United States Securities and exchange commission
                          Washington, D.C. 20549

                                 FORM 10-KSB
(Mark One)
  [X]     Annual Report Pursuant to Section 13 or 15(d) of The
          Securities Exchange Act of 1934
          For the Fiscal Year Ended December 31, 1998

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

          Commission File Number   0-21441

                        MEDISYS TECHNOLOGIES, INC.
              (Name of small business issuer in its charter)

            Utah                           72-1216734
(State or other jurisdiction of         (I.R.S. Employer
incorporation or organization)          Identification No.)

              144 Napoleon Street, Baton Rouge, Louisiana 70802
           (Address of principal executive officers) (Zip Code)

Issuer's telephone number:  (225) 343-8022

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: 
                Common Stock,  par value $0.0005 per share

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

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  [  ]

State issuer's revenues for its most recent fiscal year.  $26,846

State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as of
a specified date within the past 60 days. $4,598.834 (Based on
price of $.375 per share on April 13, 1999)

State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.

            Class                 Outstanding as of January 20, 1999
Common Stock, Par Value $0.0005              34,009,757

DOCUMENTS INCORPORATED BY REFERENCE

Transitional Small Business Disclosure Format.  Yes [  ]  No [X]
<PAGE>
                    MEDISYS TECHNOLOGIES, INC.

                              TABLE OF CONTENTS

                                  PART I

Item 1.   Business . . . . . . . . . . . . . . . . . . . . . . . . .   3

Item 2.   Properties . . . . . . . . . . . . . . . . . . . . . . . .  22

Item 3.   Legal Proceedings. . . . . . . . . . . . . . . . . . . . .  22

Item 4.   Submission of Matters to a Vote of Security 
          Holders. . . . . . . . . . . . . . . . . . . . . . . . . .  23

                                  PART II

Item 5.   Market for Registrant's Common Equity and 
          Related Stockholder Matters. . . . . . . . . . . . . . . .  23

Item 6.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations. . . . . . .  24

Item 7.   Financial Statements and Supplementary Data. . . . . . . .  28

Item 8.   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure . . . . . . . . . .  48

                                 PART III

Item 9.   Directors and Executive Officers of the 
          Registrant . . . . . . . . . . . . . . . . . . . . . . . .  48

Item 10.  Executive Compensation . . . . . . . . . . . . . . . . . .  52

Item 11.  Security Ownership of Certain Beneficial Officers 
          and Management . . . . . . . . . . . . . . . . . . . . . .  53

Item 12.  Certain Relationships and Related Transactions . . . . . .  55

                                  PART IV

Item 13.  Exhibits, Financial Statement Schedules, and 
          Reports on Form 8-K. . . . . . . . . . . . . . . . . . . .  56

          Signatures.. . . . . . . . . . . . . . . . . . . . . . . .  57
<PAGE>
                              PART I

Item 1.   Business

     Medisys Technologies, Inc. ("Medisys" or the "Company") was
incorporated on March 17, 1983 as Whitewater Products, Ltd. under
the laws of the State of Utah.  On August 6, 1992, the Company
acquired Medisys Technologies, Inc., a Louisiana corporation formed
in 1992 to explore the potential for development of The SofCeps
Birth Assistance Safety Device concept, and changed it name to
Medisys Technologies, Inc.  Following the acquisition, the Company
began operations as a development stage research and development
company.

     In December of 1998, Medisys acquired Phillips Pharmatec Labs,
Inc. ("Phillips") which added revenue and manufacturing capability
to Medisys for some of its patented products and the complimentary
healthcare product lines of Phillips and its customers along with
significant key personnel.

     In March of 1999, Medisys signed a letter of intent to acquire
Health Care Direct Services, Inc. and affiliates.  Management
believes that this acquisition will add revenue to the Company and
give Medisys the marketing capability necessary to begin
commercialization of many of its proprietary devices and
complimentary health care products of Phillips and its customers.

     The Company has invested approximately $7,000,000 in the
development of its proprietary ideas and patented intellectual
property.  In 1998, the Company reduced its debt by approximately
$1,1000,000 primarily through equity investment of four of its 
Board Members, Gary Alexander, Kerry Frey, William David Kiesel,
and Edward Sutherland.

     The principal Executive and Administrative offices of Medisys
are leased and located at 144 Napoleon Street, Baton Rouge,
Louisiana 70802 and its telephone number is (225) 343-8022..  The
Company also maintains a small operations office which it rents in
Far Hills, New Jersey. Phillips Pharmatec Labs, Inc. conducts its
manufacturing, packaging, and related operations out of two
buildings in Largo, Florida.  One of the buildings is owned by
Phillips and one is leased.  Health Care Direct Services operates
from two locations in Lutz and Tampa, Florida. 

     Today, Medisys Technologies, Inc is a diversified medical
company which employs a multidivisional integrated business
strategy. The Company owns 15 patents covering safety devices and
other products that offer proprietary, high potential technology
that is on the brink of' substantial commercialization. Medisys
develops, manufactures and markets quality products which improve
safety, nutrition and patient care. These products can be
effectively sold using the management discipline of' market driven
business units (MDBU's).

     The Company presently operates three market driven business
units as synergistic independent divisions.  The "Medical Device
Division" concentrates on the commercialization of specialized
medical devices in markets within large growing categories of
medical care.  The product focus is on medical safety within the
specific market segments of "Sharps Protection" and "Women's
Health".  The Company's patented products within these areas
provide a base for creating complementary multi-product specialized
business units.

     The "Manufacturing "Division provides the Company with the
internal capability of manufacturing its own proprietary products
and other medical devices. Consistent with the overall Company
philosophy, this division operates as an independent MDBU which
produces substantial revenue through the manufacture of selected
complementary health products of other companies on a contract
basis.

     The Company also anticipates creating a "Marketing Division"
which will operate as an independent MDBU to provide the Company
with marketing resources to access certain niche markets for its
medical devices.

The Business Units

MEDICAL DEVICE SAFETY

     Medical device safety is a large and growing issue within the
healthcare community.  The transfer of infectious diseases result
in enormous economic and social costs. With AIDS (HIV), Hepatitis
and other communicable disease, the possibility of accidental
infection is a  critical issue to healthcare workers and  medical
professionals.  Approximately one million needle sticks are
reported each year among healthcare workers with the probability of
many more going unreported.  The potential for transmission of the
hepatitis C (HCV), hepatitis B (HBV) and the HIV (AIDS) viruses can
occur from just one needle stick and the potential cost of a single
contaminated needle stick injury is estimated between $250-$2,302
just for evaluation and testing.  The Centers for Disease Control
and Prevention ("CDC") reports 54 documented cases and 114 possible
cases of healthcare workers who acquired HIV on the job as of
December 1997.  While the incidence of AIDS contracted through
accidental needle sticks is low, the impact to the individuals
tested and the cost of both the testing and treatment is enormous.
For both hepatitis B virus and HIV infections, the primary source
of exposure was, according to the CDC, is a contaminated dirty
needle stick.


     On September 30, 1998, Governor Pete Wilson of California
signed legislation that will make California the first state in the
nation to require the use of safety needles to protect health care
workers from hazardous needle sticks. With this new legislation,
California is creating a model for national standard that will lead
to a safer workplace for medical and public safety workers
nationwide. National mandates for the use of sharps blunting
systems for syringes are likely within the next two years.

     HYPODERMIC SHARPS SAFETY

CoverTipTM Hypodermic Syringe

     The current syringe market annually approaches 2.5 billion
dollars in the United States alone.  Currently, the State of
Tennessee has followed California and become the second state to
adopt safety syringe legislation. Safety syringes comprise less
than 30% of the total market.  The desire to use a safety syringe
has been impeded by both cost and technique requirements of
currently available safety syringes.  Current safety syringes are
four to ten times the cost of standard syringes.  Safety syringe
devices currently in the market are difficult to use and require
hospital training and ongoing in service.  These products do not
cover the needle prior to removal from the skin and can pose danger
upon extraction from the patient.

     In contrast to other safety syringes, the Medisys CoverTipTM
device employs a unique but simple design which covers the tip of
the needle while in the patient's skin and locks in place
protecting the healthcare worker during the injection process as
well as during disposal of the used syringe.  There is virtually no
difference in the use of CoverTipTM and in standard non-safety
syringe units which translates into minimal medical user training
and lower overall product cost.  CoverTipTM provides needle tip
safety that is easy to use at reasonable cost.

     The Company received U.S. Food and Drug Administration (FDA)
510K clearance to market the CoverTipTM safety syringe on May 15,
1998.  Medisys is presently pursuing specialty applications for
CoverTipTM and has begun a pre-market campaign in preparation for
a limited market introduction of the hypodermic product application
beginning in California.

PreSafTM Lever Fulcrum Hypodermic Syringe

     PreSafTM is an intramuscular  injection safety syringe designed
primarily for prefilled syringe application.  These applications
typically include flu shots, pneumonia shots, AIDS serums, and
other epidemic treatment or prevention therapies. Like CovertipTM,
but in a different fashion, it provides automatic passive
protection before withdrawal from the patient. The Company has a
clear  patent search.  The U.S. Patent has been applied for and  is
pending.  Concept design is essentially complete. Prototypes and
clinical development will begin after patent approval is received.
This device will be marketed as an OEM product and sold to
pharmaceutical distribution producers of pre-filled syringes.

     DIAGNOSTIC SHARPS SAFETY

     Medisys recognizes that diagnostic sharps applications are a
critical area of medical device safety.  This segment is largely
unexplored and significantly under-penetrated by safety device
solutions and has less competition and fewer economic barriers to
entry than those apparent in the hypodermic field.  These products
address a somewhat different customer base than the hypodermic end
user in that physicians and other more specialized technicians are
the primary care givers who use diagnostic sharps instruments.  The
specialized and professional aspects of these devices will offer
high margin opportunity to the marketplace.

     To fill this need for sharps safety protection, Medisys has
developed a line of devices with more commercial potential than its
hypodermic syringe line.  Some of these devices are ready to enter
the final phases of commercialization.

SofDrawTM

     SofDrawTM is a blood/fluid collection syringe designed to
protect the clinician from an accidental self puncture with a
contaminated needle during the collection of blood or bodily fluids
and through the transfer of fluids into vials for transport and
study.  Current procedures use standard syringes, usually 15cc or
larger.  The operator is either drawing blood or aspirating fluid. 
Fluid aspiration is typically performed by physicians or other
highly specialized technicians.  In either case, the body of the
patient is punctured and, after collection, the contaminated needle
is withdrawn with the sharp exposed.  Transferring the fluid into
vials involves multiple opportunities for accidental self puncture. 
Importantly, intramuscular safety syringes, cannot be used because
the safety mechanisms rely at least in part on forward movement of
the syringe plunger/piston assembly.  Achieving activation of the
safety feature would run the risk of a potentially fatal air
embolism.  This procedure requires its own distinctive safety
product since removing fluid from the body relies on rearward
movement of the syringe plunger/piston assembly.

     The U.S. Patent has been issued, all filings are current and
initial design development is complete through prototyping.  A 510K
application for marketing of the device with the FDA will be filed
when the working design is finalized. Given the shared technology
between this device and CoverTipTM syringe, a fast track clearance
for marketing by the FDA is reasonably anticipated by Medisys. A
Continuation in Part  (CIP) application to cover features allowing
large volume drainage without syringe barrel change is in process.

     The Company intends to market this specialized product
directly to both OEM blood and fluid collection tray assemblers and
specialty markets such as physicians arid phlebotomists. 
Orthopedists will be a specific target customer group for the use
of SofDrawTM during the drainage of knee and shoulder joints.

VacuSafTM

     This device, using CoverTipTM  technology in combination with
an adapted passive energy source, covers and protects the sharp of
a blood collection needle while it is still in the vein.  The
safety mechanism is activated and locked with the first use of a
vacuum specimen tube and the sharp is rendered safe prior to
withdrawal.  The device provides protection to the user and waste
handlers and produces the added benefit of protecting the vein
lumens during the collection procedure.  Version "Select" permits
selection of needle gauge for use with a single adaptive shroud
while version "Fixed" is a pre-assembled unit, and safety
mechanism, fixed to the shroud.  Final design concept is
essentially complete and working models have been fabricated. The
Company has a clear patent search and the U.S. patent application
is in progress and is anticipated to be ready for filing in 1999. 
A moderate volume test site has agreed to perform clinical trials
as soon as clinical prototypes can be produced.

     The marketing direction of this device has not been finalized. 
Potential options are specialty sales to phlebotomists or as a
license/OEM product for the major IV catheter manufacturers.

BxDrawTM

     This device is both a fine or coarse needle biopsy safety
syringe.  It is a physician specific device.  The U.S. patent has
been verbally approved and the Company has receipt of a formal
"Notice of Allowability."   The device provides user protection and
reduces risks of carcinogen cell "needle tracking".  It also
doubles as a post procedure safe carrier for transport to
pathology. Development and regulatory status are similar to
SofDrawTM.

     BXDrawTM addresses the needs of the diagnostic surgeon
(orthopedic, General Thoracic) and/or Radiologist and it is
anticipated that it will be sold directly by Medisys to this
specialized segment. 

BX-T-DrawTM OBTSN

     "Obdurated Titanium Safety Needle."  This device is designed
for use with MRI (Magnetic Resonance Imaging) placement to take a
tissue sample with a cutting needle.  Concept design is complete
and the company has a clear patent search.  An application for a
U.S. Patent will be filed when final design alternatives are
complete.  As with the BX, the BX-T-DrawTM device should be
specialty marketed to Radiologists, Oncologists, general surgeons
and other diagnosticians.




CoverStikTM

     This device permits safe collection of capillary blood.  The
small cutting blade is passively and automatically retracted into
a protective housing concurrent with skin puncture.  Applications
include checks for glucose levels, clotting, and blood gases.  As
a system, CoverStikTM protects the user and eliminates reusable
carriers, which contaminate easily and are known sources of
pathogen transfer, particularly hepatitis.   Conceptual design work
is complete.  The Company has a clear patent search and will file
a patent application as soon as final design alternatives are
complete.   

     The CoverStikTM marketing plan is to sell directly to Lab and
Respiratory Therapy as well as to the OEM market to diagnostic
companies.

