1997 from the Medical
College of Georgia. He completed his postgraduate work in Cell and Molecular
Biology in Georgia, and his work in cell Biology at Baylor College of Medicine
in Houston, Texas. Dr. Rojas received a Doctoral Degree in Biochemistry from the
University of Chile, Santiago, Chile. Dr. Rojas was an Associate Professor and
Director of Laboratory of Reproductive Endocrinology and Infertility at the
Department of Obstetrics and Gynecology, University of California, Irvine, from
1986 to 1996. From inception in January of 2001 through its purchase by us, Dr.
Rojas owned 25 percent of Spectrum. See Item 12. Certain Relationships and
Related Transactions -- Spectrum Analytics, Inc. / Francisco Rojas, Ph.D.

     Jeffrey C. Burke, CPA, joined us joined us as our Chief Financial Officer
in October of 2000. During the two years prior to his joining us on a full-time
basis, he was an independent financial consultant a variety of other entities
and to us. Between June of 1994 and October of 1998, Mr. Burke was the Chief
Financial Officer of Tasman Roofing Company in Corona, California, a
manufacturing and distributing company.

     Jemo Kang, Ph.D., joined us as a director upon our formation in 1996 and
served as co-chair of our board of directors between November of 2000 and
November of 2001. For more than the past five years, Dr. Kang has been the
President and Chief Executive Officer of PBM, a privately held biotech
manufacturer of diagnostic devices located in Princeton, New Jersey, that
develops, manufactures, and distributes rapid, point of care diagnostic
products, including products similar to those sold by the Company. See Item 12.
Certain Relationships and Related Transactions -- Princeton BioMeditech
Corporation / Jemo Kang. Dr. Kang also serves as a director of Spectral
Diagnostics, Inc. ("SDI"), an Ontario, Canada, corporation whose shares are
traded on the Toronto Stock Exchange. SDI develops and sells membranes and
reagents for the detection of biochemical markers that are indicative of disease
and manufactures its "Cardiac STATus" tests.

                                       40
<PAGE>


     James G. Barrons joined us as a director in February of 2000, and currently
serves as a director. Mr. Barrons retired from his position as Manager of
Information Technology Business Operations for Radar Systems Group at Hughes
Electronics in June of 1996. Most recently, in August of 2000, Mr. Barrons
formed Cyber Marketing Concepts, Inc. ("Cyber Marketing"), a company that
markets and distributes our products via the Internet. See Item 12. Certain
Relationships and Related Transactions -- Cyber Marketing Concepts, Inc. / James
G. Barrons.

     G. Wendell Birkhofer joined us as a director in October of 2001. Mr.
Birkhofer is an Investment Banking/Venture Capital Consultant. For more than the
preceding five years, Mr. Birkhofer has been a consultant to New World Capital
Markets, Inc. ("New World"), an investment banking boutique with offices in
Santa Barbara, California, and affiliated offices located in Washington D.C. and
Zurich, Switzerland. Between January of 2000 and Januray 24, 2001, Mr. Birkhofer
was a consultant to Citadel, a venture capital investment company located in
Pasadena, California. See Item 12. Certain Relationships and Related
Transactions -- Citadel Capital Management Corporation; New World Capital
Markets, Inc. / G. Wendell Birkhofer.

     David M. Jeranko joined us as a director in April of 2000 and continues to
serve in that capacity. For more than the past five years, Mr. Jeranko has owned
and operated Alante Insurance Agency, a property and casualty insurance agency
in Mission Viejo, California.

     Jeffrey H. Nicholas, Esq., joined us as a director in October of 2000 and
continues to serve in that capacity. Mr. Nicholas is a business law attorney and
a partner in the Philadelphia law firm of Fox, Rothschild, O'Brien & Frankel,
LLP. In the course of his practice, Mr. Nicholas and his firm routinely
represent PBM and Dr. Kang. See Item 12. Certain Relationships and Related
Transactions -- Princeton BioMeditech Corporation / Jemo Kang. Mr. Nicholas also
serves as a director of Met-Pro Corporation ("MPR"), a Delaware corporation
whose securities are traded on the New York Stock Exchange. MPR specializes in
product recovery/pollution control equipment for purification of air and liquid
corrosive, abrasive, and high temperature liquids.

