SECURITIES AND EXCHANGE COMMISSION
                    Washington, DC 20549

                         FORM 10-KSB
  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                    EXCHANGE ACT OF 1934

For the year ended December 31, 2000
Commission File No. 000-25485





                  ELAST TECHNOLOGIES, INC.
   (Exact name of registrant as specified in its charter)




Nevada                                            88-0380544
(State of organization) (I.R.S. Employer Identification No.)

2505 Rancho Bel Air, Las Vegas, Nevada 89107
(Address of principal executive offices)

Registrant's telephone number, including area code (702) 878-3397

Securities registered under Section 12(g) of the Exchange
                                   Act: Common stock, $0.001
                                   par value per share

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

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

Issuer's Revenue during the year ended December 31, 2000: $ 0

As of December 31, 2000, the registrant had 1,611,655 shares
of   its   common  stock,  $0.001  par  value,  outstanding.
Aggregate  market value of the voting and non-voting  common
equity held by non-affiliates based on the price of N/A  per
share  (the  selling or average bid and asked price)  as  of
December 31, 2000: 1,510,926.56.

            DOCUMENTS INCORPORATED BY REFERENCE:

None

                           PART I

ITEM 1.   DESCRIPTION OF BUSINESS

Development of the Company.

The Company was incorporated in the State of Nevada on
November 5, 1996 under the name Med Mark, Inc. In 1998,
Elast Technologies Corporation, A Delaware Corportion,
merged with and into Elast Merger, Inc., a Nevada
Corporation, which was a wholly owned subsidiary of Med
Mark, Inc. On or about June 29, 1998, the Company filed a
Certificate of Amendment to its Articles of Incorporation
changing the name of the Company to Elast Technologies, Inc.
The executive offices of the Company are located at 2505
Rancho Bel Air, Las Vegas, Nevada 89107. The Company's
telephone number is 702.878.3397.

On or about June 30, 1998, the Company acquired all of the
issued and outstanding capital stock of Elast Technologies
Corporation, a Delaware corporation ("Elast Delaware"), and,
as specified above, changed the Company's name from Med
Mark, Inc. to Elast Technologies, Inc. The Company entered
into a licensing agreement with Dr. Robert D. Milne and
acquired the rights to develop, test, manufacture, and
market Dr. Milne's patented allergy-testing device ("ELAST
Device", U.S. Patent No. 5413113, issued on or about May 9,
1995). Dr. Milne is a board-certified family practice
physician with extensive experience in allergy testing and
preventative medicine. The Company has spent significant
amounts of time during its last two fiscal years on research
and development activities relating to the ELAST Device.

Business of the Company.

The Company is engaged in the development of two separate
diagnostic tools: Its allergy testing device and its
chiropractic outcome-measuring instrument. These instruments
stem from the Company's identification of commercial
applications for worldwide patents secured by Robert D.
Milne, M.D. A primary application is the innovative
Electronic Allergo Sensitivity Test ("ELAST Device") The
ELAST Device is a no-invasive medical tool designed to
accurately diagnose allergies, as well as food and chemical
sensitivities. The Company holds the patents, trademarks and
legal rights to manufacture and sell and lease its
electronic allergy-testing device and is continually
striving to achieve refinement of its prototype.

A second and more readily available commercial application
of the Company's technologies is the Bio-Potential
Instrument. While working towards the perfection of the
ELAST Device, the Company's engineer realized a chiropractic
application of its technology. Specifically, they discovered
that the measurement of the body's electrical responses
could be applied to measuring chiropractic outcome. The Bio-
Potential Instrument can provide doctors of chiropractic
with the means to measure the damage of vertebral
subluxations, small misalignments of the vertebrae, which
interfere with the normal nerve flow, as well as the
normalizing effect of chiropractic adjustments. In its
present stage of development, management believes that the
instrument is capable of providing such assessments. With
functional input from a chiropractic perspective, it is
being tailored into an objective outcome-measuring
instrument for use by the chiropractic profession.

Allergy Division

Estimates from the Second National Health and Nutrition
Examination Survey suggest that allergies affect as many as
40 to 50 million people in the United States. Key to the
treatment of allergies is the proper identification of the
offending allergens. Therefore it is not surprising that
allergy testing was identified by the Centers for Disease
Control and Prevention as the reason for 1.4 million office
visits to physicians in 1991 alone.

Annoying reactions to foods were first documented by
Hippocrates (460- 370 BC) and some 600 years later by Galen
(131-210 AD). However, it was not until the 20th century
when fulminating reactions attributable to specific foods
were linked, that systematic inquiries were initiated. In
the 1920's, two German scientists discovered the immediate-
type hypersensitivity reactions in humans.

Over the subsequent decades increasing numbers of cases of
allergic reactions to foods were documented and the spectrum
of the clinical abnormalities expanded to include the slower
onset reactions of targeted organs. However, the cause-
effect relationship between the exposure to the food and the
manifestation of the clinical abnormalities was often not
established.

                        ELAST DEVICE

The technology of the Electronic Allergo Sensitivity Test
(ELAST Device) is based on:

     (1)  the physiological fact that the human body has an
     electric current; and,

     (2)  the clinical observation that the body's
          electrical current changes when it is exposed to a
          substance to which the body is sensitive or
          allergic.

The ELAST Device detects, measures and records perturbations
of normal micro-voltage upon a patent's exposure to an
offending substance. The Device charts the electrical flow,
processes the signal via analog-to-digital conversion, and
presents it graphically on a PC screen. This process is made
possible by sophisticated software developed by the Company,
resulting in documentation similar to an EKG.

ELAST Technologies holds patents, trademarks and legal
rights to the ELAST Device in all worldwide target markets
and, upon its perfection, the ELAST Device is expected to be
a significant aid in the diagnoses of allergies and
sensitivities.

The ELAST Device detects, measures and records perturbations
of normal micro-voltage upon a patent's exposure to an
offending substance. The Device charts the electrical flow,
processes the signal via analog-to-digital conversion, and
presents it graphically on a PC screen. This process is made
possible by sophisticated software developed by the Company,
resulting in documentation similar to an EKG.

The Company holds the patents, trademarks and legal rights
to the ELAST Device in all worldwide target markets and,
upon its perfection, the ELAST Device is expected to be a
significant aid in the diagnoses of allergies and
sensitivities.

Human therapeutic products are subject to rigorous pre-
clinical and clinical testing and other approval procedures.
The FDA and comparable foreign government regulatory
agencies require laboratory and clinical testing and other
costly and time- consuming procedures before medical
products such as the ELAST Device can be marketed. Various
federal, state and foreign statutes also govern or affect
the manufacturing, safety, labeling, storage, and marketing
of such products, as well as record-keeping incidental to
such marketing. Obtaining such approvals, and maintaining
ongoing compliance with these requirements can require the
expenditure of significant resources. To date, the Company
has not determined what procedures, if any, will be required
in this regard and has not begun any of these procedures.
The Company is currently investigating the possibility that
the ELAST Device falls under a category for which FDA
approval has already been given. The Company anticipates
that the ELAST Device may be included in such a category,
but research is currently being done by the Company to
determine regulatory requirements. In addition, regulatory
testing and approval would require significant funding and,
in the event that such funding exceeded the present
financial resources of the Company, the Company would have
to raise additional capital to market the ELAST Device.

In the event the FDA or other domestic or foreign regulatory
agency requires approval and testing of the ELAST Device,
prior to its commercial exploitation, the Company cannot
provide any assurances that testing procedures will be
successfully completed, or if completed, demonstrate that
the ELAST Device is safe and efficacious. Further, there can
be no assurances that any required government approvals will
be obtained. Accordingly, there can be no assurance that the
Company will be able to market the ELAST Device in the
United States or any foreign country. Any failure by the
Company, its subsidiary, collaborators or licensees to
obtain any required regulatory approvals or licenses would
adversely affect the ability of the Company to market its
products and would have a significant adverse affect on the
Company's revenues.

Allergy Testing Market

Management believes that the prospective market for the
ELAST Device is vast. The number of people affected by
allergies and food and chemical sensitivities is staggering
and the early and accurate identification of offending
allergens is critical to efficacious treatment.

The American College of Allergy, Asthma and Immunology
estimates that allergies, including hay fever, asthma and
skin disorders, affect 25% of the population. Notably,
allergies are the sixth-leading cause of chronic disease in
the United States and are estimated to cost the health-care
system more than $18 billion annually.

Currently, the same types of blood tests that are used to
detect food allergies are being used for other types of
allergies. The accuracy level for these tests is higher than
for food allergies, but management believes that the ELAST
Device's ease of use, non-invasiveness, real-time
quantifiable results and much lower costs make ELAST a
potential leader in the larger market segment.

Because of physical changes in our bodies as we age and
because of increased usage of prescription drugs, adults
over the age of 60 are much more susceptible to adverse
reactions. Of the nearly 45 million Americans 60 and older,
approximately 90% are taking one or more medications.
According to the book Worst Pills, Best Pills, in 1990, an
estimated 659,000 older Americans adults (60 and older) were
hospitalized because of adverse reactions to drugs they were
taking before their hospitalization. For these reasons,
management believes there is great potential for the
Electronic Allergo Sensitivity Testing device when testing
for adverse reactions to prescription drugs.

Management also believes that the ELAST Device can benefit
the 15% of the population that the National Academy of
Sciences estimates suffer from a variety of disabling
symptoms as a result of exposure to chemicals.

The following statistics are illustrative of the enormity of
the allergy testing market.

     *    In 1998 prescription drug expenditures for allergy
          related therapeutic agents exceeded $6 billion. 34

     *    From 1993 to 1998 the annual expenditures for
          antihistamines increased more than 600% from $317
          million to $2.3 billion.

     *    Contact dermatitis and other eczema were diagnosed
          during more than 7.1 million office visits to
          physicians and 430,000 outpatient visits.

     *    Between 2 to 3% of hospitalized patients have
          allergic drug reactions.

     *    Eight percent of children younger than six years
          experience food intolerances. Of this group, 2 to
          4% appear to have allergic reactions to food. In
          adults, an estimated 1 to 2% is sensitive to food
          or food additives.

Competition

The ELAST Device offers a completely unique approach to the
diagnosis of allergies and sensitivities than any allergy
testing method currently employed by the health care
industry. The science underlying the ELAST Device represents
a paradigm shift from biochemistry to bioelectricity.
Accordingly, Elast's competition will not be other firms
offering a similar product, which is the competitive norm,
but rather existing testing methods. There are several
including the skin-prick, Oral Challenge Test and various
types of blood testing. But, these allergy-testing methods
suffer, as a group, from being insufficiently accurate
and/or invasive, painful, time consuming and expensive.
Worst of all, they are too often diagnostically inaccurate,
leaving patients' conditions untreated, to the frustration
of both patient and doctor.

In fact allergists agree that results of available blood
testing are not a good indication of allergies. For example,
a clinically significant maladaptive response to a specific
food (or other allergic substance) cannot be diagnosed by
the presence of a positive serological or skin prick test
alone; neither can the diagnosis be invalidated by their
absence. Even when the food allergy is of the immediate
type, skin prick tests and measurement of allergen-specific
IgE may be negative. Furthermore, it is clear that IgE
mediated immune responses do not explain many food
reactions.

Clinical reports have shown that, in addition to typical
allergic responses such as asthma, skin rashes, and
rhinitis, other disorders such as vascular headache,
irritable bowel syndrome, Crohn's Disease, arthritis, and
neurological problems including attention deficit disorder
and hyperactivity may be attributed to food sensitivities.

Additionally, for most foods, true standardization is not
yet available. Radioallergosorbent Testing ("RAST") testing
is usually inferior to other means of allergen
quantification.

Because of the inaccuracies and inconsistencies present in
current clinical allergy tests, the elimination diet
continues to be the "gold standard" for diagnosing food
allergies and food intolerance.

Currently, the market for allergy testing devices (skin-
prick test kits, RAST and cytotoxic testing) and products
(allergens, solutions, syringes, etc.) consists of companies
of varying size and capabilities, ranging from small
privately held companies to divisions of multibillion dollar
international companies. According to its 1994 Annual
Report, Bayer Corporation (formerly Miles, Inc.) holds over
50% of the worldwide allergy testing market, exclusive of in
vitro testing. In 1994, Pharmacia (now Pharmacia & Upjohn,
Inc.) held a 73% worldwide market share for in vitro allergy
tests. Additional competitors in this area include Sanofi,
Ciba Corning and Diagnostic Products Corporation. This list
of competitors is not exhaustive.

Sales and Marketing Strategies

People with actual allergic reactions or food-related
symptoms often seek treatment from physicians who specialize
in allergy treatment. In addition to these specialists,
patients often seek relief from other medical practitioners
who believe that food allergies and sensitivities are often
the cause of underlying medical complaints. These medical
practitioners include chiropractors, naturopaths, clinical
ecologists, and otolaryngologists (ear, nose and throat
specialists).

The number of these practitioners in the United States are
approximately as follows:

   Allergists/Immunology Physicians           -         3,400
   (according to the American Medical
   Association)
   Otolaryngologists                          -         8,400
   (according to the American Medical
   Association)
   Chiropractors                              -        50,000
   (according to the American Chiropractic
   Association)
   Naturopaths                                -         1,400
   (according to the American Association
   of Naturopathic Physicians)
   Clinical Ecologists (estimated)            -           500
   Pharmaceutical Retail                      -     unavailab
                                                           le
   All Physicians Prescribing Medication      -     unavailab
                                                           le

Management believes that all the above listed medical
practitioners and their patients could benefit from Elast's
technology, which is designed to provide a more accurate and
cost effective testing method than those currently in use
for food allergy testing. The ELAST Device has significant
benefits over the testing methods commonly used to detect
allergies and sensitivities. Both RAST and cytotoxic testing
require that the patient's blood be drawn and sent to an
outside laboratory, which causes results to be delayed
several days. Skin-prick testing is also invasive in that it
requires that the patient's skin to be scratched or
punctured. The ELAST DeviceT, by contrast, requires only the
attachment of harmless electrodes to the patient's skin;
furthermore its results are immediate.

Elast anticipates that it will contact medical practitioners
through specialized marketing agents and Company sales
representatives. The Company plans to provide education,
training and support to physicians and their staffs in
testing and identifying potential allergic conditions for
testing diagnosis and treatment. These initiatives, however,
cannot be undertaken in the US until the FDA grants
approval.

International Sales and Marketing

Outside the US, where the FDA does not have jurisdiction,
regulatory approval of the ELAST Device is expected to be
granted more readily (if approval is even required). Thus,
ELAST plans to aim to introduce its ELAST Device in selected
overseas markets prior to its anticipated introduction in
the US.

Elast Technologies has entered into a licensing agreement
with River Plate (New South Wales, Australia), which
acquired exclusive rights to market the ELAST Device in
Australia and New Zealand.

The Company is also currently negotiating proposed marketing
agreements for both Japan and Mexico as well as a joint
venture for Chinese distribution. An Asian medical
diagnostic device firm seeking to acquire the licensing
rights for the ELAST Device in the South Korean market has
also approached the Company. The Company is very cognizant
of the potentials offered by the international market and
has made it a high priority to have international licensing
agreements in place when the ELAST Device is ready for
market.

Product Placement

The Company plans to place the ELAST Device with physicians
and hospitals through a lease program as opposed to a direct
sale. The current plan calls for a three-year lease with a
forfeitable lease payment of $3,000 each term. Test revenues
will be in addition to, and separate from, the cost of
leasing the device.

This model will have advantages for both the Company as well
as the physician and health care facility. The lessee of the
device will receive training, maintenance, service and
software/hardware upgrades and the Company will receive the
recurring revenue of the lease payments and the retention of
ownership, including ownership and control of test data.

Chiropractic Division

Since its founding Elast Technologies, Inc. has focused its
energies on perfecting the ELAST Device. In pursuing that
goal the Company's engineers realized a chiropractic
application for Elast's technology. More specifically, the
Company discovered that it had the capability to objectively
measure the outcome of a chiropractic spinal adjustment.
After further exploration, Elast's Board of Directors
concluded that the Company would establish a chiropractic
division to market its chiropractic device, transforming
Elast from a purely research and development company to a
manufacturing/marketing company and providing a mechanism to
generate revenue to further the refinement of the allergy
diagnostic device.

