Leonard E. Neilson
                                 ATTORNEY AT LAW
                            8160 South Highland Drive
                                    Suite 209
                                Sandy, Utah 84093

Phone: (801) 733-0800                                        Fax: (801) 733-0808

April 16, 2001



Securities and Exchange Commission
Office of Document Control
450 Fifth Street N.W.
Washington, D.C. 20549

VIA:     EDGARLink

         Re:      Medisys Technologies, Inc.
                  File No.  0-21441
                  Form 10-KSB (for the period ended December 31, 2000)

To Whom It May Concern:

         Please find herewith transmitted by EDGARLink, the Form 10-KSB filed on
behalf of Medisys  Technologies,  Inc.,  for the fiscal year ended  December 31,
2000.

         Please direct all  correspondences  concerning  this filing and Medisys
Technologies, Inc. to this office.

                                          Yours truly,



                                          By: /s/ Leonard E. Neilson
                                          --------------------------
                                                  Leonard E. Neilson


<PAGE>

                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, 2000

[ ] 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.  $1,197.00

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. $8,127,250 (Based on price of $0.24 per share on April 10, 2001)

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 December 31, 2000
Common Stock, Par Value $0.0005                      61,154,342

DOCUMENTS INCORPORATED BY REFERENCE

Transitional Small Business Disclosure Format.  Yes [  ]  No [X]

                                       1
<PAGE>

                           MEDISYS TECHNOLOGIES, INC.

                                TABLE OF CONTENTS

                                     PART I

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

Item 2.  Properties.......................................................... 12

Item 3.  Legal Proceedings................................................... 12

Item 4.  Submission of Matters to a Vote of Security
          Holders............................................................ 14

                                     PART II

Item 5.  Market for Registrant's Common Equity and
          Related Stockholder Matters........................................ 14

Item 6.  Management's Discussion and Analysis of
          Financial Condition and Results of Operations...................... 15

Item 7.  Financial Statements and Supplementary Data......................... 17

Item 8.  Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure............................. 43

                                    PART III

Item 9.  Directors and Executive Officers of the
          Registrant......................................................... 43

Item 10. Executive Compensation.............................................. 46

Item 11. Security Ownership of Certain Beneficial
          Officers and Management............................................ 47

Item 12. Certain Relationships and Related Transactions...................... 49

                                     PART IV

Item 13. Exhibits, Financial Statement Schedules, and
          Reports on Form 8-K................................................ 49

         Signatures.......................................................... 51

                                       2
<PAGE>

                                     PART I

Item 1.  Business

General Developments

         Medisys  Technologies,  Inc.  ("Company")  is a development  stage Utah
corporation focused on the  commercialization of CoverTip(TM)  hypodermic safety
syringe and other sharps related medical devices.

         The  Company  owns a total  of 20 U.S.  and  foreign  patents  covering
medical safety devices and other products that offer proprietary, high-potential
technology,  and has  additional  patent  applications  pending  for its medical
devices  in both the U.S.  and  overseas.  To date,  the  Company  has  invested
approximately  $16,000,000 in the  development of its  proprietary  products and
patented intellectual property.

         To take  advantage of the new market  opportunity  created by State and
Federal safety regulatory guidelines first introduced by California in 1998, the
Company adopted a strategy to focus on commercializing  its proprietary group of
safety needle  devices,  including  its patented and current lead  product,  the
CoverTipTM Hypodermic Safety Syringe.

         In December of 1998, the Company  acquired  Phillips  Pharmatech  Labs,
Inc.  (hereinafter referred to as "PPL"), which was expected to generate revenue
for  some  of  the  Company's  patented  products  and  from  the  complementary
healthcare product lines of PPL and its customers.  However, PPL did not achieve
expectations,  ceased  operations in May 2000 and filed for Chapter 7 bankruptcy
protection.

         The Company's  executive and administrative  offices are located at 144
Napoleon Street, Baton Rouge,  Louisiana 70802 and its telephone number is (225)
343-8022.  The Company maintains its operations sales and marketing offices,  in
Bedminster, New Jersey.

Description of Business

         The Company is a  diversified  medical  device  company with a business
strategy to design and develop products that address concerns about safety.  The
Company  believes that medical device safety  features,  commanding a reasonable
cost differential from standard,  non-safety devices,  will ultimately lower the
cost of health care,  enhance patient care and improve healthcare worker safety.
The Company also believes that a substantial sales and profit opportunity exists
for mandated safety devices.

         The Company's  current business  strategy is to commercialize  its lead
product, the CoverTipTM Hypodermic Safety Syringe, and to develop other products
in the Medisys sharps safety device  portfolio  which address  Federal and State
mandates to reduce the occurrence of accidental  needlesticks  in the healthcare
workplace setting. These products are similar in appearance, use and size to the
standard  non-safety  devices  commonly  used and the Company  believes that its
safety  medical  devices  can assist  healthcare  providers  in  meeting  safety
standards  established by the U.S. Occupational Safety and Health Administration
(OSHA) to eliminate or minimize  occupational  exposure to bloodborne pathogens.
Each of these products incorporates patented proprietary technology that enables
a healthcare professional to use standard operating technique, but also provides
fail-safe protection both during and after the medical procedure. As part of the
Company's  strategy of maximizing  its investment in sharps safety device design
and  development,   the  Company  has  developed  various  products,  sizes  and
adaptations for a range of medical diagnostic and treatment applications.

                                       3
<PAGE>

MEDICAL DEVICE SAFETY

         Management  anticipates  a  growing  market  due to  Federal  and State
Legislation  mandating the conversion to safety protection  devices that protect
healthcare  workers against the potential  danger from accidental  needlesticks.
The transfer of infectious  diseases  from  accidental  needlesticks  results in
enormous  economic and social  costs.  The  possibility  of infection  from AIDS
(HIV),  Hepatitis  and  other  communicable  diseases  is a  critical  issue for
healthcare workers, medical professionals, and healthcare institutions.

         Among the  applications  for  needles in the  medical  setting  are the
injection  of drugs  (hypodermic  syringes)  and the  drawing of blood and other
bodily fluids (blood collection  needles).  The rate of accidental  needlesticks
reported  by  American  Nurses  Association  is as high as  600,000  each  year.
However,  authorities  believe  that this  number is much  higher  because  many
incidents are not reported.  The potential for  transmission  of the Hepatitis C
(HCV),  Hepatitis  B (HBV) and the HIV  (AIDS)  viruses  can occur from just one
needlestick.  In a study  conducted  by the  American  Nurses  Association,  the
average  cost of  follow-up  for a  high-risk  exposure  is  almost  $3,000  per
needlestick injury even when no infection occurs.1

         While the incidence of AIDS contracted through accidental  needlesticks
is low, the occurrence of Hepatitis and other infectious  diseases compounds the
problem and cumulatively  results in high costs,  liability,  long-term care and
productivity losses. The impact among individual  healthcare workers tested, and
the cost of both the testing and treatment,  are enormous.  For both Hepatitis B
virus and HIV  infections,  the primary source of exposure is,  according to the
Center for Disease Control (CDC), a contaminated dirty needlestick.

         New York  became  the 17th  state to pass  sharps  safety  legislation.
Signed  into law on  November 1, 2000,  it is  considered  to be one of the most
stringent yet in  protecting  health care workers from  hazardous  needlesticks.
Also, on November 6, 2000,  President  Clinton  signed into law the  Needlestick
Safety & Prevention Act which mandates the conversion to needle safety devices.

         Federal  mandates for the use of sharps  blunting  systems for syringes
were established in November 1999 when the U.S.  Occupational  Safety and Health
Administration (OSHA) revised its 1991 bloodborne pathogens compliance directive
to help minimize the serious health risks faced by workers  exposed to blood and
other potentially infectious materials,  including HIV and the Hepatitis B and C
viruses.  The new directive  emphasizes the importance of an annual review of an
employer's  bloodborne pathogens program and the use of safer medical devices to
help reduce  needlesticks  and other  sharps  injuries.  In response to the OSHA
directive,  the American Hospital Association (AHA) issued an advisory statement
urging its  members to comply  with state  regulations.  The CDC also  issued an
Alert  recommending  the use of  devices  with  safety  features,  which  are an
integral part of the device design,  operate  passively  without  requiring user
activation,  cannot be deactivated,  and remain protective  through the disposal
procedure.  The Company believes that national  attention on the compelling need
to adopt safety medical devices will focus increased  attention on the Company's
products.  The Company is in a strategic  position to  capitalize on this demand
because  its  portfolio  of  safety  products   uniquely  meet  proposed  safety
requirements.  As a result of these national  regulations  and  guidelines,  the
Company  believes that the use of safety  needle  products is likely to increase
significantly and achieve a dominant position in this market.

The Safety Needle Syringe Market

         The August 1998 Theta Report #850 on disposable medical suppliesreports
that there were an estimated a total of 6.6 billion syringes and needles sold in
the U.S. in 1997.  Theta  forecasts that the U.S.  market will grow at an annual
rate of between 6.8% and 7.3% through 2001,  with total  syringe sales  reaching
8.7 billion units.

-------------
1 Testimony  of the  American  Nurses  Association  Before the  Subcommittee  on
Workforce  Protections  Committee on Education and the  Workforce  United States
House of Representatives  Presented by Karen Daley, MPH, RN 6/22/00

                                       4
<PAGE>

         Historically,  the non-safety syringe market has been price competitive
with little differentiation between products. New regulatory  requirements,  the
economic  pressures of avoiding product liability suits,  negative publicity and
pressure from healthcare  worker  organizations and medical safety advocates are
strong  motivators for the healthcare  industry to adopt a relatively  low-cost,
easy-to-use  safety syringe.  In addition to price,  suppliers are now competing
for market  share  based on  operating  and safety  features.  The Theta  report
suggests that in 2001 safety syringes will command more than a 66% selling price
premium over non-safety  syringes.  Theta predicts a 15% yearly U.S. growth rate
in safety  blood  collection  devices.  The  target  markets  for these  devices
include: 1) hospitals of all types  (approximately 6,300 in the U.S. by year end
2000), 2) private practitioners  (approximately 600,000 plus in the U.S. by year
end 2000), 3) home healthcare  providers,  4) clinics and, 5) nursing homes, and
6) EMT units.  The global market has been  estimated to be twice the size of the
U.S. market.