     Each of our directors has been elected to serve until the next meeting of
stockholders. Except as described below, there are no arrangements or
understandings between any director and any other person pursuant to which any
person was elected or nominated as a director. Following our 2001 Annual Meeting
of Stockholders and in connection with the agreements that we memorialized with
PBM on May 9, 2001 (the "PBM Agreements"), the Company and its current directors
reached the following understandings with respect to the service of certain of
our directors:

-    For so long as the Company remains indebted to PBM under its Convertible
     Secured Promissory Note dated as of January 1, 2001, and except as
     otherwise required by the bylaws, our board of directors will not call a
     special or annual meeting of our stockholders for the purpose of electing
     or replacing directors if the purpose of such meeting would be inconsistent
     with the terms of the understandings;

-    For so long as the Company owes at least $350 thousand to PBM, neither our
     board of directors nor our management will take any action to remove Mr.
     Nicholas  as  a  director;

                                       41
<PAGE>


-    Once our financial obligations to PBM have been reduced to less than $350
     thousand, Mr. Nicholas has agreed to resign as one of our directors;

-    Until our financial obligations to PBM have been fully satisfied, and if
     our board of directors nominates a slate for election of directors at any
     annual or special meeting of stockholders, our board of directors has
     indicated that it will continue to nominate Dr. Kang or an individual
     nominated by him, with the exception of Mr. Nicholas, for re-election as
     one of our directors;

-    Until our financial obligations to PBM have been fully satisfied, and if
     our board of directors nominates a slate for election of directors at any
     annual or special meeting of stockholders, and if our board of directors
     solicits proxies from our stockholders:

     a.   the named proxy holders shall be the entire board of directors;
     b.   each of our directors has agreed to vote his shares for the nominated
          slate; and
     c.   none of our directors shall solicit any other proxies.

-    Until our financial obligations to PBM have been fully satisfied, each of
     our directors has agreed not to solicit consents to elect or replace any of
     our directors, unless each of our directors agrees with such solicitation.

     Except as described below, our executive officers serve at the discretion
of the Board of Directors. Article III, Section 8 of our Amended Bylaws provides
that, for so long as we are indebted to PBM and if at such time Dr. Kang is one
of our Directors, he shall have the right to veto decisions by our other
Directors with respect to the selection, retention, and terms and conditions of
employment of our Chief Executive Officer, President, Chief Operating Officer,
and Chief Financial Officer. In connection with the PBM Agreements, Dr. Kang
agreed not to exercise his veto right from and after the date on which the
outstanding principal of the PBM Note did not exceed $531,513.37. As of the date
of this Annual Report, the outstanding principal is approximately $476 thousand.
However, until we have reduced the principal amount of the PBM Note to less than
$256,513.37, Dr. Kang maintains his veto rights if we are in default on our
payment obligations under the PBM Note. See Item 12. Certain Relationships and
Related Transactions -- Princeton BioMeditech Corporation / Jemo Kang.

     Mr. McGuire acts as our president and chief executive officer pursuant to
an employment agreement, the material terms of which are described in Item 10.
Executive Compensation.

ITEM 10. EXECUTIVE COMPENSATION

     On April 4, 2000, Daniel G. McGuire became the President of the Company and
entered into an Employment Agreement with us. We pay Mr. McGuire an annual base
salary of $125 thousand and a monthly car allowance of $600. In addition, Mr.
McGuire is entitled to an annual bonus, calculated as a percentage of our
pre-tax net income. The pro-rated bonus amount for the year ending December 31,
2000, totaled $20 thousand. The initial term of the Employment Agreement was for
six months, with an additional, automatic extension of six months that was
exercised. Thereafter, the Employment Agreement continues in effect until
terminated by either party.

                                       42
<PAGE>


     The Employment Agreement contains two concurrent termination provisions;
the "reducing termination entitlements" and the "standard termination
entitlements." As of October 4, 2001, Mr. McGuire was entitled to a reducing
termination entitlement in an amount equivalent to six month's base salary. For
each month thereafter that Mr. McGuire remains employed by us, the reducing
termination entitlement is reduced by one month, such that, effective April 4,
2002, the reducing termination entitlements was eliminated. We are obligated to
pay to Mr. McGuire a standard termination entitlement, or an amount equivalent
to one year's base salary and any vacation or bonus accrued to the date of such
termination, in the event that we terminate him without cause or that he resigns
for good reason after a change of control of the Company. The Employment
Agreement defines good reason as (i) our failure to honor any of our material
obligations; (ii) a significant adverse change in the nature or scope of his
authorities, powers, functions, responsibilities, or duties; (iii) a reduction
in his base salary, or the termination or a reduction of his rights to any
continuing employee benefit; or (iv) certain travel-related issues.

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

                                         Annual Compensation                  Long-Term Compensation

                                                                    Awards        Payouts

Name and. . . . .                                        Other     Restricted    Securities
Principal . . . .                                       Annual       Stock       Underlying      LTIP        All Other
Position. . . . .  Year   Salary          Bonus    Compensation    Award(s)    Options/SARs   Payouts   Compensation (4)
-----------------  ----   ------          -----    ------------    --------    ------------   -------   ----------------
                              ($)            ($)             ($)         ($)             (#)       ($)

Daniel G. McGuire  2001  $ 125,000                    $ 7,200(1)                   35,000(2)
                   2000  $ 93,750 (3)  $ 20,000       $ 7,200(1)

H. Thad Morris. .  2000  $ 17,717 (4)         0             0           0                0         0                 0
</TABLE>


(1)  In our 2001 and 2000 fiscal years, Mr McGuire received a monthly automobile
     allowance for $600.