SAFETY IN WOMEN'S HEALTH

SofCepsTM

     The Company's primary women's health device is an obstetrical
tractor (birth assistance delivery device) known as SofCepsTM which,
in part, is designed to replace traditional steel obstetrical
forceps and vacuum extractors used to assist child birth.  SofCepsTM
is intended to offset the possible negative obstetrical
consequences of epidural anesthesia which may slow or interrupt the
descent of the fetus through the birth canal and may diminish
maternal ability to produce voluntary and involuntary contractions
during delivery.  SofCepsTM is a disposable soft and thin double-
walled multifiber braided axial gripping cylinder, which is placed
over the fetal skull with a simple application system.  It is
designed to uniformly distribute assisting traction forces about
the circumference and longitudinal surface areas of the fetal
skull.

SofCepsTM

     The devices that SofCepsTM is designed to replace are
traditional steel obstetrical forceps and vacuum extractors.  The
Company believes that maternal/fetal injuries associated with the
use of these devices will be reduced with the adoption of this new
approach.  Maternal injuries caused by forceps range from spiral
lacerations to severe lacerations of the cervix resulting in
increased in-patient time, major surgical repair, incontinence,
sexual disorders, protracted discomfort, death, and substantial
increases in health care costs.  Infant injuries due to the use of
forceps include minor "forceps marks", fractures of the fetal
skull, central nervous system (CNS) deficit (cerebral palsy),
severe mental retardation, blindness, deafness, and death. 
Injuries may also include slowed development of motor skills and
learning disability. 
 


     The vacuum extractor was developed as an alternative to
traditional steel obstetrical forceps, but after over thirty years
of use it still presents clinical problems.  The operative feature
of the device is a suction cup that is applied over the crown
portion of the fetal skull where traction forces are concentrated. 
Improper traction can result in the device "popping" off the fetal
skull with secondary rebound trauma being transmitted to the
intracranial area.  Hematomas over the skull have been noted due to
the use of the vacuum extractor.  Use of both forceps and vacuum
extractors require a high degree of skill and training.

     Clinical testing of SofCepsTM began in October 1993. During the
first year of testing, it was determined that SofCepsTM presented
little, if any, risk of maternal injury.  Traction testing on
several stillborns demonstrated no evidence of fetal trauma and
permitted clinical conclusion that the device was very likely to be
less injurious to a fetus than traditional devices. 

     On April 6, 1995 a developmental milestone occurred when a
term stillborn was successfully delivered with the device.  During
this procedure, application over the fetal head was accomplished
and the Company concluded the device was clinically effective in
assisting completion of the delivery.  Several modifications of the
SofCepsTM  delivery system have been made and with the completion of
a minimal number of stillborn deliveries, the results expected from
the Phase One testing protocol were considered completed by the
Company.

     Application for approval of Phase Two protocol governing live
deliveries has begun. More testing was planned in the fourth
quarter of 1997 and the first quarter of 1998.  An interruption of
the research and development capital needed to refine the clinical
prototypes to a final commercial design has delayed these clinical
studies.  Internationally, clinical sites at the Perinatal
Institute in Bern, Switzerland, the Hospital Central in Mexico, and
the Kenyata National Hospital in Kenya were selected for live birth
testing. This testing has not commenced at present, but is
anticipated to begin first in Mexico and later in Switzerland
and/or Kenya with the acquisition of adequate research and
development capital and completion of final commercial design. 

AmnioSafTM

     This safety syringe device is designed to protect both the
physician and the fetus during amniocentesis.  Protection of the
fetus is provided through reduction of the risks of eye, thorax,
cord, or placental puncture.  Patent, development, and regulatory
status are similar to SofDrawTM.

     AmnioSafTM  will be marketed to obstetricians and gynecologists
(OB/GYN) and will complement the Women's Health focus of Medisys as
well as Medical Safety.




THE MANUFACTURING DIVISION

     The Manufacturing Division (Phillips Pharmatec Labs, Inc.)
provides the Company with the internal capability of assembling its
own proprietary products and other medical devices. The
manufacturing division is dedicated to expanding its contract
manufacturing capability in order to substantially increase the
revenue position of Medisys and to enhance the growth potential of
the Company. Currently, this business unit is profitable with
opportunities for internal growth as well as new strategic
acquisitions.

OTC Contract Manufacturing

     As a contract manufacturer of over-the-counter complementary
health care products, Phillips produces vitamins, mineral
supplements herbal therapy and diet aids.  These products are
produced for customers under private labels and are packaged and
shipped from the Company's location in Largo, Florida.

     The first step in the manufacturing of an order can involve
either compounding ingredients using client-specific formulas, or
the use of premixed combinations.  Currently, clients specify the
ingredients to be mixed, and the Company performs the process. The
Company plans for an onsite laboratory in which original
formulation can be created and tested, allowing Phillips to further
capture more revenue from each order.

     The second step in the manufacturing process involves product
formation.  Typically, the health and diet supplements are taken
orally by end-user customers; thus the Company prepares the product
in either a tablet or capsule form.  This is accomplished with
high-speed encapsulators and minimal manpower.  Powdered bulk
products, such as dietary supplements, are typical products as
well.  To further increase revenue, Phillips plans to add more
liquid and paste medications to their present product mix.

     The last step in the manufacturing process includes packaging,
labeling and shipping.  The labeling process involves the placement
of the clients' private name brand on the supplement container.

Device Assembly and Manufacture

     The acquisition of Phillips provided additional revenue and
also gave Medisys an immediate capability to begin assembly and
manufacture of some of its proprietary products.  Phillips also
provides the future capability, through achievable expansion, to
transition into the manufacture of the Medical Safety Products.

     Phillips has completed the set up and preparation for
producing two of the Company's proprietary specialty products. 
These products will also be marketed by the Marketing Division
(HCDS) which is pending acquisition by the Company.

     Medisys Specialty Products that are being produced and
commercialized through the newly established manufacturing and
marketing divisions are:

Vetceps Obstetrical Tractor

     VetCeps is a veterinary application of the SofCepsTM
obstetrical tractor. The Company enjoys patent protection for
veterinary application in bovine (cattle), ovine (sheep), and
equine (horse) obstetrics within its original patents. Development
thus far has been limited in large measure to the bovine
application because of its substantial potential market. The device
has been successfully used on both foreleg and hind leg to deliver
live and stillborn calves.  This product is now being sold
commercially in eight foreign countries and the United States.

DisKlipTM

     DisKlipTM is a latex free securement device used in connection
with the management of standard intravenous administration of
medication (IV) and other medical tubing and lines.  DisKlipTM is a
simple and inexpensive disposable (single-use) securement device
designed to afford the medical provider with an easier, more
efficient means to attach and manage medical tubing.

     The Company believes that DisKlipTM will require little or no
personnel training and will result in savings in nursing time,
reduction of instances of site inflammation and irritation of vein
walls (lumens), reduction of instances of infiltration and vein
wall puncture, reduction of risk of sepsis, and reduction of
patient discomfort.
  
     The Company has limited hospital field-testing consisting of
actual patient use at several hospitals in the United States and in
Mexico.  Additional designs are being constructed to accommodate
various locations of the body such as: MultiKlip, for management of
multiple tubing/lines; KidKlip, a pediatric version and The Freedom
IV device, a retractable IV line management device.  Market
sampling and testing will be initiated to determine the viability
of the product in the marketplace prior to assembly.

Re-TyTM

     Re-TyTM is a releasable, adjustable and reusable "cable tie"
product group that was developed originally to enhance the VetCeps 
device.  The Company has three designs: side release, top release
and enscoping; all of which are intended for out license to
industrial users.

Limited market sampling and testing of the top-release version is
being conducted to determine the viability of the product in the
marketplace prior to manufacture and packaging.




OTC PRODUCTS

     There is a growing trend among "baby boomers" toward
alternatives to traditional medicine recognized as big business in
the Health Care industry.  The use of complimentary health care
products such as vitamins and dietary and nutritional supplements,
has created a niche industry in Health Care that is growing at an
increasing rate.  Sales nationwide have increased consistently
since 1994 and annual growth rates for vitamins and mineral
supplements are expected to surpass 7%  annually through the year
2000.

     Over The Counter complementary health care products also
represent a rapidly growing market. According to the
Non-prescription Drug Manufactures Association (NDMA), over six
hundred products are now available on the over-the-counter basis.
The Food and Drug Administration (FDA) began a review process in
1972, in which they have been identifying well-established
prescription drugs which could be switched to over-the-counter
status.  In 1976,  six popular drugs switched from prescription to
over the counter status.  In 1986, sixty-five medications switched,
and the trend is expected to increase in the foreseeable future.

     Studies show that consumers self-treat medical problems four
times more often than health care professionals do. It is estimated
that sixty to ninety percent of all illness is now treated
initially with self-care, including self-treatment with over-the-
counter drugs.

     As a contract manufacturer of over-the-counter complimentary
health care products, Phillips produces vitamins, mineral
supplements herbal therapy and diet aids. Phillips does not
currently manufacture any products under its own label. 
Occasionally, customers will ship liquids, tablet and capsules to
the Company in bulk for packaging and labeling.

     The Company's present product mix consist of 50% capsules, 25%
bulk powder, 10% liquids 10% other and 5% tablets. To increase
margins and attract new customers Phillips plans to have a product
mix that consists of 25% tablets, 25% liquids, 17% capsules 17%
bulk powder and 17% other.  These products are produced for
customers under private labels and are packaged and shipped from
the Company's location in Largo, Florida.

THE MARKETING DIVISION

     The Company's Marketing Division (Health Care Direct Services,
Gulf Coast Media and Direct Distribution) (acquisitions pending)
will operate as an independent MDBU to provide the Company with
marketing resources to access high opportunity niche markets for
its medical devices with marketing, distribution and direct sales
capabilities for the complimentary health products manufactured by
the Company and its customers.

     In March of 1999, Medisys signed a letter of intent to acquire
Health Care Direct Services, Inc. ("HCDS") and affiliates.  This
provides the Company with the marketing capability to begin
commercializing many of its proprietary devices as well as the
complementary health care products of Phillips and its customers. 
In keeping with its ongoing acquisition strategy, the Company
believes that HCDS will potentially enhance the revenue position of
Medisys.

MANUFACTURING PLAN

     The Company intends to contract the production of its products
through internal divisions and/or third party vendors.  By having
the company manufacturing business operate as a stand alone
contract manufacturer, Medisys has internal production resources
available that are profit centers through the business generated
with outside customers.

CoverTipTM

Market Analysis
 
     Currently $2.5 billion of annual sales volume is generated
with the use of syringes in the United States with safety syringes
purchases approximating $300 million of this amount.  The
penetration rate of safety syringes is driven by concern over the
health of the doctors, nurses, and other healthcare professionals
as well as cost associated with their care and the testing
necessary in response to the occurrence of accidental needle
sticks.

     Significant regulations in California require the use of
needle safety devices by August 1, 1999.  Tennessee and
approximately twenty other states are considering similar
legislation.  Federal requirements are anticipated within the next
year.

     The rate of accidental needle stick reported by the Center for
Disease Control (CDC) was one occurrence for every 250 injections
made.  Although the number of confirmed cases of AIDS contracted
accidental dirty needle sticks remains small (less than 100
individuals) the occurrence of hepatitis and other infectious
diseases compounds the problem and cumulatively results in high
cost, liability, long-term care and productivity losses. 
Requirements for reporting all accidental dirty needle sticks
result in subsequent testing cost alone for each event from between
$250 and $2,302.

     Although there is substantial support from legal requirements,
the healthcare worker community and medical safety advocates for
safety syringes, there are still various obstacles to other devices
currently available.  These include higher cost, from three to five
times standard syringes, as well as the difficult technique changes
necessary to use many of these cumbersome devices.  The in service
cost to train a myriad of healthcare practitioners using syringes
places an added burden on the conversion rate due to the awkward
nature of currently existing safety syringes.  Many of these
products require two-handed application techniques which can, at
times, present accidental stick opportunities.

     The problem has become so well recognized, that on September
30, 1998, Governor Pete Wilson of California signed into law
legislation to require the use of safety needles to protect health
care workers from hazardous needle sticks.  Under the bill,
California Health Care Employers were required to begin to shift to
safe needle devices by January 15, 1999.  The Company believes that
this is an important first step toward FDA and OSHA mandates for
safe needle devices throughout the United States.

     1.  Customer characteristics:

     Customers for the CoverTipTM safety syringe include all
healthcare workers, nurses, physicians, hospitals, clinics, managed
care organizations as well as insurers.

          a.  Doctors, nurses, and healthcare providers.

          The desire to reduce the likelihood of an accidental dirty
     needle stick is strong with all healthcare workers. 
     Individuals who have contracted AIDS, hepatitis and other life
     threatening contagious disease have become advocates for the
     adoption of safety devices within the healthcare community. 
     These individuals and organizations supporting healthcare
     worker safety provide impetus for the use of safety syringes
     and legislation requiring safety products.

          b.  Hospitals.
          The need to reduce the cost of testing associated with
     accidental needle sticks, reduce potential liability and
     negative publicity, and pressure from healthcare worker
     organizations are strong motivators for hospitals to adopt a
     relatively low cost easy to use safety syringe.  State and
     Federal requirements for safety devices will cause hospitals
     to search for products that offer safety and reasonable cost
     as well as medical staff acceptance.

          c.  Managed Care/Insurance

          Managed Care organizations and insurers assume the burden of
     liability both for treatment and damages associated with
     accidental needle sticks.  These groups appear supportive of
     efforts to reduce the incidence of infectious disease
     contracted by cross contamination but are sensitive to cost
     issues.  Presentations of compelling cost in use studies will
     be needed to gain managed care product support.

     2.  Competitive Evaluation:

     Within the syringe business in the United States, Becton -
Dickenson enjoys the largest market share position of approximating
60% of the market.  Sherwood Medical, a division of Tyco Industries
has approximately 30% with the remainder of the market which is
divided among numerous private label as well as foreign companies
such as Terumo.  The safety syringe market is sub-divided in
similar fashion.  Over 450 patents have been issued on various
types of safety needles and/or syringes.  Despite the interest and
effort to convert to these products, difficulty in changing
behavior of the application technique as well as the prohibitive
cost, from three to ten times standard syringes, has inhibited the
penetration of  safety syringes into the overall standard syringe
marketplace.  However, the advent of required safety protection
will transform companies to a comparison of the various safety
devices available. The Company believes that minimal market
acceptance of CovertipTM and their other patented safety devices
will place Medisys in a position to acquire a competitive presence
in this marketplace. 
 
     3.  Marketing Plan:

     Due to the large capital investment required to manufacture
large quantities of the CoverTipTM safety syringe, the Company's
selling strategy will ultimately be to obtain a third party large
company partner.  This partner will need manufacturing and
distribution resources and expertise to rapidly introduce a product
into the marketplace.

