<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(MARK ONE)

[X]        Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934.

                For the quarterly period ended December 31, 2000

OR

[ ]        Transition Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934.

            For the transition period from ___________ to __________.

                         COMMISSION FILE NUMBER: 1097181

                            MOBILE PET SYSTEMS, INC.
        (Exact name of Small Business Issuer as Specified in its Charter)

            Delaware                                    11-2787966
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or Organization)

                     2150 WEST WASHINGTON STREET, SUITE 110
                           SAN DIEGO, CALIFORNIA 92110
                    (Address of principal executive offices)

                                 (619) 226-6738
                (Issuer's Telephone Number, Including Area Code)

      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 [ ]

      On December 31, 2000, there were 15,737,172 shares outstanding of the
issuer's common stock, par value $.0001 per share.

      Transitional Small Business Disclosure Format (check one) Yes [ ] No [X]



<PAGE>   2

                    MOBILE PET SYSTEMS, INC. AND SUBSIDIARIES
                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                 PAGE NO.
                                                                                                                 --------
<S>                                                                                                              <C>
PART I    FINANCIAL INFORMATION
ITEM 1.   FINANCIAL STATEMENTS (UNAUDITED)...............................................................            1
          Consolidated Balance Sheets as of December 31, 2000 and 1999...................................            3
          Consolidated Statements of Operations for the three months and six months ended
          December 31, 2000 and 1999.....................................................................            4
          Consolidated Statements of Cash Flows for the three months and six months ended
          December 31, 2000 and 1999.....................................................................            5
          Consolidated Statement of Shareholders' Equity (Deficit) as of Dec 31, 2000....................            6
          Notes to Unaudited Consolidated Financial Statements...........................................            7
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION...........           17
PART II.  OTHER INFORMATION..............................................................................           20
ITEM 2.   CHANGES IN SECURITIES..........................................................................           20
ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K...............................................................           20
</TABLE>



<PAGE>   3

                    MOBILE PET SYSTEMS, INC. AND SUBSIDIARIES
                For the quarterly period ended December 31, 2000

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS (UNAUDITED)

The following financial statements are furnished:

           Consolidated Balance Sheets as of December 31, 2000 and 1999.

           Consolidated Statements of Operations for the three months and six
           months ended December 31, 2000 and 1999.

           Consolidated Statements of Cash Flows for the three months and six
           months ended December 31, 2000.

           Consolidated Statement of Shareholders' Equity (Deficit) as of
           December 31, 2000.

           Notes to Unaudited Consolidated Financial Statements.



<PAGE>   4

                           ACCOUNTANTS' REVIEW REPORT

TO THE BOARD OF DIRECTORS
Mobile PET Systems, Inc.

We have reviewed the accompanying consolidated balance sheets of Mobile PET
Systems, Inc. and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of operations and cash flows for the three months and
six months then ended, in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified Public
Accountants. All information included in these consolidated financial statements
is the representation of the management of Mobile PET Systems, Inc. and
subsidiaries.

A review consists principally of inquiries of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the consolidated financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements in order for them
to be in conformity with generally accepted accounting principles.

                                               /s/ PETERSON & CO.
                                               --------------------------------
                                               PETERSON & CO.


San Diego, California
February 16, 2001




                                       2
<PAGE>   5

                    MOBILE PET SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                           2000              1999
                                                                                       ------------      ------------
<S>                                                                                    <C>               <C>
                                          ASSETS

CURRENT ASSETS
     Cash ........................................................................     $      2,699      $    338,094
     Accounts receivable, net of allowance for doubtful accounts of
         $129,320 and $0 at December 31, 2000 and 1999, respectively .............          808,127           246,225
     Due from London Radiosurgical Centre ........................................               --           256,024
     Other receivables ...........................................................           35,614                --
     Prepaid expenses ............................................................           24,803            40,916
     Deposits and other assets ...................................................          819,608           436,431
                                                                                       ------------      ------------
         Total current assets ....................................................        1,690,851         1,317,690
PROPERTY AND EQUIPMENT, NET ......................................................       18,548,867         1,971,929
OTHER ASSETS
     Accrued interest receivable .................................................           10,573                --
     Due from London/ Radiosurgical Centre, Ltd. .................................          422,283                --
     Subordinated equity participation ...........................................          200,000           200,000
     Restricted cash .............................................................          337,723           105,226
                                                                                       ------------      ------------
         Total assets ............................................................     $ 21,210,297      $  3,594,845
                                                                                       ============      ============
                           LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
     Bank overdraft ..............................................................     $     24,934      $         --
     Accounts payable ............................................................        1,886,041           225,330
     Current portion of long term debt ...........................................           18,101                --
     Income taxes payable ........................................................              800               800
     Accrued liabilities .........................................................          255,086            83,651
     Due to London Radiosurgical Centre, Ltd. ....................................          106,582                --
     Notes Payable - Related Party ...............................................          300,000            50,000
     Obligations under capital lease - current ...................................        3,352,729            32,761
                                                                                       ------------      ------------
         Total current liabilities ...............................................        6,034,925           392,542

NONCURRENT LIABILITIES
     Obligations under capital lease .............................................       15,286,727         1,670,348
     Long term debt, net of current portion ......................................           90,652                --
     Deferred revenue ............................................................               --            14,127
                                                                                       ------------      ------------
         Total liabilities .......................................................       21,321,651         2,077,017

SHAREHOLDERS' EQUITY
     Preferred stock; 10,000,000 shares authorized Series A preferred
         stock; 42 and 0 shares issued and outstanding at December 31,
         2000 and 1999, respectively .............................................        2,125,000                --
     Series B preferred stock; 30 and 0 shares issued and outstanding at
         December 31, 2000 and 1999, respectively ................................        1,500,000                --
     Common stock; $0.0001 par value; 90,000,000 shares authorized; 14,944,658 and
         15,737,172 shares issued and outstanding at December 31, 2000 and 1999,
         respectively ............................................................            1,574             1,336
     Additional paid in capital ..................................................       10,072,971         4,830,947
     Accumulated deficit .........................................................      (13,872,172)       (3,311,005)
     Foreign currency translation adjustment .....................................           61,273            (3,450)
                                                                                       ------------      ------------
         Total shareholders' equity ..............................................         (111,354)        1,517,828
                                                                                       ------------      ------------
             Total liabilities and shareholders' equity ..........................     $  21,21,297      $  3,594,845
                                                                                       ============      ============
</TABLE>

             See accompanying notes and accountants' review report.

                                       3
<PAGE>   6

                    MOBILE PET SYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED                SIX MONTHS ENDED
                                                          DECEMBER 31,                     DECEMBER 31
                                                 -----------------------------     -----------------------------
                                                     2000             1999             2000             1999
                                                 ------------     ------------     ------------     ------------
<S>                                              <C>              <C>              <C>              <C>
SERVICE REVENUES ............................    $  1,118,687     $    216,925     $  1,959,668     $    296,920
COST OF SERVICE REVENUES ....................       1,735,898           97,044        2,348,651          140,573
                                                 ------------     ------------     ------------     ------------
     Gross Profit ...........................        (617,211)         119,881         (388,983)         156,347

EXPENSES

     General and administrative .............       2,398,056          809,993        4,650,778        1,546,577
                                                 ------------     ------------     ------------     ------------

         Total expenses .....................       2,398,056          809,993        4,650,778        1,546,577
                                                 ------------     ------------     ------------     ------------
Loss from operations ........................      (3,015,267)        (690,112)      (5,039,761)      (1,390,230)

OTHER INCOME (EXPENSE)
     Interest income ........................          11,712            2,662           24,989            9,328
     Other income (expense) .................             890               --           (6,362)              --
     Interest expense .......................        (190,709)         (57,601)        (435,267)        (104,640)
                                                 ------------     ------------     ------------     ------------
         Total other income (expense) .......        (178,107)         (54,939)        (416,640)         (95,312)
                                                 ------------     ------------     ------------     ------------
     Loss before provision for income Taxes .      (3,193,374)        (745,051)      (5,456,401)      (1,485,542)

Provision for income taxes ..................              --              800               --            1,600
                                                 ------------     ------------     ------------     ------------
NET LOSS ....................................      (3,193,374)        (745,851)      (5,456,401)      (1,487,142)

Preferred stock dividend ....................         375,094               --          651,481               --
                                                 ------------     ------------     ------------     ------------
NET LOSS - AVAILABLE TO COMMON SHAREHOLDERS .    $ (3,568,468)    $   (745,851)    $ (6,107,882)    $ (1,487,142)
                                                 ============     ============     ============     ============
Loss per share - basic ......................    $      (0.25)    $      (0.06)    $      (0.43)    $      (0.11)
                                                 ============     ============     ============     ============
Loss per share - diluted ....................    $      (0.25)    $      (0.06)    $      (0.43)    $      (0.11)
                                                 ============     ============     ============     ============
</TABLE>

             See accompanying notes and accountants' review report.