(2)  In May 2001, Mr. McGuire was granted options to purchase 25,000 shares of
     the Company's common stock at $0.25 per share vesting over 36 months. In
     October 2001, Mr. McGuire was granted options to purchase up to 10,000
     shares, at an exercise price of $0.35, expiring on October 30, 2006.

(3)  Mr. McGuire's annualized base compensation for the Company's 2000 fiscal
     year was $125 thousand. He became the Company's President and Chief
     Executive Officer on April 4, 2000.

(4)  Mr. Morris resigned as of April 4, 2000.

DIRECTOR COMPENSATION

                                       43
<PAGE>


     Each director receives an annual fee of $10 thousand, plus a $500 fee per
board meeting and options to purchase 10,000 shares of the Company's common
stock.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than 10
percent of the Company's stock, to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission. Executive
officers, directors and greater than 10 percent beneficial owners are required
by applicable regulations to furnish the Company with copies of all Section
16(a) forms they file. Based solely upon a review of the copies of such forms
furnished to the Company and information involving securities transactions of
which the Company is aware, the Company believes that during our 2001 fiscal
year, all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than 10 percent beneficial stockholders were
complied with.

     Except as otherwise indicated by footnote, the following table sets forth
certain information regarding the beneficial ownership of Common Stock at April
3, 2001, by (i) each person, including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, known by management to
own beneficially more than 5 percent of our outstanding Common Stock, (ii) each
of our directors, and (iii) all of our executive officers and directors of the
Company as a group.

Name and Address (1). . . . . . . . .  Number of Shares  Percentage of Class
-------------------------------------  ----------------  -------------------

Daniel G. McGuire (2) . . . . . . . .           389,929                 2.5%
Francisco Rojas (3) . . . . . . . . .           310,160                 2.0%
Jemo Kang (4) . . . . . . . . . . . .         3,728,514                22.0%
James G. Barrons (5). . . . . . . . .           307,500                 2.0%
G. Wendell Birkhofer (6). . . . . . .           110,000                   *
David M. Jeranko (7). . . . . . . . .           265,041                 1.7%
Jeffrey H. Nicholas (8) . . . . . . .            10,000                   *
Princeton BioMeditech Corporation (9)         3,728,514                22.0%
Citadel Capital Management Group (10)           950,000                 6.3%
All directors and executive officers
as a group (8 persons) (11) . . . . .         5,174,269                30.3%


(1) We believe that all persons have full voting and investment power to the
shares. Under the rules of the Securities and Exchange Commission, a person, or
group of persons, is deemed to be a "beneficial owner" of a security if he or
she, directly or indirectly, has or shares the power to vote or to direct the
voting of such security. Accordingly, more than one person may be deemed to be a
beneficial owner of the same security. A person is also deemed to be a
beneficial owner of any security, which that person has the right to acquire
within 60 days, such as warrants, or options to purchase shares of the Company's
common stock.

                                       44
<PAGE>


(2) Includes 342,429 shares beneficially owned by Mr. McGuire (of which, 12,500
shares are issuable to Mr. McGuire in connection with the Company's private
placement of debt and equity securities in March of 2002), plus options,
exercisable by Mr. McGuire as of, or within 60 days of, the date of this Annual
Report, to purchase up to 25,000 shares at an exercise price of $0.25 per share,
expiring on May 9, 2006, and up to 10,000 shares, at an exercise price of $0.35,
expiring on October 30, 2006. Mr. McGuire's address is c/o Worldwide Medical
Corporation, 13 Spectrum Pointe Drive, Lake Forest, California 92630.

(3) Includes 250,160 shares beneficially owned by Dr. Rojas, plus options
exercisable by Dr. Rojas as of, or within 60 days of, the date of this Annual
Report, to purchase up to 10,000 shares, at an exercise price of $0.35, expiring
on October 30, 2006, and 50,000 shares issuable as a result of the sale of Dr.
Rojas' interest in Spectrum Analytics to the Company. See also Item 12. Certain
Relationships and Related Transactions. Dr. Rojas' address is c/o Spectrum
Analytics, Inc., 13 Spectrum Pointe Drive, Lake Forest, California 92630.