         Until recent state legislation and more exacting regulatory  directives
compelled  the  healthcare  industry to consider  the safety  aspects of medical
devices,  the industry was reluctant to convert from standard syringes to safety
syringes because of the added costs and difficult technique changes necessary to
use the more cumbersome devices now on the market. While unit cost is important,
overall  cost-in-use  is critical  for adoption of safety  devices.  Not only do
safety syringes on the market cost more to produce than standard  syringes,  the
in-service cost to train healthcare  practitioners to use safety syringes places
an added burden on the conversion rate. In all cases, current devices force upon
the operator a change of habit.  Safety devices currently in the marketplace are
more complicated to use than standard devices.  Typically, the operator must use
a new methodology, either during or after the injection process. Sleeve syringes
are awkward to use, provide  inadequate  protection and are susceptible to reuse
by  intravenous  drug  users.   Retractable  syringes   incorporate   retraction
technology that requires some change in operating  technique in order to retract
the  needle  permanently  into the  barrel.  Some  products  require  two-handed
application   techniques,   which  actually   present   accidental   needlestick
opportunities. Activation studies indicate that, despite the potential danger of
standard  syringes,  healthcare  workers find it  difficult to change  long-held
habits,  especially in a fast-paced healthcare setting. One study found that 25%
of the  needle  injuries  since  1993,  when the  devices  began  being  used by
students,  came from  safety  needle  devices.  The  extensive,  round-the-clock
in-service  training  required  to  overcome  the  difficult  technique  changes
necessary to use with many of these cumbersome devices must be factored in.

         Despite the  inadequacies of safety devices  currently  available,  the
Company  believes  that the  proliferation  of interest and effort to convert to
safety needle products,  legal requirements,  as well as tremendous support from
the healthcare  worker community will accelerate  conversion to safety syringes.
As the  safety  syringe  market  begins  to  demonstrate  some  differentiation,
Management   believes  that  CoverTipTM  has  superior  advantages  to  products
currently in the marketplace and to those to be introduced.  The main advantages
of  the  Company's  safety  syringe  are  its  ability  to  virtually  eliminate
accidental  neelesticks and its close  similarity in use to a standard  syringe.
The passive,  one-handed  activation of CoverTipTM  offers superior  benefits to
other  available  safety  syringes.  The Company cannot  forecast  prices of its
products,  but the Company  believes that its safety  devices have superior cost
benefits  and that its  production  costs  should fall below  devices  with more
complicated  retractable  and sleeve  safety  technologies  and  design  thereby
creating a product  that has both  benefits  for its  customers  and  attractive
margins for its producer.

                                       5
<PAGE>

CoverTipTM Hypodermic Syringe

         The CoverTipTM  Hypodermic  Safety  Syringe not only provides  benefits
over standard  intramuscular  (IM)  syringes,  but  addresses  each of the major
issues  associated  with  current  safety  syringes.   The  superiority  of  the
CoverTipTM Safety Syringe exits in its conformity to unique, but simple,  design
criteria for safety,  ease of use and cost. First, the window of opportunity for
an accidental needlestick is virtually eliminated. The CoverTipTM device employs
a design that provides  protection from the sharp needle tip prior to withdrawal
from the  patient's  skin,  protecting  the  healthcare  worker  during the drug
delivery  process,  as well as during the  disposal  of the used  syringe.  This
virtually  eliminates any contaminated  needle exposure to the healthcare worker
and offers an advantage over other safety syringes that require  extraction from
the patient's  skin prior to  implementation  of various  needle tip  protection
methods.  Single  usage of the  syringe  results in a locking of the  protective
sheath.

         Secondly,  the  device  is easy to use  with  little  or no  additional
training for the health care worker.  In contrast to other safety syringes,  the
CoverTipTM  device is identical to  conventional  syringes,  employing  standard
syringe usage technique and requiring no costly instruction,  medical in-service
training, or habit changes for the healthcare  professional.  The safety feature
is passive  and  automatic  with no  additional  active  steps  required  of the
operator.  One-handed  usage increases  safety and meets current OSHA standards.
CoverTipTM  is used just as any standard  syringe  with  insertion of the needle
into the  patient's  skin and  depression  of the syringe  plunger to inject the
medicine.  As the  syringe  plunger is  depressed,  it  automatically  engages a
micro-thin safety sleeve that advances down to cover the tip of the needle after
penetration of the skin and  subsequent  insertion of the medicinal  fluid.  The
needle blunting occurs prior to removal from the patient's skin,  offering added
protection, at the point of injection to the healthcare worker.

         Third,  the  device  is  fail-safe  by  relying  entirely  on  positive
mechanical action rather than on buttons,  releases,  springs, vacuums, or other
such  complicated   additional  steps.   Finally,  the  design  is  economically
acceptable,  holding down production  costs to a reasonable level as compared to
both safety devices and current  standard  products.  It is anticipated that the
CoverTipTM safety syringe will maintain  reasonable  margins as it reduces costs
in step with substantial market penetration and high volume production.

PreSafTM Lever Fulcrum Hypodermic Syringe

         PreSafTM  is  an   intramuscular   injection  safety  syringe  designed
primarily for  pre-filled  syringe  application,  which allows  medication to be
injected into the patient  directly from a pre-filled  vial. The pre-filled vial
containing fluid medication is an existing component used by many pharmaceutical
manufacturers.  These applications typically include flu shots, pneumonia shots,
AIDS  serums,  and  other  epidemic  treatment  or  prevention  therapies.  Like
CovertipTM,  PreSafTM provides  automatic  passive  protection before withdrawal
from the patient's skin. A U.S. patent has been granted on this product. Concept
design is complete.  Prototypes,  clinical development and FDA 510(k) submission
are targeted  for the year 2001.  This device will be marketed as an OEM product
and sold to pharmaceutical distribution producers of prefilled syringes.

DIAGNOSTIC SHARPS SAFETY

         The  Company  recognizes  that  diagnostic  sharps  applications  are a
critical area of medical device safety.  These medical diagnostic products offer
the  potential for premium  margins due to their high cost of procedure,  unique
presence in the market, and market specialization.

         This   market   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.  Physicians  and other more  specialized  technicians  are the primary
end-users of diagnostic  sharps  instruments.  The specialized and  professional
aspects of these devices should offer high-margin opportunity to the company.

                                       6
<PAGE>

         To fill the need for diagnostic sharps safety  protection,  the Company
has developed a line of devices with strong commercial potential.  These devices
work with  standard  blood  collection  needle  accessories  and are  similar in
appearance,   size,  and  performance  to  conventional   devices.  The  primary
difference  is the safety  feature  activated by the  proprietary  safety needle
mechanism.  Some of these  devices  are  ready  to enter  the  final  phases  of
development.

         Blood  collection  needles  are used to obtain a  sufficient  volume of
blood for diagnostic procedures.

VacuSafTM

         This device, using CoverTipTM technology, 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. 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 prototyping  and FDA 510(k)  submission are
targeted for 2001. The U.S. patent for this device is pending.

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,  as the operator  either draws blood or aspirates  fluid.  Fluid
aspiration  is typically  performed by  physicians  or other highly  specialized
technicians.  In either case,  the skin 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,  which  would  risk 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 for  SofDraw(TM),  all  filings  are
current and initial design development is complete through prototyping. A 510(k)
application for marketing of the device is targeted for filing with the FDA when
the working  design is  finalized.  Given the shared  technology  between  these
devices and the CoverTipTM  syringe, a fast track clearance for marketing by the
FDA is reasonably anticipated by the Company.

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

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 aspects of the Medisys Medical Safety Product portfolio.

                                       7
<PAGE>

         The  Company  was granted a U.S.  patent for its  BxDrawTM  Fine Needle
Aspiration Safety Device in October,  1999.  BxDrawTM addresses the safety needs
of diagnostic  surgeons  (orthopedic and general  thoracic),  radiologists,  and
other healthcare  professionals,  who may become exposed to bloodborne pathogens
during  fine needle  fluid  aspiration  treatment.  The  Company  believes  that
BxDrawTM is the first safety device in this product category.  It is a physician
specific  device.  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.

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. As with BxDraw(TM),  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.

Manufacturing

         Proceeds  from the  Company's  financing  commitments  are  being  used
principally to begin the production and commercial  launch of CoverTipTM into an
increasingly  safety-conscious  hospital supply market.  Monies are also funding
the  regulatory  approval  process  and  prototype   production  of  PreSaf(TM),
VacuSaf(TM) and SofDrawTM.

         While  industry  capacity  shortfalls  exist,  the  Company  believes a
strategy of outsourcing  manufacturing  through syringe  contract  manufacturers
should provide sufficient product supply for successful commercialization of its
safety medical devices.

         In 2000, the Company entered into a multi-phase,  proprietary agreement
with Dispomedic 2000, a syringe  manufacturer  based in Dimona,  Israel, for the
production of CoverTipTM. The capabilities of Dispomedic are expected to provide
the  capacity  necessary  for  the  Company  to play a  significant  role in the
dramatically  expanding safety syringe  marketplace.  Under the general terms of
the  Agreement,  Dispomedic  has begun  manufacturing  the  CoverTip(TM)  safety
syringe.

         The  Company  has  a  long-term  strategy  to  expand  production  into
additional  locations  in  Europe  and in the  United  States.  Plans  include a
possible  manufacturing facility in Louisiana in connection with the acquisition
of a USDA loan  presently  being  pursued.  However,  these  expansions are only
proposed at this time and there can be no assurance that they will occur without
the acquisition of significant capital.

         Dispomedic has incentive-based options to acquire shares in the Company
in  return  for  achieving  production  targets  and  price  reductions  for the
Company's CoverTipTM safety syringes and for providing what management estimates
to  be up  to a  potential  $12  million  in  capital  value  and  manufacturing
investments.  As part of the Agreement,  Dispomedic formed a marketing  company,
owned in part by the Company, to generate sales outside North America.

                                       8
<PAGE>

         At mid year 2000,  Dispomedic and Medisys  amended its agreement to add
improvements to the CoverTip(TM)  syringe which promise to make the product more
effective  and less  costly.  In late  October of 2000,  an initial  shipment of
CoverTip(TM)  was  delivered  to the  sales  force to  support  pilot  marketing
efforts.

         At the end of the 4th  quarter  2000 the  first  CoverTip(TM)  purchase
orders  were  received  by the  Company  and the first  quantity  of  commercial
syringes were shipped by Dispomedic.  However,  the Company's  validation of all
production processes of the manufacturer in compliance with FDA GMP requirements
have delayed  distribution  of commercial  product and sales  revenues  until at
least the 2nd quarter of 2001.

         Additional  capital  investment may be required to support higher speed
assembly equipment.

         Due to the large capital  investment  required to manufacture  multiple
quantities of the CoverTipTM  product,  a later phase of the  CoverTipTM  market
introduction  campaign may require the  involvement  of additional  third-party,
big-company   partners.   The  Company  will  explore  potential  joint  venture
arrangements  that can  address the  manufacturing  and  marketing  requirements
effectively  enough to gain  significant  market  share for the  medical  device
product   category.   The  Company  has  identified  over  20  large  healthcare
manufacturers as potential strategic partners through joint venture or licensing
agreements  but has not formally  concluded  any such  agreements as of year-end
2000.

Marketing

         On May 15, 1998,  the Company  received FDA 510(K)  clearance to market
CoverTipTM. Simplicity of design with strong patent protection should combine to
make the product  available  for market  with a long  revenue  life  cycle.  The
Company  has now begun to market  CoverTip(TM)  in a  customary  medical  market
introduction/evaluation  of the hypodermic  product  application to primary care
clinics,  home health and hospitals.  A carefully planned  three-phase  regional
market  introduction and national rollout is underway to utilize traditional and
non-traditional distribution and marketing tactics.