The Company has entered into an agreement with Dr. Terry A.
Rondberg to head its newly established chiropractic division
and oversee the marketing of the device to the chiropractic
profession. Dr. Rondberg's extensive knowledge and contacts
in this field, and his position as founder and president of
the World Chiropractic Alliance, make him the ideal
candidate for this position.

The ELAST Device derives its diagnostic capabilities from
its ability to measure, non-invasively and in real-time, the
body's electrical responses to external stimuli. For the
chiropractic profession the patented technology should prove
valuable when applied to measuring the outcome of the
chiropractic event. Doctors of chiropractic have long sought
an objective means to measure outcome of the correction of
vertebral subluxation. Until now, however, the technology to
quantify this phenomenon has not existed. Elast's Bio-
Potential Instrument will measure the electrical flow of the
patient and show changes in real time, both assisting in
establishing care parameters, and encouraging patient
understanding of the efficacy of subluxation corrective
care.

By providing doctors of chiropractic with the means to
measure the positive indications of vertebral subluxations,
small misalignments of the vertebrae which interfere with
the normal nerve flow and homeostasis, and the correction of
a vertebral subluxation through chiropractic spinal
adjustments, the Bio-Potential Instrument offers an
objective outcome assessment to doctors of chiropractic. In
its present stage of development, the Bio-Potential
Instrument is capable of providing such an assessment, and
with appropriate input from a chiropractic perspective, the
device is being tailored into an objective outcome-measuring
instrument for use by the chiropractic profession.

Chiropractors will measure their patients with the device
pre and post delivery of the spinal adjustment to correct
the vertebral subluxation(s). The patients will be able to
see for themselves the immediate results of correcting or
reducing the spinal nerve interference by measuring any
change in the outcome of electrical potential. Management
believes that the Instrument will eliminate any uncertainty
regarding the efficacy of rendering chiropractic spinal
adjustments to correct vertebral subluxations.

We believe that the chiropractic application of the device
will provide significant revenues in the near future.
Through expansion into this field, increased product
recognition will lead to future applications for the device
in other health care fields such as reflexology and
acupuncture, whose industry leaders are also active in the
search for objective methods to justify their costs and
treatments. ELAST will be well positioned to become the
leader in the field of health care outcome measurement and
assessment methods.

Chiropractic Market

There are approximately 60,000 chiropractors in the United
States. A 1991 Gallup poll commissioned by the American
Chiropractic Association found that 10.1% of adults had used
chiropractic services within the last year. Chiropractic is
the third largest primary health care field after medicine
and dentistry.

Management's estimates demonstrate that Elast should realize
$8 million dollars in revenue after marketing the device for
one year. When the Company achieves a 10% saturation rate of
the domestic chiropractic market, Elast will have realized
$18 million in device revenue and $30 million annually in
test revenue.
                  BIO-POTENTIAL INSTRUMENT

The Bio-Potential Instrument is a patented, non-invasive,
diagnostic device based on the physiological fact that the
body has an electrical current and the clinical observation
that the body's current changes when exposed to an external
stimulus (such as a chiropractic spinal adjustment). The
device detects, measures, and records the body's electrical
current in real time. By running the micro-voltage
measurements through the Company's proprietary software, the
current is then represented graphically on a PC screen
similar to an EKG. The Instrument is vastly different and
superior to any other device that claims to do something
similar because it puts nothing (i.e. a guard voltage) into
the body, and the electrical measurements are not dermal in
origin.

The Bio-Potential Instrument consists of a number of
interdependent components. The first is a dual sensor
electrode, which is a proprietary development of the
Company, in combination with an analog to digital conversion
unit. This is the portion of the device that is in contact
with the test subject. A fiber-optic communication system
connects the sensing unit to the second part of the system,
the test module. Rechargeable power cells provide a medical
grade power supply, which achieves accuracy and stability of
the system. The test module can support and record multiple
(30) sensing units simultaneously. The test module then
sends the readings to a server of the Elast network, a
designated computer running the Elast software, which
converts the measurements to a graphic format that can be
stored, analyzed, and transmitted over the Internet. The
resulting graphic file of the test is then transmitted back
to a screen in the practitioner's office where it can be
printed out for the test subject and become a permanent part
of the patient's record.

The Bio-Potential Instrument in its current state of
development successfully measures the change in the body's
electrical flow following the metabolic event of a
chiropractic spinal adjustment. The final modifications to
this device are desirable more from a marketing standpoint
than as a result of technological necessity.

Sales and Marketing

Elast Technologies Inc. has recently entered into an
agreement with Dr. Terry A. Rondberg to head its newly
formed chiropractic division. Dr. Rondberg is
internationally prominent in the field of chiropractic as
founder and president of the World Chiropractic Alliance.
The World Chiropractic Alliance boasts a large international
membership representing the interests of 50,000 doctors of
chiropractic in the United States and another 10,000 doctors
outside the U.S. The Bio-Potential Instrument presents an
opportunity for the chiropractic profession to gain
increased credibility through objective measurements through
its ability to measure the powerful effects that occur after
chiropractic adjustment and the changes in electrical flow
when a vertebral subluxation is corrected in a human being.

Dr. Rondberg has developed a plan to market the device to
the chiropractic profession. Elast plans to employ its own
well-trained sales force to market the Instrument to ensure
that the needs of the doctor of chiropractic will be
understood and met. In addition a technical support staff
will be employed to monitor and support constant network
connections to ensure network testing and billing
operations.

Elast plans three components to its marketing plan. First,
Elast will enlist chiropractor participation in a wide
reaching study in which the participating doctors of
chiropractic will lease the Bio-Potential Instrument and
incorporate its use in their practice. Test results and user
comments will be compiled as part of the clinical study.

In addition, Elast has enlisted the assistance of Robert
H.I. Blanks, Ph.D. Dr. Blanks is a Professor of Anatomy and
Neurobiology at the School of Biological Sciences,
University of California, Irvine. Since receiving his Ph.D.
in 1973 Dr. Blanks has continued his studies through
extensive and almost constant funded research as well as
postgraduate teaching. Dr. Blanks is widely published, has
lectured extensively and has received numerous awards from
the scientific community. At Elast Dr. Blanks will evaluate
the Bio-Potential Instrument as it applies to the physiology
of the human body in an effort to provide the scientific
support for the Instrument.

The second component of Elast's marketing strategy will
involve traditional advertising. Elast plans to focus its
marketing attention on the approximately 50,000 existing
doctors of chiropractic in the United States along with the
10,000 international practitioners and with Dr. Rondberg's
experience its advertising dollars will be spent most
effectively. Moreover, as the Bio-Potential Instrument will
revolutionize the chiropractic profession, its low cost
should ensure its ready saleability

The third component of the marketing plan is designed to
convey the benefits of the Bio-Potential Instrument to the
future doctors of chiropractic. ELAST plans to place Bio-
Potential Instruments in participating chiropractic college
clinics. Preliminarily approximately six chiropractic
colleges have indicated their interest in using the Bio-
Potential Instrument. Aside from providing valuable data
this strategy will expose the Instrument to students of
chiropractic and hopefully, upon graduation, they will use
the Instrument in their practices.

Elast's Bio-Potential Instrument presents a new technology
that the chiropractic profession has been searching for
since its earliest development. Therefore, by employing a
focused marketing plan Elast has unlimited earnings
potential.

Product Placement

The current chiropractic-application business model calls
for a 3-year renewable lease with a forfeitable lease
payment of $3,000 per device. Another lease payment will
become due upon renewal of the lease in the fourth year and
at the beginning of each subsequent lease period.

In order to encourage doctors of chiropractic to incorporate
use of the Instrument into their practices, Elast
anticipates charging a nominal fee (i.e. one dollar per
patient) for testing. At that cost, the chiropractor will
not have to alter his patient fee rates to add the
Instrument to his practice. Each individual test will be
transmitted over the Internet from the Instrument to the
central data center where the results will be collected in
the database and then instantaneously transmitted back for
use by the doctor of chiropractic.

The advantages of leasing the Instrument accrue to both
Elast and the practitioner. Elast will receive more revenue
(through lease renewal) as well as retain the rights and
privileges of ownership, especially as these rights would
pertain to the database of test results. This database
should prove a most valuable asset of Elast. The
practitioner would receive the benefits of training,
service, maintenance, and software or hardware updates as
they became available.

Competition

The Bio-Potential Instrument is based on a new and exclusive
technology developed by Elast Technologies Inc. The
instrument satisfies a need of the chiropractic profession
that has never before been met; accordingly there is no
current competition for Elast. Through patent protection and
Elast's business plan, Elast will protect its proprietary
property for as long as possible. Elast will have taken
control of the market and be the industry standard before
competition has the opportunity to present itself. In this
way, Elast will limit future competition as well.

                 Operating and Manufacturing

While the allergy device is still in the development and
clinical phase, only the chiropractic device will be in
production. In order to keep the costs as low as possible
while retaining as much control as possible, the first
production run will be a beta run of 250 units. This run
will be sub-contracted out to domestic manufacturers. While
the sub-contracting scenario sacrifices some control,
economies of scale make in-house manufacturing impractical.
At this point in time, the Company does not want to send the
manufacturing overseas because while it may be slightly
cheaper, vital control of the process would be sacrificed.

The Company has developed positive relationships with
vendors during the development phase, however, and has
confidence in the reliability of these sub-contractors. The
Director of Engineering will personally oversee the
manufacturing process and coordinate interaction and
assembly between the vendors and sub-contractors. In order
to ensure a manageable production run the first run will be
limited to 250 units. That number of units should provide a
satisfactory number of units that may be required by the
Company for further refinement or research trials.

The product will be manufactured in two stages using Surface
Mount Technology and computer automated assembly processes.
After assembly, all electronic components will be rigorously
tested before release using the Company's proprietary
computerized testing system. The heart of the devices is
electronic circuitry that controls all data collection
functions. Many surface mount manufacturers can provide the
electronic parts necessary for manufacture. The Company also
has its own sources for all components. After assembly, the
tested electronic circuit boards will be encased in
technologically - advanced looking packaging that will
psychologically impart the advanced characteristics and
technology of the devices.

When the Company is confident that it has identified all
changes or modifications that would be necessary for the
marketable units or in the manufacturing process, Elast will
initiate a production run of 10,000 units. At this level,
the cost per unit would start to come down and the Company
will have an inventory that should cover all reasonable
sales expectations until such time as another run may be
undertaken. Storage and handling of the finished product
will be contracted to a public warehouse operator
specializing in medical products and offering a secure
environment so that the Company is assured that its
sensitive technology will be protected.

Government Regulation

A significant factor in the production and marketing of the
Company's products, and in its research and development
activities, is the Regulation by governmental authorities in
the United States and other countries. The FDA regulates
medical devices and categorizes them into three regulatory
classifications subject to varying degrees of control:

     Class I:    Subject to the least regulatory control.
           Require compliance with labeling and record
           keeping regulations.

     Class II:   Subject to performance standard and other
           general controls.

     Class III:  Require clinical testing to assure safety
           and effectiveness. Subject to other general
           controls

Management believes that the ELAST Device should be
classified by the FDA as a Class II medical device similar
to an EKG. The Company has prepared a 510K application for
approval but has not yet submitted it to the FDA pending
consultations with leading consultants in the field.
Management is still in the decision-making process regarding
regulatory approval for the chiropractic Bio-Potential
Instrument. A 510K could be submitted, using a Surface
Electromyography (SEMG) device as a predicate, however, the
Company may be limited in its marketing claims and uses if
it takes that approach. Another alternative would be to
simply use a disclaimer and not seek FDA approval.

The decisions in this area are made more complex due to the
unique and exclusive nature of the company's technology and
diagnostic devices. The FDA makes approval processes much
simpler for companies who just want to copy and compete with
existing technologies. Elast has a brand new technology
however, and for that reason, does not fit neatly into the
FDA's guidelines. The Company is consulting with leaders in
this field in order to determine the best course of action
in this regard. If deemed the right course, the Bio-
Potential Instrument may be marketed without FDA approval.
The allergy device requires approval and in a worse case
scenario, the FDA would require large-scale clinical trials,
which the Company plans on undertaking anyway. In addition
to human health care products and medical devices, the FDA
also regulates the processes and facilities used to
manufacture such products.

Among the conditions for marketing products approved by the
FDA, is the requirement that the prospective manufacturer's
quality control and manufacturing procedures conform to the
FDA's Good Manufacturing Practice (GMP) regulations which
must be followed at all times. These regulations require
adherence to strict quality control procedures, including
documentation of all aspects of manufacturing process, to
demonstrate that a "controlled" process that ensures
consistency and reliability of the end product. Any
significant changes to the manufacturing process require
notification and documentation to the FDA.

The FDA has the right to conduct inspections of the
manufacturing facility at any time and at its discretion. To
ensure full technical compliance to FDA regulations, the
Company will continually spend time, money and effort in all
areas of production and quality control.

Compliance with Federal, State, and local provisions which
have been enacted or adopted regulating the discharge of
materials into the environment, or otherwise relating to the
protection of the environment, have not had a material
effect upon the capital expenditures, earnings or
competitive position of the Company nor are they expected to
be significant in the future.

Employees.

Elast currently has four employees. Management has and is
using consultants for business, accounting, engineering and
legal services until anticipated revenues become realized.
Further, the Company plans to make extensive use of
licensing and manufacturing agreements with third parties.

Compliance with Environmental Laws.

The Company's management believes that no toxic or hazardous
materials will be byproducts of the manufacturing processes
of the ELAST Device; accordingly, management of the Company
believes that the Company will not incur unforeseen material
expenditures related to the cost of compliance with
applicable environmental laws, rules or regulations. The
Company believes that it is presently in compliance with all
applicable federal, state, and local environmental laws,
rules and regulations. Furthermore, in the event the Company
licenses the manufacturing rights, of the ELAST Device, to
third parties, the Company will not become subject to any
such restrictions. However, at some time in the future, the
research, development, manufacturing and production
processes of the Company may involve the controlled use of
hazardous materials. The Company may be subject to various
laws and regulations governing the use, manufacture,
storage, handling, and disposal of such materials and
certain waste products. The risk of accidental contamination
or injury from hazardous materials cannot be completely
eliminated. In the event of such an accident, the Company
could be held liable for any damages that result and any
such liability could exceed the financial resources of the
Company. In addition, there can be no assurance that in the
future the Company will not be required to incur significant
costs to comply with environmental laws and regulations
relating to hazardous materials. The Company cannot estimate
the potential costs of complying with local, state, and
federal environmental laws.

ITEM 2.   DESCRIPTION OF PROPERTY.

Management has elected to keep overhead expenses as  low  as
possible to further research and development activities. Our
laboratory is located at the Center for Applied Technologies
(CACT) in San Diego, California. CACT is a government-funded
laboratory,  which  is designed to accelerate  the  path  of
biotech   products   from  research   and   development   to
manufacturing.   CACT  offers  technological   time-sharing,
whereby  certain  equipment, otherwise cost prohibitive  for
development stage companies, is available. CACT is a  member
of the National Coalition of Advanced Technology Centers and
has  served  since  1992  as  a regional  affiliate  of  the
National    Institute   for   Standards    and    Technology
Manufacturing Extension Centers. Since 1997, it has  been  a
Regional  Affiliate  of NASA's Far West Regional  Technology
Transfer Center.

Elast's  Engineers  are  utilizing CACT's  laboratories  and
manufacturing   extension  resources   to   facilitate   the
completion   of  the  ELAST  Device  and  the  Bio-Potential
Instrument in addition to exploring additional applications.
Management believes that CACT's wide-ranging resources, such
as   immediate   laser  prototyping  and  varied   technical
assistance, as well as its access to the latest technologies
will accelerate final development of the ELAST Device.

Property held by the Company.