(4) Includes 266,666 shares beneficially owned by Dr. Kang and (i) 70,000 shares
owned by two individuals who have agreed to transfer record ownership of such
shares to Dr. Kang's designees, (ii) 50,000 shares owned by Dr. Kang's spouse,
(iii) 1,564,000 shares owned by Dr. Kang's sons, as to which shares Dr. Kang
disclaims beneficial ownership, and (iv) 1,190,848 shares into which the
principal of our promissory note to PBM, outstanding as of the date of this
Annual Report, may be converted See Item 12. Certain Relationships and Related
Transactions -- Princeton BioMeditech Corporation / Jemo Kang, plus 75,000
shares issued in the name of, and to be delivered to, PBM in the event that any
principal under our promissory note to PBM remains unpaid or unconverted as of
January 1, 2002, warrants, exercisable by Dr. Kang as of, or within 60 days of,
the date of this Annual Report, to purchase up to (a) 246,000 shares at an
exercise price of $0.30 per share, expiring on December 31, 2002, and (b)
246,000 shares at an exercise price of $0.40 per share, expiring on December 31,
2003, and options, exercisable by Dr. Kang as of, or within 60 days of, the date
of this Annual Report, to purchase up to 10,000 shares at an exercise price of
$0.25 per share, expiring in April of 2005, and up to 10,000 shares, at an
exercise price of $0.35, expiring on October 30, 2006. The shares referenced
herein do not include 225,000 shares issued in the name of, and deliverable to,
PBM in the event that any principal under our promissory note to PBM remains
unpaid or unconverted as of January 1, 2002, and the 1,515,000 shares issued in
the name of PBM as partial security for our obligations under our promissory
note to PBM. Dr. Kang's address is c/o Princeton BioMeditech Corporation, 4242
U.S. Route 1, Monmouth Junction, New Jersey 08852-1905.

(5) Includes 179,500 shares beneficially owned by Mr. Barrons and (i) 82,000
shares owned by an individual who has provided Mr. Barrons with voting power in
respect of such shares and (ii) 18,000 shares owned by an individual who has
provided Mr. Barrons with voting and investment power in respect of such shares,
as to which 100,000 shares Mr. Barrons disclaims beneficial ownership, plus
options, exercisable by Mr. Barrons as of, or within 60 days of, the date of
this Annual Report, to purchase up to 18,000 shares at an exercise price of
$0.25 per share, expiring at various dates from April to June of 2005, and up to

                                       45
<PAGE>

10,000 shares, at an exercise price of $0.35, expiring on October 30, 2006. Mr.
Barrons' address is c/o Cyber Marketing Concepts, Inc., 13 Spectrum Pointe
Drive, Lake Forest, California 92630.

(6) Includes 100,000 shares owned by New World Capital Markets, Inc. or its
affiliates, who have provided Mr. Birkhofer voting power for such shares and as
to which 100,000 shares Mr. Birkhofer disclaims beneficial ownership, plus
options to purchase up to 10,000 shares, at an exercise price of $0.35, expiring
on October 30, 2006. Mr. Birkhofer's address is c/o New World Capital Markets,
Inc., 1206 Coast Village Circle, G, Santa Barbara, California 93108.

(7) Includes 230,874 shares beneficially owned by Mr. Jeranko (of which, 4,167
shares are issuable to Mr. Jerank in connection with the Company's private
placement of debt and equity securities in March of 2002) and 2,000 shares owned
by Mr. Jeranko's daughter, as to which shares Mr. Jeranko disclaims beneficial
ownership, plus options, exercisable by Mr. Jeranko as of, or within 60 days of,
the date of this Annual Report, to purchase up to 18,000 shares at an exercise
price of $0.25 per share, expiring at various dates from April to June of 2005,
and up to 10,000 shares, at an exercise price of $0.35, expiring on October 30,
2006. Mr. Jeranko's address is c/o Alante Insurance Agency, 23456 Madero, Suite
250, Mission Viejo, California 92691.

(8) Represents options, exercisable by Mr. Nicholas as of, or within 60 days of,
the date of this Annual Report, to purchase up to 10,000 shares at an exercise
price of $0.35, expiring on October 30, 2006. Mr. Nicholas' address is c/o Fox
Rothschild O'Brien & Frankel LLP, 997 Lenox Drive, Building 3, Lawrenceville,
New Jersey 08648-2311.

(9) Includes 266,666 shares beneficially owned by Dr. Kang, an executive
officer, director, and principal shareholder of PBM, and (i) 70,000 shares owned
by two individuals who have agreed to transfer record ownership to Dr. Kang's
designees, (ii) 50,000 shares owned by Dr. Kang's spouse, (iii) 1,564,000 shares
owned by Dr. Kang's sons, as to which shares Dr. Kang disclaims beneficial
ownership, and (iv) 1,190,848 shares into which the principal of our promissory
note to PBM, outstanding as of the date of this Annual Report, may be converted
See Item 12. Certain Relationships and Related Transactions -- Princeton
BioMeditech Corporation / Jemo Kang; plus 75,000 shares issued in the name of,
and to be delivered to, PBM in the event that any principal under our promissory
note to PBM remains unpaid or unconverted as of January 1, 2002, warrants,
exercisable by Dr. Kang as of, or within 60 days of, the date of this Annual
Report, to purchase up to (a) 246,000 shares at an exercise price of $0.30 per
share, expiring on December 31, 2002, and (b) 164,000 shares at an exercise
price of $0.40 per share, expiring on December 31, 2003, and options,
exercisable by Dr. Kang as of, or within 60 days of, the date of this Annual
Report, to purchase up to 10,000 shares at an exercise price of $0.25 per share,
expiring in April of 2005, and up to 10,000 shares, at an exercise price of
$0.35, expiring on October 30, 2006. The shares referenced herein do not include
225,000 shares issued in the name of, and deliverable to, PBM in the event that
any principal under our promissory note to PBM remains unpaid or unconverted as
of January 1, 2002, and the 1,515,000 shares issued in the name of PBM as
partial security for our obligations under our promissory note to PBM. Princeton
BioMeditech Corporation's address is 4242 U.S. Route 1, Monmouth Junction, New
Jersey 08852-1905.