         The Company's  strategy upon market launch is to pursue target  syringe
customers in a closely confined  regional  rollout.  To maximize market presence
and minimize  total selling cost,  many  healthcare  institutions  are tied into
buying groups, or group purchasing  organizations  (GPO's),  which contract with
major suppliers.  Large GPO's have traditionally  awarded exclusive contracts to
their  biggest  suppliers,  but they are  responding  to mounting  pressures for
conversion to safety syringes by signing less  exclusionary  contracts.  Managed
care  organizations  and  insurers  assume  the  burden  of  liability  both for
treatment  and  damages  associated  with  accidental  needlesticks.  Recent GPO
contracts contain  provisions  permitting the GPO to evaluate safety devices and
enter  into   additional   contracts  with  suppliers  who  have   break-through
technologies.  The Company believes that its safety devices will qualify for GPO
evaluation procedures.

         In addition,  the Company will target  non-GPO  hospital and  specialty
customers, a potentially sizable market. Minimal market acceptance of CoverTipTM
and its companion  patented safety needle devices in niche markets will position
the  Company to acquire a  competitive  presence  and brand  recognition  as the
larger institutional  market converts to safety products.  As the superiority of
the CoverTipTM device is validated,  the Company plans to concurrently implement
the GPO test markets  necessary for an upgrade to CoverTipTM in the  high-volume
hospital  market.  This approach  allows the Company to prepare for  mass-market
sales while generating early revenue in the niche markets.

                                       9
<PAGE>

         The Company plans to market its medical  safety device  products in the
U.S. both through traditional and innovative  independent  distribution channels
and directly to  end-users.  These will include  Internet and direct  marketing.
Consulting  marketing  specialists  and  the  engagement  of  a  medical  device
marketing agency augment the Company's  marketing  program.  Sales of CoverTipTM
will be  directed by sales  specialists  who have been hired to  coordinate  the
efforts of sales brokers.  Products will be shipped both directly and by medical
distribution  companies.  Specialty sales and  distribution  personnel have been
engaged to market to clinics,  physicians,  outpatient  and  treatment  centers.
Medisys received initial orders for CoverTip(TM)  prior to year-end 2000 and has
since  completed an agreement for the sale of 40 millioin  syringes from ATL, an
8K medical distributor.

Competition

         The safety medical device market is highly  competitive.  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 the
Company as a competitive presence in this marketplace.  The Company will compete
in the U.S.  with  companies  that  manufacture  standard  syringes  and  safety
needles.  Major  competitors have better name recognition in the market,  longer
operating  histories and are  substantially  larger and better financed than the
Company.  Such  competitors  may use their  economic  strength to influence  the
market  to  continue  to buy  their  existing  products.  One or more  of  these
competitors  also could use their resources to improve their current products or
develop additional products.  New competitors may arise and may develop products
that compete with the Company's  products.  In addition,  new  technologies  may
arise which could lower or eliminate the demand for the Company's products.  The
Company  cannot  predict  the  development  of future  competitive  products  or
companies.

SAFETY IN WOMEN'S HEALTH

         While the Company has narrowed its strategic  focus to Sharps Safety in
the short term, in the long term,  the Company  intends to pursue  completion of
the design and development of its SofCepsTM and AmnioSafTM Ob/Gyn safety devices
as financial  resources become  available.  (SofCeps(TM)  human birth assistance
device  had  successful  stillborn  deliveries  and was  approaching  live birth
clinical  studies prior to suspension of development.  AmnioSaf(TM)  obstetrical
fluid collection safety syringe is still in the concept phase).

Backlog

         The Company presently has no backlog for any of its products other than
the initial orders listed in the marketing section.

PATENTS AND TRADE SECRETS

         The Company owns 17 U.S.  patents and three foreign patents  protecting
the  Company's  SofCepsTM,   CoverTipTM,   SofDrawTM,   Multi-DrawTM,   VetCeps,
DisKlipTM,  and Re-TyTM  devices.  These consist of U.S. Patent numbers 5122148,
5217467, 5318573,  5460611, 5496283, 5573539, 5593413, 5632750,  5681290,5687455
(two device patents), 5720727, 5785662, 5836054,  5846228,5910146,  5964735, and
5993418.  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 that meet company development criteria.

         The Company has obtained or filed trademark applications preserving its
right  to  use  the  trademarks   "VetCeps(R)",   the   "Medisys(R)"   logo  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 selected 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.

                                       10
<PAGE>

GOVERNMENT REGULATION

         Generally, all medical devices in the USA 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.
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.  Section 510(K) of the Medical
Device  Amendments  provides  for  a  pre-market  notification  requirement.  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 that  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  meet all  requirements  of the FDA
regulations.

         The  Company  believes  that all of its  primary  safety  products  are
"substantially  equivalent" to devices already marketed and are therefore exempt
from PMA.  However,  the fact that the SofCepsTM 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.  The FDA  reviewed  the  Company's  application  and  testing
protocol.  Based on Phase I data,  the Company was allowed to continue its fetal
demised  clinical  testing.  Because of the Company's change of strategic focus,
the Company has suspended all FDA pursuits with regard to SofCepsTM.

         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 complementary safety devices.

                                       11
<PAGE>

         Medical device  manufacturers are also required to comply with FDA Good
Manufacturing  Practices (GMP) with regard to each specific product manufactured
and at each manufacturing location. The Company has retained the services of Dr.
Stephen  Liebermann,  a former FDA  employee  and a  consultant  to the  medical
industry to assess that manufacturing facilities are in compliance.

         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.  The Company maintains  $5,000,000 of products  liability
coverage for its CoverTip(TM)  safety syringe.  The Company currently  maintains
general  business  liability   insurance  limited  to  $1,000,000  coverage  per
occurrence and in the aggregate.

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

EMPLOYEES

         As of December 31, 2000, the Company  employed 9 individuals  including
part-time and full-time employees,  managerial staff and executive officers. The
Company anticipates adding management and employees in strategic areas.

         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(Edward
Sutherland's   sister)  an  accountant  and  bookkeeper;   Joel  Faden,  an  FDA
consultant;  Gary Schneberger,  a development and manufacturing consultant;  S/S
Small Cap Network,  consultant  on  financial  relations  and public  relations;
Investor  Relations Group,  consultants in investor  relations  services;  Steve
Stephenson, sales management; Malcolm Dunn, working in sales; Hal Smith, working
in import,  customer service,  distribution and procurement;  Stephen Lieberman,
working  in  regulatory  compliance  and  Quality  Assurance;   and  Picus/Omega
Solutions,  redesigning  the  website.  Richard  Reisner,  Director,  also  does
part-time consulting work for the Company on financial matters.

Item 2.  Properties

         The Company leases office facilities  consisting of approximately 1,500
square  feet  located in Baton  Rouge,  Louisiana  from Diana and Ed  Sutherland
(Director).  The lease calls for a monthly payment of $900 plus utilities and is
an annual lease  renewable  in  September of each year.  The office is primarily
devoted to administrative and financial  activities.  Additionally,  the Company
leases office space in Bedminster, New Jersey at a cost of $3,245 per month. The
New Jersey office oversees operations including marketing, sales and 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
contract with Dispomedic.

Item 3.  Legal Proceedings

         On  March  16,  2000,  the  Company  filed a  Complaint  against  Brett
Phillips,  Elbert Carl Anderson,  William H. Morris,  William Morris and Barbara
Larkins in the United States  District  Court in and for the Middle  District of
Louisiana,  alleging  various  securities  law  violations and related claims in
connection with the 1998  acquisition by the Company from the defendants of PPL.
The Company is seeking rescission of the acquisition,  damages and other relief.
The case was dismissed in Louisiana on a contractual  venue provision.  The case
bears docket number  2:00CV00677ST  in the United States  District Court in Salt
Lake  City,  Utah.  The  Company  believes  that the  suit  filed is in the best
interests of the shareholders.

                                       12
<PAGE>

         On May 9, 2000, E. Carl Anderson,  William  Morris and Brett  Phillips,
filed a derivative  action lawsuit in the United States District  Court,  Middle
District of Florida,  cash number  8:00CV905-T 24MSS against the Company and the
current  Directors  of the  Company.  The action was filed by Messrs.  Anderson,
Morris and Phillips  allegedly  for and on behalf of the Company.  The complaint
alleges corporate waste in the form of excessive  salaries and bonuses and other
alleged  wastes  related to PPL.  Additionally,  plaintiff  Anderson  has made a
demand for  corporate  records  and to void the  election  of  directors  by the
shareholders at the shareholders'  meeting held in May 2000. The Complaint seeks
injunctive  relief,  alleging a fraudulent  election,  and damages.  Each of the
plaintiffs in this action is also a defendant in the lawsuit previously filed by
the Company on March 16, 2000 referenced above.

         PPL has filed for  protection  under  Chapter  7 of the  United  States
Bankruptcy Code in the United States  Bankruptcy Court of the Middle District of
Florida, Tampa Division.

         On August 24, 2000, a Magistrate for the United States  District Court,
Middle District of Florida, in the action brought by plaintiffs,  Carl Anderson,
William  Morris  and  Brett  Phillips,  against  various  Directors  of  Medisys
Technologies,  Inc.,  issued a 39 page Report of  Recommendation  to the Federal
District Court Judge. The Report followed an Evidentiary Hearing held before the
Magistrate on plaintiffs' Motion for Preliminary Injunction,  Defendants' Motion
to Dismiss the Derivative  Claims and  defendants'  Motion to Dismiss  Plaintiff
Anderson's  Individual  Claim. The Report  recommended that the Federal District
Court  Judge  deny  plaintiffs'  Motion  for  Preliminary  Injunction  and grant
defendants'  Motion  to  Dismiss  the  Derivative  Claims  and  further  dismiss
plaintiff  Anderson's  Individual Claim. All parties were then permitted to file
written  responses  with the Court  before  the Report  and  Recommendation  was
submitted to the Federal District Judge for final ruling. The Court subsequently
ordered  Medisys to retain  counsel  separate  from the  individual  defendants.
Various  other  pleadings  have been filed and the  plaintiffs  now seek another
injunction to enjoin the directors from using Company assets to solicit proxies.
The parties now await the Federal  District  Court  Judge's  final ruling on the
Magistrate's  recommendations to dismiss. Pursuant to the Company's by-laws, the
Company  provides  full  indemnity  to the  defendant  directors  and/or  former
directors for fees and costs pending  dismissal of the action.  These  directors
have agreed and will be required to reimburse  the Company in the event that any
judgment is rendered against them which legally precludes indemnity.