The  consolidated financial statements filed as exhibits  to
this  Registration  Statement include the  accounts  of  the
Company  and its wholly-owned subsidiary, Elast Technologies
Corporation, a Delaware corporation (previously  defined  in
this  Registration  Statement  as  "Elast  Delaware").   All
significant  intercompany transactions have been eliminated.
As  of  the  dates  specified in the  following  table,  the
Company held the following property:

-----------------------------------------------------------
         Property             Dec. 31, 1999    Dec. 31, 2000

Cash and equivalents            $205,715.00          19,194
-----------------------------------------------------------
License to use Patent No.           $240.00               -
5413113
-----------------------------------------------------------

The Company defines cash equivalents as all highly liquid
investments with a maturity of 3 months or less when
purchased. The Company does not presently own any interests
in real estate. The Company does not presently own any
inventory or equipment.

ITEM 3.   LEGAL PROCEEDINGS

All  references in this Form 10-KSB to number of  shares  of
the  Company's  common  stock have  been  adjusted  to  give
retroactive effect for the reverse stock.

In February, 2000 we registered 100,000 shares of our common
stock  for  sale  on  a "best efforts" basis.  We  deposited
80,000  of those shares into DTC, one of the world's largest
security depositories and a national clearinghouse  for  the
settlement  of trades in corporate and municipal securities.
On  March  7,  2000, we were informed by the Securities  and
Exchange  Commission that our financial statements  on  file
were  not current, so we directed that the 80,000 shares  be
returned  to  certificate  form and  not  delivered  to  any
purchaser.  Unfortunately, Crescent Partners L.P.,  and  its
principal, Jeffrey Stone, accessed those shares and tried to
sell  them,  against  our orders.  We  were  forced  to  sue
Crescent  Partners  L.P.  in Dallas County,  Texas  District
Court and we obtained a restraining order freezing 66,900 of
those shares. We later learned that Jeffrey Stone is a felon
convicted  of  securities fraud in  United  States  District
Court in New York. We are continuing to prosecute this  case
and we believe Mr. Stone has been returned to prison, as his
conduct with our shares violated his probation. There  is  a
risk  that  we will not be able to recover all  the  shares,
which could affect the market and value of our common stock.

The Company has recently settled a dispute with Mr. Hamilton
a  former  officer and director of the Company. Mr. Hamilton
has  agreed to receive 50,000 shares of restricted stock and
50,000   shares  of  the  Company's  registered   stock.   A
settlement agreement has not been drafted, but both  parties
have agreed to the terms.

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

On Wednesday, November 22, 2000, the Company held its annual
meeting to elect the the officers and directors. The as  set
forth  in  the  proxy the nominees were as  follows:  Thomas
Krucker,   Robert  D.  Milne  and  Eduardo  Daniel   Jimenez
Gonzalez.  The  attendees  were  given  the  opportunity  to
address  the meeting with questions or comments specifically
relating to matters which have a bearing on the election  of
directors.  There were no questions or comments  or  further
nominations  and the nominations were closed.  Ballots  were
provided  for  stockholders in attendance who desired  them.
The  ballots were collected from those that voted in  person
and the polls were closed at 12:47 p.m.

The results of the voting for the election of directors from
those  stockholders voting by proxy and those who  voted  in
person at the Meeting were tabulated as follows:

          FOR:                  9,491,451
          AGAINST:                     50
          ABSTAIN:                271,040

The  following individuals were elected to serve as  members
of  the Board of Directors until the next Annual Meeting  of
Stockholders or until their successors are duly elected  and
qualified:

                Thomas Krucker
                Robert D. Milne
                Eduardo Daniel Jimenez Gonzalez

                           PART II

ITEM 5.   MARKET  FOR  COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS.

Reports to Security Holders.

The  Company is a reporting company with the Securities  and
Exchange  Commission ("SEC"). The public may read  and  copy
any  materials  filed  with the  SEC  at  the  SEC's  Public
Reference  Room  at 450 Fifth Street N.W., Washington,  D.C.
20549.  The  public  may  also  obtain  information  on  the
operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.  The  SEC maintains an  Internet  site  that
contains  reports,  proxy  and information  statements,  and
other information regarding issuers that file electronically
with    the   SEC.   The   address   of   that    site    is
http://www.sec.gov. The Company currently maintains its  own
Internet address at www.elast.com.

The  Company  participates in the  OTC  Bulletin  Board,  an
electronic  quotation medium for securities  traded  outside
the  Nasdaq Stock Market. The Company's common stock  trades
on  the  OTC Bulletin Board under the trading symbol "ELTI".
This  market  is  extremely limited and the prices  for  the
Company's  common stock quoted by brokers is not necessarily
a  reliable indication of the value of the Company's  common
stock.  The  Company  was  listed  with  Standard  &  Poor's
Corporation  Records by publication on or about December  3,
1998.

There  have been no cash dividends declared on the Company's
common  stock since the Company's inception. Dividends  will
be declared at the sole discretion of the Company's Board of
Directors.

The Company's Board of Directors has approved and adopted  a
stock  option plan ("Stock Option Plan"), pursuant to  which
500,000 shares of the Company's $.001 par value common stock
will  be  reserved for issuance to satisfy the  exercise  of
options.  The Stock Option Plan will be designed  to  retain
qualified  and competent officers, employees, and  directors
of  the  Company.  The Company's Board of  Directors,  or  a
committee  thereof, shall administer the Stock  Option  Plan
and will be authorized, in its sole and absolute discretion,
to grant options thereunder to all eligible employees of the
Company, including officers, and to the Company's directors,
whether  or  not those directors are also employees  of  the
Company.  Options will be granted pursuant to the provisions
of  the  Stock  Option Plan on such terms, subject  to  such
conditions  and  at  such  exercise  prices  as   shall   be
determined  by  the  Company's Board of  Directors.  Options
granted  pursuant  to the Stock Option  Plan  shall  not  be
exercisable after the expiration of ten years from the  date
of grant.

ITEM 6.   MANAGEMENT'S PLAN OF OPERATION

        Management's Discussion And Plan Of Operation

Forward-looking statements are statements that estimate  the
happening  of future events and are not based on  historical
facts.  Forward-looking statements may be identified by  the
use  of forward-looking terminology, such as "could", "may",
"will",   "expect",   "shall",   "estimate",   "anticipate",
"probable",  "possible", "should", "continue",  "intend"  or
similar terms, variations of those terms or the negative  of
those  terms.  The forward-looking statements  specified  in
this  prospectus  have been compiled by  management  of  the
company  on the basis of assumptions made by management  and
considered by management to be reasonable. Future  operating
results  of the company, however, are impossible to  predict
and  no  representation, guaranty,  or  warranty  is  to  be
inferred from those forward-looking statements.

The  assumptions  used for purposes of  the  forward-looking
statements  represent  estimates of future  events  and  are
subject  to uncertainty as to possible changes in  economic,
legislative, industry, and other circumstances. As a result,
the  identification and interpretation  of  data  and  other
information  and  their  use  in  developing  and  selecting
assumptions  from and among reasonable alternatives  require
the  exercise  of judgment. To the extent that  the  assumed
events do not occur, the outcome may vary substantially from
anticipated  or  projected  results,  and,  accordingly,  no
opinion  is expressed on the achievability of those forward-
looking  statements. No assurance can be given that  any  of
the  assumptions relating to the forward-looking  statements
specified  in  this report are accurate, and  we  assume  no
obligation to update any such forward-looking statements.

General Overview

The  Company  is engaged in the development of two  separate
diagnostic  tools:  its  allergy  testing  device  and   its
chiropractic outcome-measuring instrument. These instruments
stem   from   the  Company's  identification  of  commercial
applications  for  worldwide patents secured  by  Robert  D.
Milne,   M.D.  A  primary  application  is  the   innovative
Electronic Allegro Sensitivity Test or the ELAST Device,  is
a  non-invasive medical tool designed to accurately diagnose
allergies, as well as food and chemical sensitivities. Elast
holds   the   patents,  trademarks  and  legal   rights   to
manufacture  and  sell  and lease  its  electronic  allergy-
testing  device and is making great strides in refining  the
prototype. While working towards the perfection of the ELAST
Device,  the Company's discovered a chiropractic application
of  its  technology, Bio-Potential Instrument. Specifically,
Elast's  engineers  discovered that the measurement  of  the
body's electrical responses could be successfully applied to
measuring chiropractic outcome and therefore prove  valuable
to the chiropractic profession. The Bio-Potential Instrument
can  provide  doctors  of chiropractic  with  the  means  to
measure   the   damage  of  vertebral  subluxations,   small
misalignments  of  the vertebrae, which interfere  with  the
normal  nerve  flow,  as well as the normalizing  effect  of
chiropractic   adjustments.  In   its   present   stage   of
development  the  instrument is capable  of  providing  such
assessments,  and with functional input from a  chiropractic
perspective it is being tailored into an objective  outcome-
measuring instrument for use by the chiropractic profession.

We  have  established a chiropractic division to market  its
chiropractic  device,  transforming  Elast  from  a   purely
research  and  development company to  a  manufacturing  and
marketing company.

As  a development stage company, we have incurred net losses
since  inception through December 31, 2000 of  approximately
$5,312,445.  We  expect that we should be able  to  generate
revenue,  due  principally  to marketing  the  Bio-Potential
Instrument. To date, however, the Company has not  generated
revenues from the commercialization of any products.

The  Company is currently engaged in negotiations with three
international    firms,   wishing   to   obtain    exclusive
distribution  rights for the ELAST Device in  Japan,  Mexico
and South Korea, respectively. The Company has finalized  an
agreement for exclusive distribution rights in Australia and
New  Zealand.  Elast  is  also negotiating  with  a  Chinese
technology-manufacturing firm concerning a joint venture  to
manufacture  and market both the ELAST Device and  the  Bio-
Potential  Instrument in China and additional Asian  markets
not covered by the Company's other licensing agreements. The
Company has temporarily set aside its negotiations to market
the  ELAST  Device  and to concentrate its  efforts  on  the
commercial application of the Bio-Potential Instrument.

On December 20, 2000, the Company's common stock underwent a
10:1 reverse split.

Subsequent Events

During  the  period from January 1, 2001 through  March  31,
2001,  the  Company issued 2,716,741 shares  of  its  common
stock for cash and services rendered. The shares were valued
at $900,074. Of this amount $561,050 was for cash and shares
issued in exchange of a promissory note.

Subsequent to December 31, 2000, the Company granted options
to  purchase  250,000 shares of its common  stock  to  three
individuals   involved   in  the  Company's   research   and
development activities. The options are exercisable at  $.50
per share at any time after January 22, 2002.

Objectives

The principal objectives of ELAST Technologies Inc. are as
follows:

     *    Raise $5 million to facilitate the manufacture and
          marketing of the Bio-Potential Instrument and meet
          the  financial  requirements of a NASDAQ  or  AMEX
          listing, by selling our common stock.

     *    Manufacture and place 25 Bio-Potential Instruments
          as  a  pre-beta test with doctors of  chiropractic
          and develop an online database/billing network.

     *    Perfect the ELAST Device, complete beta test phase
          and commence broad-based clinical trials under the
          aegis  of a prominent medical research institution
          to  assure  market  acceptance and  file  for  FDA
          approval.

     *    Establish   an  Electromechanical  Diagnosis   and
          Therapeutic  Information Center and web  site  for
          medical practitioners and consumers.

     *    Establish a database of patient profiles  for  use
          by the medical/health insurance industries.

Results of Operations

Comparison of the Year Ended December 31, 2000 with the Year
Ended December 31, 1999.

Research  and  development expenses  include  the  costs  of
engineering,  manufacturing, clinical  trials,  and  related
activities conducted in connection to the further  prototype
development  of the ELAST Device to meet the functional  and
technical requirements for economic viability as well as the
marketing  and  delivery of the Bio-Potential Instrument  by
the end of the 2nd quarter of 2001. Research and development
increased  by $33,235 to $362,919 in 2000 from  $329,684  in
1999.

Officers' compensation increased by $159,737 to $504,474  in
2000 from $344,737 in 1999.

Legal  and  professional  fees  increased  by  $321,464   to
$415,427, respectively, in 2000 from $93,963 in 1999.

Our expenses for consulting services increased by $26,748 to
$44,597 in 2000 from $17,849 in 1999.

Our  expenses for investor relations increased by $1,179,350
to $1,325,432 in 2000 from $146,082 in 1999.

Other operating costs and expenses significantly increased
by $211,366 to $264,724 in 2000 from $53,358 in 1999.

Liquidity and Capital Resources.

At  December  31, 2000, the Company had cash and equivalents
of  $19,194. Because we are not generating any revenues from
the  sale  or  licensing of our products, our only  external
source of liquidity is the sale of our capital stock.

Over  the past three years, the Company incurred significant
operating losses and utilized significant amounts of cash to
fund operations.  The Company is in a critical stage in  its
growth  as  it  continues to transition from a research  and
development company to a manufacturing company with complete
marketing and production capabilities.

During 2000, the Company implemented an agenda to reduce its
consumption of cash, including operating expense reductions.
On  February 1, 2000, the Company relocated its research and
development  facilities to San Diego's  Center  for  Applied
Competitive Technologies ("CACT"). Established in 1990, CACT
is  one of twelve advanced technology centers designated  by
the State of California to serve firms in the manufacture of
biomedical  and  bio-technical products and to  assist  such
companies  in  transitioning from research  and  development
activities  to  manufacturing their  products.  CACT  offers
technological   time-sharing,  whereby  certain   equipment,
otherwise  cost prohibitive for development stage companies,
is available.

ITEM 7.   FINANCIAL STATEMENTS.

The  Audited Financial Statements as of December, 31,  2000,
and December 31, 1999
                  Elast Technologies, Inc.
            (A Company in the Development Stage)

       Index to the Consolidated Financial Statements

            As of December 31, 2000 and 1999 and
 For Each of the Two Years in the Period Ended December 31,
                          2000 and
  For the Period from June 12, 1996 (Inception) to December
                          31, 2000



          Report of Independent Auditors                   1

          Consolidated Financial Statements
          of Elast Technologies, Inc.:
          Consolidated Balance Sheets,                     2
          December 31, 2000 and 1999
          Consolidated Statements of                       3
          Operations for Each of the Two
          Years in the Period ended December
          31, 2000 and for the Period from
          June 12, 1996 (Inception) to
          December 31, 2000
          Consolidated Statements of                       4
          Shareholders' Equity (Deficit) for
          Each of the Two Years in the
          Period ended December 31, 2000 and
          for the Period from June 12, 1996
          (Inception) to December 31, 2000
          Consolidated Statements of Cash                  9
          Flows for Each of the Two Years in
          the Period ended December 31, 2000
          and for the Period from June 12,
          1996 (Inception) to December 31,
          2000
          Notes to the Consolidated                       11
          Financial Statements

                  REPORT OF INDEPENDENT AUDITORS

  To the Board of Directors
  Elast Technologies, Inc.

   We  have  audited  the accompanying consolidated  balance
   sheets  of  Elast Technologies, Inc. (a  company  in  the
   development stage) as of December 31, 2000 and 1999,  and
   the   related   consolidated  statements  of  operations,
   shareholders' equity (deficit) and cash flows for each of
   the  two years in the period ended December 31, 2000  and
   for the period from June 12, 1996 (inception) to December
   31, 2000. These consolidated financial statements are the
   responsibility   of   the   company's   management.   Our
   responsibility  is  to  express  an  opinion   on   these
   consolidated financial statements based on our audit.
   We  conducted  our  audit  in accordance  with  generally
   accepted auditing standards. Those standards require that
   we  plan  and  perform  the audit  to  obtain  reasonable
   assurance about whether the financial statements are free
   of material misstatement. An audit includes examining, on
   a   test  basis,  evidence  supporting  the  amounts  and
   disclosures  in the financial statements. An  audit  also
   includes  assessing  the accounting principles  used  and
   significant  estimates  made by management,  as  well  as
   evaluating  the overall financial statement presentation.
   We believe that our audit provides a reasonable basis for
   our opinion.