                                        4
<PAGE>   7

                    MOBILE PET SYSTEMS, INC. AND SUBSIDIARIES
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED                SIX MONTHS ENDED
                                                                     DECEMBER 31                      DECEMBER 31
                                                            -----------------------------     -----------------------------
                                                                2000             1999             2000             1999
                                                            ------------     ------------     ------------     ------------
<S>                                                         <C>              <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss ..........................................    $ (3,193,374)    $   (745,851)    $ (5,456,401)    $ (1,487,142)
     Adjustments to reconcile net loss to net cash used
         in operating activities
         Depreciation ..................................         562,424           24,497          841,522           93,901
         Interest ......................................              --               --           47,508               --
         Options issued or compensation ................          92,331               --          184,662               --
     (Increase) decrease in operating assets
     Due from London Radiosurgical Center, LTD .........         214,835          (44,006)         119,399         (226,053)
         Accounts receivable ...........................        (240,592)        (110,610)        (335,394)        (246,225)
         Other receivable ..............................         586,709               --          257,425               --
         Prepaid expenses ..............................         111,590          (30,710)         216,959          (21,847)
         Deposits and other assets .....................         834,561          787,271          788,281          114,861
         Restricted cash ...............................          (4,147)          (1,186)          (8,243)         147,146
         Deferred assets ...............................         (12,008)              --          (12,714)              --
Increase (decrease) in operating liabilities
     Accounts payable ..................................         804,572          170,516        1,247,541          143,462
     Income Taxes Payable ..............................        (227,950)              --               --               --
     Accrued liabilities ...............................              --           61,948         (220,767)          (5,099)
                                                            ------------     ------------     ------------     ------------
         Net cash used in operating activities .........        (471,049)         111,869       (2,330,222)      (1,486,996)
                                                            ------------     ------------     ------------     ------------
CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures ..............................         (65,474)        (273,257)        (166,050)        (573,694)
     Proceeds from sale of fixed assets ................              --          279,390               --          279,390
                                                            ------------     ------------     ------------     ------------
         Net cash used in investing activities .........         (65,474)           6,133         (166,050)        (294,304)

CASH FLOWS FROM FINANCING ACTIVITIES
     Cash overdraft ....................................          24,934               --           24,934               --
     Proceeds from loan ................................         100,000           50,000          408,753           50,000
     Payments on obligations under capital lease .......        (294,808)              --         (560,907)              --
     Stock issued ......................................         500,000               --        1,932,500          285,000
                                                            ------------     ------------     ------------     ------------
         Net cash provided by financing activities .....         330,126           50,000        1,805,280          335,000
Effect of exchange rate changes in cash ................          31,068                4          172,658                4
                                                            ------------     ------------     ------------     ------------
Net decrease in cash ...................................        (175,329)         168,006         (518,334)      (1,446,296)
Cash - beginning of period .............................         178,028          170,088          521,033        1,784,390
                                                            ------------     ------------     ------------     ------------
Cash - end of period ...................................    $      2,699     $    338,094     $      2,699     $    338,094
                                                            ------------     ------------     ============     ============
SUPPLEMENTAL DISCLOSURES
     Interest paid........................................  $    190,709     $     57,601     $    435,267     $    104,640
                                                            ------------     ------------     ============     ============
     Income taxes paid....................................  $         --     $        800     $         --     $      1,600
                                                            ------------     ------------     ============     ============
NONCASH INVESTING AND FINANCING ACTIVITIES
     Equipment under capital lease........................  $ 11,737,082     $         --     $ 18,985,457     $  1,433,863
                                                            ============     ============     ============     ============
     Gain on sale of equipment in connection with capital
         lease............................................  $         --     $     14,127     $                $     14,127
                                                            ============     ============     ============     ============
     Preferred stock dividend - beneficial Conversion
         feature..........................................  $    138,193     $         --     $    414,580     $         --
                                                            ============     ============     ============     ============
     Cumulative preferred dividend........................  $    236,701     $         --     $    236,901     $         --
                                                            ============     ============     ============     ============
     Obligations under capital lease......................  $ 11,737,082     $         --     $ 18,985,457     $  1,433,863
                                                            ============     ============     ============     ============
</TABLE>

           See accompanying footnotes and accountants' review report.

                                       5
<PAGE>   8

                    MOBILE PET SYSTEMS, INC. AND SUBSIDIARIES

                        STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                    PREFERRED STOCK         COMMON STOCK
                                 ------------------- --------------------------    PAID IN     ACCUMULATED TRANSLATION SHAREHOLDERS'
                                 SHARES    AMOUNT       SHARES        AMOUNT       CAPITAL       DEFICIT    ADJUSTMENT     EQUITY
                                 ------  ----------- ------------   -----------  ------------  ----------- -----------  ------------
<S>                              <C>     <C>          <C>           <C>           <C>           <C>           <C>        <C>
Balance - December 1, 1998           --  $        --   10,328,395   $     1,033  $    825,803  $  (826,836) $       --  $        --
  Reverse stock split: 50 - 1                         (10,121,636)       (1,012)        1,012                                    --
  Common stock issued                                   3,937,899           393        98,053                                98,446
                                 ------  ----------- ------------   -----------  ------------  -----------   ---------  -----------
Balance immediately prior to
  acquisition                                           4,144,658           414       924,868     (826,836)         --       98,446