         On October 11, 2000, the United States  District Court for the District
of Utah, Central Division,  in the litigation  brought by Medisys  Technologies,
Inc.  against various  defendants,  including Carl Anderson,  William Morris and
Brett Phillips,  concluded a two day Evidentiary  Hearing on plaintiffs'  Motion
for  Preliminary  Injunction  to make  permanent a Temporary  Restraining  Order
previously  issued which sought an Order restraining the defendants from trading
shares acquired as a result of the  acquisition of PPL from the  defendants.  At
the  conclusion  of  the  hearing,  the  Judge  denied  plaintiffs'  Motion  for
Preliminary  Injunction  relief.  Dissolution  of a TRO can lead to the award of
attorney's fees and reasonable  provable damages in the discretion of the Court.
The Court denied the defendants'  subsequent motions to strike certain parts and
the plaintiffs' claim and will hear additional motions in this mater as the case
proceeds  to a  resolution  on the merits of the claim.  In a State  Court claim
filed by the  Company for  injunctive  relief,  the Court  dissolved a Temporary
Restraining Order against Messrs. Anderson, Morris and Phillips and awarded them
attorney's  fees,  payable by the  Company.  The Company  expects to appeal that
Order of approximately $30,000 on advice of counsel.

                                       13
<PAGE>

         PPL is a party to various  other  legal  proceedings.  These  primarily
involve commercial claims and one action involves a former employee. The Company
cannot  predict the outcome of these  lawsuits or the  attempts by  litigants to
make Medisys a party to these legal  proceedings and claims with certainty.  Nor
can the Company  predict  whether  the outcome of any or all these  proceedings,
even if  determined  adversely,  could  have a  material  adverse  effect on the
Company's  business or financial  condition.  There is a possibility that due to
PPL discontinuing its operations,  both PPL and the Company could be the subject
of future  actions,  which the Company  expects to vigorously  defend.  Case No.
3C063258  California  Superior Court, Elaine Wilkes v. Phillips Pharmatech et al
is one such case which Medisys has moved to be dismissed from. The final results
are pending and the Company expects to vigorously defend any such allegations as
they relate to Medisys.

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

         The Company did not submit any matters to its  shareholders  during the
three month period ended December 31, 2000.

                                     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
1998 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
         1999
                  First Quarter              .50            .13
                  Second Quarter             .38            .17
                  Third Quarter              .31            .15
                  Fourth Quarter             .78            .12

         2000
                  First Quarter             2.87            .57
                  Second Quarter            1.8750          .6563
                  Third Quarter             1.1563          .75
                  Fourth Quarter             .71            .1875

         2001
                  First Quarter              .37            .11

         As of December 31, 2000 there were  approximately 550 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 5,000 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

         During 1998, the Company issued 2,448,767 shares of its common stock in
satisfaction of accrued wages and accounts payable of $979,508. The Company also
issued 881,255 shares of common stock for services,  which shares were valued at
the trading  price of the common stock on the date of issuance,  or an aggregate
of $308,284.  Further, the Company issued 546,666 shares of its common stock for
cash for an aggregate of $170,000,  and 760,112  shares were issued for interest
expense and valued at $268,875.  An additional  650,000  shares were issued to a
shareholder  pursuant  to an  arrangement  to  prevent  dilution  of the  shares
previously  issued to the  shareholder.  Pursuant to its acquisition of PPL, the
Company issued a total of 15,120,810 shares.

                                       14
<PAGE>

         In 1999,  the  Company  issued  324,477  shares of its common  stock in
satisfaction  of accrued wages of $90,000 and 3,305,737  shares for services and
interest expense valued at $703,343. The shares issued for services and interest
were valued at the trading price of the common stock on the date the shares were
issued.  The Company also issued 1,435,000 shares of its common stock to convert
$303,000 of  debentures  payable.  The Company  issued  3,388,443  shares of its
common stock for cash of $521,135.  An additional  5,555,555  shares were issued
for  subscription  receivables in the amount of  $1,000,000.  The Company issued
8,889  shares of its common  stock from the  exercise  of  warrants  for cash of
$10,000. Finally, certain officers and directors of the Company canceled 972,214
shares of common stock and the shares were  reissued to convert a portion of the
debentures payable.

         During 2000,  the Company  issued 588,500 shares of its common stock in
satisfaction  for debentures  and notes payable of $144,500.  The Company issued
3,384,984  shares of its common stock for services.  The services were valued at
the trading  price of the common  stock or the value of the  service  performed,
whichever was more readily  determinable on the date the shares were issued. The
Company  issued  896,608  shares of its common stock to convert  debentures  and
accrued  interest  of  $620,000  and $6,430,  respectively.  The Company  issued
3,539,773  shares  of its  common  stock  for cash of  $1,048,750.  The  Company
incurred stock offering costs of $83,937 related to these stock-for-cash  sales.
Finally, the Company issued 188,833 shares of its common stock from the exercise
of warrants  for cash of $83,333.  Additionally,  the Company  issued  5,500,000
shares for prepaid services and placed the shares into escrow. These shares were
valued at $.32 as of December 31, 2000.

         Proceeds  from the  issuances  of stock for cash  were used to  further
research and  development  of the Company's  products and for general  operating
expenses.  Except for issuances  made  pursuant to the Company's  equity line of
credit and  convertible  debentures,  the above  issuances  were made in private
transactions  in  reliance  upon  the  exemption  from  registration  under  the
Securities  Act of 1933,  as  amended,  provided  by  Section  4(2)  thereunder.
Issuances pursuant to the equity line of credit and convertible  debentures were
issued  pursuant to registration  statements file with the Commission  under the
Securities Act of 1933, as amended.

         A more  detailed  description  of the  above  issuances  of  shares  is
contained in the Company's  Consolidated  Statements of Stockholders' Equity and
Notes 4 and 5 to the  Consolidated  Financial  Statements,  which  can be  found
elsewhere within this Form 10-KSB.

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,  2000  ("2000")  was
$6,652,529  compared  to  $1,687,621  for the  corresponding  1999  period.  The
increased  loss is primarily  attributed  to losses  incurred by the  $2,043,697
increase in product  research and development  expenses related to the Company's
products  and the  $2,611,919  increase in selling,  general and  administrative
expenses due to ramping up of sales and marketing activity and increase in staff
and contracts required to prepare for market  introduction of CoverTip(TM).  The
Company also recognized a $554,477 loss from discontinued operations in 2000 due
to the closing of PPL.

                                       15
<PAGE>

         Total  operating   expenses  for  2000  were  $5,770,013   compared  to
$1,042,483  for the 1999 period,  a 453%  increase  primarily  attributed to the
costs  associated  with pre-market  preparation  and additional  contractors and
employees  expenses and general overall growth of the Company as it prepared for
CoverTip(TM)  market  introduction.  Because available outside funding decreased
until  year-end  2000,  the  Company  used cash on hand and from the sale of its
common stock to pay for its ongoing research and  development.  Product research
and development  expenses  increased 888% in 2000 to $2,273,682 from $230,075 in
1999,  due to the  commercialization  of  CoverTip(TM)  and the  development  of
SofDraw(TM), PreSaf(TM) and VacuSaf(TM). Depreciation and amortization increased
483% in 2000 to $85,241 from $14,627 in 1999 primarily due to re-amortization of
patent costs.

         Net Operating Losses

         The Company has accumulated  approximately  $9,400,000 of net operating
loss carry forwards as of December 31, 2000, which may be offset against 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  carry  forwards.  The
carry-forwards  expire in the year  2020.  In the event of  certain  changes  in
control of the Company,  there will be an annual limitation on the amount of net
operating  loss  carry  forwards,  which can be used.  No tax  benefit  has been
reported  in the  financial  statements  for the year ended  December  31,  2000
because the Company  believes the carry forward may expire unused.  Accordingly,
the  potential  tax benefits of the loss carry  forward is offset by a valuation
allowance of the same amount.

Liquidity and Capital Resources

         In 2000,  the Company  realized net cash of $3,470,916  from  financing
activities,   primarily  through  the  private  issuance  of  common  stock  and
convertible debt placement.  This compares to net cash of $641,437 in 1999, also
from the private  placement of common stock and  placement  of  debentures  with
related parties.

         Net cash used by operations  for the 2000 was  $3,396,581,  compared to
net cash used of $389,681  for 1999.  The  increase in net loss and  issuance of
common  stock  for cash in 2000 was  partially  offset  by the net  increase  in
accounts  payable in 2000. The Company used net cash by investing  activities of
$117,962 in 1999,  primarily  from the  purchase of fixed assets and increase in
patent costs. This compared to net cash used of $31,473 in 1999.

         The Company is currently  technically in default on one note payable to
an individual totaling $12,500.  This note holder is not demanding repayment and
the Company continues to accrue interest on that outstanding note.

         At December  31, 2000 the Company had total  assets of  $1,179,604  and
stockholders' deficit of $1,333,977. In comparison, at December 31, 1999 the
Company  had total  assets of  $2,105,780  and total  stockholders'  deficit  of
$43,535. The 12% decrease in total assets and increase in stockholders'  deficit
in 2000 is primarily due to losses from the closing of PPL and increased  losses
from continuing operations.

                                       16
<PAGE>

         Management  believes that the Company has sufficient  capital resources
and  commitments to fund  anticipated  operations into the second quarter of the
year 2001. The Company intends to seek additional equity or debt capital through
private and government  sources and/or a public offering,  although there can be
no assurance that the Company could successfully  complete any such offering. In
2000, the Company entered into a firm agreement for the acquisition of up to $14
million of capital from private sources.  However, market conditions reduced the
projected return on that funding to approximately $2 million. The Company is now
preparing  an  application  for a USDA loan in the amount of $4.5  million.  The
Company has retained Viscogliosi  Brothers,  LLC, an investment banking firm, as
financial consultants to the Company for raising capital and exploring strategic
relationships.  If investment capital should fail for any reason to be realized,
or if 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.

         Additional funds, as realized,  will be used to market CoverTip(TM) and
for the development of SofDrawTM,  PreSaf(TM) and VacuSaf(TM), and other general
corporate business.

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

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

         In June 1999, the Financial  Accounting Standards Board ("FASB") issued
SFAS No. 133,  "Accounting for Derivative  Instruments and Hedging  Activities,"
which was later amended by SFAS No. 137 "Accounting  for Derivative  Instruments
and Hedging  Activities - Deferral of the Effective  Date of FASB No. 133." SFAS
No. 133  established  standards for the  accounting and reporting for derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts, and hedging activities.  The statement generally requires recognition
of gains and  losses on hedging  instruments,  based on changes in fair value or
the  earnings  effect of a forecasted  transaction.  SFAS No. 133, as amended by
SFAS No. 137, is effective  for all fiscal  quarters of fiscal y ears  beginning
after June 15, 2000.  Management  does not believe that SFAS No. 133 or SFAS No.
137 will have a 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, 2000 and
the related  Consolidated  Statements of Operations,  Stockholders'  Equity, and
Cash  Flows  for the  years  ended  December  31,  2000,  and 1999 have all been
examined to the extent indicated in their report by HJ & Associates, 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.