   In  our  opinion,  the consolidated financial  statements
   referred   to  above  present  fairly,  in  all  material
   respects,  the consolidated financial position  of  Elast
   Technologies,  Inc. (a development stage company)  as  of
   December 31, 2000 and 1999, and the consolidated  results
   of operations and cash flows for the years ended December
   31,  2000 and 1999 and for the period from June 12,  1996
   (inception)  to  December 31, 2000,  in  conformity  with
   generally accepted accounting principles.

   The  accompanying financial statements have been prepared
   assuming  that  the  Company will  continue  as  a  going
   concern.   As  discussed in Notes 1, 15  and  16  to  the
   financial  statements, the Company  has  suffered  losses
   since inception during it's developmental operations, has
   negative working capital, and the implementation  of  its
   business  plan has been limited by its ability  to  raise
   necessary  operating  capital through  the  sale  of  its
   common  stock. In addition, the Company has not  withheld
   or  reported and is delinquent in the payment of  payroll
   tax  deposits discussed in Note 8.  The Company's  future
   operations is are dependent, in part, upon its ability to
   raise  sufficient capital to pay its obligations as  they
   come  due,  complete  development  and  testing  of   its
   prototype  chiropractic  units, finalize  the  commercial
   device,   establish  commercial  production,   and   then
   successfully market its product.   These  matters   raise
   substantial doubt about the Company's ability to continue
   as  a going concern. Management's plan in regard to these
   matters   is  partially  described  in  Note   15.    The
   accompanying  financial statements  do  not  include  any
   adjustments that might result from the outcome  of  these
   uncertainties.

  Kelly & Company
  Newport Beach, California
  March 31, 2001



                  Elast Technologies, Inc.
            (A Company in the Development Stage )
                 Consolidated Balance Sheets
                 December 31, 2000 and 1999
<TABLE>
<S>                                            <C>          <C>
                                ASSETS

                                                  2000          1999
Current assets:                                 ---------   -----------
    Cash and equivalents                        $  19,194    $ 205,715
    Advances to officer                            26,893            -
                                               ----------    ---------
                Total current assets               46,087      205,715
Equipment, net                                     78,628       10,672
License, net                                            -          240
Other assets                                        2,922            -
                                               ----------    ---------
    Total assets                                $ 127,637     $216,627
                                               ==========    =========
            LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

Current liabilities:
    Accounts payable - trade                      $54,753     $14,613
    Accrued payroll taxes                          79,638      38,898
    Due to related party                            4,000           -
    Current portion of capital leases               7,913           -
                                               ----------    ---------
                Total current liabilities         146,304      53,511
Capital leases, net of current portion              5,555           -
                                               ----------    ---------
    Total liabilities                             151,859      53,511
                                               ----------    ---------
Shareholders' equity (deficit):
    Common stock, $.001 par value; 25,000,000       1,612         796
    shares authorized; 1,611,655 and 796,166
    shares issued and outstanding at December
    31, 2000 and 1999, respectively.
    Additional paid-in capital                  5,172,611   2,137,653
    Additional paid-in capital for warrants       205,000     205,000
    Deficit accumulated during the
    development stage                         (5,312,445)  (2,180,333)
                                               ----------    ---------
                                                   66,778     163,116
    Notes receivable                             (91,000)           -
                                               ----------    ---------
Total shareholders' equity (deficit)             (24,222)     163,116
                                               ----------    ---------
Total liabilities and shareholders' equity
(deficit)                                       $ 127,637    $216,627
                                               ==========    =========
</TABLE>
     The accompanying notes are an integral part of the
             consolidated financial statements.
                              2


                            Elast Technologies, Inc.
                      (A Company in the Development Stage )
                      Consolidated Statements of Operations
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996  (Inception) to December 31, 2000

<TABLE>
<S>                                  <C>                  <C>                  <C>
                                                                               Period from
                                           For the                             June 12, 1996
                                          Year Ended                           (Inception) to
                                      December 31, 2000    December 31, 1999   December 31, 2000
Operating costs:                      ------------------   --------------      -----------------
     Officers compensation                 $504,474           $344,737            $1,052,893
     Research and development               362,919            329,684               868,984
     Legal fees                             323,205             45,589               895,359
     Professional fees                       92,222             48,374               140,596
     Consulting services                     44,597             17,849               296,855
     Investor relations                   1,325,432            146,082             1,475,864
     Travel and entertainment                83,793              1,484                85,277
     Debt conversion expense                115,284                  -               115,284
     Other operating costs and
     expenses                               264,724             53,358               397,153
                                          ---------          ---------           -----------
             Total operating costs        3,116,650            987,157             5,328,265
Interest income                               8,989             10,229                40,271
Interest expense                           (24,451)                  -              (24,451)
                                          ---------          ---------           -----------
Net loss                                 $3,132,112           $976,928            $5,312,445
                                          =========          =========           ===========
Loss per common share - basic
     and diluted                              $3.29            $1.27                 $8.37
                                          =========          =========           ===========
</TABLE>
    The accompanying notes are an integral part of the consolidated financial
                                   statements.


						   3


                            Elast Technologies, Inc.
                      (A Company in the Development Stage )
            Consolidated Statements of Shareholders' Equity (Deficit)
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996 (Inception) to December 31, 2000

<TABLE>
<S>                                        <C>         <C>         <C>         <C>         <C>
                                                                     Elast Technologies,
                                                                            Inc.
                                             Elast Technologies      (Formerly Med Mark,
                                                 Corporation                Inc.)
                                           (A Delaware Corporation)  (A Nevada Corporation    Price
                                             Common      Common      Common      Common        per
                                              Stock       Share      Stock       Shares       Share

Balance, June 12, 1996 (inception)                   -           -          -            -           -

Shares issued for the medical device           320,019      $  320          -            -
license
Shares issued for legal services                 2,133           2          -            -     $  3.15
Contribution of funds expended by the
major shareholder on the Company's behalf            -           -          -            -
Shares issued in private placement              54,667          55          -            -     $  3.78
Net loss                                             -           -          -            -
                                            ----------   ---------  ---------   ----------   ---------
Balance, December 31, 1996                     376,819         377          -            -

Contribution of funds expended by the
major shareholder on the Company's behalf            -           -          -            -
Net loss                                             -           -          -            -
                                            ----------   ---------  ---------   ----------   ---------
Balance, December 31, 1997                     376,819         377          -            -
                                            ==========   =========  =========   ==========   =========
Continued on page 4(a)
</TABLE>
  The accompanying notes are an integral part of the consolidated financial
                                   statements.

                                        4


                            Elast Technologies, Inc.
                      (A Company in the Development Stage )
            Consolidated Statements of Shareholders' Equity (Deficit)
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996 (Inception) to December 31, 2000


<TABLE>
<S>                                        <C>          <C>         <C>               <C>            <C>            <C>
Continued from page 4
                                                                        Deficit                          Less:
                                                        Detachable    Accumulated                       Common
                                           Additional      Stock       During the                        Stock
                                             Paid-in     Purchase     Development                    Subscription
                                             Capital     Warrants        Stage           Subtotal     Receivable       Total
                                           -----------  -----------   -----------       ----------   -------------    -------
Balance, June 12, 1996 (inception)                   -            -                -               -             -            -

Shares issued for the medical device             $ 480            -                -          $  800             -       $  800
license
Shares issued for legal services                 6,717            -                -           6,719             -        6,719
Contribution of funds expended by the
major
 shareholder on the Company's behalf             4,167            -                -           4,167             -        4,167
Shares issued in private placement             204,945            -                -         205,000   $  (10,000)      195,000
Net loss                                             -            -       $ (38,309)        (38,309)             -     (38,309)
                                           -----------  -----------    -------------     -----------  ------------  -----------
Balance, December 31, 1996                     216,309            -         (38,309)         178,377      (10,000)      168,377

Contribution of funds expended by the
major
 shareholder on the Company's behalf             1,500            -                -           1,500             -        1,500
Net loss                                             -            -         (62,722)        (62,722)             -     (62,722)
                                           -----------  -----------    -------------     -----------  ------------  -----------
Balance, December 31, 1997                  $  217,809            -     $  (101,031)      $  117,155   $  (10,000)   $  107,155
                                           ===========  ===========    =============     ===========  ============  ===========
</TABLE>

 												4(a)

                            Elast Technologies, Inc.
                      (A Company in the Development Stage )
            Consolidated Statements of Shareholders' Equity (Deficit)
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996 (Inception) to December 31, 2000


<TABLE>
<S>                                            <C>          <C>        <C>          <C>        <C>
                                                                        Elast Technologies,
                                                                                Inc.
                                                 Elast Technologies     (Formerly Med Mark,
                                                     Corporation               Inc.)
                                             (A Delaware Corporation)  (A Nevada Corporation     Price
                                                 Common       Common     Common      Common       per
                                                  Stock       Share       Stock      Shares      Share
                                               -----------   ---------   --------   ---------   --------
Balance, December 31, 1997                         376,819       $ 377           -          -
Shares outstanding prior to the reorganization           -           -     122,000      $ 122
Shares issued in private placement                  39,400          39           -          -     $ 5.00
Payment of  receivable arising from
issuance of common stock                                 -           -           -          -
Shares issued on the exercise of warrants           50,664          51           -          -       3.75
Shares issued to consultant in connection
with the reorganization                            100,747         101           -          -       3.75
Shares issued and surrendered in the
acquisition
of Elast Technologies, Inc. (a Nevada
Corporation)
 (reverse merger)                                (567,630)       (568)     567,630        568
Shares issued for consulting services,
   engineering services, and employee                    -           -      27,000         27      15.09
compensation
Shares issued to an existing  shareholder to
  correct a stock issuance error                         -           -       1,334          1
Net loss                                                 -           -           -          -
                                               -----------  ----------  ----------  ---------  ---------
Balance, December 31, 1998                               -           -     717,964      $ 718
                                               -----------  ----------  ----------  ---------  ---------
Continued on page 5(a)
</TABLE>
 The accompanying notes are an integral part of the consolidated financial
                                   statements.

                                        5


                            Elast Technologies, Inc.
                      (A Company in the Development Stage )
            Consolidated Statements of Shareholders' Equity (Deficit)
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996 (Inception) to December 31, 2000

<TABLE>
<S>                                          <C>           <C>          <C>           <C>           <C>           <C>
Continued from page 5
                                                                           Deficit                      Less:
                                                            Detachable   Accumulated                   Common
                                              Additional      Stock      During the                     Stock
                                               Paid-in       Purchase    Development                Subscription
                                               Capital       Warrants       Stage       Subtotal     Receivable        Total
                                              ----------    -----------  ------------   ---------   -------------      ----------
Balance, December 31, 1997                      $ 217,809             -   $ (101,031)     $ 117,155    $ (10,000)       $ 107,155
Shares outstanding prior to the                    30,604             -             -        30,726             -          30,726
reorganization
Shares issued in private placement                196,961             -             -       197,000             -         197,000
Payment of  receivable arising
  from issuance of common stock                         -             -             -             -        10,000          10,000
Shares issued on the exercise of warrants         189,483             -             -       189,990             -         189,990
Shares issued to consultant in connection
with the reorganization                           377,697             -             -       377,798             -         377,798
Shares issued and surrendered in the
  acquisition of Elast Technologies, Inc.
(a
   Nevada Corporation) (reverse merger)                 -             -             -             -             -               -
Shares issued for consulting services,
   engineering services, and employee
   compensation                                   407,338             -             -       407,365             -         407,365
Shares issued to an existing  shareholder
to
  correct a stock issuance error                      (1)             -             -             -             -               -
Net loss for the year ended December 31,                -             -   (1,102,374)   (1,102,374)             -     (1,102,374)
1998
                                              -----------   -----------  ------------   -----------  ------------     -----------
Balance, December 31, 1998                      1,420,347             -  $(1,203,405)     $ 217,660             -       $ 217,660
                                              -----------   -----------  ------------   -----------  ------------     -----------
</TABLE>


						5(a)


                            Elast Technologies, Inc.
                      (A Company in the Development Stage )
            Consolidated Statements of Shareholders' Equity (Deficit)
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996 (Inception) to December 31, 2000

<TABLE>
<S>                                         <C>           <C>          <C>        <C>        <C>
                                                                       Elast Technologies,
                                                                               Inc.
                                               Elast Technologies      (Formerly Med Mark,
                                                   Corporation                Inc.)
                                                    (A Delaware               (A Nevada        Price
                                                   Corporation)            Corporation)
                                                Common       Common      Common     Common      Per
                                                Shares       Stock       Shares      Stock     Share
							     ---------	---------   ---------   -------    -------
Balance, December 31, 1998                             -             -       717,964     $718
 Shares issued in
private
   placement                                           -             -        20,590       21      $14.97
 Shares issued in
private
  placement                                            -             -        50,000       50      $10.00
 Shares issued for
consulting
   services                                            -             -         2,613        2      $15.36
 Shares issued for research and
  development services                                 -             -         5,000        5      $14.80
 Net loss                                              -             -             -        -
Balance, December 31, 1999                             -             -       796,167      796
 Shares sold in a registered offering                  -             -        18,333       18      $14.00
 Shares sold in a registered offering                  -             -         9,000        9      $11.11
 Shares issued for investor relation                   -             -         5,000        5      $17.69
services
 Shares issued for investor relation                   -             -         5,000        5      $23.13
services
 Shares issued for investor relation                   -             -           640        1      $24.38
services
 Shares issued for officer compensation                -             -        12,500       13      $21.25
 Shares issued for officer compensation                -             -         1,900        2      $12.65
Shares subject to litigation                           -             -        26,600       27
 Shares issued in settlement of a dispute              -             -         4,000        4       $7.10
 Shares issued for investor relation                   -             -        13,800       14       $7.17
services
 Shares issued for investor relation                   -             -        30,000       30       $7.23
services
 Shares sold in a private placement                    -             -         5,000        5      $10.00
 Shares issued for research and
  development                                          -             -        10,000       10       $5.00
consulting
 Shares issued for investor relation                   -             -        15,000       15       $9.00
services
Continued on page 6(a)
</TABLE>
 The accompanying notes are an integral part of the consolidated financial
                                   statements.