  Common stock issued in
    acquisition                                         7,000,000           700          (700)                                   --
  Net loss - December 1, 1998
    to December 31, 1998                                                                           (34,426)                 (34,426)
                                 ------  ----------- ------------   -----------  ------------  -----------  ----------  -----------
Balance - December 31, 1998                            11,144,658         1,114       924,168     (861,262)         --       64,020
  Common stock issued through
    the exercise of stock options                         900,000            90       899,910                               900,000
  Common stock issued as
    compensation                                          100,000            10        99,990                               100,000
  Common stock subscribed through
    the exercise of options                                                           350,000                               350,000
  Net loss - January 1, 1999 to
    March 31, 1999                                                                                (251,675)         --     (251,675)
                                 ------  ----------- ------------   -----------  ------------  -----------  ----------   ----------
Balance - March 31, 1999             --           --   12,144,658         1,214     2,274,068   (1,112,937)         --    1,162,345
  Common stock issued through
    the exercise of stock
    options                                               600,000            60       549,940                               550,000
  Common stock issued as
    compensation                                          100,000            11       149,989                               150,000
  Common stock subscribed, net
    of offering costs                                                               1,572,001                             1,572,001
  Net loss - April 1, 1999 to
    June 30, 1999                                                                                 (710,927)                (710,927)
                                 ------  ----------- ------------   -----------  ------------  -----------  ----------   ----------
Balance - June 30, 1999              --           --   12,844,658         1,285     4,545,998   (1,823,864)         --    2,723,419
  Common stock issued from
    subscriptions paid, net
    of offering costs                                     515,000            51       284,949                               285,000
  Net loss - July 1, 1999 to
    December 31, 1999                                                                           (1,411,936)         --   (1,411,936)
  Foreign currency translation
   adjustment                                                                                       (3,450)                  (3,450)
                                 ------  ----------- ------------   -----------  ------------  -----------  ---------- ------------
Balance - December 31, 1999          --           --   13,359,658         1,336     4,830,947   (3,235,800)     (3,450)   1,593,033
  Prior period adjustment -
    net effect of the
    reclassification of
    certain leases from
    operating leases to
    capital leases                                                                                 (75,206)                 (75,206)
                                 ------  ----------- ------------   -----------  ------------  -----------  ---------- ------------
Balance - December 31, 1999          --           --   13,359,658         1,336     4,830,947   (3,311,006)     (3,450)   1,517,827
  Common stock issued in
    private placement, net of
    offering costs                                      1,550,000           155     2,664,128                             2,664,283
  Preferred stock issued in
    private placement, net of
    offering costs                   60    3,000,000                                 (300,000)                            2,700,000
  Net loss - January 1, 2000
    to March 31, 2000                                                                           (1,574,207)         --   (1,574,207)
  Foreign currency translation
    adjustment                                                                                                   5,806        5,806
                                 ------  ----------- ------------   -----------  ------------  -----------  ---------- ------------
Balance - March 31, 2000             60    3,000,000   14,909,658         1,491     7,195,075   (4,885,213)      2,356    5,313,709
  Common stock issued for
    services                                               35,000             4       109,371                               109,375
  Options issued as compensation                                                    1,276,442           --                1,276,442
  Net loss - April 1, 2000 to
    June 30, 2000                                                                                (3,530,558)        --   (3,530,558)
  Foreign currency translation
    adjustment                                                                                                 (44,754)     (44,754)
                                 ------  ----------- ------------   -----------  ------------  -----------  ---------- ------------
Balance - June 30, 2000              60    3,000,000   14,944,658         1,495     8,580,888   (8,415,771)    (42,398)   3,124,214

  Preferred stock issued in
    private placement, net of
    offering costs                   20    1,000,000                                 (115,000)                              885,000
  Stock subscribed, net of
    offering costs                                                                    547,500                               547,500

  Options issued as compensation                                --           --        92,331           --                   92,331
  Net loss - July 1, 2000 to
    September 30, 2000                                                                          (2,263,027)         --    2,263,027)
  Foreign currency translation
    adjustment                                                                                                  72,603       72,603
                                 ------  ----------- ------------   -----------  ------------  -----------  ---------- ------------
Balance - September 30, 2000         80    4,000,000   14,944,658         1,495     9,105,719  (10,678,798)     30,205    2,458,621
  Preferred stock issued from
    subscriptions, net of
    offering costs                   10      500,000                                              (500,000)                      --
  Common stock issued through
    conversion of preferred
    stock                           (18)    (875,000)     719,736            72                    874,928                       --
  Common stock issued through
    conversion of preferred
    stock dividend                                         47,778             4                     20,095     (20,099)          --
  Common stock issued from
    subscriptions paid, net of
    offering costs                                         25,000             3            (3)                                   --
  Options issued as compensation                                                       92,331                                92,331
  Stock subscribed, net of
    offering costs                                                                    500,000                               500,000
  Net loss - October 1, 2000
    to December 31, 2000                                                                        (3,193,374)              (3,193,374)
  Foreign currency translation
    adjustment                                                                                                  31,068       31,068
                                 ------  -----------  -----------  ------------  ------------  -----------  ---------- ------------
Balance - December 31, 2000          72    3,625,000   15,737,172         1,574    10,093,070  (13,892,271)     61,273     (111,354)
                                 ======  ===========  ===========  ============  ============  ===========  ========== ============
</TABLE>

           See accompanying footnotes and accountants' review report.

                                       6
<PAGE>   9

                    MOBILE PET SYSTEMS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - THE COMPANY

           Mobile PET Systems, Inc. (the "Company") and subsidiaries were
           organized to provide Positron Emission Tomography (PET) systems and
           services to hospitals and other health care providers on a mobile,
           shared user basis. The Company's PET services include the provision
           of high technology imaging systems, technologists to operate the
           imaging systems, the management of day-to-day operations and
           educational and marketing support. The Company has operations in the
           United States and the United Kingdom.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

           Basis of Presentation

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

           Cash and Cash Equivalents

           The Company considers all highly liquid debt instruments purchased
           with a maturity of three months or less to be cash and cash
           equivalents.

           Property, Equipment and Leasehold Improvements

           Property and equipment are recorded at cost less depreciation and
           amortization. Depreciation and amortization are accounted for on the
           straight-line method based on estimated useful lives. The
           amortization of leasehold improvements is based on the shorter of the
           lease term or the life of the improvement. Betterments and large
           renewals, which extend the life of an asset, are capitalized;
           whereas, maintenance and repairs and small renewals are expensed as
           incurred.

           Foreign Currency Translation

           The financial statements of all foreign subsidiaries were prepared in
           their respective local currencies and translated into U.S. dollars
           based on the current exchange rate at the end of the period for the
           balance sheet and a weighted-average rate for the period on the
           statement of operations. Translation adjustments are reflected as
           foreign currency translation adjustments in shareholders' equity and
           accordingly have no effect on net loss. Transaction adjustments for
           all foreign subsidiaries are included in the statements of operation.

           Estimates

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

           Income Taxes

           The Company accounts for income taxes under Statement of Financial
           Accounting Standards No. 109, "Accounting for Income Taxes." This
           statement requires an asset and liability approach to account for
           income taxes. The Company provides deferred income taxes for
           temporary differences that will result in taxable or deductible
           amounts in future years based on the reporting of certain costs in
           different periods for financial and income tax purposes.

           Stock Option Plans

           The Company has adopted SFAS No. 123 "Accounting for Stock-Based
           Compensation," which permits entities to recognize as expense over
           the vesting period the fair value of all stock-based awards on the
           date of grant. Alternatively, SFAS No. 123 also allows entities to
           continue to apply the provisions of APB Opinion No. 25 "Accounting
           for Stock Issued to Employees," and provide pro forma net income and
           pro forma earnings per share disclosures for employee stock option
           grants as if the fair-value-based method



                                       7
<PAGE>   10

           defined in SFAS No. 123 has been applied. The Company has elected to
           apply the provisions of APB Opinion No. 25 and provide the pro forma
           disclosure provisions of SFAS No. 123.

NOTE 3 - ACQUISITIONS

           Mobile PET Systems, Inc. was incorporated in the State of Nevada on
           December 1, 1998. On December 22, 1998, Mobile PET Systems, Inc.'s
           shareholders exchanged all of the 7,000,000 shares of outstanding
           common stock for 7,000,000 shares of common stock in Colony
           International Incorporated, prior to that named American Coin and
           Stamp, Inc., incorporated in the State of Delaware on August 21, 1995
           and its wholly owned subsidiary Colony International Incorporated,
           incorporated in the State of Nevada on April 25, 1995. This exchange
           of shares has been accounted for as a reverse merger, under the
           purchase method of accounting. Accordingly, the combination of the
           Mobile PET Systems, Inc. and Colony International Incorporated and
           subsidiary is recorded as a recapitalization of the shareholders'
           equity of Mobile PET Systems, Inc., the surviving corporation and for
           accounting purposes the financial statements presented are those of
           Mobile PET Systems, Inc. Accordingly, pro-forma information has not
           been presented. Mobile PET Systems, Inc. reported no sales and a net
           loss of $15,200 prior to the acquisition. The other individual
           companies reported no net sales and no net income or loss prior to
           the acquisition.

           On December 10, 1999, the Company incorporated a wholly owned
           subsidiary, The London PET Centre Limited, a United Kingdom private
           limited company. On December 17, 1999 the Company incorporated two
           wholly owned subsidiaries, Mobile PET Leasing Limited, a United
           Kingdom private limited company and Mobile PET Systems (UK) Limited,
           a United Kingdom private limited company.