                                       17
<PAGE>


                  MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES

                       CONSOLIDATED FINANCIAL STATEMENTS

                               December 31, 2000


<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)

                        CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2000

                                 C O N T E N T S


Independent Auditors' Report .............................................. 19

Consolidated Balance Sheet ................................................ 20

Consolidated Statements of Operations ..................................... 22

Consolidated Statements of Stockholders' Equity (Deficit).................. 23

Consolidated Statements of Cash Flows ..................................... 28

Notes to Consolidated Financial Statements ................................ 30

                                       18
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
Medisys Technologies, Inc. and Subsidiaries
(A Development Stage Company)
Baton Rouge, Louisiana

We  have  audited  the  accompanying   consolidated  balance  sheet  of  Medisys
Technologies, Inc. and Subsidiaries (a development stage company) as of December
31, 2000, and the related consolidated  statements of operations,  stockholders'
equity (deficit),  and cash flows for the years ended December 31, 2000 and 1999
and from inception of the  development  stage on April 1, 2000 through  December
31, 2000. These consolidated  financial statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our 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 (a development stage company) as of December
31, 2000, and the results of their operations and their cash flows for the years
ended December 31, 2000 and 1999 and from inception of the development  stage on
April 1, 2000 through  December 31, 2000 in conformity  with generally  accepted
accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 8 to the
consolidated  financial  statements,  the Company is a development stage company
with no significant operating results,  which raises substantial doubt about its
ability to continue as a going  concern.  Management's  plans in regard to these
matters are also described in Note 8. The consolidated  financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of  the
uncertainty.



By: /s/ HJ & Associates
-----------------------
HJ & Associates, LLC
Salt Lake City, Utah
April 7, 2001

                                       19
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                           Consolidated Balance Sheet


                                     ASSETS

                                                              December 31,
                                                                      2000
                                                               -----------
CURRENT ASSETS

   Cash                                                        $   201,678
   Accounts receivable, net (Note 1)                                   446
   Inventory (Note 1)                                                4,944
   Prepaid expenses                                                420,000
                                                               -----------

     Total Current Assets                                          627,068
                                                               -----------

FIXED ASSETS (Note 1)

   Computers and equipment                                          63,221
   Leasehold improvements                                            2,195
   Furniture and fixtures                                           37,410
   Accumulated depreciation                                        (95,655)
                                                               -----------

     Total Fixed Assets                                              7,171
                                                               -----------

OTHER ASSETS

   Deposits                                                         15,835
   Patent and trademark costs, net (Note 1)                        529,530
                                                               -----------

     Total Other Assets                                            545,365
                                                               -----------

     TOTAL ASSETS                                              $ 1,179,604
                                                               ===========

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

                                       20
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                     Consolidated Balance Sheet (Continued)
<TABLE>
<CAPTION>
                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                                                           December 31,
                                                                                   2000
                                                                           ------------
CURRENT LIABILITIES
<S>                                                                        <C>
   Accounts payable                                                        $    175,358
   Accrued expenses                                                              53,318
   Notes payable - shareholders (Note 4)                                         12,500
   Debentures payable (Note 6)                                                1,421,740
                                                                           ------------

     Total Current Liabilities                                                1,662,916
                                                                           ------------

NET LIABILITIES IN EXCESS OF THE ASSETS OF DISCONTINUED
 OPERATIONS (Note 9)                                                            850,665
                                                                           ------------

     Total Liabilities                                                        2,513,581
                                                                           ------------

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' EQUITY (DEFICIT)

   Common stock: 100,000,000 shares
    authorized of $0.0005 par value,
    61,154,342 shares issued and outstanding                                     30,577
   Additional paid-in capital                                                17,408,805
   Treasure stock (Note 2)                                                     (450,000)
   Stock subscriptions receivable (Note 2)                                     (175,000)
   Prepaid expenses (Note 5)                                                 (1,760,000)
   Accumulated deficit prior to the development stage                       (13,669,966)
   Accumulated deficit since the inception of the development stage          (2,718,393)
                                                                           ------------

     Total Stockholders' Equity (Deficit)                                    (1,333,977)
                                                                           ------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                  $  1,179,604
                                                                           ============
</TABLE>

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

                                       21
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Operations
<TABLE>
<CAPTION>
                                                                                                      From
                                                                                                  Inception of
                                                                                                  Development
                                                                                                    Stage on
                                                                                                    April 1,
                                                                  For the Years Ended             2000 Through
                                                                      December 31,                December 31,
                                                               2000              1999                 2000
                                                        ------------------  ------------------  ------------------
<S>                                                     <C>                 <C>                 <C>
REVENUES                                                $            1,197  $            1,973  $              574
                                                        ------------------  ------------------  ------------------

OPERATING EXPENSES

   Cost of sales                                                     1,137                 523                 458
   Product research and development                              2,273,682             230,075             634,247
   Depreciation and amortization                                    85,241              14,627              63,931
   Selling, general and administrative                           3,411,150             799,231           1,847,747
                                                        ------------------  ------------------  ------------------

     Total Operating Expenses                                    5,771,210           1,044,456           2,546,383
                                                        ------------------  ------------------  ------------------

OPERATING LOSS                                                  (5,770,013)         (1,042,483)         (2,545,809)
                                                        ------------------  ------------------  ------------------

OTHER INCOME (EXPENSES)

   Interest income                                                  44,381                  65              37,836
   Interest expense                                               (372,420)           (282,547)           (210,420)
                                                        ------------------  ------------------  ------------------

     Total Other Income (Expenses)                                (328,039)           (282,482)           (172,584)
                                                        ------------------  ------------------  ------------------

LOSS FROM CONTINUING OPERATIONS
 BEFORE INCOME TAXES                                            (6,098,052)         (1,324,965)         (2,718,393)

INCOME TAXES                                                        -                   -                   -
                                                        ------------------  ------------------  ------------------

LOSS FROM CONTINUING OPERATIONS                                 (6,098,052)         (1,324,965)         (2,718,393)

LOSS FROM DISCONTINUED
 OPERATIONS (Note 9)                                              (554,477)           (362,656)             -
                                                        ------------------  ------------------  ------------------

NET LOSS                                                $       (6,652,529) $       (1,687,621) $       (2,718,393)
                                                        ==================  ==================  ==================

BASIC LOSS PER SHARE (Note 1)

   Loss from continuing operations                      $            (0.10) $            (0.04)
   Loss from discontinued operations                                 (0.01)              (0.01)
                                                        ------------------  ------------------

     Basic Loss Per Share                               $            (0.11) $            (0.05)
                                                        ==================  ==================
</TABLE>

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

                                       22
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
            Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
                                                                  Additional                  Stock
                                          Common Stock              Paid-In    Treasury   Subscription    Prepaid   Accumulated
                                     Shares         Amount          Capital      Stock      Receivable    Expenses    Deficit
                                  ------------   ------------   -------------- ---------   ------------  ---------- ----------
<S>                                 <C>               <C>           <C>          <C>       <C>           <C>       <C>
Balance, December 31, 1998          34,009,757        $17,004       $8,122,813   $   -     $ (175,000)   $   -     $(8,048,209)

Common stock issued for
 subscription receivable             5,555,555          2,778          997,222       -     (1,000,000)       -               -

Common stock issued for
 services rendered                   2,121,619          1,061          424,282       -             -         -               -

Common stock issued for
 accrued wages                         324,477            162           89,838       -             -         -               -

Common stock canceled                 (972,214)          (486)             486       -             -         -               -

Common stock issued to
 convert debentures payable          1,435,000            717          302,283       -             -         -               -

Issuance of common stock
 from exercise of common
 stock warrants                          8,889              5            9,995       -             -         -               -

Common stock issued for
 interest expense                    1,184,118            592          277,408       -             -         -               -

Common stock issued for cash         3,388,443          1,694          519,441       -             -         -               -

Cash received on stock
 subscription receivable                    -              -                -        -        100,000        -               -

Net loss for the year ended
 December 31, 1999                          -              -                -        -             -         -      (1,687,621)
                                  ------------   ------------   -------------- -------   ------------  -------      ----------

Balance, December 31, 1999          47,055,644         23,527       10,743,768       -     (1)075,000        -      (9,735,830)
January 1, 2000, warrants
 granted below market value                 -              -             7,227       -             -         -               -

January through February 2000,
 common stock and warrants
 issued for cash at $0.25
 per share                           2,555,000          1,277          637,473       -             -         -               -

January through March 2000,
 common stock issued to convert
 debentures and notes payable
 at $0.25 per share                    588,500            294          144,206       -             -         -               -

January 2000, common stock
 and warrants issued for cash
 at $0.18 per share                    333,332            167           59,833       -             -         -               -
                                  ------------   ------------   -------------- -------   ------------  -------     -----------

Balance Forward                     50,532,476   $     25,265   $   11,592,507 $     -   $ (1,075,000) $     -     $(9,735,830)
                                  ------------   ------------  --------------  -------   ------------  -------     -----------
</TABLE>

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

                                       23
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
                                                                  Additional                  Stock
                                          Common Stock              Paid-In    Treasury   Subscription    Prepaid   Accumulated
                                     Shares         Amount          Capital      Stock      Receivable    Expenses    Deficit
                                  ------------   ------------   -------------- ---------   ------------  ---------- ----------
<S>                                 <C>          <C>            <C>             <C>     <C>             <C>        <C>
Balance Forward                     50,532,476   $     25,265   $   11,592,507  $    -  $ (1,075,000)   $    -     $(9,735,830)

January 12, 2000, common stock
 issued for services rendered
 valued at approximately $0.36
 per share                           1,500,000            750          534,750       -             -         -               -

January 14, 2000, common stock
 issued for warrants exercised at
 $1.00 per share                         3,833               2           3,831       -             -         -               -

January 20, 2000, common stock
 issued for services rendered valued
 at approximately $1.94 per share      535,777            268        1,037,800       -             -         -               -

January 26, 2000, common stock
 issued for services rendered valued
 at approximately $1.94 per share       13,333              7           25,826       -             -         -               -

February 1, 2000, common stock
 issued for services rendered valued
 at $0.25 per share                    632,954            316          157,922       -             -         -               -

February 1, 2000, warrants issued
 below market value                          -              -          166,195       -             -         -               -

February 3, 2000, common stock
 warrants exercised at $0.40 per
 share                                 180,000             90           71,910       -             -         -               -

February 17, 2000, common stock
warrants exercised at $1.50 per
 share                                   5,000              3            7,497       -             -         -               -

February 22, 2000, warrants granted
 below market value                          -              -           77,903       -             -         -               -

February 28, 2000, warrants granted
 below market value                          -              -           86,260       -             -         -               -

February through April 2000, cash
 received on stock subscription
 receivable                                  -              -                -       -       450,000         -               -

Conversion discount on debentures
 (see Note 6)                                -              -          300,000       -             -         -               -

March 10, 2000, common stock
 issued for services rendered valued
 at approximately $1.44 per share       51,400             26           73,854       -             -         -               -
                                  ------------   ------------   --------------  ------  ------------    ------  --------------

Balance Forward                     53,454,773   $     26,727   $   14,136,255  $    -  $   (625,000)   $    -  $   (9,735,830)
                                  ------------   ------------   --------------  ------  ------------    ------  --------------
</TABLE>