     The CoverTipTM safety syringe addresses each of the major
issues associated with current safety syringes and provides
benefits over standard intramuscular (IM) syringes.  Standard
syringes cost between $0.06 and $0.12 each and it is anticipated
that the CoverTipTM safety syringe will be priced at less than $0.20
each after substantial market penetration and high volume
production are achieved.  Specific costs will be developed once
full production plans are implemented.  Other safety syringes
currently cost between $0.25 and $0.75 and have use and technique
limitations. 

     Because the CoverTipTM safety syringe requires no change in
technique, and is currently identical in use to a standard syringe,
it will eliminate educational (inservice) requirements that
currently exist with many safety syringes on the market. 
Additionally, because of the unique design of the CoverTipTM, the
needle tip is actually protected prior to removal from the
patient's skin.  This greatly reduces any contaminated needle
exposure to the healthcare worker and offers an advantage to other
safety syringes that require extraction from the patient's skin
prior to implementation of various needle tip protection methods.

     Medical diagnostic products are used by physicians and other
medical professionals.  These products offer the potential for
premium margins due to their high cost of procedure, unique
presence in the market, and market specialization.

SofCepsTM

Market Analysis  

     The market for obstetrical products, both in the United States
and worldwide, is substantial.  While declining birthrates are a
factor for consideration in western countries, a stable growing
United States market of about 4,000,000 births per year for the
next ten years is forecasted.  Management believes that the rapidly
expanding population growth of third world and Pacific rim
countries represents a marketing opportunity for assisted delivery
devices and obstetrical products in general.  The simple technology
that SofCepsTM employs will be of particular appeal in third world
countries and should offer strong market opportunities.

     The primary assistance device in use today is stainless steel
obstetrical forceps. They were developed in the latter part of the
16th Century.  Actual traction is exerted slightly below or
underneath the mandible and is point concentrated.  Slippage of the
forceps is almost invited because of natural lubrication, refusal
of the fetal skull to conform to existing forceps design, and a
myriad of variables which exist from one fetal skull/pelvic
relationship to another.  Virtually every forceps assisted delivery
involves risk of injury to the mother and the baby. 

     Stainless steel forceps apply a concentrated gripping force on
the fetal head which can result in a series of injuries from minor
"forceps marks" to skull fractures with massive brain damage,
central nervous system damage and fetal death.  The manipulation of
the steel forceps in the birth canal often causes maternal injuries
ranging from spiral lacerations of the pelvic floor to severe
lacerations to the cervix.  In both instances, these injuries
result in significantly increased healthcare costs associated with
post-delivery complications and increased inpatient days.  Such
injuries are exhaustively dealt with in the medical literature and
the obstetrical community would most likely welcome a device which
promises a significant reduction in maternal and fetal morbidity.

     The only other significant attempt to introduce a new product
into this forceps arena has been the vacuum system.  The vacuum
unit was patented in the late fifties and in spite of numerous
attempts toward refinement, management feels that the approach
still remains plagued with disadvantages.  The system grips the
upper half of the fetal skull with a suction device and traction is
then applied.  Use of the system frequently results in hematoma
over the fetal skull as well as rebound trauma caused by the device
popping off the fetal skull.  Once in place, the device precludes
manual rotation of the skull.  Rotation is frequently required to
ease passage through the pelvis.  Many obstetricians have
experienced difficulties because they resort to twisting on the
extractor to accomplish rotation.  This can  result in serious
fetal injury.  For these and other reasons, the vacuum system is
not the instrument of choice for many obstetricians who continue
the use of traditional forceps.

     1.  Customer Characteristics

     Potential customers for the SofCepsTM product include
obstetricians, managed care organizations, hospitals and patients
(consumers).

          a. Obstetricians

          The need for safe, reliable birth assistance creates a base
     need for replacement of current devices.  Documentation of
     successful deliveries, with reduction of risk to both mother
     and infant, will be a strong motivator influencing the
     adoption of SofCepsTM by the obstetrical community.  The
     American College of Obstetrics  and Gynecology (ACOG) has
     28,000 members.

          b. Hospitals (Health Care Providers)

          Management believes that obstetrical care is being
     consolidated within communities to birthing centers  to 
     establish a cost effective delivery system for this service. 
     Hospitals are increasingly under pressure to reduce    costs,
     while maintaining quality of care.  SofCepsTM offers these
     healthcare providers the opportunity to increase the quality
     of the delivery process, while reducing the overall cost of
     care.  An additional opportunity is the economic potential for
     reduced malpractice insurance and C-Section rates.  

          c. Patients (Consumers)

          Patients are increasingly aware of the need to reduce health
     care costs, but at the same time are concerned over the
     quality of care.  Forceps use and the concept of vacuum
     extractor assisted deliveries are innately unpleasant to the
     average consumer. Therefore, management believes that the
     SofCepsTM  product, as well as other simple Medisys products,
     represent viable alternatives to the general consumer
     community, including Women's health and pediatric advocacy
     groups.

     2.  Managed Care (Insurers)

     Managed care organizations are interested in containing costs
and directing cost efficient products and procedures.  Cost in use
and potential reduction of C Section rates will position SofcepsTM
to managed care consideration.

     3.  Competitive Evaluation

     The competitive product situation for obstetrics includes
products that are a part of diversified health care corporations
with slight focus on obstetrics.  In the device arena, products for
obstetrics are produced from divisions of various companies whose
products are broadly based in many areas of health care.  Equipment
companies such as Utah Medical and Hewlett Packard market
monitoring equipment and diagnostic tools for OB.  Competition to
SofCepsTM includes instrument manufacturers such as the Codman
Division of Johnson & Johnson, V. Muellar, and Weck manufacture
obstetrical forceps in various forms.  Vacuum extractors are
manufactured by Utah Medical, Columbia and others.  Instrument
companies and vacuum extractor companies do not look at these
products as a major product line.  However, they can be expected to
respond with alternative methods of assisted delivery once the
SofCepsTM product is introduced into the market place.

     4.  Market Potential

     SofCepsTM is intended to be multi-dimensional in use and is
designed to be applied in a prophylactic manner when mother and
fetus do not present contraindications.  SofCepsTM is a totally new
concept which the Company intends to market on a worldwide basis. 
The market is limited only by the eventual degree of acceptance in
the obstetrical community and by the number of live births in each
given market area.  The device is disposable after a single use and
thus a potential market exists for repeat orders.  The degree of
market penetration will depend upon product acceptance and
effectiveness of marketing efforts.  The medical marketplace is
receptive to new products which can provide better patient care,
savings in medical costs, benefits to the health care industry, and
which represent advances in risk reduction.  The Company is poised
to effectively demonstrate that the device will meet the criteria
of today's managed healthcare marketplace.

     There are no past or present medical comparables to SofCepsTM
and pricing is based on costs of manufacture and distribution,
including usual administrative items, as well as preliminary price
sensitivity analysis.  Medisys believes that a price of
approximately $150 per device will meet the requirements of the
managed care environment.

     5.  Non-Controllable Elements

     With significant health care reform apparently postponed for
the foreseeable future, government intervention would appear only
to enhance the prospects for SofCepsTM as well as other Medisys
technologies.  The managed care companies should encourage the use
of SofCepsTM and economic studies are planned in order to document
the value of the SofcepsTM device.  

     The Company intends to participate in economic studies of
various products to demonstrate their positive cost outcome versus
standard care and other competitive methods of treatment. These
economic studies may be conducted from assessment of currently
available data and/or specific studies to demonstrate reduction in
overall cost through use of Medisys products.  These studies are
anticipated to commence simultaneously with market introduction of
the various products and take varying amounts of time to complete
based on their complexity.  Although these studies support various
benefits of the Company's products, they are not deemed critical to
market introduction, rather enhancements to each of the product's
value to key decision makers.  The greatest elements outside
immediate control would be the introduction of similar birth assist
products and the uncertainty of the FDA approval process.

     6.  Marketing Plan

     The Company currently plans to market SofCepsTM on a direct
basis or through a co-marketing arrangement with supplemental sales
support from specialized sales representatives.  This approach is
intended to achieve appropriate marketing activity while minimizing
selling expenses.  The Company plans to distribute Medisys 
products worldwide through international market development
brokers.

     Concurrent with development and refinement efforts, the
Company will employ comprehensive measures designed to apprise the
obstetrical community of what is forthcoming.  Management will
endeavor to have customers ready and waiting when the device enters
mass production.  These efforts have begun with public relations
and preliminary market communications which are underway. 

     Selling strategy will take a multi-focused approach centered
around the following customer groups:

               a. During the final development stage the Company will
     communicate with Obstetricians via direct mail and convention
     exposure at major OB meetings to introduce the concept idea of
     SofCepsTM.  In addition, after successful live birth clinical
     testing, educational seminars will be conducted on the
     appropriate use of SofCepsTM by targeting the thought leaders
     and volume delivery obstetrical centers.  Specific effort will
     be made to establish SofCepsTM advocates in the top 20 markets
     nationally.  Major benefits that will be positioned to the
     obstetrician will include an increase in patient care and
     potential for reduced malpractice insurance.

               b. Major obstetrical societies will be contacted and
     requests made for endorsements of the SofCepsTM product versus
     forceps use.

               c. After product testing, the Company plans to commission
     a panel of distinguished obstetricians as an advisory group to
     provide broad input and endorsement support.

               d. Obstetrical Nurses will be exposed to the product
     through convention activity at major meetings, select targeted
     direct mail to key association officers, and thought leaders
     within the major metropolitan markets.

               e.  Providers/Hospitals.  A direct selling strategy will
     be employed to the top 200 obstetrical hospitals.  In
     addition, group purchasing organizations will be contacted for
     inclusion of the SofCepsTM product into their "formulary."  The
     major selling appeal to providers is the potential to increase
     care quality and the potential for reduction of C-Section
     rates and malpractice occurrence.

               f. Although physician obstetricians will be the final
     users, the device is considered a hospital supply item. 
     Exclusively, hospitals with obstetrical units will be the
     customers of the Company.

               g. Managed care organizations have established a list of
     procedures which they feel are being excessively used within
     the health care community.  Included as one of the highest
     within this list are C-Section rates.  C-Sections currently
     cost about $4,570 more than normal  vaginal deliveries and
     there are wide variations of occurrence by institution and
     geography.  Management believes that the use of SofCepsTM
     should generate a net savings over C-Section delivery.

               h. The Company's selling strategy will include contacting
     major women's and children's advocacy organizations.  The
     development of a press kit for use in local areas where
     SofCepsTM has been adopted for use will provide an efficient
     tool for local media, physicians, and hospitals thereby
     enhancing general media public relations.

               i. Insurers.  If SofCepsTM proves clinically successful
     and produces a relatively short track record of safe and
     injury free deliveries, the Company believes that medical
     malpractice and health insurers will support the transitioning
     of insured obstetricians from the continued use of forceps. 
     A single instance of infant brain damage can cost an insurer
     in excess of $40 million dollars.  A demonstration that
     SofCepsTM will reduce the number of such instances will
     ingratiate insurers and compel their collective assistance.

               j. Women's Groups.  The Company intends to advertise and
     solicit various consumer periodicals that target a
     predominantly female readership. By using the family
     periodicals as communication tools, the message of the
     benefits of a SofCepsTM delivery will be widespread.  

               k. Education.  The Company intends to provide user
     training through seminars, literature, clinical video
     programs, and clinical workshops.  Emphasis will initially be
     placed on working through teaching hospitals in the various
     geographic markets.  Planning is underway for a detailed and
     intense education program.  Plans are to conduct at least one
     seminar per month at strategic geographical areas across the
     United States.

     7.  Advertising and Promotions:

     The Company has commenced initial public relations and market
education activity.  This initiative consists of periodical news
releases and publication in a limited number of business and
professional publications about the Company in general. Further
advertising and public relations will be targeted to each category. 
For example, even though hospitals will be the purchasers,
obstetrical physician users will dictate whether the purchases are
made.  This will require a blanket effort to insure wide
familiarity with the device within the obstetrical community.   

     Medical literature, in this case the various obstetrical
journals, is a primary key in dissemination of new information to
individual obstetrical practitioners.  Appropriate physician
authored informative articles will be provided to these journals
for publication and distribution to individual subscribers. 
Results of human clinical trials are being reported with clinical
details of each delivery.





     8.  Product Warranties

     The Company intends to develop reasonable warranties with
application of the SofCepsTM product.  These warranties will be
contained in the product package insert which will be included with
every SofCepsTM unit sold or distributed.

Backlog

     The Company has no backlog for any of its products.

PATENTS AND TRADE SECRETS

     The Company owns fourteen U.S. patents and one foreign patent
protecting the Company's SofCepsTM, CoverTipTM,  SofDrawTM, Multi-
DrawTM VetCeps, DisKlipTM, and Re-TyTM devices.  These consists of
U.S. Patent numbers 5122148, 5217467, 5318573, 5460611, 5496283,
5573539, 5593413, 5632750, 5681290,5687455 (two device patents),
5785662, 5836054, 5846228 and 5720727.  The Company also owns one
letters patent protecting the SofCepsTM device (no. 669116) from
Australia.  Eleven of the issued patents are being prosecuted
internationally.  Additionally, the Company has pending a mix of
seven original and/or CIP applications.  The Company also has a
backlog of viable proprietary product concepts which meet company
development criteria.

     The Company has filed six U.S. trademark applications
preserving its right to use the trademarks "SofCepsTM", "VetCeps",
the "Medisys " logo, "DisKlipTM", "SofDermTM", and "CoverTipTM".  As
the Company proceeds forward with the commercialization of these
and other products, it will file U.S. and foreign trademark
applications to protect product names.

     The Company intends to obtain copyright protection on its
product packaging, instruction sheets, and such other Company
materials that the Company believes significant to warrant
procurement of copyrights.

GOVERNMENT REGULATION

     Generally, all medical devices are subject to FDA regulation
under the Medical Device Amendments of the Federal Food, Drug and
Cosmetic Act.  Devices are classified into one of three categories;
Class I, Class II or Class III, depending on their intended use and
upon the degree of regulation necessary to provide reasonable
assurance of their safety and effectiveness.  The class into which
any specific device is placed determines the requirements that must
be met before a manufacturer may distribute the device in
interstate commerce.  Section 510(K) of the Medical Device
Amendments provides for a pre-market notification requirement. 
Manufacturers intending to market a new or significantly modified
device, must submit to the FDA a pre-market notification.  This
notification must establish substantial equivalence in terms of
safety and effectiveness, to a device already on the market in the
United States prior to 1976, or to a device marketed after that
date that has been determined to be substantially equivalent.  The
notification must be submitted at least 90 days prior to
introducing the device into interstate commerce, or otherwise
holding or offering the device for commercial distribution.  No
prototype is required, however, additional data from testing may be
requested.