NOTE 4 - PROPERTY AND EQUIPMENT

           Property and equipment at December 31, 2000 and 1999 consist of the
           following:

<TABLE>
<CAPTION>
                                                       December 31,
                                             ------------------------------
                                                 2000              1999
                                             ------------      ------------
<S>                                          <C>               <C>
Leasehold improvements                       $     30,389      $         --
Computer equipment                                483,590           104,569
Office Furniture and fixtures                      30,623            18,093
Office equipment                                    9,443             7,092
Equipment                                      19,307,882         1,936,077
                                             ------------      ------------
                                               19,861,927         2,065,831
Less accumulated depreciation                  (1,313,061)          (93,902)
                                             ------------      ------------
                                             $ 18,548,867      $  1,971,929
                                             ============      ============
</TABLE>

           Depreciation expense for the six months ended December 31, 2000 and
           1999 was $841,522 and $93,901 respectively.

NOTE 5 - CAPITALIZATION

           Preferred Stock

           On January 20, 2000, the Company authorized the issuance of ten
           million (10,000,000) shares of preferred stock having one hundredth
           of a cent ($0.0001) par value per share. On March 3, 2000 the Company
           designated and issued sixty (60) shares 8% Cumulative Convertible
           Redeemable Preferred, Series A Stock for cash in the amount of
           $2,700,000, net of acquisition fees. These shares of 8% Cumulative
           Convertible Redeemable Preferred, Series A Stock have no voting
           rights, have a liquidation value of $50,000 per share, and accrue
           dividends at a rate of eight percent (8%) per annum per share on the
           liquidation value payable upon conversion. The total liquidation
           value of the shares outstanding at December 31, 2000 in the amount of
           $3,000,000 is classified on the Company's balance sheet as preferred
           stock. Cumulative preferred dividends are payable upon conversion and
           at December 31, 2000 there are cumulative preferred dividends in
           arrears in the amount of $171,901 or $4,045 per share. In the event
           of any liquidation, dissolution or winding up of the affairs of the
           Company, holders of the 8% Cumulative Convertible Redeemable
           Preferred, Series A Stock shall be paid the liquidation value plus
           all accrued dividends at the date of liquidation, dissolution or
           winding up of the affairs before any payment to other shareholders.
           At the


                                       8
<PAGE>   11

           option of the holders, the 8% Cumulative Convertible Redeemable
           Preferred, Series A Stock and the cumulative preferred dividends in
           arrears are convertible into shares of common stock determined by
           dividing $50,000 by the conversion price of the lesser of $5 or 75%
           of the average of the closing bid price of common stock during the
           five (5) trading days immediately prior to the conversion date. The
           Preferred Stock has an intrinsic value of beneficial conversion
           feature of approximately $1,206,000. On October 30, 2000, November
           14, 2000 and December 7, 2000, the holders converted seven (7)
           shares, four and one half (4 1/2) shares, and six (6) shares,
           respectively of Preferred Stock into 719,736 shares of common stock.

           On September 21, 2000, the Company designated thirty (30) shares 8%
           Cumulative Convertible Redeemable Preferred, Series B Stock and
           issued twenty (20) shares for cash in the amount of $885,000, net of
           acquisition fees, and in November 2000, the Company received an
           additional $500,000 and issued an additional ten (10) shares 8%
           Cumulative Convertible Redeemable Preferred, Series B Stock on
           December 7, 2000. This Security Purchase Agreement calls for the
           issuance of a total thirty (30) shares of 8% Cumulative Convertible
           Redeemable Preferred, Series B Stock in two tranches for an aggregate
           purchase price of $1,500,000 and $50,000 warrants for cash to
           purchase shares of common stock at an exercise price of $3 per share
           on the first tranche and 29,851 warrants to purchase shares of common
           stock at an exercise price of $2.5125 per share on the second
           tranche. The warrants expire on September 30, 2005. The shares of 8%
           Cumulative Convertible Redeemable Preferred, Series B Stock have no
           voting rights, have a liquidation value of $50,000 per share, and
           accrue dividends at a rate of eight percent (8%) per annum per share
           on the liquidation value payable upon conversion. The total
           liquidation value of the shares outstanding at December 31, 2000 in
           the amount of $1,000,000 is classified on the Company's balance sheet
           as preferred stock. Cumulative preferred dividends are payable upon
           conversion and at December 31, 2000 there are cumulative preferred
           dividends in arrears in the amount of $65,000 or $3,383 per share. In
           the event of any liquidation, dissolution or winding up of the
           affairs of the Company, holders of the 8% Cumulative Convertible
           Redeemable Preferred, Series B Stock shall be paid, pari passu with
           holders of the 8% Cumulative Convertible Redeemable Preferred, Series
           A Stock, the liquidation value plus all accrued dividends at the date
           of liquidation, dissolution or winding up of the affairs before any
           payment to other shareholders. At the option of the holders, the 8%
           Cumulative Convertible Redeemable Preferred, Series B Stock and the
           cumulative preferred dividends in arrears are convertible into shares
           of common stock determined by dividing $50,000 by the conversion
           price of the lesser of $3 or 75% of the average of the closing bid
           price of common stock during the five (5) trading days immediately
           prior to the conversion date. The thirty (30) shares of Preferred
           Stock issued has an intrinsic value of beneficial conversion feature
           of approximately $414,580.

           Common Stock

           The Company has authorized the issuance of ninety million
           (90,000,000) shares of common stock, having one hundredth of a cent
           ($0.0001) par value per share. On December 1, 1998 (date of
           recommencement) the Company had 10,328,395 shares of common stock
           issued and outstanding. Prior to December 22, 1998 the Company
           authorized a 50 to 1 reverse stock split, leaving 206,759 shares
           (after adjustment for fractional shares). Immediately after the
           reverse stock split the Company issued 3,937,899 shares for cash in
           the amount of $98,446. On December 22, 1998 the Company acquired
           Mobile PET Systems, Inc. in a non-cash, stock for stock transaction
           by issuing: 7,000,000 shares of the Company's stock in exchange for
           7,000,000 shares of Mobile PET Systems, Inc. common stock and
           subsequently changed its name to Mobile PET Systems, Inc. The Company
           issued common stock in non-cash transactions as follows: 200,000
           shares in connection with employment valued at $250,000 and 35,000
           shares in connection with services valued at $109,375, 719,736 shares
           converted from cumulative preferred dividends valued at $20,099. The
           Company issued additional shares of common stock in cash
           transactions: 1,525,000 shares from the exercise of stock options for
           cash in the amount of $1,847,500, and 2,065,000 shares for cash in
           the amount of $4,521,284.

           Stock Options

           In December 1998 the Board of Directors authorized the issuance of
           stock options to purchase 1,500,000 shares of common stock at a price
           from $1.00 to $1.50 per share. These options were exercised prior to
           December 31, 2000.

           The Company and subsidiaries' Board of Directors adopted the 1999
           Stock Option Plan pursuant to which incentive stock options or
           nonstatutory stock options to purchase up to 6,000,000 shares of
           common stock may be granted to employees, directors and consultants.
           Some stock options expire on June 30, 2002, with some options
           extending to 2004 and vesting over service periods that range from
           zero to four years. During


                                       9
<PAGE>   12

           the six month period ended December 31, 2000, the Company recognized
           compensation expense of $184,662.