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

                                       24
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
                                                                  Additional                  Stock
                                          Common Stock              Paid-In    Treasury   Subscription    Prepaid   Accumulated
                                     Shares         Amount          Capital      Stock      Receivable    Expenses    Deficit
                                  ------------   ------------   --------------  ---------  ---------    ----------  -----------
<S>                                 <C>          <C>            <C>             <C>     <C>             <C>        <C>
Balance Forward                     53,454,773   $     26,727   $   14,136,255  $    -  $   (625,000)   $    -     $(9,735,830)

March 31, 2000, common stock
 issued for services rendered valued
 at approximately $1.44 per share       50,000             25           71,850       -             -         -               -

April 3, 2000, common stock issued
 for services rendered valued at
 approximately $1.51 per share          25,000             12           37,613       -             -         -               -

April 3, 2000, warrants granted
 below market value                          -              -           20,484       -             -         -               -

April 4, 2000, common stock
 issued for services rendered valued
 at approximately $1.26 per share       34,222             17           43,134       -             -         -               -

May 12, 2000, common stock
 issued for services rendered
 valued at approximately $1.78
 per share                               5,626              3            9,997       -             -         -               -

June 1, 2000, common stock
 issued for services rendered valued
 at approximately $0.85 per share      211,480            106          180,071       -             -         -               -

June 7, 2000, warrants granted
 below market value                          -              -            8,270       -             -         -               -

June 8, 2000, warrants granted
 below market value                          -              -            7,647       -             -         -               -

June 19, 2000, common stock
 issued for services rendered valued
 at approximately $0.94 per share       11,522              6           10,796       -             -         -               -

June 28, 2000, common stock
 issued for services rendered valued
 at approximately $1.25 per share       26,000             13           32,518       -             -         -               -

Repurchase common stock by
 canceling stock subscription
 receivable (see Note 2)                     -              -                -   (450,000)   450,000         -               -

July 24, 2000, common stock
 issued for services rendered
 valued at $0.94 per share               3,723              2            3,498       -             -         -               -
                                  ------------   ------------   --------------  ---------  ---------    ------     -----------

Balance Forward                     53,822,346   $     26,911   $   14,562,133  $(450,000) $(175,000)   $    -     $(9,735,830)
                                  ------------   ------------   --------------  ---------  ---------    ------     -----------
</TABLE>

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

                                       25
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
                                                                  Additional                  Stock
                                          Common Stock              Paid-In    Treasury   Subscription    Prepaid   Accumulated
                                     Shares         Amount          Capital      Stock      Receivable    Expenses    Deficit
                                  ------------   ------------   -------------- ---------   ------------  ---------- ----------
<S>                                 <C>          <C>            <C>            <C>        <C>           <C>        <C>
Balance Forward                     53,822,346   $     26,911   $   14,562,133 $(450,000) $ (175,000)   $    -     $(9,735,830)

July 26, 2000, common stock
 issued to convert debentures
 payable at approximately $0.75
 per share                             132,687             66           99,934       -             -         -               -

July 26, 2000, common stock
 issued to convert accrued interest
 on debentures at approximately
 $0.75 per share                           477              -              359       -             -         -               -

July 26, 2000, common stock
 issued for services rendered valued
 at approximately $0.78 per share      100,000             50           78,050       -             -         -               -

August 3, 2000, common stock
 issued for services rendered valued
 at approximately $0.81 per share       17,713              9           14,374       -             -         -               -

August 7, 2000, common stock
 issued to convert debentures
 payable at approximately $0.71
 per share                             176,903             88          124,912       -             -         -               -

August 7, 2000, common stock
 issued to convert accrued interest
 on debentures at approximately
 $0.71 per share                         1,298              1              916       -             -         -               -

August 21, 2000, common stock
 issued for services rendered valued
 at approximately $1.14 per share       10,901              5           12,455       -             -         -               -

August 31, 2000, common stock
 issued to convert debentures
 payable at approximately $0.69
 per share                             109,234             55           74,945       -             -         -               -

August 31, 2000, common stock
 issued to convert accrued interest
 on debentures at approximately
 $0.69 per share.                        1,274              1              874       -             -         -               -

September 6, 2000, common stock
 issued to convert debentures
 payable at approximately $0.69
 per share                             218,468            109          149,891       -             -         -               -
                                  ------------   ------------   --------------  ---------  ---------    ------     -----------

Balance Forward                     54,591,301   $     27,295   $   15,118,843  $(450,000) $(175,000)   $    -     $(9,735,830)
                                  ------------   ------------   --------------  ---------  ---------    ------     -----------
</TABLE>

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

                                       26
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>
                                                                  Additional                  Stock
                                          Common Stock              Paid-In    Treasury   Subscription    Prepaid   Accumulated
                                     Shares         Amount          Capital      Stock      Receivable    Expenses    Deficit
                                  ------------   ------------   -------------- ---------   ------------  ---------- ----------
<S>                                 <C>          <C>            <C>            <C>        <C>           <C>        <C>
Balance Forward                     54,591,301   $     27,295   $  15,118,843  $(450,000) $ (175,000)   $    -     $(9,735,830)

September 6, 2000, common stock
 issued to convert accrued interest
 on debentures at approximately
 $0.69 per share                         2,767              1           1,899        -             -         -               -

September 21, 2000, common stock
 issued to convert debentures
 payable at approximately $0.68
 per share                             250,000            125         169,875        -             -         -               -

September 21, 2000, common stock
 issued to convert accrued interest
 on debentures at approximately
 $0.68 per share                         3,500              2           2,378        -             -         -               -

September 21, 2000, common stock
 issued for services rendered valued
 at approximately $0.81 per share       50,000             25          40,575        -             -         -               -

October 2, 2000, common stock
 issued for services rendered valued
 at $0.74 per share                     25,000             13          18,487        -             -         -               -

October 9, 2000, common stock
 issued for services rendered valued
 at approximately $0.51 per share       15,000              7           7,632        -             -         -               -

October 12, 2000, common stock
 issued for cash at approximately
 $0.54 per share                          651,441           326        349,674       -             -         -               -

November 8, 2000, common stock
 issued for services rendered valued
 at $0.75 per share                     13,333              7           9,993        -             -         -               -

December 13, 2000, common stock
 issued for services rendered valued
 at approximately $0.31 per share       51,000             25          15,887        -             -         -               -

December 28, 2000, common stock
 issued for services rendered valued
 at $0.25 per share                      1,000              1             249        -             -         -               -

Stock offering costs                         -              -         (83,937)       -             -         -               -

Common stock issued for prepaid
 services (see Note 5)               5,500,000          2,750       1,757,250        -             -  (1,760,000)            -

Net loss for the year ended
 December 31, 2000                           -              -               -        -             -         -      (6,652,529)
                                  ------------   ------------   -------------   ---------  ---------  -----------  -----------

Balance, December 31, 2000          61,154,342   $     30,577   $  17,408,805   $(450,000) $(175,000) $(1,760,000) $16,388,359)
                                  ============   ============   =============   =========  =========  ===========  ===========
</TABLE>

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

                                       27
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                                                                   From
                                                                                                                Inception of
                                                                                                                Development
                                                                                                                 Stage on
                                                                                                                  April 1,
                                                                                  For the Years Ended           2000 Through
                                                                                      December 31,              December 31,
                                                                                2000             1999               2000
                                                                          ---------------   ----------------  ----------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                       <C>               <C>               <C>
   Net loss                                                               $    (6,652,529)  $     (1,687,621) $     (2,718,393)
   Adjustments to reconcile net income to net cash used
    by operating activities:
     Common stock issued for services and interest                              2,419,025            703,343           515,631
     Depreciation and amortization                                                 85,241             14,628            63,931
     Warrants issued below market value                                           373,986             -                 36,401
     Conversion discount on debentures                                            300,000             -                150,000
   Changes in operating assets and liabilities:
     (Increase) decrease in receivables and advances                                2,054              2,184             2,394
     (Increase) decrease in inventory                                               2,785             (2,444)            2,785
     (Increase) decrease in prepaids and deposits                                (413,672)            -               (413,672)
     Increase (decrease) in accounts payable                                      110,509            (39,843)           31,210
     Increase (decrease) in accrued expenses                                     (127,676)           249,615           (56,518)
     Increase (decrease) in reserve for discontinued operations                   503,696            370,451            -
                                                                          ---------------   ----------------  ----------------

       Net Cash Used by Operating Activities                                   (3,396,581)          (389,681)       (2,386,231)
                                                                          ---------------   ----------------  ----------------

CASH FLOWS FROM INVESTING ACTIVITIES

   Increase in patent costs                                                       (94,276)           (31,473)          (84,374)
   Purchase of fixed assets                                                       (23,686)            -                (11,767)
                                                                          ---------------   ----------------  ----------------

       Net Cash Used by Investing Activities                                     (117,962)           (31,473)          (96,141)
                                                                          ---------------   ----------------  ----------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Proceeds (payments) from payable - shareholders                                (27,230)            10,302            -
   Proceeds from the issuance of common stock                                   1,048,750            521,135           350,000
   Stock offering costs                                                           (83,937)            -                (31,500)
   Payments received on stock subscription receivable                             450,000            100,000            50,000
   Proceeds from the exercise of warrants                                          83,333             10,000            -
   Proceeds from debentures payable                                             2,000,000             -              1,000,000
                                                                          ---------------   ----------------  ----------------

       Net Cash Provided by Financing Activities                          $     3,470,916   $        641,437  $      1,368,500
                                                                          ---------------   ----------------  ----------------
</TABLE>

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


                                       28
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                Consolidated Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
                                                                                                                   From
                                                                                                                Inception of
                                                                                                                Development
                                                                                                                 Stage on
                                                                                                                  April 1,
                                                                                  For the Years Ended           2000 Through
                                                                                      December 31,              December 31,
                                                                                2000             1999               2000
                                                                          ---------------   ----------------  ----------------
<S>                                                                       <C>               <C>               <C>
NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                                         $       (43,627)  $       (220,283) $     (1,113,872)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                  245,305             25,022         1,315,550
                                                                          ---------------   ----------------  ----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                $       201,678   $        245,305  $        201,678
                                                                          ===============   ================  ================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

CASH PAID FOR:

   Income taxes                                                           $        -        $         -       $         -
   Interest                                                               $        28,520   $            699  $          8,874

NON-CASH FINANCING ACTIVITIES

   Stock issued for services and interest expense                         $     2,419,025   $        703,343  $        515,631
   Stock issued in payment of accrued expenses and
    accounts payable                                                      $         6,430   $         90,000  $          6,430
   Stock issued to convert debentures and notes payable                   $       764,500   $        303,000  $        620,000
   Stock issued for stock subscription receivable                         $        -        $      1,000,000  $         -
   Repurchase of common stock by canceling stock subscription
     receivable                                                           $       450,000   $         -       $        450,000
   Stock issued for prepaid expenses                                      $     1,760,000   $         -       $      1,760,000
</TABLE>

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

                                       29
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999


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.  (Phillips).  The Company reentered
              the  development  stage  effective  April 1,  2000 as a result  of
              Phillips ceasing all operations (see Note 9).