                                       46
<PAGE>


(10) Includes 950,000 shares beneficially owned by Citadel. Citadel's address is
251 S. Lake Avenue, 10th Floor, Pasadena, California 91101.

(11) Includes shares of Common Stock and warrants, options referenced in
footnotes 2 through 8, inclusive, above, and 53,125 shares beneficially owned by
an executive officer, who is not one of our directors (of which, 3,125 are
issuable to such executive officer in connection with the Company's private
placement of debt and equity securities in March of 2002).

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Princeton BioMeditech Corporation / Jemo Kang

     Dr. Jemo Kang, one of our directors, and who, together with members of his
family constitutes the Company's largest block of stockholders, is the owner,
President, and Chief Executive Officer of PBM, a privately held biotech
manufacturer of diagnostic devices located in Princeton, New Jersey, rapid,
point of care diagnostic products, including products similar to those sold by
the Company. PBM develops, manufactures, and distributes rapid, point of care
diagnostic products including products similar to those sold by the Company.
Management has been advised by representatives of PBM that its marketing and the
distribution of its products does not compete with ours and that PBM's
distribution through the channels that we currently use is limited; accordingly,
as of the date of this Annual Report, the Company and PBM do not consider
themselves to be competitors. However, in the event that either PBM or we modify
or expand our distribution channels, we could become competitors with each
other.

     Prior to May of 1998, we purchased substantially all of our diagnostic
tests from PBM, under an agreement that granted us certain non-exclusive
distribution rights to various diagnostic tests produced by PBM. During such
time period, PBM advised our then-current management that PBM supplied customers
in addition to us and that the terms and conditions under which we purchased
product from PBM were no less favorable, and, in certain instances, more
favorable, than the terms and conditions under which PBM supplied other
entities. During such time period, we did not pay for all of the product that we
purchased from PBM, such that, by May of 1998, PBM alleged that we owed it
approximately $656 thousand. In connection with that obligation, as well as
certain other issues related the belief by our then-current management that PBM
may have materially breached its agreements with us and the breakdown in
communicating between ours' management and PBM's, the agreements between the two
companies were terminated.

     On May 8, 2001, PBM and we executed a series of documents that were
effective as of January 1, 2001. The framework of the economic terms of the PBM
Agreements was negotiated for us by Mr. McGuire and for PBM by Dr. Kang. Further
negotiation of that framework occurred at a meeting of our board of directors in
October of 2000 through the efforts of Mr. McGuire and our counsel and of Dr.
Kang and his and PBM's counsel, Mr. Nicholas. At that meeting, our Board of

                                       47
<PAGE>


Directors, with Dr. Kang abstaining from the vote and periodically removing
himself from the meeting, as appropriate, approved the framework of the economic
terms of the PBM Agreements and then nominated Mr. Nicholas to serve as one of
our directors. Following our Board's approval of the framework of the economic
terms, further substantial negotiations between our representatives, primarily
Mr. McGuire and our counsel, and representatives of PBM, primarily Jeffrey
Nicholas, occurred until the definitive PBM Agreements were drafted and
executed. Management believes that the PBM Agreements were negotiated on an
arm's length basis and are as fair as to the Company as the Company could have
obtained from a non-affiliated third party, although we did not seek a formal
opinion from a third party as to this conclusion.

     At the core of the PBM Agreements is our secured, convertible promissory
note in favor of PBM in the initial amount of approximately $632 thousand (the
"PBM Note"), as we had previously paid PBM $25 thousand in reduction of our
obligation to it. PBM and we agreed not to include any cash component in the PBM
Agreements in respect of any interest that might have accrued through the
effective date of the PBM Agreements. Under the PBM Note, our payments are
determined by the quantity of our test products that we sell on a weekly basis.
The amount of each of our weekly payments is based on an increasing scale,
commencing at the rate of $0.25 per test sold, which rate increases every six
months until from and after July 1, 2003, when the rate is fixed at $1.00 per
test sold. As of the date of this Annual Report, the per test rate is $0.75. If
we sell shares of our common stock to any third party while we still owe any
principal under the PBM Note, we are obligated to make additional principal
payments to PBM, as follows:

     -    15% of the cash proceeds if we sell shares at a per-share price of up
          to $0.75; and
     -    10% of the cash proceeds if we sell shares at a per-share price in
          excess of $0.75.