           As of December 31, 2000, the Company has granted options to purchase
           4,992,500 shares of common stock as follows:

<TABLE>
<CAPTION>
                                                                                              Number of
                                                                    Exercise Price              Shares          Vested Shares
                                                                    --------------          -------------      ----------------
<S>                                                                 <C>                     <C>                <C>
                 Outstanding, November 30, 1998                                                        --                   --
                       Granted                                      $1.00 - $4.50               1,500,000            1,500,000
                                                                    And Fair Value
                       Exercised                                        $1.00                    (900,000)            (900,000)
                       Cancelled                                                                       --                   --
                                                                                            -------------      ---------------
                 Outstanding, December 31, 1999                                                   600,000              600,000

                       Granted                                      $1.91 - $3.00               1,235,000                   --
                                                                    And Fair Value
                       Exercised                                                                       --                   --
                       Cancelled                                                                       --                   --
                                                                                            -------------      ---------------
                 Outstanding, March 31, 1999                                                    1,835,000              600,000

                       Granted                                      $2.50 - $4.46                 500,000              975,000
                                                                    And Fair Value
                       Exercised                                        $1.50                    (600,000)            (600,000)
                       Cancelled                                                                       --                   --
                                                                                            -------------      ---------------
                 Outstanding, June 30, 1999                                                     1,735,000              975,000

                       Granted                                      $1.00 - $4.63                 284,000              175,000
                                                                    And Fair Value
                       Exercised                                                                       --                   --
                       Cancelled                                                                 (200,000)                  --
                                                                                            -------------      ---------------
                 Outstanding, September 30, 1999                                                1,819,000            1,150,000

                       Granted                                      $1.50 - $2.50                 115,000              334,000
                                                                    And Fair Value
                       Exercised                                                                       --                   --
                       Cancelled                                                                       --                   --
                                                                                            -------------      ---------------
                 Outstanding, December 31, 1999                                                 1,934,000            1,484,000

                       Granted                                      $1.63 - $5.31               1,734,500              115,000
                                                                    And Fair Value
                       Exercised                                                                       --                   --
                       Cancelled                                                                       --                   --
                                                                                            -------------      ---------------
                 Outstanding, March 31, 2000                                                    3,668,500            1,599,000

                       Granted                                      $2.00 - $3.31               2,319,500            1,048,000
                                                                    And Fair Value
                       Exercised                                                                       --                   --
                       Cancelled                                                                       --                   --
                                                                                            -------------      ---------------
                 Outstanding, June 30, 2000                                                     5,988,000            2,647,000

                       Granted                                      $2.50 - $3.25                 400,000                7,500
                                                                    And Fair Value
                       Exercised                                                                       --                   --
                       Cancelled                                    $1.00 - $5.31              (1,530,000)             (55,000)
                                                                                            -------------      ---------------
                 Outstanding, September 30, 2000                                                4,858,000            2,599,500

                       Granted                                      $1.26 - $2.99                 354,500              365,000
                                                                    And Fair Value
                       Exercised                                                                       --                   --
                       Cancelled                                    $1.00 - $5.31                (220,000)                  --
                                                                                            -------------      ---------------
                 Outstanding, December 31, 2000                                                 4,992,500            2,964,500
                                                                                            =============      ===============
</TABLE>


                                       10
<PAGE>   13

           The Company accounts for stock-based compensation using the intrinsic
           value method prescribed by Accounting Principles Board Opinion No.
           25, "Accounting for Stock Issued to Employees," under which no
           compensation cost for stock options is recognized for the stock
           option awards granted at or above fair market value. During the six
           month period ended December 31, 2000, the Company recognized
           compensation expense of $184,662.

           Had compensation expense for the Company's 1999 Stock Option Plan
           been determined based upon fair values at the grant dates for awards
           under the plan in accordance with SFAS No. 123, "Accounting for
           Stock-Based Compensation," the Company's net loss and loss per share
           would have been increased to the pro forma amounts indicated below.
           Additional stock option awards are anticipated in future years.

<TABLE>
<CAPTION>
                                                                               December 31,
                                                                     ------------------------------
                                                                         2000              1999
                                                                     ------------      ------------
<S>                                                                  <C>               <C>
                     Net loss

                        As reported                                  $ (5,456,401)     $ (1,487,142)

                        Pro forma                                      (6,586,670)       (2,347,478)

                     Net loss - available to common shareholders

                        As reported                                  $ (6,107,882)     $ (1,487,142)

                        Pro forma                                      (7,238,151)       (2,347,478)

                     Loss per share

                        As reported                                  $      (0.43)     $      (0.11)

                        Pro forma                                           (0.51)            (0.18)
</TABLE>

           Warrants

           At December 31, 2000 and 1999 warrants were outstanding for 1,126,000
           and 231,500 shares of common stock at exercise prices between $1.75
           to $5.00 per share and the average of the last reported sale price of
           the common stock for the five trading days preceding the issue date.
           These warrants expire between January 2001 and September 2005.

NOTE 6 - RELATED PARTY TRANSACTIONS

           Subordinated Equity Participation

           At December 31, 2000 the Company entered into a Memorandum of
           Agreement and retroactively to June 1, 1999 restructured an 8%
           interest in a subordinated equity participation in London
           Radiosurgical Centre Ltd (LRC), a foreign corporation with a common
           shareholder, officer and director. The subordinated equity
           participation is recorded at cost in the amount of $200,000. Prior to
           December 31, 2000 the agreement was to provide distributions of cash,
           if any, including interest at a rate of 15% per annum, up to the
           amount of the investment plus accrued interest, after which the
           Company is to receive distributions of 60% of net income. According
           to the terms of the participation agreement, net income for
           distribution is equal to net income less equipment financing
           payments, operating expenses, reserve capital and taxes.

           The Memorandum of Agreement will provide a distribution of 8.42% of
           LRC's net distributable cash flow, until the total of $210,573 has
           been distributed and then 5.05% of net distributable cash flow,
           subject to future dilution. The Memorandum of Agreement stopped the
           accrual of interest at June 1, 1999. At the


                                       11
<PAGE>   14
           date of the Memorandum of Agreement, the Company canceled $47,447 of
           accrued interest from the original investment. Accordingly, accrued
           interest on the investment was $10,573 at December 31, 2000. The
           investment is personally guaranteed by a shareholder and officer of
           the Company.

           London Radiosurgical Centre Ltd

           During the six month period ended December 31, 2000 and 1999, the
           Company advanced without interest $421,783 and $0, respectively to
           LRC for working capital during LRC's start up period. At December 31,
           2000, and 1999 the balance due from London Radiosurgical Centre Ltd
           was $422,283 and $256,024, respectively. The advance is personally
           guaranteed by a shareholder and officer of the Company. In addition,
           LRC provides office space under normal commercial terms to Company's
           subsidiaries. During the six month period ended December 31, 2000 the
           Company paid LRC approximately $40.955 in administrative expenses. At
           December 31, 2000 there is a balance due to LRC of $106,582.

           Loan

           The Company received on August 23, 2000, an eight percent (8%) bridge
           loan from a shareholder in the amount of $200,000. The new loan dated
           October 11, 2000 is an eight percent bridge loan in the amount of
           $200,000 and was due on or before December 11, 2000. At December 31,
           2000, there is accrued interest in the amount of $5,655. This loan's
           due date has been extended to March 1, 2001.

           On October 24,2000 the Company received an eight percent (8%) bridge
           loan from an officer and shareholder in the amount of $100,000, which
           was due on or before November 30, 2000. At December 31, 2000, there
           is accrued interest in the amount of $1,490. This loan's due date has
           been extended to March 1, 2001.

NOTE 7 - SECURITIES PURCHASE AGREEMENTS

           On March 1, 2000, the Company entered into a Securities Purchase
           Agreement, pursuant to which the Company issued 60 shares of 8%
           Cumulative Convertible Redeemable Preferred, Series A Stock for cash
           in the amount of $2,700,000, net of acquisition fees and 120,000
           warrants to purchase shares of common stock at an exercise price of
           $5.00 per share, which expire in March 2003. The buyer of the
           preferred stock agreed to purchase shares of common stock of the
           Company in tranches, for an aggregate purchase price of up to
           $10,000,000, at a price equal to eighty five percent (85%) of the
           average closing bid price five (5) consecutive days immediately prior
           to the Company providing a tranche notice to the buyer. The Company
           may begin the tranche notices three (3) business days after the
           registration of both the 8% Cumulative Convertible Redeemable
           Preferred, Series A Stock and warrants, and the common stock
           described in this Agreement. On December 7, 2000, under the terms of
           a Security Purchase Agreement, the Company received cash in the
           amount of $500,000 for the first tranche and has issued a second
           tranche notice for an additional $500,000 for a put to issue
           1,590,584 shares of common stock on January 31, 2001.