                                        6

                            Elast Technologies, Inc.
                      (A Company in the Development Stage )
            Consolidated Statements of Shareholders' Equity (Deficit)
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996 (Inception) to December 31, 2000

<TABLE>
<S>                                          <C>             <C>           <C>            <C>           <C>          <C>
Continued from page 6
                                                                              Deficit                      Less:
                                                              Detachable    Accumulated                   Common
                                              Additional        Stock       During the                     Stock
                                                Paid-in        Purchase     Development                 Subscription
                                                Capital        Warrants        Stage       Subtotal     Receivable      Total
                                              -----------     ----------    -------------  -----------  ------------   -----------
Balance, December 31, 1998                     $1,420,347              -     $(1,203,405)     $217,660             -       $217,660
 Shares issued in private
   placement                                      308,229              -                -      308,250             -        308,250
 Shares issued in private
  placement                                       294,932       $205,000                -      499,982             -        499,982
 Shares issued for consulting
   services                                        40,150              -                -       40,152             -         40,152
 Shares issued for research and
  development services                             73,995              -                -       74,000             -         74,000
 Net loss                                               -              -        (976,928)    (976,928)             -      (976,928)
                                              -----------     ----------     ------------  -----------     ---------    -----------
Balance, December 31, 1999                      2,137,653        205,000      (2,180,333)      163,116             -        163,116
 Shares sold in a registered offering             256,650              -                -      256,668             -        256,668
 Shares sold in a registered offering              99,991              -                -      100,000             -        100,000
 Shares issued for investor relation               88,445              -                -       88,450             -         88,450
services
 Shares issued for investor relation              115,620              -                -      115,625             -        115,625
services
 Shares issued for investor relation               15,600              -                -       15,601             -         15,601
services
 Shares issued for officer compensation           265,613              -                -      265,626             -        265,626
 Shares issued for officer compensation            24,033              -                -       24,035             -         24,035
 Shares subject to litigation                        (27)              -                -            -             -              -
 Shares issued in settlement of a dispute          28,396              -                -       28,400             -         28,400
 Shares issued for investor relation               98,986              -                -       99,000             -         99,000
services
 Shares issued for investor relation              216,870              -                -      216,900             -        216,900
services
 Shares sold in a private placement                49,995              -                -       50,000             -         50,000
 Shares issued for research and
  development consulting                           49,990              -                -       50,000             -         50,000
 Shares issued for investor relation              134,985              -                -      135,000             -        135,000
services
</TABLE>

						6(a)


                            Elast Technologies, Inc.
                      (A Company in the Development Stage )
            Consolidated Statements of Shareholders' Equity (Deficit)
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996 (Inception) to December 31, 2000

<TABLE>
<S>                                         <C>         <C>         <C>         <C>        <C>
                                              Elast Technologies     Elast Technologies,
                                                                            Inc.
                                                  Corporation        (Formerly Med Mark,
                                                                            Inc.)
                                                 (A Delaware                (A Nevada        Price
                                                 Corporation)           Corporation)
                                              Common     Common      Common      Common      Per
                                              Shares      Stock      Shares      Stock       Share
							   ---------   --------    --------   --------    --------
Balance, December 31, 1999 (Continued):
 Shares issued for legal services                     -          -        10,000       $10        $9.00
 Shares issued on debt conversion                     -          -        50,000        50       $11.77
 Shares sold in a registered offering                 -          -         5,000         5        $5.00
 Shares issued for investor relation                  -          -        40,000        40        $4.20
services
 Shares issued for investor relation                  -          -        34,000        34        $8.75
services
 Shares sold in a registered offering                 -          -         5,000         5        $5.00
 Shares issued for investor relation                  -          -         2,500         3        $7.81
services
 Shares sold in a registered offering                 -          -         6,429         6        $3.50
 Shares sold in a registered offering                 -          -         6,061         6        $3.30
 Shares sold in a registered offering,
  net of $10,080 commission                           -          -        21,938        22        $2.74
 Shares sold in a registered offering,
  net of $1,500 commission                            -          -         4,762         5        $1.78
 Shares sold in a registered offering,
  net of $3,000 commission                            -          -        11,111        11        $1.53
 Shares sold in a registered offering,
  net of $300 commission                              -          -         1,081         1        $1.57
 Shares sold in a registered offering,
  net of $1,500 commission                            -          -         5,333         5        $1.59
 Shares issued for investor relation                  -          -         7,500         8        $2.50
services
 Shares sold in a registered offering
  net of $2,250 commission                            -          -        12,000        12        $1.06
 Shares sold in a registered offering
  net of $3,150 commission                            -          -        15,000        15        $1.19
 Shares sold in a registered offering for
   notes receivable                                   -          -       260,000       260        $0.35
Continued on page 7(a)
</TABLE>

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

                                        7



                           Elast Technologies, Inc.
                      (A Company in the Development Stage )
            Consolidated Statements of Shareholders' Equity (Deficit)
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996 (Inception) to December 31, 2000


<TABLE>
<S>                                          <C>             <C>            <C>              <C>          <C>             <C>
Continued from page 7
                                                                                Deficit                       Less:
                                                                  Detachable    Accumulated                  Common
                                                  Additional        Stock       During the                    Stock
                                                   Paid-in         Purchase     Development                 Subscription
                                                   Capital         Warrants        Stage      Subtotal      Receivable      Total
								------------    ------------   ------------   ----------    ------------    ---------
Balance, December 31, 1999 (Continued):
 Shares issued for legal services                   $89,990              -              -     $90,000               -      $90,000
 Shares issued on debt conversion                   588,552              -              -     588,602               -      588,602
 Shares sold in a registered offering                24,995              -              -      25,000               -       25,000
 Shares issued for investor relation                167,960              -              -     168,000               -      168,000
services
 Shares issued for investor relation                297,465              -              -     297,499               -      297,499
services
 Shares sold in a registered offering                24,995              -              -      25,000               -       25,000
 Shares issued for investor relation                 19,522              -              -      19,525               -       19,525
services
 Shares sold in a registered offering                22,494              -              -      22,500               -       22,500
 Shares sold in a registered offering                19,994              -              -      20,000               -       20,000
 Shares sold in a registered offering,
   net of $10,080                                    60,098              -              -      60,120               -       60,120
commission
 Shares sold in a registered offering,
   net of $1,500                                      8,495              -              -       8,500               -        8,500
commission
 Shares sold in a registered offering,
   net of $3,000                                     16,988              -              -      16,999               -       16,999
commission
 Shares sold in a registered offering,
   net of $300                                        1,699              -              -       1,700               -        1,700
commission
 Shares sold in a registered offering,
   net of $1,500                                      8,495              -              -       8,500               -        8,500
commission
 Shares issued for investor relation                 18,742              -              -      18,750               -       18,750
services
 Shares sold in a registered offering
   net of $2,250                                     12,738              -              -      12,750               -       12,750
commission
 Shares sold in a registered offering
   net of $3,150                                     17,835              -              -      17,850               -       17,850
commission
 Shares sold in a registered offering for
    notes receivable                                 90,740              -              -      91,000       $(91,000)            -
</TABLE>

						7(a)



			          Elast Technologies, Inc.
                      (A Company in the Development Stage )
            Consolidated Statements of Shareholders' Equity (Deficit)
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996 (Inception) to December 31, 2000

<TABLE>
<S>                                    <C>           <C>           <C>           <C>           <C>
                                                                         Elast Technologies, Inc.
                                            Elast Technologies     (Formerly Med Mark, Inc.)
                                              Corporation
                                          (A Delaware Corporation)       (A Nevada Corporation)     Price
                                             Common       Common         Common        Common         Per
                                             Shares       Stock          Shares        Stock         Share
							----------    ----------     ---------      --------      --------
Balance, December 31, 1999 (Continued):
 Shares sold in a registered offering            -             -         10,000         $10        $0.68
 Shares sold in a registered offering            -             -         10,000          10        $0.70
 Shares sold in a registered offering            -             -          5,000           5        $0.75
 Shares sold in a registered offering            -             -         26,000          26        $0.70
 Shares sold in a registered offering            -             -         10,000          10        $0.65
 Shares issued for legal services                -             -        100,000         100        $0.56
 Net loss                                        -             -              -           -
                                       -----------   -----------     ----------  ----------   ----------
Balance, December 31, 2000                       -             -      1,611,655      $1,612
                                       ===========   ===========     ==========  ==========   ==========
Continued on page 8(a)
</TABLE>


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


                                        8






					Elast Technologies, Inc.
                      (A Company in the Development Stage )
            Consolidated Statements of Shareholders' Equity (Deficit)
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996 (Inception) to December 31, 2000



<TABLE>
<S>                                <C>         <C>          <C>             <C>          <C>         <C>
Continued from page 8
                                                                Deficit                      Less:
                                                  Detachable    Accumulated                Common
                                     Additional     Stock       During the                  Stock
                                       Paid-in    Purchase     Development               Subscription
                                       Capital    Warrants        Stage      Subtotal    Receivable      Total
						-----------   ---------    ------------  ---------   ------------    ------
Balance, December 31, 1999 (Continued):
 Shares sold in a registered          $6,740           -              -       $6,750          -       $6,750
offering
 Shares sold in a registered           6,990           -              -        7,000          -        7,000
offering
 Shares sold in a registered           3,745           -              -        3,750          -        3,750
offering
 Shares sold in a registered          18,149           -              -       18,175          -       18,175
offering
 Shares sold in a registered           6,490           -              -        6,500          -        6,500
offering
 Shares issued for legal services     55,900           -              -       56,000          -       56,000
 Net loss                                  -           -   $(3,132,112)  (3,132,112)          -  (3,132,112)
                                  ----------  ----------   ------------  -----------  --------- ------------
Balance, December 31, 2000        $5,172,611    $205,000   $(5,312,445)      $66,778  $(91,000)    $(24,222)
                                  ==========  ==========   ============  ===========  ========= ============
</TABLE>

						8(a)


                            Elast Technologies, Inc.
                      (A Company in the Development Stage )
                      Consolidated Statements of Cash Flows
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996  (Inception) to December 31, 2000

<TABLE>
<S>                                           <C>                    <C>                       <C>
                                                                                                 Period from
                                                         For the                 For the          June 12, 1996
                                                        Year Ended              Year Ended        (Inception) to
                                                    December 31, 2000       December 31, 1999      December 31, 2000
								  -------------------     --------------------
Cash flows from operating activities:
   Net loss                                        $(3,132,112)               $(976,928)         $(5,312,445)
   Adjustments to reconcile net loss to net
   cash  used in operating activities:
       Depreciation and amortization                     12,038                    2,706               15,514
       Issuance of shares for services                1,660,008                  114,152            2,594,442
       Shares issued in settlement of dispute            28,400                        -                    -
       Loss on sale of asset                                  -                    2,608                2,608
       Debt conversion expense                          115,284                        -              115,284
   Decrease (increase) in assets:
       Advances to officer                             (26,893)                        -             (26,893)
       Other assets                                     (2,922)                        -              (2,922)
   Increase (decrease) in liabilities:
       Accounts payable - trade                          40,140                    5,997               54,753
       Due to related party                               4,000                        -                4,000
       Accrued payroll taxes                             63,226                   34,523              102,125
                                                   ------------               ----------         ------------

      Cash used in operating activities             (1,238,831)                (816,942)          (2,453,534)
                                                   ------------               ----------         ------------
Cash flows provided by (used in) investing
activities:
   Purchase of equipment                               (57,554)                 (17,393)             (78,751)
   Sale of property and equipment                             -                    5,000                5,000
                                                   ------------               ----------         ------------
Cash used in investing activities                      (57,554)                 (12,393)             (73,751)
                                                   ------------               ----------         ------------
Cash flows provided by (used in) financing
activities:
   Proceeds from issuance of convertible debt           450,832                        -              450,832
   Payments on capital lease obligations                (8,732)                        -              (8,732)
   Acquisition of MedMark, Inc.                               -                        -               30,726
   Proceeds from the exercise of warrants                     -                        -              189,990
   Payment of common stock subscription
     receivable                                               -                                        10,000
   Proceeds from the issuance of common stock           667,764                  808,232             1,867,996
   Contribution to additional paid-in capital                 -                        -                 5,667
                                                   ------------               ----------          ------------
Cash provided by financing activities                 1,109,864                  808,232             2,546,479
                                                   ------------               ----------          ------------
Net increase (decrease) in cash                       (186,521)                 (21,103)                19,194
Cash at beginning of period                             205,715                  226,818                     -
                                                   ------------               ----------          ------------
Cash at end of period                                   $19,194                 $205,715               $19,194
                                                   ============               ==========          ============
</TABLE>

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

                                        9


                            Elast Technologies, Inc.
                      (A Company in the Development Stage )
                      Consolidated Statements of Cash Flows
         For Each of the Two Years in the Period Ended December 31, 2000
     And for the Period from June 12, 1996  (Inception) to December 31, 2000

<TABLE>
<S>                                              <C>                <C>
               Supplemental Schedule of Cash Flow Information
                                                                    Period from
                                         For the         For the    June 12, 1996
                                       Year Ended       Year Ended  (Inception) to
                                      December 31,     December 31,  December 31,
                                         2000             1999          2000

Interest paid                                   -              -        $1,375
Income taxes paid                               -           $170        $1,973


    Supplemental Schedule of Non-Cash Investing and Financing Activities

Assets acquired in non-cash
transaction:
     Acquisition of medical                     -              -          $800
    device license
     Increase in common stock
    subscription
       receivable                               -              -       $10,000
     Issuance of common stock                   -              -     $(10,800)
Issuance of common stock for
notes receivable:
     Common stock receivable              $91,000              -       $91,000
     Issuance of common stock           $(91,000)              -     $(91,000)
Assets acquired in non-cash
transaction:
     Assets acquired                      $22,200              -       $22,200
     Capital lease obligations          $(22,200)              -     $(22,200)
    incurred
Common stock issued upon debt
conversions:
     Debt converted                      $473,318              -      $473,318
     Issuance of common stock          $(473,318)              -    $(473,318)

</TABLE>
    The accompanying notes are an integral part of the consolidated financial
                                   statements.
                                       10



                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

1.Development Stage Operations

  Elast  Technologies, Inc. (a company  in  the  development
  stage)  has  a limited operating history with no  revenues
  and  no  products  or operable technology  ready  for  the
  market.  The Company is engaged in the ongoing development
  of  its  first marketable product, a non-invasive  medical
  device  to  test  for human bio-voltage  measurement  with
  real   time,  quantifiable,  visually  displayed  results.
  Management's  efforts  to date have focused  primarily  on
  the  raising  of equity capital through the  sale  of  its
  common  stock  and  on  the  development  of  the  medical
  device.  As such, the Company is subject to the risks  and
  uncertainties associated with a new business. The  success
  of  the Company's future operations is dependent, in part,
  upon the Company's ability to raise sufficient capital  to
  complete   development  and  testing  of   its   prototype
  chiropractic   units,  finalize  the  commercial   device,
  establish  commercial  production, and  then  successfully
  market its product.  Management's  plans   are   discussed
  further in Note 15.

2.Summary of Significant Accounting Policies

  Principles of Consolidation

  The   accompanying   consolidated   financial   statements
  include  the  accounts  of  Elast  Technologies,  Inc.  (a
  Nevada  corporation) (the "Company") and  its  subsidiary,
  Elast  Technologies  Corporation (a Delaware  corporation)
  ("Elast    Delaware").   All   significant    intercompany
  transactions have been eliminated.

  Revenue Recognition

  Revenue sales will be recognized upon the shipment of  the
  Company's  medical devices.  Provision for  discounts  and
  allowances  will  be provided for in the same  period  the
  related medical devices sales are recorded.

  Cash and Equivalents

  The  Company invests portions of its excess cash in highly
  liquid  investments.  Cash  and equivalents  include  time
  deposits and commercial paper with original maturities  of
  three  months  or less. In addition, the  Company  has  no
  compensating  balance requirements. The Company  maintains
  its  cash in bank accounts, which did not exceed federally
  insured   limits  at  December  31,  2000   and   exceeded
  federally  insured  limits  by $104,334  at  December  31,
  1999;  however, the Company has not experienced any losses
  in such accounts.

  Equipment

  Equipment  is  recorded at cost and are depreciated  using
  the  straight-line method over its expected useful  lives.
  Expenditures  for  normal  maintenance  and  repairs   are
  charged  to  operations. The cost and related  accumulated
  depreciation of assets are removed from the accounts  upon
  retirement or other disposition, and the resulting  profit
  or  loss  is  reflected  in the statement  of  operations.

  Renewals and betterments that materially extend

                             11


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000


2.Summary of Significant Accounting Policies, Continued

  Property and Equipment, Continued

  the  life  of  the assets are capitalized.  The  Company's
  property  and  equipment consists of equipment,  computers
  and software with expected useful lives of 3 - 5 years.

  Intangible Asset

  The  Company  recorded its intangible asset at  cost.  The
  intangible  asset was amortized on a straight-line  method
  over  the shorter of its contractual term or its estimated
  useful life, which was shorter.

  Research and Development Costs

  Research  and  development  expenditures  are  charged  to
  operations as they are incurred.

  Impairment of Long-Lived Assets

  The  Company  annually  evaluates its  long-lived  assets,
  including its intangible asset, described as a license  to
  patented   technology,  for  potential  impairment.   When
  circumstances  indicate that the carrying  amount  of  the
  asset   is  not  recoverable,  as  demonstrated   by   the
  projected  undiscounted  cash flows,  an  impairment  loss
  will   be   recognized.  The  Company's   management   has
  determined  that  there  was such  impairment  present  at
  December  31,  2000  and  the  remaining  $80  unamortized
  amount  of the license to patented technology was  written
  off.