The $0.75 threshold is subject to adjustment if we declare a stock dividend or
if we subdivide, combine, or reclassify our common stock. Since the signing of
the PBM Agreements, through December 31, 2001, and including the initial $25
thousand payment, we have paid PBM approximately $155 thousand of principal on
the PBM Note and no interest. During our 2001 and 2000 fiscal years, we did not
pay PBM any sums.

     The PBM Note is secured by all of the Company's assets, together with
1,515,000 shares of our common stock. We have conditionally issued a certificate
representing these shares in the name of PBM. Our counsel as collateral agent
for the benefit of PBM holds this certificate. PBM may not exercise its rights
as a secured creditor against our assets, other than the 1,515,000 shares of
common stock, except in the event of our bankruptcy, an assignment for the
benefit of our creditors, our liquidation, or in the event that we are acquired
in certain kinds of merger or asset sales transactions. PBM may exercise its
rights as a secured creditor against the 1,515,000 shares of our common stock in
those events, as well as in other standard events of default, such as our
failure to pay our obligations to PBM or other parties timely. PBM has not
provided the Company with any indication that it considers the Company to be in
breach of its obligations under the PBM Note or that PBM has any current rights
to initiate foreclosure under the terms of the Company's security agreement with
it. PBM has agreed to subordinate our obligation under the PBM Note to any bank
or other institutional indebtedness that we may obtain to a maximum of $300
thousand of such indebtedness.

                                       48
<PAGE>


     PBM may convert some or the entire unpaid principal of the PBM Note into
shares of our common stock at any time through and including September 30, 2002.
The initial conversion price is $0.40 per share, which price is subject to
adjustment if we were to declare a stock dividend or were to split our stock. If
PBM were to provide us with a conversion notice, we could pre-pay the amount of
principal specified in such notice for conversion, thereby precluding such
conversion. If our common stock trades for an average of not less than $2.00
during any period of 30 consecutive trading days, we can provide PBM with
written notice of our decision to shorten the conversion period to 30 days. To
date, PBM has not elected to convert any unpaid principal amounts into shares of
our common stock.

     We also conditionally issued PBM 300,000 shares of our common stock,
portions of which are deliverable to PBM on various dates beginning on January
1, 2002, in the event that, as of such dates, any principal amount under the PBM
Note remains unpaid or unconverted, with the balance of the 300,000 shares to be
issued to PBM if the PBM Note is not paid in full by September 30, 2003. In
connection with this conditional issuance,75,000 shares were deliverable to PBM
on January 1, 2002. By its terms, the PBM Note is not interest bearing.

     In connection with our issuance of the PBM Note, we issued to Dr. Kang a
series of warrants for the purchase of our common stock, exercisable as follows:

-    164,000 shares, exercise price of $0.20 per share, expiry of December 31,
     2001, which were exercised by Dr. Kang in December of 2001;

-    246,000 shares, exercise price of $0.30 per share, expiry of December 31,
     2002; and

-    246,000 shares, exercise price of $0.40 per share, expiry of December 31,
     2003.

Worldwide Sales Management Corporation and TKR Investments, Inc. / Daniel G.
McGuire and Thomas K. Ramstead

     Through March of 2000, the Company was a party to a sales agreement with
Worldwide Sales, an enterprise owned by Daniel G. McGuire and Thomas K.
Ramstead, a former director of Worldwide. The agreement provided that we would
pay to Worldwide Sales a 15 percent commission on sales it generated in North
America and Mexico. Worldwide Sales and we agreed to reduce the commission rate
from and after April of 2000, when Mr. McGuire became our President and
disassociated himself from Worldwide Sales. Commencing on January 1, 2001, we
entered into a replacement sales agreement with TKR Investments, Inc. ("TKR"),
an enterprise owned by Mr. Ramstead. The agreement provides for a guaranteed
retainer at the rate of eight thousand dollars per month, a commission that
varies between 2.5 percent and 4 percent depending on incremental net sales, and
interest at the rate of eight percent per annum for all retainer and commission
payments not timely made. TKR or we may terminate this agreement upon 120 days'
written notice. If terminated, we have agreed to continue paying TKR its
retainer and commissions in an amount equal to the average for the prior three
months during the 120-day period. In our 2001 fiscal year, Worldwide Sales
accrued $0 commissions, $0 commissions were paid, and $0 commissions were owed
to Worldwide Sales as of December 31, 2001. In our 2000 fiscal year, Worldwide

                                       49
<PAGE>

Sales earned $223,131. Together with the amount of $74,844 in commissions
accrued but unpaid in 1999, total accrued commissions for Worldwide Sales in our
2000 fiscal year were $297,975. Of the $297,975, Worldwide Sales was paid
$221,473 in cash payments of $96,474 and 500,000 shares of common stock valued
at $125 thousand, with the remaining balance of $76,501 transferred to TKR. In
our 2001 fiscal year, $249,870 was earned by TKR and a subcontractor used by
TKR, Mathew Cook. Together with the $76,501 transferred from Worldwide Sales,
the total accrual in 2001 for TKR was $326,371. Of the $326,371, TKR (together
with Mathew Cook) was paid $169,578, leaving an accrued balance at December 31,
2001 of $156,793.