              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                 5 years
                         Furniture and fixtures                 5 years
                         Computers and equipment                5 years

              Depreciation  expense  for the years ended  December  31, 2000 and
              1999 was $28,241 and $13,340, respectively.

                                       30
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

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)
              clearance 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,  2000,  the Company has received
              twenty individual  patents related to medical products and devices
              with the related costs being  amortized over the estimated  useful
              life (17 years) of the patents.  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 capitalized costs are for patents that have not
              yet been received and 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,
                                                                   2000
                                                             -----------------
                         Patents                             $         579,828
                         Trademarks                                     11,961
                                                             -----------------

                         Subtotal                                      591,789
                         Less accumulated amortization                 (62,259)
                                                             -----------------

                         Total                               $         529,530
                                                             =================

              Amortization  expense  for the years ended  December  31, 2000 and
              1999 was $57,000 and $1,288, respectively.

              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.

                                       31
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999


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

              At  December  31,  2000,   the  Company  had  net  operating  loss
              carryforwards  of  approximately  $9,400,000  that  may be  offset
              against  future  taxable  income  through 2020. No tax benefit has
              been  reported in the  consolidated  financial  statements  as the
              Company  believes  that  the  carryforwards  will  expire  unused.
              Accordingly,  the potential tax benefits of the net operating loss
              carryforwards  are  offset by a  valuation  allowance  of the same
              amount.

              The income tax benefit differs from the amount computed at federal
              statutory rates of approximately 38% as follows:
<TABLE>
<CAPTION>
                                                                                     For the Years Ended
                                                                                          December 31,
                                                                            --------------------------------------
                                                                                  2000                1999
                                                                            ------------------  ------------------
<S>                                                                         <C>                 <C>
              Income tax benefit at statutory rate                          $        1,347,838  $          259,804
              Change in valuation allowance                                         (1,347,838)           (259,804)
                                                                            ------------------  ------------------

                                                                            $           -       $           -
                                                                            ==================  ==================

              Deferred tax assets (liabilities) are comprised of the following:

                                                                                      For the Years Ended
                                                                                           December 31,
                                                                            --------------------------------------
                                                                                  2000                1999
                                                                            ------------------  ------------------

              Income tax benefit at statutory rate                          $        3,576,470  $        2,228,632
              Change in valuation allowance                                         (3,576,470)         (2,228,632)
                                                                            ------------------  ------------------

                                                                            $           -       $           -
                                                                            ==================  ==================
</TABLE>

              Due to the change in ownership provisions of the Tax Reform Act of
              1986,  net operating  loss  carryforwards  for Federal  income tax
              reporting  purposes  are subject to annual  limitations.  Should a
              change in ownership occur, net operating loss carryforwards may be
              limited as to use in future years.

              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.

                                       32
<PAGE>

                    MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARY
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

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

              h.  Revenue Recognition

              Revenue is recognized upon shipment of goods to the customer.

              i.  Inventory

              Inventory  is carried at the lower of cost or market  value  using
              the first-in,  first-out  method.  Inventory  consists of finished
              goods.
<TABLE>
<CAPTION>
              j.  Basic Loss Per Share
                                                                                     For the Years Ended
                                                                                         December 31,
                                                                            --------------------------------------
                                                                                  2000               1999
                                                                            ------------------  ------------------
              Basic loss per share from continuing operations:
<S>                                                                         <C>                 <C>
                 Income (loss) - numerator                                  $       (6,098,052) $       (1,324,965)
                 Shares - denominator                                               58,406,082          37,152,674
                                                                            ------------------  ------------------
                 Per share amount                                           $            (0.10) $            (0.04)
                                                                            ==================  ==================

              Basic loss per share from discontinued operations:

                 Income (loss) - numerator                                  $         (554,477) $         (362,656)
                 Shares - denominator                                               58,406,082          37,152,674
                                                                            ------------------  ------------------
                 Per share amount                                           $            (0.01) $            (0.01)
                                                                            ==================  ==================
</TABLE>
              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 financial statements. Shares to be issued from warrants and
              options are not  included in the  computation  because  they would
              have an antidilutive effect on the net loss per common share.

              k.  Advertising

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

              l.  Credit Risks

              Medisys  maintains  its  cash  accounts  primarily  in one bank in
              Louisiana.  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 of
              the Company and its Subsidiaries 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.

                                       33
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

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

              n.  Accounts Receivable

              Accounts  receivable  are shown net of the  allowance for doubtful
              accounts of $-0- at December 31, 2000.

              o.  Change in Accounting Principle

              The Company has adopted the  provisions of FASB  Statement No. 138
              "Accounting  for  Certain   Derivative   Instruments  and  Hedging
              Activities, (an amendment of FASB Statement No. 133.)" Because the
              Company had  adopted the  provisions  of FASB  Statement  No. 133,
              prior to June 15, 2000, this statement is effective for all fiscal
              quarters  beginning  after June 15,  2000.  The  adoption  of this
              principle  had no material  effect on the  Company's  consolidated
              financial statements.

              The Company has adopted the  provisions of FASB  Statement No. 140
              "Accounting  for Transfers  and Servicing of Financial  Assets and
              Extinguishments  of  Liabilities  (a replacement of FASB Statement
              No.  125.)"  This  statement  provides  accounting  and  reporting
              standard for  transfers  and  servicing  of  financial  assets and
              extinguishments  of  liabilities.  Those  standards  are  based on
              consistent  application of a financial-  components  approach that
              focuses on control. Under that approach, the transfer of financial
              assets,  the Company recognized the financial and servicing assets
              it controls  and the  liabilities  it has  incurred,  derecognizes
              financial   assets  when   control  has  been   surrendered,   and
              derecognizes   liabilities  when   extinguished.   This  statement
              provides  consistent  standards  for  distinguishing  transfers of
              financial  assets that are sales from  transfers  that are secured
              borrowings.   This   statement  is  effective  for  transfers  and
              servicing of financial assets and  extinguishments  of liabilities
              occurring  after March 31, 2001.  This  statement is effective for
              recognition and reclassification of collateral and for disclosures
              relating to securitization  transactions and collateral for fiscal
              years  ending  after  December  15,  2000.  The  adoption  of this
              principle  had no material  effect on the  Company's  consolidated
              financial statements.

              The Company has adopted the provisions of FIN 44  "Accounting  for
              Certain    Transactions    Involving   Stock    Compensation   (an
              interpretation  of APB Opinion No.  25.)" This  interpretation  is
              effective  July 1,  2000.  FIN 44  clarifies  the  application  of
              Opinion No. 25 for only  certain  issues.  It does not address any
              issues  related to the  application  of the fair  value  method in
              Statement  No.  123.  Among other  issues,  FIN 44  clarifies  the
              definition  of employee for  purposes of applying  Opinion 25, the
              criteria   for   determining   whether  a  plan   qualifies  as  a
              noncompensatory  plan,  the  accounting   consequence  of  various
              modifications  to the terms of a previously  fixed stock option or
              award, and accounting for an exchange of stock compensation awards
              in a business  combination.  The adoption of this principal had no
              material   effect   on  the   Company's   consolidated   financial
              statements.

                                       34
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 2 -      STOCK SUBSCRIPTION RECEIVABLE

              During 1999, the Company issued  5,555,555  shares of common stock
              for  $1,000,000.  Payment  for the  common  stock  was made with a
              non-interest bearing promissory note. Those shares were being held
              in escrow as collateral until the note was to be paid.  During the
              year ended  December 31, 2000,  $550,000 on the note had been paid
              and the balance of $450,000  was  forgiven by the Company in order
              to repurchase 1,000,000 of the shares of common stock (the Company
              also  canceled  900,000  common stock  warrants as a result of the
              transaction).  These  shares  are  being  held by the  Company  as
              treasury stock.

              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 with the due date
              being  extended to May 2001 during  2000.  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 3 -      NOTES PAYABLE - SHAREHOLDERS

              Notes payable - shareholders consisted of the following:
<TABLE>
<CAPTION>
                                                                         December 31,
                                                                             2000
                                                                      -----------------
<S>                                                                   <C>
              Note payable to Cynthia F. Vatz, unsecured, dated
               October 19, 1993 at 8%; principal and interest
               delinquent since August 18, 1994.                      $          12,500
                                                                      -----------------

                       Total                                                     12,500

                       Less current portion                                     (12,500)
                                                                      -----------------

                       Total long-term portion                        $           -
                                                                      =================
</TABLE>
              The note  payable is  technically  in default.  The  related  note
              holder  has  not  demanded   repayment   however  the  Company  is
              continuing  in  the  process  of  locating  this  shareholder  and
              negotiating repayment terms.

                                       35
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999


NOTE 4 -      COMMON STOCK

              During 1999, the Company issued 324,477 shares of its common stock
              in  satisfaction  of accrued wages of $90,000.  The Company issued
              1,435,000  shares  of its  common  stock to  convert  $303,000  of
              debentures  payable.  The Company issued  3,305,737  shares of its
              common stock for services and interest expense.  The shares issued
              for services and interest  were valued at the trading price of the
              common  stock on the date the  shares  were  issued.  The  Company
              issued  3,388,443 shares of its common stock for cash of $521,135.
              The  Company  issued  8,889  shares of its  common  stock from the
              exercise  of  warrants  for  cash  of  $10,000.  Finally,  certain
              officers and directors of the Company  canceled  972,214 shares of
              common stock and the shares were  reissued to convert a portion of
              the debentures payable.

              During 2000, the Company issued 588,500 shares of its common stock
              in satisfaction for debentures and notes payable of $144,500.  The
              Company issued  3,384,984 shares of its common stock for services.
              The services  were valued at the trading price of the common stock
              or the value of the service performed,  whichever was more readily
              determinable  on the date the  shares  were  issued.  The  Company
              issued  896,608  shares of its common stock to convert  debentures
              and accrued  interest of $620,000  and $6,430,  respectively.  The
              Company  issued  3,539,773  shares of its common stock for cash of
              $1,048,750.  The Company  incurred stock offering costs of $83,937
              related to these stock for cash sales. Finally, the Company issued
              188,833  shares of its common  stock from the exercise of warrants
              for cash of $83,333.

NOTE 5 -      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, 2000. 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 received  salaries of
              $12,500 per month during 2000 and will receive salaries of $15,000
              per month during 2001.

              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.  The cash
              bonus is designed not to exceed 50% of their  annual  compensation
              and stock  bonuses are designed not to exceed 100% of their annual
              compensation.  However,  additional compensation may be awarded by
              the  Board  of  Directors   under  the  terms  of  the  employment
              contracts.

              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 $900 per  month,  expiring  in  September
              2001.