     Within 90 days of receipt of the pre-market notification, the
Center for Devices and Radiological Health ("CDRH") determines
whether the device is "equivalent".  If the device is deemed
equivalent, it can be marketed.  If the CDRH determines that a
device is not equivalent, the manufacturer may resubmit the 510(K)
notification with new data, file a reclassification petition, or
submit a pre-market approval application ("PMA").  A PMA is
required instead of the Section 510(K) process only if the device
is held to be a Class III device.  Class III devices are those
represented to be life-sustaining or life-supporting, are implanted
in the body, or present potential unreasonable risk of illness or
injury.  Class III devices are subject to a more rigorous FDA
approval process which generally required the completion of three
major steps.  The first step involves the granting by the FDA of an
Investigational Device Exemption ("IDE") which permits the proposed
product to be used in controlled human clinical trials.  Upon
completion of a sufficient number of clinical cases to determine
the safety and effectiveness of the proposed device for specific
indication, a PMA is then prepared and submitted to the FDA for
review.  This extensive submission includes design, manufacturing,
quality control and clinical data to substantiate the proposed
device's compliance with FDA manufacturing regulations as well as
to support its medical effectiveness.  Upon acceptance by the FDA
of the PMA, the third major step, a public review if the data by an
advisory panel of the FDA, industry and medical professionals takes
place.  Prior to receiving final approval, a company is inspected
by the FDA to verify that its manufacturing procedures meets all
requirements of the FDA regulations.
  
     The Company believes that both of its primary safety products
are "substantially equivalent" to devices already marketed and are
therefore exempt from PMA.  However, the fact that the SofCeps_
device involves the birthing of babies, the Company's approach has
been and remains determined to follow a protocol consistent with
all FDA guidelines and to complete all good manufacturing practices
prior to marketing the product.

     A discussion of where the Company stands with regard to the
FDA process is included under each product heading.

     Prior to Phase I testing of SofCepsTM, the Company applied to
the FDA for a 510(K) exemption from Pre Market Approval (PMA) for
marketing the SofCepsTM device.  PMA could require a lengthy testing
and approval process.  The FDA has reviewed the Company's
application and testing protocol.  Based on Phase I data, the
Company was allowed to continue its fetal demised clinical testing. 
An Investigational Device Exemption (IDE) Draft for Phase II
testing has been submitted to the Office of Device Evaluation
(ODE/OB-GYN) for review and comment.  The Company has established
a positive dialogue with the FDA and believes that the IDE process
will be postured to proceed with Phase II testing when Phase I is
successfully completed.  The Company intends to resubmit a 510(K)
application to the FDA concurrent with the accumulation of live
human clinical test data.

     The CoverTipTM safety device received 510(K) FDA clearance on
May 15, 1998.  This allows the Company to market the CoverTipTM
device in the U.S. and provides a basis for approvals in other
international markets.  The approval of the CoverTipTM device should
enhance the Company's ability to gain clearance for its other
safety devices.

     Other than the FDA, the Company does not believe that there
are any existing or probable governmental regulations that would
adversely affect the Company or its business.

PRODUCT LIABILITY AND LIABILITY INSURANCE

     The Company may be exposed to potential product liability
claims by users of its products. Presently, only the Vetceps
product is in commerce, therefore, in the opinion of the Company,
there is no immediate exposure to product claims other than from
Vetceps  The Company currently maintains general business liability
insurance limited to $1,000,000 coverage per occurrence and in the
aggregate.  Additionally, the Company has obtained product
liability insurance for the VetCeps product from American Equity
Insurance Company.  The coverage limit on this policy is $1,000,000
per occurrence with a $1,000,000 general aggregate.  Due to a
reduction in the dollar volume of sales, this coverage has been
suspended until active marketing is funded. 

     All materials used in Medisys disposable products are standard
medical materials compatible with present methods of hospital
disposal in accordance with accepted practices and applicable laws.

     The Company's clinical testing for human use has been through
St. Paul insurance Company  with coverage limits of $5,000,000 per
occurrence and $15,000,000 aggregate coverage.

     Product liability insurance is also maintained on the products
manufactured by Phillips.

EMPLOYEES

     As of March 1, 1999, the consolidated companies of Medisys
employed 46 individuals including part time and full time
employees, managerial staff and executive officers.  In addition to
its employees, the Company uses the services of certain consultants
on a contract basis.  These consultants include, William David
Kiesel, a patent attorney and Director of the Company; Carolyn
Crochet, an accountant and bookkeeper; Joel Faden, an FDA
consultant; George Lombardi, a CFO/Accounting/Consultant KJS
financial consultants and Eastern Capital Consultants.  Mr. Kiesel
is reimbursed for patent costs and expenses only.  Ms. Crochet is
compensated on an hourly basis.  Mr. Faden and Mr. Lombardi are
compensated on an hourly basis, as services are needed. The
financial and capital consultants are compensated only on a results
produced basis.

Item 2.   Properties

     The Company leases office facilities consisting of
approximately 1,500 square feet located in Baton Rouge, Louisiana. 
The lease calls for a monthly payment of $835 plus utilities and is
an annual lease renewable in October of each year. The office is
primarily devoted to administrative and financial activities. 
Additionally, the Company leases office space in Far Hills, New
Jersey at a cost of $850 per month. The New Jersey office is
primarily used to oversee operations including marketing,
development and acquisition of new products. The Company believes
that all of its initial requirements for manufacturing, packaging,
and storage will be met by its acquisition of Phillips Pharmatec or
by other contract manufacturers.  The Phillips facilities are
described hereinabove under the heading "The Manufacturing
Division."

Item 3.   Legal Proceedings

     The Company is not a party to any material pending legal
proceedings and no such action by, or to the best of its knowledge,
against the Company has been threatened.  In December 1998, the
Company issued a proxy statement attaching only unaudited financial
statements of Phillips, its acquired subsidiary, and on February
16, 1999, The Company voluntarily agreed to sign the entry of an
informal cease and desist order by the agreeing to send audited
statements to its shareholders and to more carefully follow the
proxy rules in the future.



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

     The acquisition of Phillips Pharmatec and a provision to give
the Board of Directors the authority to reverse split the stock in
their discretion, if deemed appropriate in the future were
submitted to a vote of the Company's Securities Holders on December
22, 1998 held in Baton Rouge, Louisiana, pursuant to notice and
after the filing of a proxy statement with the commission and
mailing to the shareholders of record more than 10 days thereafter. 
Both proposals were passed by more than 90% of the shares who were
present in person or by proxy.  More than 70% of the total shares
outstanding were represented at the meeting, therefore the
proposals were approved by more than 60% of the total number of
shares outstanding as of the record date.

                             PART II 

Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters

     The Company's Common Stock has been traded in the over-the-
counter market and quotations are published on the OTC Bulletin
Board under the symbol "SCEP", and in the National Quotation
Bureau, Inc. "pink sheets" under Medisys Technologies, Inc.

     The following table sets forth the range of high and low bid
prices of the Common Stock for each calendar quarterly period since
the first quarter of 1997 as reported by the National Quotation
Bureau, Inc. ("NQB").  Prices reported by the NQB represent prices
between dealers, do not include retail markups, markdowns or
commissions and do not represent actual transactions.

                              High          Low

     1997
          First Quarter       2.44           1.12
          Second Quarter      1.94            .87
          Third Quarter       1.47            .56
          Fourth Quarter      1.19            .44

     1998
          First Quarter        .94            .31
          Second Quarter       .88            .28
          Third Quarter        .47            .15
          Fourth Quarter       .38            .16
     
     1999
          First Quarter(1)     .50            .13
______________
         (1)  Through March 31, 1999.

     As of December 31, 1998 there were approximately 460 holders
of record of the Company's Common Stock, which figure does not take
into account those shareholders whose certificates are held in the
name of broker-dealers.  The Company estimates that in excess of
1,000 shareholders of the Company hold their shares in the name of
broker-dealers.

Dividend Policy

     The Company has not declared or paid cash dividends or made
distributions in the past, and the Company does not anticipate that
it will pay cash dividends or make distributions in the foreseeable
future.  The Company currently intends to retain and invest future
earnings to finance its operations.



Recent Sales of Unregistered Securities

     A description of recent sales of unregistered securities can
be found in the Consolidated Statements of Stockholders' Equity and
Note 7 to the Consolidated Financial Statements which can be found
elsewhere within this Form 10-KSB.  Issuances of securities by the
Company were made in reliance upon the exemption from registration
under the Securities Act of 1933, as amended, provided by
Section 4(2) thereunder.

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

     The following information should be read in conjunction with
the Consolidated Financial Statements and Notes thereto appearing
elsewhere in this Form 10-KSB.

Results of Operations

     The net loss for the year ended December 31, 1998 decreased
$840,188 to $1,252,501 when compared to the corresponding 1997
period. These results are primarily attributed to the costs
associated with the Company's effort to finalize development of its
products.

     Operating expenses for the year ended December 31, 1998
("1998") decreased $792,034 when compared to the corresponding 1997
period, primarily attributed to decreases for 1998 in the following
items:  product research and development (45% decrease) reflecting
the Company's completion of development of new and existing
products; and general and administrative expenses (50% decrease)
due to reduction in staff and in general business expenses. Because
available funding decreased in 1998, the Company used both cash and
its common stock to pay for its ongoing research and development. 
Available development funds were focused and allocated primarily to
CoverTipTM and other safety products.

Liquidity and Capital Resources

     Historically, the Company's working capital needs have been
satisfied through its financing activities including private loans
and raising capital through the sale of securities.  Working
capital as of December 31, 1998 was a negative $790,026 as compared
to working capital of a negative $780,243 as of December 31, 1997. 
The slight decrease in working capital from 1997 to 1998 is
primarily attributable to the 51% increase in accounts payable,
127% increase in payables to shareholders, customer deposits of
$116,200, a line of credit of $250,000 and a debentures payable to
related parties of $395,000.  These increases were mostly offset by
the increase in cash from $2,178 in 1997 to $75,483 in 1998, the
increase in accounts receivable from $11,005 in 1997 to $294,949 in
1998, the increase in inventory from $21,004 in 1997 to $432,706 in
1998, together with a decrease in accrued expenses from $361,257 in
1997 to $95,819 in 1998.  Also, a portion of the debentures were
retired in the first quarter of 1999 which will further increase
working capital.

     The Company raised approximately $142,000 in cash and cash
commitments in 1998 though a convertible debenture.  This debenture
was subscribed to by the Company's officers and directors and five
other investors.  The proceeds from the debenture plus VetCeps 
revenue has provided the capital to continue the Company's
operations.

     Net cash used by operations for the year ended December 31,
1998 decreased to $231,691 compared to net cash used of $876,853  
for the comparable 1997 period.  This decrease is attributed to the
decrease in net loss for 1998, the issuance of common stock for
services rendered and increase in deferred expenses.  Net cash from
financing activities for the year ended December 31, 1998 was
$310,347 compared to $310,945 for the comparable 1997 period.

     The Company is currently technically in default on three notes
payable to various individuals totaling $30,222.  One of the three
notes calls for monthly payments of $500 which the Company
continues to pay.  Neither of the other two note holders have
demanded repayment and the Company continues to accrue interest on
all outstanding notes payable.

     As of December 31, 1998 the Company had total assets of
$1,624,726 and stockholders' deficit of $83,392.  In comparison, as
of December 31, 1997 the Company had total assets of $497,884 and
total stockholders' deficit of $591,046.  The 226% increase in
total assets for the year ended December 31, 1998 is primarily due
to the acquisition of Phillips Pharmatec.

     Management believes that the Company has sufficient capital
resources and commitments to fund anticipated operations in 1999. 
The acquisition of Phillips Pharmatec has improved the Company's
financial status. Phillips basically funds itself through
operations and  management estimates that its current level of
operations require approximately $50,000 in additional operating
capital per month in cash based upon average monthly cash flows
during the fourth quarter of 1998.  Unless the Company is able to
substantially increase current sales of its products during early
1999, or is able to raise funds from the sale of corporate debt or
equity securities, or complete its intended mergers or
acquisitions, the Company may encounter a cash flow shortage during
the second quarter of 1999.  The Company intends to seek additional
equity or debt capital through private sources and/or a public
offering, although there can be no assurance that the Company could
successfully complete any such offering.  As of the date hereof,
the Company has not entered into any firm agreements or
understandings for the raising of capital from public or private
sources. The Company has signed a letter of intent to acquire a
marketing company which has substantial positive cash flow.  If
sales revenue from the Company's products under development are not
adequate to fund the Company's future operations and it is unable
to secure financing from the sales of its securities or from
private lenders, the Company could experience additional losses
which could curtail the Company's operations or postpone product
development and expansion plans.  The continuation as a going
concern is directly dependent upon the success of its future
operations and ability to obtain additional financing.

     In the opinion of management, inflation has not had a material
effect on the operations of the Company.





Year 2000

     Year 2000 issues may arise if computer programs have been
written using two digits (rather than four) to define the
applicable year.  In such case, programs that have time-sensitive
logic may recognize a date using "00" as the year 1900 rather than
the year 2000, which could result in miscalculations or system
failures.

     The Company has completed its assessment of the Year 2000
issue and believes that any costs of addressing the issue will not
have a material adverse impact on the Company's financial position. 
The Company believes that its existing accounting computer systems
and software will not need to be upgraded to mitigate the Year 2000
issues.  The Company has not incurred any costs associated with its
assessment of the Year 2000 problem.  In the event that Year 2000
issues impact the Company's accounting operations and other
operations aided by its computer system, the Company believes, as
part of a contingency plan, that it has adequate personnel to
perform those functions manually until such time that any Year 2000
issues are resolved.

     The Company believes that third parties with whom it has
material relationships will not materially be affected by the Year
2000 issues as those third parties are relatively small entities
which do not rely heavily on information technology ("IT") systems
and non-IT systems for their operations.  However, if the Company
and third parties upon which it relies are unable to address any
Year 2000 issues in a timely manner, it could result in a material
financial risk to the Company, including loss of revenue and
substantial unanticipated costs.  Accordingly, the Company plans to
devote all resources required to resolve any significant Year 2000
issues in a timely manner.

Risk Factors and Cautionary Statements

     Forward-looking statements in this report are made pursuant to
the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995.  The Company wishes to advise readers that
actual results may differ substantially from such forward-looking
statements.  Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed in or implied by the statements, including,
but not limited to, the following: the ability of the Company to
secure additional financing, the development of the Company's
existing and new products, the potential market for the Company's
products, competitive factors, and other risks detailed in the
Company's periodic report filings with the Securities and Exchange
Commission. 