Cyber Marketing Concepts, Inc. / James G. Barrons

     Effective August 9, 2000, Cyber Marketing and we entered into an Exclusive
Marketing Rights Contract. Cyber Marketing is owned by James G. Barrons, one of
our directors. During the two-year term of the agreement, and any annual
extensions thereafter, subject to either party's providing 180-days written
notice to the other of its intention not to renew the agreement, we granted to
Cyber Marketing the exclusive rights to market our products on the Internet.
Cyber Marketing will pay us our standard wholesale and distributor prices for
any product that it purchases and we will provide it with all advertising
incentives and promotional allowance accorded to other of our major customers.
During the eight-month period between November of 2000 and June of 2001, we paid
Cyber Marketing consulting fees of three thousand dollars per month to update
our website and to subsidize, on a partial basis, their full-time sales
representative for our professional products, or $18 thousand and six thousand
dollars for, respectively, the year ended December 31, 2001, and the year ended
December 31, 2000. Cash payments from Cyber Marketing were $145,179 for our 2001
fiscal year and $481 for our 2000 fiscal year. Cyber Marketing is a subtenant of
ours under short-term lease. During our 2001 fiscal year, Cyber Marketing paid
us $5,400, in rent. See Item 2. Description of Property -- Facilities.

Citadel Capital Management Corporation; New World Capital Markets, Inc. / G.
Wendell Birkhofer

     Effective July 6, 2000, we entered a $250 thousand line of credit agreement
with Citadel and Larry Osaki. In September of 2001, and in substitution for the
line of credit agreement, we executed our $250 thousand promissory note in favor
of Citadel. Interest accrues thereon at the rate of 10 percent simple interest
per annum and we may prepay any or all of the obligation without penalty. As of
the date of this Annual Report, we owe Citadel approximately $330 thousand,
pursuant to the terms of the note and a consensual $80 thousand over-advance,
without penalty. In July of 2001, we paid to Citadel a one-time fee of $25
thousand through the issuance of 100,000 shares of our restricted common stock.
During our 2000 fiscal year, we paid to Citadel $50 thousand of principal and
$315 of interest. During our 2001 fiscal year, Citadel exercised a warrant to
purchase 100,000 shares of our common stock through an offset of $20 thousand of
our promissory obligations to them. See Item 6. Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources. For more than the preceding five years, Mr. Birkhofer has
been a consultant to New World and since January of 2000, Mr. Birkhofer has been
a consultant to Citadel. He joined us as a director in October of 2001.

                                       50
<PAGE>


Spectrum Analytics, Inc. / Francisco Rojas, Ph.D.

     From January of 2001 through April 2, 2002, Dr. Francisco Rojas, one of our
directors, Dr. Ines Moretti, and the Company were the stockholders of Spectrum,
which was formed to provide confirmatory analysis for our First Check consumer
business and to act as our affiliated research and development facility.
Spectrum subleases its laboratory equipment and its office and laboratory space
from us. Until April 2, 2002, 50 percent of its equity was owned by the Company
and 50 percent of its equity was owned by Drs. Rojas and Moretti. Effective that
date, the Company purchased the equity owned by Drs. Rojas and Moretti for the
following consideration: (i) the Company forgave a $58 thousand obligation from
Pyxis Laboratories, Inc., a company wholly owned by Dr. Moretti, through which
she held her ownership of Spectrum; and (ii) the Company issued 50,000 shares of
its common stock to Dr. Rojas, which shares were valued at an aggregate of
$20,250. At Spectrum's inception on January 1, 2001, Drs. Rojas and Moretti
contributed $50 thousand in equipment to Spectrum and the Company contributed
$50 thousand in capital. Thereafter, Drs. Rojas and Moretti have provided
on-going laboratory services and the Company has provided necessary operating
capital to Spectrum. During the year ended December 31, 2001, the Company
allocated $85 thousand in expenses to Spectrum, consisting of salary, rent,
utilities, and other operating costs, advanced $171 thousand to Spectrum and its
vendors, and paid $30 thousand to Spectrum for confirmatory tests. The net
financial impact to the Company for such activities was a net investment of $236
thousand.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     The exhibits required to be furnished pursuant to Item 13(a) are listed in
the Exhibit Index filed herewith, which Exhibit Index is incorporated herein by
reference.

Exhibit 3.1*   Certificate of Incorporation of Era Oil Company, Inc.

Exhibit 3.1a#  Certificate of Amendment of Certificate of Incorporation of
               Era Oil Company, Inc.