  Income Taxes

  The  Company accounts for income taxes using the liability
  method. Under the liability method, deferred income  taxes
  are  determined based on differences between the financial
  reporting  and  tax bases of assets and liabilities.  They
  are  measured  using the enacted tax rates and  laws  that
  will  be  in  effect when the differences are expected  to
  reverse.  The  Company is required to adjust its  deferred
  tax  liabilities  in  the period when  tax  rates  or  the
  provisions  of  the  income  tax  laws  change.  Valuation
  allowances  are established to reduce deferred tax  assets
  to the amounts expected to be realized.


                              12


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

2.Summary of Significant Accounting Policies, Continued

  Disclosures about Fair Value of Financial Instruments

  The   carrying   amount   of   the   Company's   financial
  instruments, which include cash and equivalents,  advances
  to  officers, accounts payable-trade, and capital  leases,
  approximate  their fair values at December  31,  2000  and
  1999.  The  notes receivable included in the statement  of
  shareholders'   equity   are  not   considered   financial
  instruments.  See  the discussion on the notes  receivable
  in   Note  12,  Stock  Transactions  -  Shares  Issued  in
  Registered Offerings.

  Stock Based Compensation

  Statement  of  Financial  Account Standards  ("SFAS")  No.
  123,  Accounting for Stock-Based Compensation  ("SFAS  No.
  123"),  established accounting and disclosure requirements
  using  a  fair  value  based  method  of  accounting   for
  stock-based  employee compensation plans. As permitted  by
  SFAS  No.  123, the Company will continue to  account  for
  stock-based compensation using the intrinsic value  method
  as  prescribed  in  Accounting  Principles  Board  Opinion
  ("APB")  No. 25, Accounting for Stock Issued to  Employees
  ("APB  No. 25"). Compensation cost from stock options,  if
  any,  is measured as the excess of the quoted market price
  of  the  Company's  stock at the date of  grant  over  the
  amount   an  employee  must  pay  to  acquire  the  stock.
  Compensation cost is amortized over the requisite  vesting
  periods.

  Common Shares and Per Share Amounts

  All   common  shares  and  per  share  amounts  have  been
  adjusted  to give retroactive effect, where applicable  to
  the one for ten reverse stock split.

  Earnings (Loss) per Common Share

  Basic  earnings  (loss) per common share  is  computed  by
  dividing   net  earnings  (loss)  applicable   to   common
  shareholders  by  the weighted average  number  of  common
  shares  outstanding  during the period.  Diluted  earnings
  (loss)  per common share is determined using the  weighted
  average  number  of common shares outstanding  during  the
  period,  adjusted for the dilutive effect of common  stock
  equivalents,  consisting of shares that  might  be  issued
  upon  exercise  of common stock options and  warrants.  In
  periods  where  losses are reported, the  weighted-average
  number of common shares outstanding excludes common  stock
  equivalents,  because  their  inclusion  would  be   anti-
  dilutive.


                             13


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

2.Summary of Significant Accounting Policies, Continued

  Management 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  revenues  and  expenses during the  reporting  period.
  Actual results could differ from those estimates.

  Reclassification

  Certain  reclassifications have  been  made  to  the  1999
  financial  statements  in order to  conform  to  the  2000
  financial statement presentation.

3.Equipment

  Equipment  at December 31, 2000 and 1999 consists  of  the
  following:
                                        2000        1999
                                       ------      -------
     Test equipment                    $  61,028          -
     Computers                            20,848    $12,896
     Computer software                    10,774          -
                                      ----------  ---------
                                          92,650     12,896
     Less: accumulated depreciation     (14,022)    (2,224)
                                      ----------  ---------
     Total property and equipment,
     net                                 $78,628    $10,672
                                      ==========  =========

  Depreciation  expense  for the years  ended  December  31,
  2000  and  1999  and  for the period from  June  12,  1996
  (inception) to December 31, 2000 was $11,798,  $2,546  and
  $14,714 respectively.

                             14

                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

4.Income Taxes

  At  December  31,  2000 and 1999, the  components  of  the
  provision for income taxes are as follows:

                                   2000          1999
           Current tax expense:
           Federal                       -               -
           State                         -               -
				          --------	----------
                                         -               -
					    --------	----------
           Deferred tax
           expense:
           Federal                       -               -
           State                         -               -
					    --------  	----------
                                         -               -
					    --------	----------
           Total provision               -               -
					    ========	==========

  Significant  components of the Company's  deferred  income
  tax assets at December 31, 2000 and 1999 are as follows:


                                      2000          1999
Deferred income tax asset:
Capitalized expenses              $  1,716,022  $  723,971
Other                                   43,829      12,741
					    ------------  ----------
Total deferred income tax asset      1,759,851     736,712
  Valuation allowance              (1,759,851)   (736,712)
					    ------------  ----------
Net deferred income tax asset                -           -
					    ============  ==========

  The  Company, based upon its history of losses during  its
  development  stage  and management's  assessment  of  when
  operations  are  anticipated to generate  taxable  income,
  has  concluded that it is more likely than not  that  none
  of  the  net  deferred income tax assets will be  realized
  through  future  taxable earnings and  has  established  a
  valuation allowance for them.


                             15


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31, 2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

4.Income Taxes, Continued

  Reconciliation  of the effective income tax  rate  to  the
  U.S. statutory rate is as follows:
                                                2000        1999
     							     --------    -------
      Tax expense at the U.S. statutory
       income tax rate                          (34.0)%      (34.0)%
      Increase in the valuation allowance         32.7         36.2
      Other                                        1.3        (2.2)
							    ---------   ----------
      Effective income tax rate                      -%           -%
							    =========   ==========

  As  of  December  31,  2000, the  Company  has  a  federal
  research  and experimentation credit carryover of $11,985.
  The  credit will begin to expire in 2012. The Company  has
  determined  that there will be significant limitations  on
  the  future  utilization of the net operating  loss  carry
  forward due to the ownership changes in the company.

5.Capital Lease Obligations

  The  Company  leased  certain equipment  under  agreements
  that  are  classified as capital leases  during  the  year
  ended   December  31,  2000.  The  $22,200  cost  of   the
  equipment  under capital leases is included in  equipment.
  Accumulated  depreciation  of  the  leased  equipment   at
  December  31, 2000 was approximately $5,098.  Depreciation
  of   the  leased  property  is  included  in  depreciation
  expense.

  The  future  minimum lease payments under  capital  leases
  and  the  net  present value of the future  minimum  lease
  payments at December 31, 2000 are as follows:

     2001                                      $  9,153
     2002                                         5,471
     2003                                           456
							    ---------
     Total minimum lease payments                15,080
     Less: amount representing interest         (1,612)
							    ---------
     Present  value  of net  minimum  lease
     payments						 13,468
     Less: current maturities                   (7,913)
     							    ---------
     Long-term capital lease obligation        $  5,555
							    =========

6.Convertible Debt

  On   March   13,  2000,  the  Company  entered  into   two
  convertible  note agreements. Each note  had  an  original
  principal  balance of $225,416 and earned interest  at  9%
  per  annum  with a maturity date of March  31,  2002.  The
  notes were convertible into the Company's common stock  at
  $15.00  per  share.  On September 30,  2000,  the  Company
  induced  the conversion of both notes at $9.47  per  share
  and   issued  a  total  of  50,000  shares.  The   Company
  recognized debt conversion expense of $115,284.

                             16

                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000


7.Related Party Transactions

  Licensing Agreement

  In  1996  the  Company entered into a licensing  agreement
  with   an   individual  who  is  an  officer   and   major
  shareholder  whereby  the Company received  the  exclusive
  right  to  develop,  manufacture, and  market  an  allergy
  detection,   non-invasive,  medical   device   (Electronic
  Allergo-Sensitivity   Test   Device,   U.S.   Patent   No.
  5413113).  The  Company issued 320,019 shares  of  Company
  common   stock  with  a  value  of   $800.  The  licensing
  agreement  does  not  require any  royalty  payments.  The
  licensing agreement is for a term of five years, with  the
  Company  holding options to extend the agreement  for  two
  additional five-year terms at no additional cost.
  Vehicle Acquisition

  In  1999 the Company paid $11,000 to an officer and  major
  shareholder for rental and purchase of a vehicle.  Of  the
  amount  paid,  $2,700  represented automobile  rental  and
  $8,300  represented  the purchase price.   The  automobile
  was  used for business purposes and subsequently  sold  to
  an  independent party for $5,000.  The Company  recognized
  a $2,608 loss from the sale of the asset.

  Advances to Officer

  During   2000,  the  Company  advanced  amounts   totaling
  $26,893 to an officer and shareholder of the Company.

  Due to Related Party

  In  2000, an entity that was controlled by an officer  and
  shareholder of the Company loaned $4,000 to the Company.

  Housing Expenses

  In  1999,  an officer was provided housing in a  residence
  owned  by  a different officer who is a shareholder.   The
  Company  paid  $15,000 for the housing and  the  cost  was
  included in the compensation of the officer that used  the
  residence.

8.Commitments and Contingencies

  Patent Technology

  In  1996,  the Company entered into a technology licensing
  agreement   that   provided  for  its   use   of   certain
  intellectual   property  described  by  a  United   States
  patent.  Since obtaining the license rights,  the  Company
  has  expended significant research and development efforts
  in  conjunction  with the intellectual property  that  has
  resulted in significant modifications and


                             17


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

8.Commitments and Contingencies, Continued

  Patent Technology, Continued

  enhancements.  The  Company's efforts to  date,  plus  its
  anticipated  efforts in the future, raise doubt  that  the
  final  technology involved in the medical device  will  be
  protected  by the original patent. Therefore, the  Company
  has  expensed  the unamortized costs associated  with  the
  licensing agreement.

  Stock Options Dispute

  A  dispute  between  the  Company and  a  former  director
  existed  relating  to  options to  purchase  common  stock
  granted  by Elast Delaware, prior to its merger  with  the
  Company. The dispute was resolved in 2000, and the  former
  director  received  4,000 shares  with  a  fair  value  of
  $28,400 at the time the shares were issued.

  Employment Taxes

  The  Company,  in its fiduciary capacity as  an  employer,
  has   the   primary  responsibility  for   deducting   and
  remitting  both  the  employer and  employee  portions  of
  payroll  related  taxes  to  the appropriate  governmental
  agencies.   Since  inception, the Company paid  $1,052,893
  in  compensation to three of its officers upon which taxes
  were   not   withheld  nor  remitted  to  the  appropriate
  governmental  authorities.   If,  as  a  result   of   not
  withholding  employment  taxes,  the  employees  incur  an
  income  tax  liability  that  ultimately  results   in   a
  deficiency,  the Company becomes contingently responsible,
  if  the employees cannot or do not satisfy that liability.
  Since  inception, the Company is contingently  liable  for
  these  taxes,  penalties, and interest, which  approximate
  $390,000.   The  employer portion of  the  payroll-related
  taxes has been recorded as a liability by the Company.

  Termination Dispute

  A  dispute exists between the Company and a former officer
  and director of the Company. (See Note 9)


                             18


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

8.Commitments and Contingencies, Continued

  Operating Leases

  The  Company  has  certain operating  leases  with  future
  minimum lease payments at December 31, 2000 as follows:

     2001                              $  32,063
     2002                                  4,897
						  ----------
     Total minimum lease payments      $  36,960
						  ==========

  Rent  expense  for operating leases for each  of  the  two
  years  ended  December 31, 2000, and for the  period  from
  June  12,  1996  (Inception)  to  December  31,  2000  was
  $29,379, $9,638, and $39,017, respectively.

9.Stock Based Compensation

  During  1999, the Company's Board of Directors  adopted  a
  Stock  Option Plan and granted options to purchase  15,000
  shares  of  the Company's common stock to two  members  of
  the  Board  of  Directors. The maximum  number  of  shares
  issuable  under  the plan may not exceed  500,000  shares.
  The  options were issued with an exercise price of  $15.00
  with  5,000  expiring in July 2002 and 10,000 expiring  in
  March  2003.   As  the  directors  are  employees  of  the
  Company, the options were accounted for under APB No.  25.
  The  exercise price of the options equaled or exceeded the
  fair  value of the Company's common stock at the  date  of
  grant.   Consequently,   no   compensation   expense   was
  recognized  in  connection  with  the  issuance  of  these
  options.

  On  February  13,  1998, the Board of Directors  of  Elast
  Delaware  granted 10,000 options to purchase common  stock
  to  each of the three members of the Board of Directors of
  Elast Delaware in recognition of their service to it.  The
  30,000  options have a three-year term and are exercisable
  at  $20.00  per share. Two of the Directors were employees
  of  Elast  Delaware, and their options were accounted  for
  under  APB  No.  25. The options were granted  at  prices,
  which   equaled  or  exceeded  the  fair  value  of  Elast
  Delaware's   common   stock  at   the   date   of   grant.
  Consequently,  no compensation expense was  recognized  in
  connection with the issuance of these 20,000 options.  The
  10,000  options  issued to the directors  were  valued  in
  accordance  with  the  provision  of  SFAS  No.  123   and
  determined  to  have no value, therefore  no  compensation
  expense was recognized or pro forma expense disclosed.


                             19

                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

9.Stock Based Compensation, Continued

  The  following summarizes information about stock  options
  of  the  Company granted and outstanding at  December  31,
  2000 and 1999:

                                  2000                 1999
                                    Exercise                 Exercise
                           Options  Price      Options       Price
				    --------  ---------  ---------     ---------
Outstanding at beginning
of year			      15,000      $15.00            -        -
Granted                          -           -       15,000   $15.00
Exercised                        -           -            -        -
Forfeited                        -           -            -        -
				      ------      ------       ------   ------
Outstanding at end of year  15,000      $15.00       15,000   $15.00
				      ======      ======       ======   ======

  The  following  summarizes  information  about  the  stock
  options  of  Elast  Delaware granted  and  outstanding  at
  December 31, 2000 and 1999:


                                  2000                 1999
                                    Exercise                Exercise
                           Options  Price      Options      Price
				    --------  ---------  ---------     ---------
Outstanding at beginning
of year		 		30,000     $20.00       30,000   $20.00
  Granted                        -          -            -        -
  Exercised                      -          -            -        -
  Forfeited                      -          -            -        -
				      ------     ------       ------   ------
  Outstanding at end of
  year				30,000     $20.00       30,000   $20.00
				      ======     ======       ======   ======

  The   Company   continues  to  account   for   stock-based
  compensation  to  employees  using  the  intrinsic   value
  method  as  prescribed  in  APB  No.  25  under  which  no
  compensation  cost for options is recognized  for  options
  granted  at  or  above fair market value of the  Company's
  common  stock  at the date of grant.  Had the compensation
  expense  for  options  awards been determined  based  upon
  fair  values  at the grant dates in accordance  with  SFAS
  No.  123,  the Company's pro forma net loss and  net  loss
  per  share for the year ended December 31, 1999 would have
  been  the  amount  indicated in  the  following  schedule.
  There  was no effect on the Company's pro forma  net  loss
  and  net  loss  per share for the year ended December  31,
  2000.
                             20


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

9.Stock Based Compensation, Continued

  The  Black-Scholes Option Pricing Model was developed  for
  use  in  estimating the fair value of traded options.  The
  Company's  employee  stock  options  have  characteristics
  significantly  different  from those  of  traded  options,
  such   as   vesting  restriction  and  extremely   limited
  transferability.  In  addition, the  assumptions  used  in
  option    valuation   models   are   highly    subjective,
  particularly  the expected stock price volatility  of  the
  underlying  stock.  Because changes  in  these  subjective
  input  assumptions can materially affect  the  fair  value
  estimate, in management's opinion, the existing models  do
  not  provide a reliable single measure of the  fair  value
  of its employee stock options.

  The  pro  forma  effect on net loss  for  the  year  ended
  December 31, 1999 may not be representative of the  actual
  results  had  the Company accounted for the stock  options
  using the fair value method.

    Net loss, as reported                      $  (976,928)
    Pro forma net loss                         $(1,134,928)
    Basic loss per share                          $  (0.13)
    Pro forma net loss per share                  $  (0.15)

  For  purposes of the above pro forma calculation, the fair
  value  of  options granted in 1999 is estimated using  the
  BSOPM with the weighted average assumptions listed below.