Recent Accounting Pronouncements

     The Financial Accounting Standards Board ("FASB") has issued
Statement of Financial Accounting Standard ("SFAS") No. 128,
"Earnings Per Share" and Statement of Financial Accounting
Standards No. 129 "Disclosures of Information About an Entity's
Capital Structure."  SFAS No. 128 provides a different method of
calculating earnings per share than is currently used in accordance
with Accounting Principles Board Opinion No. 15, "Earnings Per
Share." SFAS No. 128 provides for the calculation of "Basic" and
"Dilutive" earnings per share.  Basic earnings per share includes
no dilution and is computed by dividing income available to common
shareholders by the weighted average number of common shares
outstanding for the period.  Diluted earnings per share reflects
the potential dilution of securities that could share in the
earnings of an entity, similar to fully diluted earnings per share. 
SFAS No. 129 establishes standards for disclosing information about
an entity's capital structure.  SFAS No. 128 and SFAS No. 129 are
effective for financial statements issued for periods ending after
December 15, 1997.  Their implementation is not expected to have a
material effect on the financial statements.

     The FASB has also issued SFAS No. 130, "Reporting
Comprehensive Income" and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 130 establishes
standards for reporting and display of comprehensive income, its
components and accumulated balances.  Comprehensive income is
defined to include all changes in equity except those resulting
from investments by owners and distributors to owners.  Among other
disclosures, SFAS No. 130 requires that all items that are required
to be recognized under current accounting standards as components
of comprehensive income be reported in a financial statement that
displays with the same prominence as other financial statements. 
SFAS No. 131 supersedes SFAS No. 14 "Financial Reporting for
Segments of a Business Enterprise."  SFAS No. 131 establishes
standards on the way that public companies report financial
information about operating segments in annual financial statements
and requires reporting of selected information about operating
segments in interim financial statements issued to the public.  It
also establishes standards for disclosure regarding products and
services, geographic areas and major customers.  SFAS No. 131
defines operating segments as components of a company about which
separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to
allocate resources and in assessing performance.

     SFAS 130 and 131 are effective for financial statements for
periods beginning after December 15, 1997 and requires comparative
information for earlier years to be restated.  Management believes
that the implementation of the new standards will not have a
material effect on the Company's financial statements.

     The FASB has also issued SFAS No 132. "Employers' Disclosures
about Pensions and other Postretirement Benefits," which
standardizes the disclosure requirements for pensions and other
Postretirement benefits and requires additional information on
changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis. SFAS No. 132 is effective
for years beginning after December 15, 1997 and requires
comparative information for earlier years to be restated, unless
such information is not readily available. Management believes the
adoption of this statement will have no material impact on the
Company's financial statements. 

     In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value.  Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on
the use of the derivative and whether it qualifies for hedge
accounting.  The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows.  SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999.  Management believes the adoption of this statement
will have no material impact on the Company's financial statements.

Item 7.   Financial Statements and Supplementary Data

     The Company's Consolidated Balance Sheet as of December 31,
1998 and the related Consolidated Statements of Operations,
Stockholders' Equity, and Cash Flows for the years ended December
31, 1998, and 1997 have all been examined to the extent indicated
in their report by Jones, Jensen & Company, independent Certified
Public Accountants, and have been prepared in accordance with
generally accepted accounting principals and pursuant to Regulation
S-B as promulgated by the Securities and Exchange Commission.  The
aforementioned financial statements are included herein in response
to Item 7 of this Form 10-KSB.
<PAGE>







                   INDEPENDENT AUDITORS' REPORT


The Board of Directors
Medisys Technologies, Inc. and Subsidiaries
Baton Rouge, Louisiana 

We have audited the accompanying consolidated balance sheet of
Medisys Technologies, Inc. and Subsidiaries as of December 31,
1998, and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for the years ended
December 31, 1998 and 1997.  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 audits.

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

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Medisys Technologies, Inc. and Subsidiaries as of
December 31, 1998, and the results of their operations and their
cash flows for the years ended December 31, 1998 and 1997 in
conformity with generally accepted accounting principles.

The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern.  As discussed in Note 11 to the consolidated financial
statements, the Company has incurred significant losses since
inception relating to its research and development efforts and has
had no significant operating revenues until the acquisition of
Phillips Pharmatech Labs, Inc. in December 1998, which raises doubt
about the Company's ability to continue as a going concern. 
Management's  plans in regard to these matters are also described
in Note 11.  The consolidated financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.



Jones, Jensen & Company
Salt Lake City, Utah 
March 31, 1999
<PAGE>
           MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                    Consolidated Balance Sheet


                              ASSETS

                                                               December 31,
                                                                    1998
CURRENT ASSETS
 
  Cash                                                       $     75,483 
  Accounts receivable, net (Note 1)                               294,949
  Due from related party                                           18,546   
  Inventory (Note 1)                                              432,706      
  Prepaid expenses                                                 25,658  

   Total Current Assets                                           847,342  

FIXED ASSETS

  Computers and equipment                                          72,061
  Machinery and equipment                                         293,850
  Leasehold improvements                                           65,445  
  Furniture and equipment                                          49,249    
  Vehicles                                                         19,915    
  Accumulated depreciation                                       (226,970)

   Total Fixed Assets                                             273,550 

OTHER ASSETS

  Security deposits                                                41,765
  Patent and trademark costs, net (Note 1)                        462,069    

   Total Other Assets                                             503,834  

   TOTAL ASSETS                                              $  1,624,726
<PAGE>
           MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
              Consolidated Balance Sheet (Continued)


          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                               December 31,
                                                                   1998 

CURRENT LIABILITIES

  Accounts payable                                           $    591,688  
  Accrued expenses                                                 95,819
  Customer deposits                                               116,200
  Payable - shareholders (Note 2)                                 111,817
  Notes payable, current portion (Note 8)                          46,622
  Line of credit (Note 4)                                         250,000 
  Notes payable - shareholders (Note 6)                            30,222
  Debentures payable - related parties (Note 3)                   395,000   

   Total Current Liabilities                                    1,637,368

LONG-TERM DEBT
  
  Notes payable (Note 8)                                           70,750 
  
   Total Long-Term Debt                                            70,750 

   TOTAL LIABILITIES                                            1,708,118 

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY (DEFICIT)

  Common stock: 100,000,000 shares 
   authorized of $0.0005 par value, 
   34,009,757 shares issued and outstanding                        17,004
  Additional paid-in capital                                    8,122,813     
  Stock subscriptions receivable (Note 5)                        (175,000)
  Accumulated deficit                                          (8,048,209)

   Total Stockholders' Equity (Deficit)                           (83,392)
  
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)      $  1,624,726
<PAGE>
              MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                 Consolidated Statements of Operations


                                                     For the Years Ended 
                                                          December 31, 
                                                      1998           1997

REVENUES                                         $    26,846    $    97,634

OPERATING EXPENSES

  Cost of product sold                                 5,396         29,797
  Product research and development                   382,318        654,629
  Depreciation and amortization                       14,322         27,898
  General and administrative                         564,543      1,117,077 

     Total Operating Expenses                        966,579      1,829,401

OPERATING LOSS                                      (939,733)    (1,731,767)

OTHER INCOME (EXPENSES)

  Gain on sale of asset                                1,475         13,042
  Interest income                                       -             5,851 
  Interest expense                                  (312,213)      (379,142)
  Bad debt expense                                    (2,030)          (673)

     Total Other Income (Expenses)                  (312,768)      (360,922)

LOSS BEFORE INCOME TAXES                          (1,252,501)     (2,092,689)

INCOME TAXES                                            -               -  

NET LOSS                                          (1,252,501)     (2,092,689)

OTHER COMPREHENSIVE INCOME                              -               -     

NET COMPREHENSIVE LOSS                          $ (1,252,501)   $ (2,092,689)

BASIC LOSS PER SHARE OF COMMON STOCK (Note 1)   $      (0.09)   $      (0.17)
                                        
FULLY DILUTED LOSS PER SHARE (Note 1)           $      (0.06)   $      (0.13)
<PAGE>
              MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
       Consolidated Statements of Stockholders' Equity (Deficit)

                                             Additional    Stock    Common Stock
                                                Paid-In Subscription Accumulated
                              Shares   Amount   Capital Receivable    Deficit

Balance, December 31, 1996  12,337,940 $6,167 $5,429,958 $(175,000) $(4,703,019)

Issuance of common stock for 
 cash at an average price 
 of $1.27 per share            130,000     65    164,935      -            -

Stock offering costs              -      -       (85,420)     -            -

Issuance of common stock in
 satisfaction of note payable 
 at $0.78 per share              8,572      4      6,718      -            -

Issuance of common stock for
 consulting and professional
 services rendered at an average
 price of $1.33 per share      644,298    324    856,911      -            - 

Net loss for the year ended
 December 31, 1997                -      -          -         -      (2,092,689)
                                 
Balance, December 31, 1997  13,120,810  6,560  6,373,102  (175,000)  (6,795,708)

Common stock issued to 
 acquire Phillips Pharmatech 
 Labs, Inc. (Note 1)        15,602,147  7,801     25,687      -            -

Common stock issued in 
 satisfaction of accrued 
 wages and accounts 
 payables                    2,448,767  1,224    978,284      -            - 

Common stock issued for 
 services rendered             881,255    441    307,843      -            - 

Common stock issued for 
 cash at $0.25 per share       546,666    273    169,727      -            - 

Common stock issued for 
 interest expense              760,112    380    268,495      -            - 

Additional common stock 
 issued for cash received 
 in prior year                 650,000    325       (325)     -            - 

Net loss for the year ended
 December 31, 1998                -      -          -         -      (1,252,501)

Balance, December 31, 1998 34,009,757 $17,004 $8,122,813 $(175,000) $(8,048,209)
<PAGE>
           MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
              Consolidated Statements of Cash Flows

                                                       For the Years Ended 
                                                           December 31, 
                                                       1998            1997 
CASH FLOWS FROM OPERATING ACTIVITIES

  Net loss                                       $ (1,252,501)   $ (2,092,689)
  Adjustments to reconcile net income to net cash
   provided (used) by operating activities:
   Common stock issued for services and interest      577,159         857,235
   Depreciation and amortization                       14,322          27,898
   Bad debt expense                                     2,030             648
  Changes in operating assets and liabilities:
   (Increase) decrease in accounts receivable           7,139         (11,653)
   (Increase) decrease in due from related party       (2,857)           -  
   (Increase) decrease in inventory                    15,719         (12,433)
   (Increase) decrease in prepaid expenses                172         (14,503)
   (Increase) decrease in deposits                      3,165            -   
   (Increase) decrease in other assets                  2,561          (2,250)
   Increase (decrease) in accounts payable            (43,684)        115,243
   Increase (decrease) in accrued expenses            445,084         255,651
   
    Net Cash (Used) by Operating Activities          (231,691)       (876,853)

CASH FLOWS FROM INVESTING ACTIVITIES
    
  Cash received in purchase of subsidiary              50,461            -
  Increase in patent costs                            (65,822)       (101,831)
  Purchase of fixed assets                               -            (10,853)
  Disposal of fixed assets                             10,010          11,166

    Net Cash (Used) by Investing Activities            (5,351)       (101,518)
                                 
CASH FLOWS FROM FINANCING ACTIVITIES

  Payments of stock offering costs                       -            (85,420)
  Payments on contracts payable                          -            (20,577)
  Borrowings from stockholders                          2,625           3,100
  Payments on shareholder loans                        (4,278)           -   
  Payment on notes payable                               -             (4,158)
  Issuance of common stock                            170,000         165,000
  Proceeds from debentures - related parties          142,000         253,000 

    Net Cash Provided by Financing Activities    $    310,347    $    310,945
<PAGE>
           MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
        Consolidated Statements of Cash Flows (Continued)

                                                       For the Years Ended
                                                           December 31, 
                                                       1998            1997  

  NET INCREASE (DECREASE) CASH AND      
   CASH EQUIVALENTS                              $     73,305     $  (667,426)

  CASH AND CASH EQUIVALENTS AT 
   BEGINNING OF YEAR                                    2,178         669,604

  CASH AND CASH EQUIVALENTS AT END 
   OF YEAR                                       $     75,483     $     2,178

  SUPPLEMENTAL DISCLOSURES OF CASH 
   FLOW INFORMATION

CASH PAID FOR

  Income taxes                                   $       -        $      -  
  Interest                                       $        222     $    13,718

NON-CASH FINANCING ACTIVITIES

  Stock issued for services and interest expense  $   577,159     $   857,235
  Stock issued in payment of accrued expenses and
   accounts payable                               $   979,508     $      - 
  
<PAGE>
 
          MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                    December 31, 1998 and 1997


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       a. Business Organization

       The Company was incorporated on March 17, 1983 under the
       laws of the State of Utah.  The Company subsequently ceased
       its original business activity in 1985 and thereafter
       primarily investigated and sought new business
       opportunities and was reclassified as a development stage
       company until December of 1998 when it acquired Phillips
       Pharmatech Labs, Inc.

       The Company has a wholly-owned subsidiary Medisys
       Technologies, Inc. (Medisys) which was incorporated in the
       State of Louisiana, on January 21, 1991,  for the purpose
       of developing a device for the assistance of childbirth
       under a patent which was applied for in May 1990 and
       granted on June 15, 1992.

       Medisys has been classified as a development stage company
       since all activities to date have been related to the
       development of a childbirth assistance device as well as
       other medical devices.

       On August 6, 1992 the Company acquired all of the
       outstanding common stock of Medisys. For accounting
       purposes the acquisition has been treated as a
       recapitalization of Medisys with Medisys as the acquirer.

       Phillips Pharmatech Labs, Inc. (Phillips) was organized
       under the laws of the State of Florida on December 13,
       1994.  It was incorporated for the purpose of engaging in
       the manufacturing and bottling of health supplements and
       other health related and natural products.