Exhibit 3.1b#  Certificate of Amendment of Restated Certificate of
               Incorporation of Forum International Center, Inc.

Exhibit 3.1c#  Certificate of Amendment of Certificate of Incorporation of
               Forum International Center, Inc.

Exhibit 3.2*   Amended Bylaws of the registrant

Exhibit 3.2a*  Amendments to Articles III, Sections 1 and 8 of the Amended
               Bylaws of the registrant

Exhibit 10.1*  Exclusive Marketing Rights Contract, dated August 9, 2000,
               by and between the registrant and Cyber Marketing Concepts, Inc.

                                       51
<PAGE>


Exhibit 10.2*  Brokerage Agreement, dated January 1, 2001, by and between
               the registrant and TKR Investments, Inc.

Exhibit 10.3*  Brokerage Agreement, dated June 1, 2001, by and between the
               registrant and Matt Cook

Exhibit 10.4*  Brokerage Agreement, dated April 1, 2001, by and between
               the registrant and Feldkamp Marketing

Exhibit 10.5*  Promissory Note, dated as of January 1, 2001, by the
               registrant in favor of Princeton BioMeditech Corporation

Exhibit 10.6*  Security Agreement, dated as of January 1, 2001, by and
               between the registrant and Princeton BioMeditech Corporation

Exhibit 10.7*  Escrow Agreement, dated as of January 1, 2001, by and
               between the registrant and Princeton BioMeditech Corporation

Exhibit 10.8*  Collateral Agent Agreement, dated as of January 1, 2001, by
               and between the registrant and Princeton BioMeditech Corporation

Exhibit 10.9*  Warrant, dated January 1, 2001, of the registrant in favor
               of Jemo Kang

Exhibit 10.10* Warrant, dated January 1, 2001, of the registrant in favor
               of Jemo Kang

Exhibit 10.11* Warrant, dated January 1, 2001, of the registrant in favor
               of Jemo Kang

Exhibit 10.12* Lease, dated June 13, 2000, by and between the registrant
               and Olen Commercial Realty Corporation

Exhibit 10.13* Employment Agreement, dated April 4, 2000, between the
               registrant and Daniel G. McGuire

Exhibit 10.14* Line of Credit Agreement, dated July 6, 2000, between the
               registrant and Citadel Capital Management Corporation and Larry
               Osaki

Exhibit 10.15* Loan and Security Agreement, dated February 20, 2001,
               between the registrant and Camel Financial, Inc.

Exhibit 10.16* Subordination Agreement, dated February 20, 2001, in favor
               of Camel Financial, Inc., among the registrant, Citadel Capital
               Management Group,and Camel Financial, Inc.

Exhibit 10.17* Promissory Note, dated September 6, 2001, by the
               registrant in favor of Citadel Capital Management Group

                                       52
<PAGE>


Exhibit 10.18  2001 Stock Plan

Exhibit 21.1*  Subsidiaries of the Registrant

----------
     * Incorporated by reference from the registrant's Registration Statement on
Form 10-SB, as filed with the Securities and Exchange Commission on October 23,
2001.

     # Incorporated by reference from the registrant's amended Registration
Statement on Form 10-SB/A, as filed with the Securities and Exchange Commission
on January 7, 2002.

(b)  Reports on Form 8-K

None.


SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this Annual Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Dated: May 20, 2002                     WORLDWIDE MEDICAL CORPORATION


                                        By: /S/ DANIEL G. MC GUIRE
                                        --------------------------
                                        Daniel G. McGuire
                                        President, Chief Executive Officer


                                        By: /S/ JEFFREY C. BURKE
                                        -----------------------
                                        Jeffrey C. Burke
                                        Chief Financial Officer


     In accordance with the Exchange Act, this Annual Report (Amended) has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

       Signature                          Title                        Date
       ---------                          -----                        ----

/s/ DANIEL G. MC GUIRE          President, Chief Executive,        May 20, 2002
-----------------------         Officer, and Director
Daniel G. McGuire


/s/ DR. FRANCISCO ROJAS         Director                           May 20, 2002
-----------------------
Dr. Francisco Rojas

                                       53
<PAGE>



/s/ DR. JEMO KANG               Director                           May 20, 2002
--------------------
Dr. Jemo Kang


/s/ JAMES G. BARRONS            Director                           May 20, 2002
-----------------------
James G. Barrons


/s/ G. WENDELL BIRKHOFER        Director                           May 20, 2002
---------------------------
G. Wendell Birkhofer


/s/ DAVID M. JERANKO            Director                           May 20, 2002
-----------------------
David M. Jeranko


/s/ JEFFREY H. NICHOLAS         Director                           May 20, 2002
-----------------------
Jeffrey H. Nicholas


                                       54
<PAGE>


                                INDEX TO EXHIBITS

Exhibit Number               Description of Document
---------------              -----------------------

10.18                         2001 Stock Plan






                                       55