           On September 21, 2000, the Company entered into a Securities Purchase
           Agreement. The Security Purchase Agreement calls for the issuance of
           a total thirty (30) shares of 8% Cumulative Convertible Redeemable
           Preferred, Series B Stock in two tranches for an aggregate purchase
           price of $1,500,000 and 50,000 warrants to purchase shares of common
           stock at an exercise price of $3 per share on the first tranche and
           29,851 warrants to purchase shares of common stock at an exercise
           price of $2.5125 per share on the second tranche. The warrants issued
           in connection with the first tranche expire on September 30, 2005.

NOTE 8 - EMPLOYMENT AGREEMENTS

           The Company has employment and compensation agreements with key
           officers and employees of the Company. The agreements vary in terms
           providing annual salaries and options to purchase shares of common
           stock, which may or may not be contingent upon individual or Company
           stock performance.

NOTE 9 - INCOME TAXES

           At December 31, 2000 the Company has a net operating loss
           carryforward for tax purposes of approximately $13,892,000 which
           expires through the year 2019. The Internal Revenue Code contains
           provisions, which may limit the loss carryforward available if
           significant changes in shareholder ownership of the Company occur.


                                       12
<PAGE>   15

           The components of the provision for income taxes for the six months
           ended December 31, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                         December 31,
                               -----------------------------
                                   2000             1999
                               ------------     ------------
<S>                            <C>              <C>
Current

      Foreign                  $         --     $         --
      Federal                            --               --
      State                              --            1,600
                               ------------     ------------
                                         --            1,600

Deferred

      Foreign                            --               --
      Federal                            --               --
      State                              --               --
                               ------------     ------------
Provision for income taxes     $         --     $      1,600
</TABLE>

            The components of the net deferred tax assets were as follows:

<TABLE>
<CAPTION>
                                                    December 31,
                                          ------------------------------
                                              2000              1999
                                          ------------      ------------
<S>                                       <C>               <C>
Deferred tax assets

      Start-up costs                      $    155,950      $    155,950
      Net operating loss carryforward        5,092,000         1,068,000
                                          ------------      ------------
                                             5,247,950         1,223,950
      LESS VALUATION ALLOWANCE              (5,247,950)       (1,223,950)
                                          ------------      ------------

Net deferred tax assets                   $         --      $         --
                                          ============      ============
</TABLE>

NOTE 10 - LONG TERM DEBT

           Long term debt at December 31, 2000 and 1999 consists of the
           following:



NOTE 11 - COMMITMENTS

           Equipment under capital lease is included in property and equipment
           as follows:

<TABLE>
<CAPTION>
                                                    2000              1999
                                                ------------      ------------
      <S>                                       <C>               <C>
      Promissory Note with interest
      at a rate of 11% per annum, due
      in monthly installments of $2,343,
      with the first payment beginning
      on January 1, 2001, with a 5%-1%
      prepayment penalty.                       $ 108,753       $       --

      Less current portion                        (18,101)              --
                                                ---------        ----------
      Long term debt, net of current
      portion                                   $  90,652               --
                                              ============      ============
</TABLE>


           At December 31, 2000 there is accrued interest in the amount of $263.
           The maturities of long term debt for each of the succeeding five
           years subsequent to December 31, 2000, are as follows:



<TABLE>
<CAPTION>
      Year Ended
      December 31,
      -------------
      <S>                                  <C>
      2001                                  $ 18,101
      2002                                    19,090
      2003                                    21,300
      2004                                    23,749
      2005                                    26,513
                                             -------
                                            $108,753
                                            ========

</TABLE>

<TABLE>
<CAPTION>
                                            December 31,
                                  -------------------------------
                                      2000              1999
                                  ------------      ------------
<S>                               <C>               <C>
Equipment                         $ 18,985,457      $  1,433,863
Less accumulated amortization       (1,190,510)          (85,349)
                                  ------------      ------------

Net capital lease assets          $ 17,794,947      $  1,348,514
                                  ============      ============
</TABLE>

           The Company leases office space under a non-cancelable operating
           lease. The office lease expires in December 2000.

           Rent expense for the three months and six months ended December 31,
           2000 and 1999 was $ and $ respectively.

                                       13
<PAGE>   16

           The following is a schedule by year of the future minimum lease
           payments at December 31, 2000:

<TABLE>
<CAPTION>
                                                                   Capital           Operating
           Year Ended December 30,                                  Lease              Leases
           -----------------------                              -------------        ---------
<S>                                                             <C>                  <C>
           2001                                                 $   5,671,591        $  38,795
           2002                                                     5,363,513           41,875
           2003                                                     5,636,513           45,195
           2004                                                     5,455,915           48,790
           2005                                                     3,502,469           16,780
           2006                                                        61,510               --
                                                                -------------        ---------
                                                                  25,964,513         $ 191,435
                                                                                     =========
           Less amount representing
              interest at 12.07%                                  (7,325,057)
                                                                ------------
           Present value of minimum lease
              payments (including current
              portion of $3,352,729)                            $ 18,639,455
                                                                ============
</TABLE>

NOTE 12 - CONCENTRATION OF CREDIT RISK

           The Company maintains cash with various major financial institutions
           in excess of the Federal Deposit Insurance Corporation limits.

NOTE 13 - EARNINGS (LOSS) PER SHARE

The computations of basic and diluted earnings per share from continuing
operations for the six months ended December 31, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
                                                  December 31,
                                        ------------------------------
                                            2000              1999
                                        ------------      ------------
<S>                                     <C>               <C>
Loss per share - basic

Numerator:

     Net loss - available to

          Common shareholders           $ (6,107,882)     $ (1,487,142)

Denominator:

     Weighted-average shares              14,319,644        13,014,088
                                        ------------      ------------

Loss per share - basic                  $      (0.43)     $      (0.11)
                                        ============      ============

Loss per share - diluted

Numerator:

     Net loss - available to

          Common shareholders           $ (6,107,882)     $ (1,487,142)

Denominator:

     Weighted-average shares              14,319,644        13,014,088
                                        ------------      ------------

Loss per share - diluted                $      (0.43)     $      (0.11)
                                        ============      ============
</TABLE>


                                       14

<PAGE>   17

The average shares listed below were not included in the computation of diluted
loss per share because to do so would have been antidilutive for the six months
ended December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                       December 31,
                                           -----------------------------------
                                               2000                   1999
                                           ------------           ------------
<S>                                        <C>                    <C>
Cumulative convertible
     redeemable preferred stock
     common stock equivalent                   900,000                     --

Employee stock options                       4,465,310              1,845,759

Warrants                                     1,309,437                239,833
</TABLE>

NOTE 14 - DEPOSITS AND OTHER ASSETS

Deposits and other assets consist of the following at December 31, 2000 and
1999:

<TABLE>
<CAPTION>
                                               2000                   1999
                                           ------------           ------------
<S>                                        <C>                    <C>
Equipment deposits -
     Mobile PET. Units                     $    719,838           $    421,431
Equipment rental deposits -
     other                                       49,000                     --
Lease deposits
Other                                            50,770                 15,000
                                           ------------           ------------
                                           $    819,608           $    436,431
</TABLE>

Equipment deposits - Mobile PET. Units are refundable upon the Company securing
lease financing or carried forward to subsequent equipment orders.

NOTE 15 - SUBSEQUENT EVENTS

Capitalization

On December 7, 2000, under the terms of a Security Purchase Agreement, the
Company received cash in the amount of $500,000 for the first tranche and has
issued a second tranche notice for an additional $500,000 for a put to issue
1,590,584 shares of common stock on January 31, 2001.