                                              1999
							     -------
Risk-free interest rate                       4.850%
Expected stock dividend yield                     -
Expected stock price volatility               0.834
Expected life in years                        1.000


  Summary    information   about   the   Company's   options
  outstanding at December 31, 2000:

                                         The            Subsidiary
                                       Company       (Elast Delaware)
							--------      ----------------
Exercise price                             $  15.00          $  20.00
Options outstanding, December 31,            15,000            30,000
2000
Weighted average remaining                2.0 years         0.1 years
contractual life
Weighted average exercise price            $  15.00          $  20.00
Options exercisable, December 31,            15,000            30,000
2000
Weighted average exercise price            $  15.00          $  20.00

                             21

                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

10.    Stock Purchase Warrants

  The  Company's private placement offering of stock in 1999
  was  accomplished with the sale of 50,000 units  comprised
  of  one  share  of  common stock and  one  stock  purchase
  warrants.  The  stock purchase warrants  were  immediately
  exercisable  upon  issuance.  The stock purchase  warrants
  provide  for  an exercise price of $24.00  and  expire  in
  July  2004.  To date, none of the stock purchase  warrants
  have  been  exercised.  At December  31,  2000  and  1999,
  50,000   shares   of  common  stock,  respectively,   were
  reserved for this purpose.

11.    Loss Per Common Share

  Basic  and diluted loss per common share has been computed
  by  dividing the loss available to common shareholders  by
  the  weighted-average  number of  common  shares  for  the
  period presented.
  The  computations  of basic and diluted  loss  per  common
  share  for the years ended December 31, 2000 and 1999  are
  as follows:
                                                                Period from
                                   For the         For the      June 12, 1996
                                   Year Ended      Year Ended   (Inception) to
                                   December 31,    December     December 31,
                                   2000            31, 1999     2000
					       ------------    -----------  ---------------
Net loss available to common       $  (3,132,112)  $ (976,928)    $(5,312,445)
stockholders
Weighted-average shares, basic
and diluted					        953,184      771,188         634,507
						 --------------   ----------    ------------
Loss per common share, basic and
diluted					      $  (3.29)    $  (1.27)       $  (8.37)
						 ==============   ==========    ============

  The  effect of the potentially dilutive securities  listed
  below was not included in the computation of diluted  loss
  per  share  because to do so would have been  antidilutive
  for the periods presented.

                                                                Period from
                                   For the         For the      June 12, 1996
                                   Year Ended      Year Ended   (Inception) to
                                   December 31,    December     December 31,
                                   2000            31, 1999     2000
						 ------------    -----------  ---------------
Shares  of common stock  issuable
under:
Stock options of the Company           15,000          15,000        15,000
Stock options of consolidated
subsidiary						30,000          30,000        30,000
Stock purchase warrants of the
Company                                50,000          50,000        50,000
							------          ------        ------
                                       95,000          95,000        95,000
                                       ======          ======        ======



                             22


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

12.    Stock Transactions

  Shares Issued to Acquire a License Agreement
  In  1996,  the Company issued 320,019 shares of its  stock
  for   $800  to  obtain  a  licensing  agreement  from   an
  individual, who is an officer of the Company (Note 7).

  Shares Issued for Services

  In  1996,  the  Company  issued  2,133  shares  for  legal
  services  related to corporate formation  and  preparation
  of  the Company's private placement memorandum. The shares
  of  Company stock were issued for legal services valued at
  $6,719.

  In  1998  the Company issued 27,000 shares for  consulting
  and  engineering  services  and employee  compensation  as
  follows:

     Consultants  were  issued 11,500 shares  as  additional
     recognition  of  their services  to  the  Company.  The
     shares  were  valued at their fair value based  on  the
     market price at the date of issuance, $15.00 per share.

     An   outside  engineer  was  issued  5,500  shares   as
     additional recognition of his services to the  Company.
     The shares were valued at their fair value based on the
     market price at the date of issuance, $15.40 per share.

     An  officer  and  major shareholder was  issued  10,000
     shares  as  additional recognition  of  his  continuing
     efforts related to the development of the technology of
     the  device to test human bio-voltage. The shares  were
     valued at their fair value based on market price at the
     date of issuance, $15.00 per share.

  In  1999  the  Company issued 7,613 shares for  consulting
  and research and development services as follows:

      Consultants  were  issued 2,613 shares  as  additional
      recognition  of  their services to the  Company.   The
      shares  were valued at their fair value based  on  the
      market  price  at  the  date of issuance,  $15.36  per
      share.

      Research  and development engineers were issued  5,000
      shares as additional recognition of their services  to
      the  Company.   The shares were valued at  fair  value
      based  on  the  market price at the date of  issuance,
      $14.80 per share.


                             23


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

12.    Stock Transactions, Continued

  Shares Issued for Services, Continued

  In  2000  the Company issued 86,900 restricted shares  and
  200,940 registered shares for services as follows:

      During  2000,  the  Company issued  75,000  restricted
      shares  and  78,440  registered  shares  for  investor
      relations  services.  The  value  of  the  shares  and
      services  were based on market value of the shares  at
      the  date  of  issuance, which ranged from  $17.69  to
      $4.20  per share, for the restricted shares and $24.38
      to $2.50 per share for the registered shares.

      The  Company issued 1,900 restricted shares and 12,500
      registered  shares  to officers as  compensation.  The
      value of the shares and compensation was based on  the
      market price of the Company's common stock at the date
      of  issuance,  which  was $12.65  per  share  for  the
      restricted  shares  and  $21.25  per  share  for   the
      registered shares.

      The  Company  issued 10,000 restricted shares  of  its
      common  stock  for consulting services  in  connection
      with  its research and development efforts. The shares
      and  services were valued at $5.00 per share, the fair
      value  of  the  shares at the date  of  issuance.  The
      Company  also issued 110,000 common shares  for  legal
      services.  The  shares and the related  services  were
      valued  at the market price per share of the Company's
      common  stock  at the date of issuance,  which  ranged
      from $9.00 to $0.56 per share.

  Private Placement Offerings

  In  1996,  the  Company, in a private placement  offering,
  sold  54,667 units consisting of one share of common stock
  and  one  stock  purchase warrant (the "warrants")  at  an
  exercise  price  of  $0.38 per share.  The  warrants  were
  redeemable   at   $3.80  per  warrant   immediately   upon
  issuance, and expired on September 30, 1999.

  In  1998,  the  Company, in a private placement  offering,
  sold 39,400 shares of common stock at $5.00 per share.

  In  1999,  the  Company, in a private placement  offering,
  sold  50,000  units at $10.00 per unit consisting  of  one
  share  of  common  stock  and one stock  purchase  warrant
  ("warrants")  at  an exercise price of $24.00  per  share.

  The  warrants are exercisable immediately and will  expire
  in  July 2004. The proceeds of from the sale of the  units
  were  allocated  between  the common  stock  and  warrants
  based on their relative market values.

  In  1999,  the  Company, in a private placement  offering,
  sold 20,590 shares of common stock at $14.97 per share.
  In  2000,  the  Company, in a private placement  offering,
  sold  for cash 5,000 shares of common stock at $10.00  per
  share.

  Shares Issued in Registered Offerings

  During  2000,  the Company issued 692,988  shares  of  its
  common  stock  including  the 200,940  shares  issued  for
  services   described  above,  pursuant   to   registration
  statements filed on Forms SB-2 and S-8 as follows:


                             24

                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

12.    Stock Transactions, Continued

  Shares Issued in Registered Offerings, Continued

     The  Company  sold  182,048  common  shares  at  prices
     ranging from $14.00 to $.65 per share and realized  net
     proceeds of $617,763 after commissions of $21,780.

     In  addition,  on December 29, 2000, the  Company  sold
     260,000  common  shares for unsecured promissory  notes
     issued  by  four individuals. The promissory notes  and
     the  related  interest earned is payable on  or  before
     December  29, 2002. The promissory notes have  a  fixed
     interest rate of 5% per annum. The face amount  of  the
     promissory  notes is subject to adjustment  based  upon
     the  trading  price per share of the  Company's  common
     stock  at the time the promissory notes are paid if  it
     is  below  $0.35 per share. The terms of the promissory
     notes  do  not  require their payment  prior  to  their
     maturity in the event the 260,000 shares or any portion
     of  those shares is sold or transferred. Therefore, the
     ultimate  cash proceeds resulting from the issuance  of
     the 260,000 shares for the promissory notes will not be
     known until the promissory notes are paid. Accordingly,
     the   notes   will  be  treated  as  a   reduction   of
     shareholders'  equity and adjusted to their  calculated
     value  at  the  end of each financial  period  reported
     upon.

     During  2000,  notes  payable  totaling  $450,832  plus
     accrued  interest  were converted to 50,000  registered
     shares of common stock of the Company.

  Common Shares Issued for Warrants Exercised

  During  1998, 50,664 warrants were exercised resulting  in
  the  issuance  of 50,664 shares of common stock  at  $3.75
  per share and realized proceeds of $189,990.
  Share Issued, Currently in Litigation

  In  December  1999, the Company entered into a  Consulting
  Agreement  ("Agreement")  with  Crescent  Partners,   L.P.
  ("Crescent") whereby Crescent was to act as  a  finder  of
  capital  and  a public relations consultant.  Pursuant  to
  the  Agreement,  the  Company issued,  in  February  2000,
  80,000  shares of the Company's common stock to  Crescent.
  In turn, Crescent was to


                             25


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

12.    Stock Transactions, Continued

  Share Issued, Currently in Litigation, Continued

  find   investors  to  purchase  those  shares  at   prices
  approved  by  the Company. Subsequently, Crescent  sold  a
  portion   of  the  common  stock  without  the   Company's
  approval  and diverted the proceeds from the Company.  The
  Company filed suit against Crescent on March 30, 2000  for
  breach  of  duty and contract. The Company also  filed  an
  injunction  to recover the 80,000 shares and through  that
  injunction  recovered 53,400 of the shares. The  remaining
  unrecovered  shares are recorded at par value  given  that
  the outcome of the litigation is uncertain.

  Shares Issued as Settlement of Termination Dispute

  A  dispute arose between the Company and a former  officer
  and  director  of  the  Company. In  December  1999,  this
  former officer and director was removed from the Board  of
  Directors  and  terminated  as  an  officer.  The  Company
  engaged  in  discussions with this  individual  seeking  a
  settlement  of  this matter provided  the  terms  of  such
  settlement  were reasonable and in the best  interests  of
  the  Company. In this connection, the Company entered into
  an  agreement in which the Company issued 12,500 shares of
  the   Company's   common  stock  as  settlement   of   the
  termination  dispute  between the  Company  and  a  former
  officer  and director of the Company regarding his removal
  from  the  Board  of  Directors  and  termination  as   an
  officer.  The Company recognized compensation  expense  of
  $265,625  based  on the fair value of the  shares  at  the
  time  of issuance. Subsequently, the Company believes  the
  former  officer breached the settlement agreement  and  in
  August 2000, filed suit against him.

  Shares Issued as Settlement of Stock Option Dispute

  A  dispute between the Company and a former director arose
  relating  to options to purchase common stock  granted  by
  Elast  Delaware prior to its merger with the Company.  The
  former director claimed the 10,000 options granted to  him
  by  Elast Delaware were options to purchase shares of  the
  Company.  The  Company  reviewed  this  matter   and   the
  relevant  documentation and believed the former director's
  claim  was  without  merit. To resolve  this  matter,  the
  Company issued 4,000 shares of the Company's common  stock
  in  settlement  of  this  dispute  in  2000.  The  Company
  recognized  a settlement expense of $28,400 based  on  the
  fair value of the shares at the time of issuance.


                             26


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

12.    Stock Transactions, Continued

  Shares Issued in the Acquisition of Med Mark, Inc.
  In  1998,  the Company issued 100,747 shares of stock  for
  consulting  services  related to the  acquisition  of  Med
  Mark, Inc. (a reverse merger). One of the individuals  who
  received   20,000   shares  for  the   acquisition-related
  consulting  services  is an officer of  the  Company.  The
  shares were valued at $3.75 per share.

  Acquisition of Med Mark, Inc. (Reverse Merger)
  On  June  10,  1998,  the  Company  acquired  all  of  the
  outstanding common stock of Elast Delaware in  a  business
  combination  accounted for as a purchase.  For  accounting
  purposes,  the  acquisition  has  been  treated   as   the
  acquisition  of the Company by Elast Delaware  with  Elast
  Delaware  as  the  acquiror (a reverse  acquisition).  The
  effective  purchase  price  was  122,000  shares  of   the
  Company's  common  stock. The Company, formerly  known  as
  Med  Mark,  had no operations as of the acquisition  date.

  No  goodwill  has  been  recorded  as  a  result  of  this
  transaction. As this transaction is treated as  a  reverse
  merger  acquisition,  the historical financial  statements
  prior to June 10, 1998 are those of Elast Delaware.

  Stock Issued to Correct a Stock Issuance Error

  In  1998,  the Company issued 1,334 shares to  correct  an
  error on a previous stock issuance.
  Stock Split

  On  December  12, 2000, the Company's Board  of  Directors
  authorized   a   one-for-ten  reverse   stock   split   to
  shareholders  of  record  on  December  22,   2000.    All
  references in financial statements and notes to  financial
  statements  to number of shares, weighted average  shares,
  per  share  amounts, and market prices  of  the  Company's
  common  stock  have  been  adjusted  to  give  retroactive
  effect for the reverse stock split.

                             27

                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

13.    Legal Fees

  The Company incurred legal fees as follows:

            For the year ended December 31, 2000:

                          Range of       Fair
                          Prices Per     Value
Service      Shares       Share          Value     Cash      Total
---------	  ---------    ----------     --------  --------  ---------
Securities       110,000    $0.56-$9.00   $146,000  $112,899   $258,899
Litigation             -                         -    55,000     55,000
Patents                -                         -     2,717      2,717
Other                  -                         -     6,589      6,589
                --------                 ---------  --------   --------
Total            110,000                  $146,000  $177,205   $323,205
                ========                 =========  ========   ========

            For the year ended December 31, 1999:

                          Range of       Fair
                          Prices Per     Value
Service      Shares       Share          Value     Cash      Total
---------	  ---------    ----------     --------  --------  ---------
Securities             -                         -  $38,212   $38,212
Litigation             -                         -        -         -
Patents                -                         -    2,030     2,030
Other                  -                         -    5,347     5,347
                --------                 ---------  -------   -------
Total                  -                         -  $45,589   $45,589
                ========                 =========  =======   =======

  Shares  issued for services were based on the  fair  value
  of the shares.

                             28


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

14.    Investor Relations

  The   Company  incurred  investor  relations  expense   as
  follows:

            For the year ended December 31, 2000:

                                 Range of       Fair
Type of                          Prices Per     Value
Service              Shares      Share          Value      Cash     Total
-----------		    --------    -----------    --------   -------  --------
Investment firms        20,000   $2.50-$23.13   $215,625   $83,213    $298,838
Internet service         5,640   $5.16-$24.38     41,375         -      41,375
firms
Individuals            122,800   $4.20-$17.69    917,350         -     917,350
Media                        -                         -    13,750      13,750
Expenses                     -                         -    54,119      54,119
                      --------                 ---------   -------     -------
Total                  148,440                $1,174,350  $151,082  $1,325,432
                      ========                ==========  ========  ==========


For the year ended December 31, 1999:

                           Range of       Fair
Type of                    Prices Per     Value
Service      Shares        Share          Value     Cash       Total
---------    --------      -----------    --------  -------    --------
Individuals            -              -          -  $140,685   $140,685
Expenses               -              -          -     5,397      5,397
                --------   ------------  ---------   -------   --------
Total                  -              -          -  $146,082   $146,082
                ========   ============  =========  ========   ========

   Shares issued for services were based on the fair value
                       of the shares.