       On December 22, 1998, the Company completed an acquisition
       and share exchange agreement whereby Medisys issued
       15,602,147 shares of its common stock in exchange for all
       of the outstanding common stock of Phillips.  The shares
       issued by Medisys represented 50% of the total shares of
       the Company's common stock issued and outstanding
       immediately following the acquisition.  The acquisition is
       accounted for as a purchase of Phillips.
              
       b. Fixed Assets

       Fixed assets are stated at cost less accumulated
       depreciation.  Expenditures for small tools, ordinary
       maintenance and repairs are charged to operations as
       incurred.  Major additions and improvements are
       capitalized.  Depreciation is computed using the straight-
       line method over estimated useful lives as follows:

             Leasehold improvements                     39 years
             Furniture and fixtures                      5 years
             Computers and equipment                     5 years
             Machinery and equipment                5 to 7 years
             Vehicles                                    5 years

       Depreciation expense for the year ended December 31, 1998 was $13,034.
<PAGE>
           MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                    December 31, 1998 and 1997


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

       c. Patent and Trademark Costs

       The capitalized costs of obtaining patents consists of
       legal fees and associated filing costs.  These patent costs
       will be amortized over the shorter of their legal or useful
       lives.  The Company has numerous patents in various stages
       of development and the application process.  Several
       patents have been granted but are being developed further
       in a continuation-in-part (CIP) status until the
       development of a commercial product is complete, the
       related product has received FDA (Food and Drug
       Administration) approval and is in a marketable condition
       ready for sale.  Once patents have been granted, FDA
       approval obtained, and sales commenced, no further costs
       associated with the patent are capitalized.  As of December
       31, 1998, the Company did have one patented product for
       which sales have commenced with the related costs being
       amortized over the estimated useful life (17  years) of the
       patent.  Management has determined that estimated future
       cash flows from this product will be sufficient to recover
       the capitalized basis of the costs associated with that
       patent.  The other patents for which costs have been
       capitalized are considered to have continued viability
       according to management of the Company with no significant
       events occurring which would impair the value of the
       capitalized costs associated with the individual patents.

       The Company has also incurred costs associated with
       obtaining trademarks related to the Company's existing and
       future products.  Those costs have been capitalized and
       will be amortized over the estimated useful life of the
       trademarks once approval has been received and usage
       begins. These trademarks are considered to have continued
       viability according to management with no significant
       events occurring which would impair the value of the
       capitalized costs associated with the trademarks.

       Patent and trademark costs incurred are as follows:
                                                              December 31,
                                                                   1998       

             Patents                                          $   454,079
             Trademarks                                            11,961

             Subtotal                                             466,040
             Less accumulated amortization                         (3,971)  

             Total                                            $   462,069

       Amortization expense for the year ended December 31, 1998 was $1,288.

       d.  Accounting Method

       The Company's financial statements are prepared using the
       accrual method of accounting.  The Company has elected a
       December 31 year end.
<PAGE>
           MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                    December 31, 1998 and 1997


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

       e. Cash and Cash Equivalents

       For purposes of financial statement presentation, the
       Company considers all highly liquid investments with a
       maturity of three months or less, from the date of
       purchase, to be cash equivalents.

       f. Income Taxes

       No provision for federal income taxes has been made at
       December 31, 1998 due to accumulated operating losses.  The
       Company has accumulated approximately $8,048,209 of net
       operating losses as of December 31, 1998, which may be used
       to reduce taxable income and income taxes in future years. 
       The use of these losses to reduce future income taxes will
       depend on the generation of sufficient taxable income prior
       to the expiration of the net operating loss carryforwards. 
       The carryforwards expire as follows:

                        Year of                                 Net Operating
                       Expiration                                     Loss 

                        2006                                   $        8,667
                        2007                                          269,551
                        2008                                          802,338
                        2009                                          960,966
                        2010                                        1,162,772
                        2011                                        1,498,725
                        2012                                        2,092,689
                        2013                                        1,252,501
       
                                                                $   8,048,209
       
       In the event of certain changes in control of the Company,
       there will be an annual limitation on the amount of net
       operating loss carryforwards which can be used.  The
       potential tax benefits of the net operating loss
       carryforwards have been offset by a valuation allowance of
       the same amount.

       g. Principles of Consolidation

       The consolidated financial statements include the accounts
       of Medisys Technologies, Inc. (parent), Medisys
       Technologies, Inc. (Medisys) a wholly owned subsidiary and
       Phillips Pharmatech, Inc. (Phillips) a wholly-owned
       subsidiary.  All significant intercompany accounts and
       transactions have been eliminated in consolidation.

       h.  Revenue Recognition

       Revenue is recognized upon shipment of goods to the customer.
<PAGE>
           MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARY
          Notes to the Consolidated Financial Statements
                    December 31, 1998 and 1997


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

       i.  Inventory

       Inventory is carried at the lower of cost or market value
       using the first-in, first-out method.  Inventory consisted
       of the following at December 31, 1998:

                                                       Amount     

                 Raw materials                     $   400,185
                 Work-in-process                        27,236
                 Finished goods                          5,285

                      Total                        $   432,706
       
       j.  Basic and Fully Diluted Loss Per Share

       The basic loss per share of common stock is based on the
       weighted average number of shares issued and outstanding
       during the period of the consolidated financial statements. 
       Shares to be issued from warrants and options and the
       conversion of debentures have been included in the
       computation of the fully diluted loss per share.

       k.  Advertising

       The Company follows the policy of charging the costs of
       advertising to expense as incurred.

       l. Credit Risks
       
       The Company maintains its cash accounts primarily in two
       banks in Louisiana and Florida.  The Federal Deposit
       Insurance Corporation insures accounts to $100,000.  The
       Company's accounts occasionally exceed the insured amount.

       m. 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.

       n.  Accounts Receivable

       Accounts receivable are shown net of the allowance for
       doubtful accounts of $153,199 at December 31, 1998.
<PAGE>
           MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                    December 31, 1998 and 1997


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

       o.  Change in Accounting Principle

       The Company adopted Statement of Financial Accounting
       Standards (SFAS) No. 128, "Earnings Per Share" during the
       year ended December 31, 1998.  In accordance with SFAS No.
       128, diluted earnings per share must be calculated when an
       entity has convertible securities, warrants, options, and
       other securities that represent potential common shares. 
       The purpose of calculating diluted earnings (loss) per
       share is to show (on a pro forma basis) per share earnings
       or losses assuming the exercise or conversion of all
       securities that are exercisable or convertible into common
       stock and that would either dilute or not affect basic EPS. 
       As permitted by SFAS No. 128, the Company has retroactively
       applied the provisions of this new standard by showing the
       fully diluted loss per common share for all years
       presented.

       The Company also adopted Statement of Financial Accounting
       Standards (SFAS) No. 130, "Reporting Comprehensive Income"
       during the year ended December 31, 1998.  SFAS No. 130
       established standards for reporting and display of
       comprehensive income (loss) and its components (revenues,
       expenses, gains and losses) in a full set of general
       purpose financial statements.  This statement requires that
       an enterprise classify items of other comprehensive income
       by their nature in a financial statement and display the
       accumulated balance of other comprehensive income
       separately from retained earnings and additional paid-in
       capital in the equity section of a balance sheet.  SFAS No.
       130 is effective for fiscal years beginning after December
       15, 1997.  The Company has retroactively applied the
       provisions of this new standard by showing the other
       comprehensive income (loss) for all years presented.

NOTE 2 - PAYABLE - SHAREHOLDERS

       From time to time the Company receives advances from
       certain shareholders for the purpose of providing funds for
       the Company's operating expenditures.  The Company has also
       advanced funds to shareholders.  The outstanding balances
       of these advances fluctuates during the year and do not
       have specific repayment terms although the advances are
       generally considered to be due or payable on demand. 
       Accordingly, the related receivable or payable has been
       reflected as current in the accompanying consolidated
       financial statements.  At December 31, 1998, the balance
       payable to shareholders totaled $111,817.

NOTE 3 - DEBENTURES PAYABLE - RELATED PARTIES

       The Company also has notes payable (debentures) to various
       shareholders in the aggregate of $395,000 at December 31,
       1998.  The notes bear interest at 10% per annum, are
       unsecured and are due in 1999.  The notes payable have
       accrued interest of $32,650 at December 31, 1998.  Interest
       expense to shareholders was $32,650 during the year ended
       December 31, 1998.
<PAGE>
          MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                    December 31, 1998 and 1997


NOTE 4 - LINE OF CREDIT

       An analysis of the line of credit with Nations Bank as of December 31, 
       1998 is shown below:

                         Available      
                         Line of                            Debt         
                         Credit                           Outstanding    

                      $    250,000                     $    250,000

       Borrowings under the line of credit are guaranteed by the
       Company's inventory and accounts receivable.  Interest
       accrues at the bank's prime rate plus 2.75% (9.50% at
       December 31, 1998).

NOTE 5 - STOCK SUBSCRIPTION RECEIVABLE

       During 1996, the Company issued 100,000 shares of
       restricted common stock upon the exercise of common stock
       warrants representing the same number of shares, having an
       exercise price of $1.75 per share.  Payment for the common
       stock was made with a non-interest bearing four year
       promissory note.  The related shares are being held by the
       Company as collateral for the promissory note.  The shares
       have been reflected as issued and outstanding with a
       corresponding $175,000 stock subscription receivable
       reflected as a reduction of stockholders' equity.

NOTE 6 - NOTES PAYABLE - SHAREHOLDERS

       Notes payable - shareholders consisted of the following: 
                                                                    December 31,
                                                                        1998 
       Note payable to Richard L. Apel, unsecured, dated November 2, 
       1993 at 8%; principal and interest delinquent since August 
       18, 1994.                                                     $  12,500

        Note payable to Cynthia F. Vatz, unsecured, dated October 
        19, 1993 at 8%; principal and interest delinquent since 
        August 18, 1994.                                                12,500

       Note payable to Abraham B. and Edele Eckstein, unsecured,
        dated March 1, 1995 which replaces an October 6, 1993 note 
        at 8%; monthly payments of $500 commencing March 1, 1995 
        with a single balloon payment for the remaining balance plus 
        interest delinquent since March 1, 1996.                         5,222
                                                     
            Total                                                       30,222
       
            Less current portion                                       (30,222)

            Total long-term portion                                  $    - 

<PAGE>
          MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                    December 31, 1998 and 1997


NOTE 6 - NOTES PAYABLE - SHAREHOLDERS (Continued)

       These notes payable are technically in default.  None of
       the related note holders have demanded repayment and the
       Company is in the process of negotiating repayment terms. 
       The Company continues to pay the $500 monthly installments
       on the note payable to Mr. and Mrs. Eckstein and continues
       to accrue interest on these and all outstanding notes
       payable.  8,572 shares of common stock were issued in
       partial payment of the Eckstein note in 1997.

NOTE 7 - COMMON STOCK 

       During 1998, the Company issued 2,448,767 shares of its
       common stock in satisfaction for accrued wages and accounts
       payable of $979,508.  The Company issued 457,056 shares of
       its common stock for services.  The services were valued at
       the trading price of the common stock on the date the
       shares were issued.  The Company issued 100,000 shares of
       its common stock for cash at $0.25 per share.  The Company
       issued an additional 650,000 shares of its common stock to
       a shareholder to prevent dilution of the shares previously
       issued to the shareholder.

NOTE 8 - NOTES PAYABLE

       Notes payable at December 31, 1998 consisted of the following:

       Note payable to Nations Bank, collateralized by a
        vehicle of the Company, interest at 8.99%, principal
        and interest payments of $303 are due monthly,
        matures on September 11, 2000.                          $   5,865

       Note payable to Nations Bank, collateralized by
        equipment of the Company, interest at 12.5%, principal
        and interest payments of $450 are due monthly,
        matures on November 4, 2002.                               16,518

       Note payable to Nations Bank, collateralized by certain
        assets of the Company, interest at the bank's prime rate
        plus 2.25%, interest payments due monthly along with
        principal payments of $3,333, matures on June 12, 2001.    94,989

            Total notes payable                                   117,372
            
            Less: current portion                                 (46,622)
       
            Long-term notes payable                             $  70,750

<PAGE>
          MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                    December 31, 1998 and 1997


NOTE 8 - NOTES PAYABLE (Continued)

       Maturities of notes payable are as follows:

             Year Ending
            December 31,                                           Amount    

                 1999                                          $   46,622
                 2000                                              46,608
                 2001                                              19,490
                 2002                                               4,652
                 2003                                                -     
                 2004 and thereafter                                 -     

                            Total                              $  117,372

NOTE 9 - COMMITMENTS AND CONTINGENCIES

       During 1996, the Company adopted a Simplified Employee
       Pension (SEP) Plan.  The Plan enables the Company to make
       an annual discretionary contribution to be allocated to
       employees on a prorata basis according to their
       compensation for the year.  In addition, employees have the
       option to make voluntary Retirement Savings Contributions
       in amounts not to exceed 15% of their annual compensation. 
       The Company elected to not make a contribution for the year
       ended December 31, 1998.  The Company has no other bonus,
       profit sharing or deferred compensation plans for the
       benefit of its employees, officers or directors except if
       discussed elsewhere.

       The Company currently has employment contracts with Edward
       P. Sutherland and Kerry Frey whereby they each will receive
       salaries of $12,500 per month.  The Company also entered
       into an independent consulting contract with Gary Alexander
       pursuant to which he will receive $5,000 per month.

       Any additional compensation to these employees is to be in
       the form of an annual cash bonus or the granting of stock
       and/or stock options at the discretion of the Board of
       Directors not to exceed 50% of their annual compensation.

       On March 29, 1995 the Company entered into a contract with
       a medical institution to perform a clinical study of the
       Company's SofCepts product.  The contract required that
       payments totaling $247,262 be made by the Company to the
       medical institution for testing services.  During 1995, the
       contract was amended with additional payments to be made
       based on services to be performed.  The contract was later
       terminated before its completion.  The Company had made
       payments of $265,465 for services performed pursuant to the
       contract.  The medical institution has claimed an unpaid
       balance of $133,326 which the Company disputes.  The
       Company contends that the services stipulated by the terms
       of the contract were not performed by the medical
       institution and that no additional amounts are due and
       payable related to this contract.  No amount has been
       accrued in the accompanying consolidated financial
       statements related to this transaction. The Company intends
       to vigorously contest any further claims with respect to
       this contract and believes that the probability that the
       Company will be required to make additional payments is
       remote. 
<PAGE>

          MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                    December 31, 1998 and 1997


NOTE 9 - COMMITMENTS AND CONTINGENCIES (Continued)

       Phillips currently leases its office on a month-to-month
       basis at $3,784 per month.  Subsequent to year end,
       Phillips purchased the office building and as a result, the
       lease was terminated (see Note 13).  Phillips also leases
       warehouse space at a rate of $3,766 per month though
       January 2000.

       Medisys entered into a lease agreement with a related party
       for its office space located in Louisiana.  The lease is
       for a period of one year at a rate of $835 per month,
       expiring in September 1999.