Office Lease

On January 17, 2001, the Company entered into a non-cancelable operating lease
for office space. The office lease expires in March 31,2004.

The following is a schedule by year of the future minimum lease payments:

<TABLE>
<CAPTION>
           Year Ended
           December 31,
           ------------
<S>                                               <C>
           2001                                   $   89,577
           2002                                      123,918
           2003                                      130,119
           2004                                       32,922
                                                  ----------
                                                  $  376,536
</TABLE>


                                       15
<PAGE>   18

Loans

On January 12, 2001, the Company received an eight percent (8%) bridge loan from
an officer and shareholder in the amount of $25,000, which has an expiry date on
March 12, 2001.

On January 17, 2001, the Company received an eight -percent (8%) bridge loan
from an officer and shareholder in the amount of $150,000, which has an expiry
date on March 17, 2001.

On February 2, 2001, the Company received a bridge loan from a European investor
and shareholder in the amount of $500,000, which has an expiry date of March 22,
2001. At the option of the holder of the Note, holder may, within 45 days of the
date of the note, convert the principal balance and accrued interest under the
note, into common stock at the conversion price of $1.00 per share.

Warrants

On January 12, 2001, warrants were issued to purchase five thousand (5,000)
shares of common stock at an exercise price of $1.05 per share. These warrants
expire in January 2004.

On January 17, 2001, warrants were issued to purchase thirty-five thousand
(35,000) shares of common stock at an exercise price of $0.875 per share. These
warrants expire in January 2004.

On February 5, 2001, warrants were issued to purchase five hundred thousand
(500,000) shares of common stock at an exercise price of $1.00 per share. These
warrants expire on April 30, 2001.

Notice of Conversion

On October 30, 2000 the Company received a Notice of Conversion to convert
$350,000 of 8% Cumulative Convertible Redeemable Preferred, Series A Stock plus
$20,099 of cumulative preferred dividends in arrears into 197,881 shares of
common stock.


                                       16
<PAGE>   19

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

           The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the financial
statements and the related notes. This quarterly report of Form 10-QSB contains
forward-looking statements based upon current expectations that involve risks
and uncertainties, such as our plans, objectives, expectations and intentions.
For this purpose, any statements contained in it that are not statements of
historical fact should be regarded as 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. For example, the words "believes,"
"anticipates," "plans," "intends," "will," "may" and "expects," or any variation
of these words including the negative of these words, are intended to identify
forward-looking statements. For a more detailed description of these risk
factors, please see Item 1 "Business - Risk Factors" of our annual report on
Form 10-KSB filed with the Securities and Exchange Commission on October 11,
2000.

OVERVIEW

           Our company and our subsidiaries are a medical service provider
operating mobile Positron Emission Tomography, or PET, molecular imaging systems
for hospitals and other health care providers on a mobile, shared user basis in
selected marketplaces in the United States. We provide the PET imaging system
housed in a mobile coach or in a dedicated facility. We also provide the
technical personnel who operate the equipment and implement the PET procedure
under the direction of hospital physicians. Our PET services include the
management of day-to-day operations and educational and marketing support. Our
services enable leading as well as small to mid-size hospitals to gain access to
advanced diagnostic imaging technology and related value-added services without
making a substantial investment in equipment and personal.

           We have operations in the United States and a dedicated PET facility
in the United Kingdom. We believe there may be opportunities for shared mobile
PET services in the United Kingdom and certain European markets. On December 10,
1999, we incorporated a wholly owned subsidiary, The London PET. Centre Limited,
a United Kingdom private limited company. On December 17, 1999, we incorporated
two wholly owned subsidiaries, Mobile PET. Leasing Limited, a United Kingdom
private limited company and Mobile PET. Systems (UK) Limited, a United Kingdom
private limited company.

           We have measured the financial position and results of operations of
our United Kingdom subsidiaries using local currency as the functional currency.
We have translated our assets and liabilities into U.S. dollars at the rates of
exchange as of the balance sheet date. We have translated our statements of
operations items using the average exchange rates prevailing throughout the
reporting period. We have accumulated the translation gains or losses resulting
from the changes in the exchange rates from quarter-to-quarter in a separate
component of shareholders' equity. We have reflected the transaction gains and
losses in the cash flow as the effect of exchange rate changes on cash.

           Our consolidated revenues for the three months and six months ending
December 31, 2000 approximated $1,118,600 and $1,959,600, respectively, compared
to our first three and six months of operations ended December 31, 1999, in
which we had revenues of $216,925 and $296,920, respectively, as we emerged from
our development stage period in the United States establishing the management
and operating infrastructure to provide PET systems and services to hospitals
and other health care providers on a mobile, shared user basis. The London PET.
Centre Limited, our wholly owned United Kingdom subsidiary, emerged from the
development stage late in the fourth quarter ended June 30, 2000 and prior to
that our efforts were principally devoted to organizational activities,
marketing efforts and placing the first fixed site PET system into service in
London.

           We continue our development and expansion efforts of organizational
activities, infrastructure, capital, marketing, and the placement of additional
mobile and fixed site PET systems. We anticipate we will continue to incur
additional losses in this fiscal year as we pursue our development efforts.
Assuming we continue our unit deployment growth and achieve targeted unit
revenues, we believe cash flow will be sufficient to cover our cost of services
on a monthly basis in fiscal 2002.

           Our future revenues will principally be a function of the number of
mobile units in service, scan volumes and fees per scan. We generate
substantially all of our revenues from exclusive multi-year contracts with
hospitals and health care providers. While we have not written off an account to
date there can be no assurance that this trend will continue and accordingly, we
have established a conservative allowance for uncollectable accounts receivable.


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           The principal component of our operating costs includes salaries and
benefits paid to technologists and drivers, marketing, equipment leasing, system
maintenance, insurance and transportation costs. Because a majority of these are
fixed, increased revenues as a result of higher scan volumes may significantly
improve our future profitability potential, while lower scan volumes may result
in lower profitability.

           Since our inception, we have incurred significant losses and through
December 31, 2000, we have incurred a consolidated net loss approximating
$13,892,000. For the three months and six months ended December 31, 2000, we
experienced a consolidated net loss from operations of $3,193,374 and $5,456,401
respectively. We expect to experience operating losses and negative cash flow
from operations until later this fiscal year 2001, when we anticipate reaching
and exceeding break even on a monthly basis. We anticipate our losses during
this next quarter may increase from current levels as we incur costs and
expenses related to infrastructure development and staffing, marketing and sales
activities and other capital expenditures. As a result, in order to achieve and
maintain profitability, we will need to continue to generate significant
revenues.

           We raised approximately $1.5 million dollars of new equity capital
through the issuance of preferred stock in a domestic and international private
placement in two tranches. During the first quarter ended September 30, 2000, we
designated thirty shares and issued twenty shares of cumulative convertible
redeemable Series B preferred stock, along with 50,000 warrants to purchase
shares of common stock at an exercise price of $3 per share, for $885,000, net
of issuing costs, as the first tranche of the financing. During November 2000,
we issued an additional ten shares of cumulative convertible redeemable Series B
preferred stock, along with 29,851 warrants to purchase shares of common stock
at an exercise price of $2.5125 per share for $500,000, as the second tranche of
the financing. During the prior year ended June 30, 2000, we designated and
issued sixty shares of cumulative convertible redeemable Series A preferred
stock for $2,700,000 net of issuance costs and 120,000 warrants to purchase
shares of common stock at an exercise price of $5 per share. Both Series A and
Series B preferred shares have no voting rights, have a liquidation value of
$50,000 per share, and accrue dividends at a rate of 8% on the liquidation value
payable upon conversion. The investor of the Series A preferred stock also
agreed to purchase shares of common stock of the Company with a value of up to
$10,000,000 in tranches for a purchase price of approximately eighty five
percent of the average closing bid price of the five prior days per share. In
October 2000, we issued 25,000 shares of common stock for $1.90 per share,
pursuant to the exercise of an outstanding option.