15.    Management's Plan, (Unaudited)

  The   Company   is  presently  continuing   research   and
  development   activities  relating  to   a   non-invasive,
  medical  device to test for human bio-voltage  flows  (the
  "device"),  which the Company owns the rights to  develop,
  test,  manufacture  and  market. To  further  advance  the
  research  and development of the device, and  to  validate
  the  scientific  principle of bio-voltage measurement,  an
  extensive  period  of testing has commenced.  The  initial
  application of the basic technology centered  on  its  use
  in   non-invasive  allergy  testing.   During  2000,  test
  results  indicated that this application is  not  feasible
  without extensive additional research and has

                             29


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

15.    Management's Plan, Continued

  been  put  on hold.  However, testing indicated  that  the
  basic  technology may have an application in  chiropractic
  medical procedures.

  With  the successful completion of initial testing of  the
  The  Life Force Analyzer chiropractic device, the  Company
  is  having 25 units of the device manufactured. These test
  devices   will   be   provided  to  a  select   group   of
  chiropractic medical practitioners. The operating plan  is
  to  develop  the production device as a stand-alone  unit,
  which is user-friendly and fully self-contained.

  The  Company  plans to negotiate and enter into  marketing
  agreements  with  appropriate distributors  and  marketing
  agents.  In addition, it may acquire the right to sell  or
  distribute   products,  or  obtain  licensing,  marketing,
  distribution  or  other  rights  to  compatible  products.

  However,   other  than  costs  related  to  the  continued
  development   of   the  device,  the  Company   does   not
  anticipate  significant  expenditures  on  acquisition  or
  development  of  other  products  during  the  next  year.
  Subsequent    to    successful    chiropractic     medical
  practitioner  testing the Company will focus  its  initial
  marketing  and  distribution efforts  on  development  and
  commercial distribution of the device. The plan calls  for
  the lease or license of the devices.

  It   will  be  necessary  to  raise  additional  funds  to
  complete   prototype  development  and  limited   clinical
  trials  of the chiropractic device. However, if the device
  performs   as   anticipated,  the   Company's   management
  believes  that  they  will  be able  to  raise  the  funds
  necessary  to begin production of the devices through  the
  sale  of  the  Company's stock, issuance of  debt,  and/or
  licensing certain proprietary rights.

  Should  the  development  of  the  prototype  or  clinical
  testing  of the prototype take more time than anticipated,
  or   if   the   results  of  testing  require  significant
  modifications to the device, sufficient funds may  not  be
  available  to  enable  the  device  to  be  completed  and
  brought to market.

16.    Subsequent Events

  Stock Transactions

  During  the period from January 1, 2001 through March  31,
  2001   the  Company  issued  2,716,741  additional  common
  shares  for  cash and services received. The  issuance  of
  these shares represents 169% of the shares outstanding  at
  December 31, 2000.  Shares were issued for the following:


                             30


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

16.    Subsequent Events, Continued

  Stock Transactions, Continued

                                                       Range of
                         Number of      Value          Prices per
                         Shares Issued  Received       Share
				   -------------  ----------     ------------
Cash                           754,700      $211,050     $0.10-$0.50
				     -----------  ------------  --------------
Note receivable                900,000       350,000           $0.35
				     -----------  ------------  --------------
Services:
  Investor relations           870,375       280,899     $0.16-$0.53
  Research and development     166,666        50,850     $0.28-$0.53
  Director Compensation         25,000         6,275           $0.25
                           -----------  ------------  --------------
  Total shares for services  1,062,041       338,024     $0.16-$0.53
                           -----------  ------------  --------------
Total shares issued          2,716,741      $900,074     $0.10-$0.53
                           ===========  ============  ==============

  Shares  issued for services were based on the  fair  value
  of the shares issued.

  On  January  24,  2001, the Company  sold  900,000  common
  shares  for  an  unsecured promissory  note  issued  by  a
  Nevada  corporation. The promissory note and  the  related
  interest earned is payable on or before January 23,  2003.

  The  promissory note has a fixed interest rate of  5%  per
  annum.  The face amount of the promissory note is  subject
  to  adjustment based upon the trading price per  share  of
  the  Company's  common stock at the  time  the  promissory
  note is paid if it is below $0.35 per share. The terms  of
  the  promissory note do not require its payment  prior  to
  its  maturity  in  the  event the 900,000  shares  or  any
  portion   of   those  shares  is  sold   or   transferred.
  Therefore, the ultimate cash proceeds resulting  from  the
  issuance  of  the  900,000 shares for the promissory  note
  will  not  be  known until the promissory  note  is  paid.
  Accordingly,  the note will be treated as a  reduction  of
  shareholder's equity and adjusted to its calculated  value
  at the end of each financial period reported upon.

  Stock Options

  Subsequent  to  December  31, 2000,  the  Company  granted
  options to purchase 250,000 shares of its common stock  to
  three  individuals involved in the Company's research  and
  development  activities. The options  are  exercisable  at
  $.50 per share at any time after January 22, 2002.


                             31


                  Elast Technologies, Inc.
            (A Company in the Development Stage)

         Notes to Consolidated Financial Statements

 For Each of the Two Years in the Period Ended December 31,
                            2000
    And for the Period from June 12, 1996  (Inception) to
                      December 31, 2000

17.    Unaudited Quarterly Financial Data

  The  following is a reconciliation of 2000 interim results
  of  operations, which were impacted by the effect of year-
  end adjustments:


                         Quarter Ended              Quarter Ended
                         March 31, 2000             June 30, 2000
                      ---------------------    ------------------------
                      As reported     As          As reported     As
                      In Form 10QSB  Adjusted    In Form 10QSB   Adjusted
                      ------------  ---------   --------------   ----------

Net income (loss)      $(837,570)   $(835,876)      $(383,735)   $(382,043)
                       ==========   ==========      ==========   ==========
Net loss per common
share,
basic and diluted         $(1.01)      $(1.01)         $(0.44)      $(0.44)
                       ==========   ==========      ==========   ==========





                         Quarter Ended            Quarter Ended
                       September 30, 2000       December 31, 2000
                      --------------------     ------------------
                      As reported     As
                      In Form 10QSB  Adjusted         Actual
                      -------------  ---------       --------
Net income (loss)      $(785,674)    $(897,706)       1,016,487
                       ==========    ==========      ==========
Net loss per common
share,
basic and diluted         $(0.85)    $   (0.98)       $  (0.87)
                       ==========    ==========      ==========

                             32




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

There  have  been  no changes in or disagreements  with  the
Company's  accountants since the formation  of  the  Company
required  to be disclosed pursuant to Item 304 of Regulation
S-B.

                          PART III

ITEM 9.   DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS,   AND
          CONTROL PERSONS

The  members of the Board of Directors of Elast serve  until
the  next annual meeting of the stockholders, or until their
successors  have  been elected. The officers  serve  at  the
pleasure of the Board of Directors.

Name                               Age    Position

Thomas Krucker                     60     President/Director

Dr. Robert Milne                   53     Secretary/Director

Dr. Eduardo Daniel Jimenez         62     Treasurer/Director
Gonzalez

Thomas  Krucker  is the President, Chief Executive  Officer,
and a director of the Company.

Mr. Krucker graduated from the University of Arizona in 1962
and  received  a  Juris  Doctorate  degree  from  Pepperdine
University in 1969. Mr. Krucker served with Toyota  USA  for
approximately 20 years. Mr. Krucker was formerly  the  chief
operating  officer  of  Fun City  Popcorn,  Inc.,  a  Nevada
corporation  which  recently  changed  its  name   to   Tone
Products.  Mr.  Krucker  left Tone Products  to  accept  the
office of President of the Company.

Robert  D.  Milne,  M.D. is the Chairman  of  the  Board  of
Directors of the Company.

Dr.  Milne  is  a board-certified family practice  physician
with   extensive   experience   in   allergy   testing   and
preventative medicine. He is also the inventor of the  ELAST
Device.  Before  starting  his own  practice  at  the  Milne
Medical  Center in Las Vegas, Nevada, Dr. Milne was  Medical
Director  at  the  Omni Medical Center  and  also  practiced
medicine at the Nevada Clinic after previous assignments  in
emergency medicine and a family practice. Dr. Milne  is  the
author  of  numerous  papers in the medical  field  and  has
authored  several books, including The Definitive  Guide  to
Headaches  and The Photon Connection - Energy  for  the  New
Millennium.

Dr. Eduardo Daniel Jimenez Gonzalez; Director

Dr.  Jiminez is an international banker and Mexican attorney
who  specializes in immigration, civil, and criminal matters
in  the  Republic  of Mexico and who provides  international
consulting  services  regarding finance,  credit,  commerce,
industrial  and  tourist  development,  import  and   export
matters,  and administrative management. Dr. Gonzalez  is  a
Fullbright Scholar who received a Master of Arts Degree from
John  Hopkins  University, School of Advanced  International
Studies,   in   Washington,  D.C.  and   who   has   studied
International Economics at Harvard University  and  American
Civilization  at  Georgetown University.  Dr.  Gonzalez  has
served  as a counselor at the Mexican Embassy in Washington,
D.C.,  as a Mexican Minister in Bonn, as Ambassador at Large
for  Mexico  in  Oslo, Norway and Islandia, and  as  private
secretary for a former President of Mexico. He has served as
Managing Director for Latin American Investment Banking  for
First  Chicago Bank in Panama, Colombia, Venezuela,  Ecuador
and  Peru,  as First Chicago Bank's Vice-President  for  the
Western  Hemisphere.  He  is  an international  lecturer  on
economic  development and an International Law Professor  at
the University of Mexico.

There  is no family relationship between any of the officers
or directors of the Company. There are no orders, judgments,
or  decrees of any governmental agency or administrator,  or
of   any  court  of  competent  jurisdiction,  revoking   or
suspending for cause any license, permit or other  authority
to  engage  in the securities business or in the sale  of  a
particular    security   or   temporarily   or   permanently
restraining  any  officer or director of  the  Company  from
engaging   in   or  continuing  any  conduct,  practice   or
employment  in  connection with  the  purchase  or  sale  of
securities,  or  convicting such person  of  any  felony  or
misdemeanor  involving a security,  or  any  aspect  of  the
securities  business or of theft or of any felony,  nor  are
any  of  the  officers or directors of  any  corporation  or
entity affiliated with the Company so enjoined.

ITEM 10.  EXECUTIVE COMPENSATION

Any   compensation  received  by  officers,  directors,  and
management personnel of the Company will be determined  from
time  to  time  by  the Board of Directors of  the  Company.
Officers, directors, and management personnel of the Company
will  be  reimbursed for any out-of-pocket expenses incurred
on  behalf  of the Company. Officers' compensation,  in  the
aggregate,  increased from $344,737 during  the  year  ended
1999 to $504,474 during the year ended 2000. Compensation to
the Company's officers is specified on the following chart:


                      Cash        Meals &                            Total
           Stock      Compen-     Entertainment Travel   Advance     Compen-
                      sation                                         sation
           --------   ----------  ------------  -------  -------     ----------

T.               --     $ 188,716   $   1,832    $14,771  $(25,319)    $180,000
Krucker                                          14,771   (25,319)
T.         $265,625            --          --         --               $265,625
Hamilton
Dr. Milne  $ 24,035        33,000   $   1,814         --               $ 58,849
           --------   ----------  -----------    -------  ---------    --------
Totals     $289,660     $ 221,716   $   3,646    $14,771  $(25,319)    $504,474

Shares  Issued as Compensation for Services.  In  2000,  the
Company  issued 14,400 shares of its $.001 par value  common
stock   as   compensation  for  consulting  and  engineering
services, and employee compensation, as follows:

     (i)  Dr.   Milne,  an  officer,  director   and   major
          shareholder of the Company, was issued  shares  of
          the  Company's  $.001 par value  common  stock  as
          additional  compensation for his services  to  the
          Company  valued  at  $24,035;  specifically,   his
          continuing  efforts related to the development  of
          certain technology which will be utilized  by  the
          Company in its business operations.

     (ii) Mr.  Hamilton, a former officer and director,  was
          issued  shares of the Company's $0.001  par  value
          common stock as compensation for his past services
          rendered as an officer and director of the Company
          valued at $265,625.

ITEM 11.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS
          AND MANAGEMENT.

The following table sets forth each person known to the
Company, as of March 9, 2001, to be a beneficial owner of
five percent (5%) or more of the Company's common stock, by
the Company's directors individually, and by all of the
Company's directors and executive officers as a group.

                                            Amount and
                                            Nature of
              Name and Address              Beneficial   Percent of
Title of      of Beneficial Owner           Ownership       Class
Class

Common Stock  William Alverson                  300,000       7.07%
              1525 Mesa Verde Dr. East
              Suite 210
              Costa Mesa, CA 92626
              Dr. Robert Milne (2)              398,998       9.40%
Common        2432 Greens Ave.
              Henderson, NV  89014
Common        Total Beneficial Owners           698,998      16.47%
              of 5% or more

Ownership of Officers and Directors:
Common Stock  Thomas Krucker (1)                 26,734       0.63%
              2505 Rancho Bel Air
              Las Vegas, NV 89107
Common Stock  Dr. Robert Milne (2)              398,998       9.40%
              2432 Greens Ave.
              Henderson, NV  89014
Common        Eduardo Jimenez Gonzalez           25,000       0.59%
              32 Montego Ct.
              Coronado, CA 92118
Common Stock  All directors and officers        450,732      10.62%
              as a group(2 persons)

(1) Shares of the Company's common stock are held by (i) Mr.
Krucker;  and  (ii)  a trust in the name  of  Mr.  Krucker's
spouse, Katherine.

(2) Shares of the Company's common stock are held by (i) Dr.
Milne;  and (ii) Dr. Milne's spouse, Julie Milne, and  (iii)
their three daughters, who hold 1,000 shares each.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Party Transactions.

Dr.  Milne,  the  Chairman  of the  Board  of  the  Company,
provides  office space and services to the  Company,  at  no
cost  to  the  Company. At such time as the  Company  begins
receiving revenue from operations, management of the Company
anticipates that the Company will begin paying rent for  800
square  feet of this office space, at a rate of  $1,200  per
month.

Also  in 1999, Edward L. Hamilton, who was, at the time,  an
officer and director of the Company, was provided housing in
a  residence owned by Thomas Krucker. The Company  paid  Mr.
Krucker  $15,000 for the housing and that cost was  included
in Mr. Hamilton's compensation for 1999.

Licensing Agreement Was Not the Result of Arms-Length
Negotiations.

As  set  forth  above,  on or about  June  12,  1996,  Elast
Delaware acquired a license from Robert D. Milne, M.D.,  who
was, at that time, Chairman of the Board of Directors and  a
major  shareholder of Elast Delaware, whereby Elast Delaware
acquired  the  exclusive right to develop,  manufacture  and
market the ELAST Device. Elast Delaware issued to Dr.  Milne
320,000  shares of its common stock to acquire the licensing
rights.  The Company believes that the fair market value  of
320,000 shares of Elast Delaware's common stock at the  time
of  the  transaction was $800, and, therefore,  the  Company
determined  that  320,000 shares of Elast Delaware's  common
stock was fair consideration for the license agreement  with
Dr.  Milne.  Because modifications may be  made  during  the
development  and  testing of the ELAST  Device,  it  is  not
certain  that  the  final  technology  developed  by   Elast
Delaware will be protected by the original patent.

ITEM 13.  EXHIBITS.

EXHIBITS

     3.1      Articles  of  Incorporation  (incorporated  by
               reference  to  the Registration Statement  on
               Form  SB-2  filed  with  the  Commission   on
               December 7, 1999).

     3.2      Articles   of   Amendment   to   Articles   of
               Incorporation. (incorporated by reference  to
               the   Registration  Statement  on  Form  SB-2
               filed  with  the  Commission on  December  7,
               1999).

     3.3      By-laws  of  the  Registrant (incorporated  by
               reference  to  the Registration Statement  on
               Form  SB-2  filed  with  the  Commission   on
               December 7, 1999).

                         SIGNATURES

In  accordance  with Section 13 or 15(d) of  the  Securities
Exchange Act, the Registrant caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
                           Elast Technologies, Inc.


                           By: /s/ Thomas Krucker
                              Thomas Krucker, President

                           Date: April 4, 2001