NOTE 10 - COMMON STOCK WARRANTS

       As of December 31, 1998, the Company had outstanding
       warrants for the issuance of common stock as follows:

       Number of       Date          Expiration       Exercise       Estimated 
        Shares        Issued            Date            Price         Proceeds

       516,000         1995           1999-2005  $ 1.1250 - $2.6250  $ 1,030,500
     2,718,368         1996           1999-2001  $ 1.0000 - $4.2500    6,552,489
       977,737         1997           2000-2002  $ 0.6875 - $1.8750    1,188,211
     5,582,867         1998           1999-2005  $ 0.2500 - $4.2500   10,273,860

     9,794,972                                                       $19,045,060

       762,000 common stock warrants were issued to current and
       former officers, directors and affiliates of the Company
       for incurring personal liability for the Company's
       indebtedness.  The exercise price of these warrants was
       equal to the fair market value of the underlying common
       stock. 

       Of the outstanding common stock warrants, 212,500 were
       issued to holders of the Company's notes payable as
       collateral and also in return for the extension of
       repayment terms.  In November 1995, 300,000 common stock
       warrants were issued to the Company's patent attorney for
       deferring payment of legal fees.  The exercise price of all
       of these warrants was equal to the fair market value of the
       underlying common stock on the date the common stock
       warrants were granted.

       261,000 common stock warrants have been issued in return
       for directors of the Company forfeiting their claim to
       director fees from prior periods.  In addition, officers,
       directors and affiliates have been issued a total of
       1,172,597 common stock warrants in exchange for common
       stock which they surrendered and were issued to an
       unrelated entity for their assistance in raising equity
       capital for the Company.  In both cases, the exercise price
       of the warrants was equal to the fair market value of the
       related common stock on the date the common stock warrants
       were granted.
<PAGE>
          MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                    December 31, 1998 and 1997


NOTE 10 - COMMON STOCK WARRANTS (Continued)

       During the period August through December 1997, the Company
       issued a total of 23,102 common stock warrants having
       exercise prices between $1.00 and $3.50 per share at a time
       when the fair market price of the underlying common stock
       was $2.75 to $3.50 per share.  The aggregate difference
       between the exercise price and fair market value of the
       common stock totaling $33,454 has been reflected as
       professional services with a corresponding charge to
       additional paid-in-capital.

       All common stock warrants issued in 1998 and 1997 had
       exercise prices at or above the trading price of the
       shares.

       During 1998, the Company conducted a private placement of
       its common stock, wherein the purchaser of one share of the
       Company's common stock also received a warrant to purchase
       one additional share of common stock at $1.25 per share. 
       The Company issued 912,333 common stock warrants pursuant
       to this private placement.  The Company also issued
       4,670,534 common stock warrants to the stockholders of
       Philips pursuant to the acquisition agreement redeemable at
       various prices depending on the expiration dates of the
       warrants.

NOTE 11 - GOING CONCERN

       The Company's consolidated financial statements have been
       prepared using generally accepted accounting principles
       applicable to a going concern which contemplates the
       realization of assets and liquidation of liabilities in the
       normal course of business.  The Company has incurred
       significant losses since inception, relating to its
       research and development efforts and has had no significant
       operating revenues until the acquisition of Phillips in
       December 1998.  In prior periods, the Company has had
       substantial working capital and stockholders' equity
       deficits.  In 1998, the Company was able to raise working
       capital through the private placement of its common stock. 
       However, cash flow projections show that the Company's
       reserves are not adequate to cover its needs for the
       expansion of its research and development projects in 1999. 
       It is unlikely that the Company can complete these research
       and development projects without additional funds.  In the
       past, the Company has been able to generate sufficient
       capital to cover its operating needs and plans to raise
       additional capital through a private placement or a public
       offering of its common stock or through additional mergers
       and acquisitions.  The Company also expects to generate
       additional revenue from increased product sales including
       the products of Phillips.

NOTE 12 - RELATED PARTY TRANSACTIONS

       The Company has incurred $365,424 of interest expense to
       shareholders in the year ended December 31, 1997.  This
       balance is comprised of the issuance of 407,226 shares of
       common stock valued at $356,323 in exchange for not calling
       the notes payable due and accrued interest payable of
       $9,101.  (See also Notes 2, 3 and 7)
<PAGE>
           MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                    December 31, 1998 and 1997


NOTE 13 - SUBSEQUENT EVENTS

       a. Building Purchase

       In February 1999, Phillips purchased the office building it
       occupies in Largo, Florida. This building was purchased for
       a price of $399,000.  A mortgage of $299,250 was taken out
       with Nations Bank in order to finance the purchase.

       b. Debenture Conversion

       In February 1999, the Company converted the debentures due
       in January 1999 to common stock.  The Company issued
       460,000 shares of its common stock in payment of $115,000
       of debt.  The shares were issued on the basis of four
       shares for each dollar of debt.

NOTE 14 - CONSOLIDATED PROFORMA STATEMENTS OF OPERATIONS

       The historical information contained herein has been
       consolidated on a proforma basis.  The purchase of Phillips
       on December 22, 1998 is described in Note 1.  The purchase
       has been presented as though it were effective January 1,
       1998 and 1997.  All significant accounting policies for
       Phillips are the same as the Company's as defined in Note 1.

                                               For the Year Ended
                                                December 31, 1998   
                                                          Proforma   Proforma 
                                     Medisys    Phillips Adjustments Combined

Revenues                         $    26,846  $ 2,777,766  $   -    $ 2,804,612
Cost of products sold                  5,396    1,949,919      -      1,955,315

Gross Margin                          21,450      827,847      -        849,297

Product research and development     382,318         -         -        382,318
Depreciation and amortization         14,322       66,224      -         80,546
General and administrative           564,543      725,845      -      1,290,388

     Total Operating Expenses        961,183      792,069      -      1,753,252

          Operating Loss            (939,733)      35,778      -       (903,955)

Gain on sale of asset                  1,475         -         -          1,475
Interest expense                    (312,213)     (44,251)     -       (356,464)
Bad debt expense                      (2,030)      (4,936)     -         (6,966)

     Total Other Income (Expense)   (312,768)     (49,187)     -       (361,955)

          Net Loss               $(1,252,501)   $ (13,409) $   -    $(1,265,910)

<PAGE>
          MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                    December 31, 1998 and 1997

NOTE 14 - CONSOLIDATED PROFORMA STATEMENTS OF OPERATIONS (Continued)

                                               For the Year Ended 
                                               December 31, 1997  
                                                          Proforma   Proforma 
                                   Medisys      Phillips Adjustments Combined 

Revenues                         $   97,634    $3,621,413  $   -    $ 3,719,047
Cost of products sold                29,797     2,701,070      -      2,730,867

Gross Margin                         67,837       920,343      -        988,180

Product research and development    654,629          -         -        654,629
Depreciation and amortization        27,898        52,899      -         80,797
General and administrative        1,117,077       832,942      -      1,950,019

     Total Operating Expenses     1,799,604       885,841      -      2,685,445

          Operating Loss         (1,731,767)       34,502      -     (1,697,265)

Gain on sale of asset                13,042          -         -         13,042
Interest income                       5,851          -         -          5,851
Interest expense                   (379,142)      (40,138)     -       (419,280)
Bad debt expense                       (673)      (46,152)     -        (46,825)

     Total Other Income (Expense)  (360,922)      (86,290)     -       (447,212)

          Net Loss              $(2,092,689)   $  (51,788)  $  -    $(2,144,477)
<PAGE>
Item 8.  Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure

    There have been no changes in or disagreements with
accountants.

                             PART III

Item 9.  Directors and Executive Officers of the Registrant

    The Executive Officers and Directors of the Company are as
follows:

Edward P. Sutherland                52    Chairman, Chief Executive Officer
                                          and Director
Kerry M. Frey                       53    President, Chief Operating
                                          Officer and Director
Brett Phillips                      38    President of Phillips Division
                                          and Director
William David Kiesel                54    Director
Dr. Robert L. diBenedetto           69    Medical Director and Director
Gary E. Alexander                   54    Treasurer, Chief Technology
                                          Officer and Director
Dr. Timothy Andrus                  49    Director
Carl Anderson                       58    Director
Bill Morris                         51    Director

    All Directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and
qualified.  The Executive Committee of the Board of Directors, to
the extent permitted under Utah law, exercises all of the power and
authority of the Board of Directors in the management of the
business and affairs of the Company between meetings of the Board
of Directors.  Each executive officers serves at the discretion of
the Board of Directors.

MANAGEMENT

    Mr. Edward P. Sutherland, Chief Executive Officer and Chairman
of the Board.  Mr. Edward P. Sutherland co-founded the Company with
Mr. Alexander in 1992 and serves as Chief Executive Officer and
Chairman of the Board.  In this role, he is instrumental in
developing strategic direction and implementing consolidation-
operating protocols.  Together with Mr. Frey he has overseen the
evolution of the Company and is focused on the administration,
financial and legal aspects of the business. 

    Mr. Sutherland was in private law practice from 1974 until he
co-founded the Company in 1992.  Mr. Sutherland has over 25 years
of business, professional and personnel management expertise in the
private and public sector including over six years of experience in
forming, developing and managing a start-up company in the medical
R&D industry.  His background includes financing, administration,
policy formulation and execution, personnel education, general
office management, bookkeeping, taxation, and interface with
governmental agencies including the FDA and the Securities and
Exchange Commission (SEC).  While practicing as an attorney, Mr.
Sutherland also developed a comprehensive background in hospital
and medical practice, and product liability litigation. Mr.
Sutherland received a Bachelor of Arts Degree from Louisiana State
University in 1968 and a Juris Doctor Degree from Louisiana State
University in 1974.

    Mr. Kerry M. Frey, President and Chief Operating Officer 

Mr. Kerry M. Frey serves as the Company's President and Chief
Operating Officer.  In this capacity, he is responsible for
developing and directing  the Company's strategic plan of expansion
through internal growth and strategic acquisitions. In addition,
Mr. Frey has recognized a niche market strategic opportunity in the
medical device industry and will employ strategic and operational
experiences learned from 25 years of professional and healthcare
management expertise to locate and acquire profitable companies. 
Mr. Frey became an Officer and a Director of the Company in November
1994. 

    Mr. Frey was associated with Johnson and Johnson for 21 years in
the development of multi-company corporate marketing programs and
services.  He was a board member of Johnson & Johnson Hospital Services
and served as Vice President of Marketing as well as Vice President of
Sales.  Mr. Frey has coordinated strategic assessment of the healthcare
market and led the development of corporate value added marketing
programs for Johnson and Johnson in the professional healthcare
marketplace.  As President of Genesys Consulting, assignments included
integrated healthcare providers such as the General Health System and
the Florida Hospital; futuristic health delivery planning with Walt
Disney Development Company and consulting for companies such as Smith
Kline Beecham.  He has also served on the boards of a medical
information systems company and a start-up minority healthcare product
distributor. Mr. Frey received a Bachelor of Arts Degree from
Southeastern Louisiana University in 1969.

    Mr. Brett Phillips, Vice President and President of Phillips
Division.  Mr. Brett Phillips co-founded Phillips Pharmatech Labs, Inc.
with Dr. William Morris and Mr. Carl Anderson in 1994 and serves a
Chief Executive Officer and President.  In this roll, he is
instrumental in developing strategic direction and implementing
manufacturing protocols.  Mr. Phillips has specific expertise in
contract manufacturing of over-the-counter pharmaceuticals that create
efficiencies leading to lower cost, higher revenue and improved
customer satisfaction.  With Mr. Phillips leadership and direction
Phillips has grown from a $54,000 investment into a company generating
$2.8 million in 1998.

    Prior to founding Phillips Pharmatech Labs, Inc., Mr. Phillips
managed Energy Factors a company that manufactures, distributes, and
markets pharmaceuticals under private label brands since 1986.  While
at Energy Factors Mr. Phillips was responsible for generating annual
sales in excess of $8.5 million.

    Mr. Phillips earned degrees in History and Business
Administration from the University of Tampa in 1984.  In addition to
his company duties Mr. Phillips is a member of the National Nutrition
and Foods Association (NNFA), has acted as a consultant to various
firms in the pharmaceutical and nutritional markets, and has testified
as an expert witness for the Food and Drug Administration.

    Mr. Gary Alexander, Chief Technical Officer and Vice President. 
Mr. Gary Alexander is the Vice President, Chief Technical Officer and
co-founder of the Company and the principle inventor of most of the
Company's patented proprietary products.  Recognizing the tremendous
opportunities in the obstetrics and sharps management fields he
invented and developed the Company's SofCepsTM and CoverTipTM products
among others.  As the inventor of the Company's patents on SofCepsTM and
CoverTipTM products, a critical aspect of Mr. Alexander's ongoing role
is the growth and management of the Company's vital patent portfolio. 

    Mr. Alexander was engaged in private law practice from 1976-1991,
specializing in medical liability matters with emphasis on obstetrics. 
In addition, he has owned and operated several businesses in building,
general contracting, and construction equipment sales.  In connection
with those businesses, he acquired the special skills and expertise in
engineering principles, design and mechanical sciences, which have led
to his inventing successes. He has advised manufacturing clients on
domestic and international business contracts, research and
development, operations, sales and mergers.  He has also served as
advisor and counsel for several financial institutions and has
interfaced with government agencies including FDA and SEC and has
represented the SBA. Mr. Alexander received his Jurist Doctor Degree
in Law from Louisiana State University in 1976

    Dr. William H. Morris, Pharmaceutical Advisor and Director. 
Dr. Morris co-founded Phillips Pharmatec Labs, Inc. along with Mr.
Phillips and Mr. Anderson in 1994 and will serve as a Pharmaceutical
Advisor and Director.  In this capacity, he is responsible for
developing, and marketing new nutritional supplements to be
manufactured by the Company.  In addition, he has been instrumental in
developing both strategic business planing and innovative  marketing
strategies  for Phillips.

    Preceding his involvement with the Company, Dr. Morris was a
pharmacist and supervisor before opening his own pharmacy in 1976. 
This successful business was sold to a leading national drug store
chain in 1989.  In addition to managing his drug store, Dr. Morris
became involved with the nutritional supplement, cosmetic,
dermatological and over-the-counter drug industry.  At this time Dr.
Morris founded National Dietary Research in 1983 to research
nutritional alternatives to health problems.  Dr, Morris has conducted
extensive research in this field and developed numerous nutritional
supplements which are in the market today.

    Dr. Morris earned a degree in Pharmacy with honors from Mercer
University in 1971.  Subsequently, he studied Pharmacology and
Metabolism at the University of Georgia graduate school.  In addition
to his Company duties Dr. Morris serves as a director on numerous
corporate boards and has been a member of the National Community
Pharmacist Association, Council for Responsible Nutrition, and the
Grocery Manufacturer's of America.