           We have a limited operating history on which to base an evaluation of
our business and prospects. You must consider our prospects in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stage of development. To address these risks, we must establish, maintain
and expand our customer base, implement and successfully execute our business
and marketing strategy, provide superior customer service, anticipate and
respond to competitive developments and attract, retain and motivate qualified
personnel. We cannot assure you that we will be successful in addressing these
risks, and our failure to do so could have a negative impact on our business,
operating results and financial condition.

RESULTS OF OPERATIONS

           The three and six months ended December 31, 1999, were our first
periods of operations. During the period ended December 31, 1999, we placed our
first mobile unit into operation, which generated revenues and incurred
operating costs in addition to those related to establishing the management and
operating infrastructure to provide PET systems and services to health care
providers on a mobile, shared user basis. These factors make it difficult to
draw informative conclusions by comparing the three months and six months ended
December 31, 1999 and the three months and six months ended December 31, 2000.

           For the three months and six months ended December 31, 2000, our net
loss from operations was $3,193,374 and $5,456,401 respectively and our net loss
available to common shareholders, after preferred stock dividend, was $3,568,468
or $0.25 per share for the three months and $6,107,882 for the six months ended
December 31, 2000, compared to the net loss of $745,851 or $0.06 per share for
the three months and net loss of $1,487,142 or $0.11 per share for the six
months ended December 31, 1999.

           We took delivery on our first PET unit in July 1999 and began
accruing revenues in August 1999. For the three months and six months ended
December 31, 2000, we had twelve units accepted and placed into service,
generating revenues of $1,118,687 and $1,959,668 and incurring cost of services
of $1,735,898 and $2,348,651, compared to $216,925 and $296,920 in revenues and
$83,348 and $126,877, in cost of services for the three and six months ended
December 31, 1999. As a result of these activities, accounts receivables
increased to $808,127, net of allowances for doubtful accounts, as of December
31, 2000, as compared to accounts receivables of $246,225 for the period ended
December 31, 1999. The costs of service revenues represent salaries paid to
technologists and drivers, depreciation on capital leases, system maintenance,
transportation and insurance on our mobile PET systems.


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           General and administrative expenses for the three months and six
months ended December 31, 2000 were $2,398,056 and $4,650,778 respectively, as
compared to $809,993 for the three months and $1,621,786 for the six months
ended December 31, 1999. We incurred increased general and administrative
expenses due primarily to the growth in staff and related expenses incurred in
operating our twelve Mobile PET units compared to our one unit in the quarter
ended December 31, 1999. In addition, we continue to incur costs in building our
infrastructure and incur costs incurred in advertising and marketing our mobile
PET services.

           Our interest income was $11,712 and $24,989 for the three and six
months ended December 31, 2000, as compared to $2,662 and $9,328 for the three
and six months ended December 31, 1999. The increase in interest income for the
three and six months ended December 31, 2000 was the result of quarterly accrued
interest on the $200,000, 15% Subordinated Equity Participation Agreement and
money market funds. Our interest expense of $109,709 and $435,267 for the three
and six months ended December 31, 2000, as compared to the interest expense of
$57,601 and $106,540 for the three and six months ended December 31, 1999, was
principally due to the capitalization of our equipment leases of image scanners,
coaches and computer equipment.

LIQUIDITY AND CAPITAL RESOURCES

           At December 31, 2000, our total assets were $21,210,297, compared to
$3,594,845 at December 31, 1999. Our current assets at December 31, 2000,
totaled $1,690,851 and our current liabilities were $5,944,273, as compared to
December 31, 1999, that reflected current assets of $1,317,690 and current
liabilities of $392,543. Shareholders' equity at December 31, 2000, decreased to
$(111,354) from $1,517,827, due primarily to the issuance of 20 shares of Series
B Convertible Preferred Stock in the amount of $885,000, net of issuance costs,
stock subscriptions of $547,500 and a net loss of $3,193,374 and $5,456,401
incurred in the three and six months ended December 31, 2000. In the comparable
three and six months ended December 31, 1999, shareholders' equity was primarily
the result of 51 shares of common stock issued from subscriptions paid in the
amount of $285,000, net of offering costs and a three and six months net loss of
$745,851 and $1,487,142 respectively.

           Our foreign currency translation adjustment in shareholders' equity
amounted to $61,273 at December 31, 2000 compared to $ $(3,450) at December 31,
1999. We have reflected the transaction gains and losses in the cash flow as the
effect of exchange rate changes on cash of $31,068 and $172,658 for the three
and six months ended December 31, 2000, with no comparable cash flow effect at
December 31, 1999.

           Our net cash used in investing activities for the three and six
months ended December 31, 2000 was $(65,474) and $(166,050), as compared to
$1,239,624 and $(329,220) in the three and six months ended December 31, 1999.
This difference is primarily a result of the $571,224 we invested in computers
and related equipment for our business and personnel growth. In July 1999, we
purchased a coach for $273,400 and made a deposit of $637,500 for our second
mobile PET system. We sold them to a leasing company in late December 1999, as
part of a five year lease agreement, resulting in a financing lease for the
coach and the imaging system, consistent with the capitalization of our mobile
system equipment leases. In August 2000, we accepted and entered into two
financing leases, approximating $3 million for the coach and the imaging system,
as part of a five-year lease agreement with a leasing company for our fourth and
fifth mobile PET systems.

           The net cash provided by our financing activities for the three and
six months ended December 31, 2000 was $801,084 and $2,229,956, a result of the
private placement and issuance of 20 shares of Series B Convertible Preferred
Stock in the amount of $885,000; the proceeds from a $200,000 bridge financing
and payments of $216,200 on obligations under capital leases, as compared to
$(530,662)and $303,834 for the three and six months ended December 31, 1999, a
result of the issuance of 515,000 shares of common stock, net of issuing costs.

           We have experienced a substantial increase in our capital
expenditures since our inception, consistent with our growth in operations and
staffing, and we anticipate that this will continue for the foreseeable future.
Additionally, we continue to evaluate business investments, geographic service
expansion and service offerings. We cannot be certain that the underlying
assumed levels of revenues and expenses will prove to be accurate. While we do
not have any binding commitments for any additional funding, we may seek to
obtain additional funding through public or private financings or other
arrangements. If we are unable to obtain such funding or if such funding is
insufficient, we may be unable to develop or enhance our services, take
advantage of business opportunities or respond to competitive pressures, any of
which could have a materially adverse impact on our business, operating results
and financial condition.


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PART II OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES

           On September 21, 2000, we entered into a Securities Purchase
Agreement. As part of the Agreement, we issued thirty shares of 8% Cumulative
Convertible Redeemable Preferred, Series B Stock for cash in two tranches for an
aggregate purchase price of (i) $1,500,000, (ii) warrants to purchase 50,000
shares of common stock at an exercise price of $3 per share, which expire on
September 30, 2005, and (iii) warrants to purchase 29,851 shares of common stock
at an exercise price of $2.5125, which expire on November 9, 2005. The shares of
8% Cumulative Convertible Redeemable Preferred, Series B Stock have no voting
rights, have a liquidation value of $50,000 per share, and accrue dividends at a
rate of eight percent (8%) per annum per share on the liquidation value payable
upon conversion. During September 2000, we received the first tranche in the
amount of $985,000, net of acquisition fees. During November 2000, we received
the second tranche in the amount of $500,000. This sale was exempt from
registration under Section 4(2) of the Securities Act of 1933, no public
offering being involved.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

           None

(b) Reports on Form 8-K.

           None

                                    SIGNATURE

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

                                   MOBILE PET SYSTEMS, INC.

                                   By: /s/ Thomas G. Brown
                                       ----------------------------------------
                                       Thomas G. Brown, Chief Financial Officer

                                   Date: February 20, 2001




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