    Carl Anderson, Director.  Mr. Anderson co-founded Phillips
Pharmatec along with Mr. Phillips and Dr. Morris in 1994 and will serve
as a Director. In this capacity he carries out the duties and
responsibilities associated with a Directors position.  Additionally,
Mr. Anderson will exploit past experiences in developing effective
direct sales, wholesale distribution, pharmaceutical manufacturing, and
other entrepreneurial activities.

    Prior to his involvement with Phillips, Mr. Anderson was employed
for several years by U.S. Phosphoric Products Corporation where he was
Plant Service Laboratory supervisor. In this capacity, he was
responsible for the planning and activities of a number of chemists and
other personnel.  Mr. Anderson resigned his position in 1968 and has
subsequently been active in various business ventures including retail
and wholesale distribution and manufacture of pharmaceuticals and
nutritional supplements. Mr. Anderson earned a degree in Chemistry from
North Carolina State University.

    Dr. Robert L. diBenedetto, Director.  Dr. diBenedetto, a
co-founder of the Company, received his Doctorate of Medicine in 1952
from the Louisiana State University Medical School and served his
internship at Mercy Hospital from 1952 to 1953, and his residency in
Obstetrics and Gynecology at Charity Hospital, New Orleans, Louisiana
from 1956 to 1959.  Dr. diBenedetto has been engaged in the private
practice of Obstetrics and Gynecology from 1959 to the present and has
recently received recognition as one of the top fifty physicians in the
United States.  His hospital affiliations include Woman's Hospital
Foundation, Baton Rouge, Louisiana where he has served as Chairman of
the Board of Directors from 1984 to 1990, and he is also affiliated
with Our Lady of the Lake Hospital, Baton Rouge General Hospital and
Earl K. Long Hospital.  Dr. diBenedetto is also currently President and
CEO of the Louisiana Medical Insurance Company, a major provider of
medical malpractice insurance.  He also serves on the following
committees:  Chairman, Dialogue with Congress;  Area-wide Health
Planning;  Liaison with Organized Specialties;  Chairman, Maternal &
Child Health;  Member, Committee on Professional Liability of American
College of Obstetrics and Gynecology;   Member, Committee on Ethics of
American College of Obstetrics and Gynecology;  Past Chairman,
Louisiana Delegation to American Medical Association.  His professional
organizations include:  Chairman & Legislative Liaison, Louisiana
Section of the American College of Obstetricians and Gynecologists; 
Past Chairman, Louisiana Delegation to the American Medical
Association;  South Central OB/GYN Society;  clinical Associate
Professor of OB/GYN, L.S.U. School of Medicine - New Orleans,
Louisiana;  American Fertility Society; Treasurer, Louisiana Medical
Political Action Committee.

    William David Kiesel, Director.  Mr. Kiesel was a co-founder of
the Company.  During the past 25 years he has been actively engaged in
advising numerous start-up businesses.  During that period he has
supported more that 100 start-up companies in all aspects of their
businesses, including structuring of R&D programs, financial planning,
management, as well as, marketing and sales of their new products. 
These companies have varied in size, up to $50 million in sales, and
encompass organizations offering a wide spectrum of products, including
medical devices and pharmaceutical products.  In addition to his
current position with Medisys, he serves as the business manager of his
own 25 person patent law firm.  He has also provided to his clients
fair market and liquidation's evaluations of patents, trademarks, and
other intellectual property.

    Dr. Timothy Andrus, Director.  Dr. Andrus became a Director of
the Company in November, 1996.  He received his Doctorate of Medicine
from the Louisiana State University Medical School in New Orleans in
1975 and completed his residency in Obstetrics and Gynecology there in
1979.  He is Board Certified in Obstetrics and Gynecology and has been
in private practice for 16 years in Baton Rouge La.  Dr. Andrus served
as Associate Medical Director of Gulf South Health Plans HMO for five
years.  He was Chief of Staff of Woman's Hospital in Baton Rouge in
1991, and currently serves on the Board of Directors of Woman's
Hospital, the largest freestanding women's specialty hospital in the
United States.  Dr. Andrus received an MBA from Louisiana State
University in Baton Rouge.

Section 16(a) Beneficial Ownership Reporting Compliance

    Each of the Company's officers and directors is required to file
a Form 5, Annual Statement of Changes in Beneficial Ownership, on or
before the 45th day after the end of the fiscal year.  These reports
have been filed and submitted to the Securities and Exchange
Commission.

Compensation of Directors

    Each member of the Board of Directors is compensated as follows. 
Directors  each receive $1,000 in stock per meeting attended in person. 
The Chairman of the Board receives $1,000 in stock per month and $1,800
in stock per meeting.  The Secretary receives $600 in stock per month
and $1,400 in stock per meeting.  The committee chair person is paid
an additional $300 in stock and committee members receive $200 in stock
per meeting.  Issuance of the shares is based on the closing bid price
of the Company's shares on the last day of the month following the
meeting.   Out of town Directors are reimbursed for reasonable travel
expenses.

Changes in Control

    Control of the company changed substantially with the Acquisition
of Phillips Pharmatec as is shown in the tables below.

Item 10. Executive Compensation

    The following table sets forth all cash compensation actually
paid (and not deferred) by the Company for services rendered to the
Company for the years ended December 31, 1996,  1997, and 1998 to the
Company's Chief Executive Officer, Chief Technical Officer, and Chief
Operating Officer.  The total compensation for the remaining Executive
Officers is not reported as it did not meet the threshold for required
reporting.






                    Summary Compensation Table

Name and                                       Other              All Other
Principal                  Year      Salary        Bonus     Annual Compensation
Position

Edward P. Sutherland       1996      150,000         -0-       -0-    33,315
C.E.O.                     1997       56,621         -0-       -0-    17,930
                           1998        -0-           -0-       -0-     -0-

Gary Alexander,            1996      108,000         -0-       -0-    34,257
C.T.O.                     1997       43,771         -0-       -0-    17,865
                           1998        -0-           -0-       -0-     -0-

Kerry M. Frey,             1996      144,000         -0-       -0-    45,553
President and              1997       52,750         -0-       -0-    19,644
C.O.O.                     1998        -0-           -0-       -0-     -0-
________________________
(1)       As of December 31, 1998 the Company had accrued salaries and
          directors fees of as disclosed in Note 3 to the Consolidated
          Financial Statements contained elsewhere in this
          Form 10-KSB.  Prior to 1998, these accruals were compromised
          and deferred for the issuance of 144 restricted stock.

Employment Agreements

    The Company entered into employment agreements with Edward P.
Sutherland and Kerry Frey respectively which have expired.  The Company
is currently negotiating employment agreements with Edward P.
Sutherland, Kerry M. Frey, and Phillips Pharmatec is negotiating with
Brett Phillips.

    No salaries, wages or bonuse have been paid to any of the
officers since April 1997.  The officers have voluntarily deferred
their salaries and bonuses on a month to month basis.  In addition, the
officers subscribed to the Company's private placement debenture and
paid in to the Company a combined total of $110,000.

Item 11. Security Ownership of Certain Beneficial Owners and
         Management

    The following table sets forth information, to the best knowledge
of the Company, as of December 31, 1998, with respect to each person
known by the Company to own beneficially more than 5% of the
outstanding Common Stock, each director and all directors and officers
as a group.

Name and Address of    Number of Shares    Percentage     Number of     Average
 Beneficial Owner     Beneficially Owned  Ownership(1)  Warrants Owned Exercise 
                                                                          Price
Gary E. Alexander *         1,488,635(2)      4%           205,800       $1.61
144 Napoleon Street
Baton Rouge, LA 70802

Carl Anderson *             6,000,412(3)     17%         1,319,793        1.94
19235 US Hwy 41 N.
Lutz, FL 33549

Brett Phillips *            6,757,557(4)      9%         1,556,842        1.94
8767 115th Avenue N.
Largo, FL 33773

Robert L. diBenedetto *       961,480(5)      3%           407,000        2.64
781 Colonial Drive
Baton Rouge, La 70806

William David Kiesel *      1,669,108(6)      5%           655,166        2.42
2355 Drusilla Lane
Baton Rouge, LA 70809

Edward P. Sutherland *      1,838,211(7)      5%           243,000        1.58
144 Napoleon Street
Baton Rouge, LA 70802

Kerry Frey *                1,650,559(8)      5%            87,400        1.79
144 Napoleon Street
Baton Rouge, LA 70802

Marilyn Morris              6,757,557(9)     19%         1,556,842        1.94
2804 Smitter Road
Tampa, FL 33618

Timothy Andrus *             179,411(10)     .5%            44,982        1.14
144 Napoleon Street
Baton Rouge, LA 70802

Directors and officers
as a group (9 persons)    27,302,930(11)     68%         6,076,825        2.49

                                
*      Director       
**     Unless otherwise indicated in the footnotes below, the Company
       has been advised that each person above has sole voting power
       over the shares indicated above.

(1)    As of December 31, 1998, there were 34,009,757 shares of common
       stock outstanding, which figure does not take into consideration
       stock purchase warrants owned by certain officers, directors  and
       shareholders, entitling the holders to purchase an aggregate of
       9,794,,972 shares of common stock and which are currently
       exercisable.  Therefore, for purposes of the table above, as of
       the date hereof, 43,804,729 shares of common stock are deemed to
       be issued and outstanding in accordance with Rule 13d-3 adopted
       by the Securities and Exchange Commission under the Securities
       Exchange Act of 1934, as amended.  Percentage ownership is
       calculated separately for each person on the basis of the actual
       number of outstanding shares as of December 31, 1998 and assumes
       the exercise of stock purchase warrants held by such person (but
       not by anyone else) exercisable within sixty days. 
(2)    Includes 205,800 shares which may be acquired by Mr. Alexander
       pursuant to the exercise of stock purchase warrants exercisable
       within sixty days at the average exercise price of $1.61 per
       share.
(3)    Includes 1,319,793 shares which may be acquired by Mr. Anderson
       pursuant to the exercise of stock purchase warrants exercisable
       within sixty days at the average exercise price of $1.94 per
       share.
(4)    Includes 1,556,842 shares which may be acquired by Mr. Phillips
       pursuant to the exercise of stock purchase warrants exercisable
       within sixty days at the average exercise price of $1.94 per
       share.
(5)    Includes 407,000 shares which may be acquired by Dr. diBenedetto
       pursuant to the exercise of stock purchase warrants exercisable
       within sixty days at the average exercise price of $2.64 per
       share. 
(6)    Includes 655,166 shares which may be acquired by Mr. Kiesel
       pursuant to the exercise of stock purchase warrants exercisable
       within sixty days at the average exercise price of $2.42 per
       share, of which 300,000 warrants are held in the name of Roy,
       Kiesel & Tucker and 10,000 warrants are held in the name of Nu
       Vue Corp.
(7)    Includes 349,600 shares held in the name of Diana B. Sutherland,
       wife of Edward P. Sutherland and 243,000 shares which may be
       acquired by Mr. Sutherland pursuant to the exercise of stock
       purchase warrants exercisable within sixty days at the average
       exercise price of $1.58 per share.
(8)    Includes 87,400 shares which may be acquired by Mr. Frey pursuant
       to the exercise of stock purchase warrants exercisable within
       sixty days at the average exercise price of $1.79 per share.
(9)    Ms. Morris is the wife of Bill Morris, a director of the Company. 
       Includes 1,556,842 shares which may be acquired by Ms. Morris
       pursuant to the exercise of stock purchase warrants exercisable
       within sixty days at the average exercise price of $1.94 per
       share.  The Company has been advised that Ms. Morris has sole
       voting power over the shares indicated above and control over the
       warrants.
10)    Includes 44,982 shares which may be acquired by Dr. Andrus
       pursuant to the exercise of stock purchase warrants exercisable
       within sixty days at the average exercise price of $1.14 per
       share.
(11)   Includes 6,076,825 shares which may be acquired by the Company's
       officers and directors pursuant to the exercise of stock purchase
       warrants exercisable within sixty days at exercise prices ranging
       from $.06875 to $4.25 per share.

Item 12.  Certain Relationships and Related Transactions

     The law firm of Roy, Kiesel & Tucker has been used for patent
work.  William David Kiesel is a partner of Roy, Kiesel & Tucker and
is the Corporate Secretary and a Director of the Company.  Mr. Kiesel
does not bill the Company for his time.  However, other attorneys at
his firm do bill the Company for their time and the Company does
reimburse Roy, Kiesel & Tucker for expenses incurred on the behalf of
the Company.
<PAGE>
                             PART IV

Item 13.  Exhibits, Financial Statement Schedules, and Reports on
          Form 8-K.

     (a)  Exhibits

      *2.1     Acquisition Agreement and Plan of Reorganization.
     **2.2     Acquisition and Share Exchange Agreement
      *3.1(i)  Articles of Incorporation and all amendments thereto
      *3.2(ii) By-Laws of Registrant
      *4.1     Specimen of Common Stock Certificate
     *10.1     Lease Agreement on Registrant's principal place of
               business
      21.1     Subsidiaries
      27       Financial Data Schedule

                                           
      *   Previously filed as Exhibit to Form 10-SB. 
     **   Previously filed as Exhibit to Form S-8 filed October 15, 1998.

     (b)  On October 15, 1998, the Company filed a report on Form S-8
     reporting under Item 2 the execution of a letter of intend dated
     October 1, 1998 to acquire Phillips Pharmatec Labs, Inc.
<PAGE>
                            SIGNATURES

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

                                       MEDISYS TECHNOLOGIES, INC.



                                   BY:   /S/ Edward P. Sutherland     
                                        EDWARD P. SUTHERLAND
                                        Chairman and Chief
                                        Executive Officer
                                        DATE:       April 14, 1999

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



                                   BY: /S/  Edward P. Sutherland
                                        EDWARD P. SUTHERLAND
                                        Chairman, Chief Executive
                                        Officer and Director
                                        DATE:  April 14, 1999



                                   BY: /S/  Gary E. Alexander        
                                        GARY E. ALEXANDER
                                        Vice President, Chief
                                        Technology Officer and
                                        Director
                                        DATE:  April 14, 1999



                                   BY: /S/  Kerry M. Frey            
                                        KERRY M. FREY
                                        President, Chief Operating
                                        Officer and Director
                                        DATE:       April 14, 1999



                                   BY:  /S/  William David Kiesel        
                                        WILLIAM David KIESEL
                                        Corporate Secretary  and
                                        Director
                                        DATE:  April 14, 1999



                                   BY:  /S/ Brett Phillips           
                                        BRETT PHILLIPS
                                        Director
                                        DATE:  April 14, 1999