                                       36
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 5 -      COMMITMENTS AND CONTINGENCIES (Continued)

              Legal Issues

              On March 16, 2000,  the Company  filed a Complaint  against  Brett
              Phillips, Elbert Carl Anderson,  William H. Morris, Marilyn Morris
              and Barbara Larkins in the United States District Court in and for
              the Middle District of Louisiana,  alleging various securities law
              violations  and  related  claims  in  connection   with  the  1998
              acquisition  by  the  Company  from  the  defendants  of  Phillips
              Pharmatech Labs, Inc. (Phillips). The Company is seeking recission
              of the  acquisition,  damages  and  other  relief.  The  case  was
              dismissed in Louisiana on a contractual venue provision.  The case
              bears docket number  2:00CV00677ST  in the United States  District
              Court in Salt Lake City,  Utah The Company  believes that the suit
              filed is in the best interests of the shareholders.

              On May 9,  2000,  E.  Carl  Anderson,  William  Morris  and  Brett
              Phillips,  filed a derivative  action lawsuit in the United States
              District   Court,   Middle   District  of  Florida,   case  number
              8:00CV905-T 24SS against the Company and the current  Directors of
              the Company. The action was filed by Messrs. Anderson,  Morris and
              Phillips allegedly for and in behalf of the Company. The complaint
              alleges  corporate  waste in the form of  excessive  salaries  and
              bonuses   and  other   alleged   wastes   related   to   Phillips.
              Additionally,  plaintiff  Anderson has made a demand for corporate
              records and to void the election of directors by the  shareholders
              at the shareholders  meeting held in May 2000. The Complaint seeks
              injunctive relief, alleging fraudulent election, and damages. Each
              of the  plaintiffs  in  this  action  is also a  defendant  in the
              lawsuit  previously  filed  by  the  Company  on  March  16,  2000
              referenced above.

              On August 24, 2000, a Magistrate  for the United  States  District
              Court,  Middle  District  of  Florida,  in the  action  brought by
              Plaintiffs  Carl  Anderson,  William  Morris  and  Brett  Phillips
              against various directors of Medisys Technologies,  Inc., issued a
              39 page Report and  Recommendation  to the Federal  District Court
              Judge. The Report followed an Evidentiary  Hearing held before the
              Magistrate  on  Plaintiffs'  Motion  for  Preliminary  Injunction,
              Defendants'   Motion  to  Dismiss   the   Derivative   Claims  and
              Defendants'  Motion to  Dismiss  Plaintiff  Anderson's  Individual
              claim.  The Report  recommended  that the Federal  District  Court
              Judge deny Plaintiffs' Motion for Preliminary Injunction and grant
              Defendants'  Motion to Dismiss the  Derivative  Claims and further
              dismiss  Plaintiff  Anderson's  Individual Claim. All parties were
              then permitted to file written responses with the Court before the
              Report and  Recommendation  was submitted to the Federal  District
              Judge for final ruling. The Court subsequently  ordered Medisys to
              retain counsel  separate from the individual  defendants.  Various
              other  pleadings  have  been  filed  and the  plaintiffs  now seek
              another  injunction  to enjoin the  directors  from using  Company
              assets to  solicit  proxies.  The  parties  now await the  Federal
              District   Court   Judge's   final  ruling  on  the   Magistrate's
              recommendations to dismiss. Pursuant to the Company's by-laws, the
              Company provides full indemnity to the defendant  directors and/or
              former  directors  for fees and  costs  pending  dismissal  of the
              action.  These  directors  have  agreed  and will be  required  to
              reimburse  the Company in the event that any  judgment is rendered
              against them which legally precludes indemnity.

                                       37
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999


NOTE 5 -      COMMITMENTS AND CONTINGENCIES (Continued)

              Legal Issues (Continued)

              On October 11,  2000,  the United  States  District  Court for the
              District of Utah,  Central Division,  in the litigation brought by
              Medisys Technologies,  Inc. against various defendants,  including
              Carl Anderson,  William Morris and Brett Philips,  concluded a two
              day  Evidentiary  Hearing on  Plaintiff's  Motion for  Preliminary
              Injunction to make permanent a Temporary  Restraining  Order (TRO)
              previously   issued,   which  sought  an  Order   restraining  the
              defendants  from  trading  shares  acquired  as a  result  of  the
              acquisition of Phillips  Pharmatech Labs from the  Defendants.  At
              the conclusion of the hearing, the Judge denied Plaintiff's motion
              for preliminary  injunctive relief.  Dissolution of a TRO can lead
              to the award of attorney's fees and reasonable provable damages in
              the  discretion  of the Court.  The Court  denied the  defendants'
              subsequent  motions to strike  certain  parts and the  plaintiffs'
              claim  will hear  additional  motions  in this  matter as the case
              proceeds to a  resolution  on the merits of the claim.  In a State
              Court claim filed by the Company for injunctive  relief, the Court
              dissolved the injunction  that prevented the transfer of shares of
              the Company's stock held by Messrs. Anderson,  Morris and Phillips
              and awarded them attorney's fees of approximately $30,000, payable
              by the Company. The Company anticipates  proceeding with an appeal
              following the entry of the Court's order.

              Phillips  is a party to various  other  legal  proceedings.  These
              primarily  involve  commercial  claims and one  action  involves a
              former  employee.  The Company cannot predict the outcome of these
              lawsuits,  or the attempts by litigants to make Medisys a party to
              these legal  proceedings  and claims with  certainty.  Nor can the
              Company   predict   whether  the  outcome  of  any  or  all  these
              proceedings,  even if determined adversely,  could have a material
              adverse effect on the Company's  business or financial  condition.
              There is a  possibility  that due to  Phillips  discontinuing  its
              operations,  both Phillips and the Company could be the subject of
              future actions,  which the Company  expects to vigorously  defend.
              Case No.  3C063258  California  Superior  Court,  Elaine Wilkes v.
              Phillips Pharmatech et al is one such case which Medisys has moved
              to be  dismissed  from.  The final  results  are  pending  and the
              Company expects to vigorously  defend any such allegations as they
              relate to Medisys.

              Phillips has filed for  protection  under  Chapter 7 of the United
              States  Bankruptcy Code in the United States  Bankruptcy  Court of
              the Middle District of Florida, Tampa Division.

              Manufacturing Agreement

              On January 19,  2000,  the Company  entered  into a  manufacturing
              agreement for the production of the Company's  patented  syringes.
              The Company has agreed to pay  $500,000  cash and issue  7,000,000
              shares of its common stock as part of the  agreement.  At December
              31,  2000,  $500,000 had been paid and  1,500,000  shares had been
              released from escrow as payment.  The remaining  5,500,000  shares
              have been  issued  and  placed  into an escrow  account  until the
              services  are  completed.  These  shares are being  classified  as
              prepaid  expenses  (in the  stockholders'  equity  section  of the
              consolidated balance sheet) until the services are completed.  The
              5,500,000 shares in escrow have been recorded at the trading price
              of the stock on  December  31, 2000 or $0.32 per share and will be
              revalued on the date the services are completed and the shares are
              released out of escrow.

                                       38
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999


NOTE 6 -      CONVERTIBLE DEBENTURES

              The  Company  received  a  $2,000,000  face  value 6%  convertible
              debenture.  The conversion price of the debentures is the lower of
              85% of the  market  price  of the  Company's  common  stock at the
              conversion date or $2.00. The conversion  discount of 15% has been
              charged to interest expense in the amount of $300,000. The Company
              converted  $620,000 of the debenture  into common stock by issuing
              887,292  shares during the third quarter of 2000. The Company also
              converted  $41,740 of accrued  interest  on the  debenture  to the
              principal  balance  during  2000  The  principal  balance  of  the
              debenture  at December  31,  2000 was  $1,421,740.  The  debenture
              matures as  follows:  $421,740  on August 31,  2001,  $500,000  on
              November 12, 2001 and  $500,000 on December 31, 2001.  The Company
              also issued  warrants to purchase  300,000 shares of the Company's
              common stock at an exercise price of $2.00 per share.

NOTE 7 -      COMMON STOCK WARRANTS

              During  the year ended  December  31,  2000,  the  Company  issued
              warrants  to  acquire  3,576,752  shares  of common  stock.  These
              warrants  were issued at  exercise  prices  ranging  from $0.50 to
              $2.00.  The warrants  issued in 2000 have  maturities  of three to
              five years.  All warrants issued in 2000 were to  non-employees of
              the  Company.  The  following  tables  summarize  the  information
              regarding  warrants  outstanding  at December  31,  2000.  All the
              warrants are exercisable at December 31, 2000.
<TABLE>
<CAPTION>

<S>                                                                                  <C>
                      Warrants outstanding at January 1, 2000                        10,859,849
                      Warrants granted                                                3,576,752
                      Warrants canceled                                             (3,192,409)
                      Warrants exercised                                              (188,833)
                                                                              ----------------

                      Warrants outstanding at December 31, 2000                      11,055,359
                                                                              =================

                      Weighted average exercise price of warrants
                        outstanding at December 31, 2000                      $            1.36
                                                                              =================
</TABLE>

<TABLE>
<CAPTION>
                                                              Number of           Weighted
                                                              Warrants            Average             Weighted
                                                            Outstanding at        Remaining           Average
                                                              December 31,       Contractual          Exercise
                      Range of Exercise Prices                2000                  Life                Price
                      ------------------------          ------------------  ------------------  ------------------

<S>                                                              <C>               <C>          <C>
                      $0.25 - $0.75                              5,832,692         1.96         $             0.55
                      $1.00 - $1.25                              1,267,204         1.96         $             1.25
                      $1.5625 - $2.00                            1,994,700         1.94         $             1.97
                      $2.625 - $4.25                             1,960,763         2.09         $             3.25
</TABLE>

                                       39
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999


NOTE 7 -      COMMON STOCK WARRANTS (Continued)

              The  Company  applies  SFAS No.  123 for  warrants  issued,  which
              requires  the Company to estimate  the fair value of each  warrant
              issued at the grant date by using the Black-Scholes  pricing model
              with the following assumptions:
                                                          2000
                                                     -------------
                      Risk-free interest rate        6.06% - 6.66%
                      Expected life                        3 Years
                      Expected volatility              1.88 - 1.99
                      Dividend yield                           0.0

              As a result of applying  SFAS No. 123,  the Company had an expense
              of $373,986  during the year ended  December 31, 2000. The expense
              is  included  in the  general  and  administrative  amount  in the
              statement of operations.

NOTE 8 -      GOING CONCERN

              The Company's consolidated financial statements have been prepared
              using generally accepting  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 no  significant
              operating  revenues.  Management  believes  that the  Company  has
              sufficient  capital  resources and commitments to fund anticipated
              operations  into the second  quarter of the year 2001. The Company
              intends to seek additional  equity or debt capital through private
              and government  sources and/or a public  offering,  although there
              can be no assurance that the Company could  successfully  complete
              any  such  offering.  In 2000,  the  Company  entered  into a firm
              agreement for the acquisition of up to $14 million of capital from
              private sources.  However, market conditions reduced the projected
              return on that funding to approximately $2 million. The Company is
              now preparing an application for a USDA loan in the amount of $4.5
              million.  The Company has retained an  investment  banking firm as
              financial  consultants  to the  Company  for  raising  capital and
              exploring  strategic  relationships.  The Company  also expects to
              generate revenue from the sales of its proprietary products.

                                       40
<PAGE>

                   MEDISYS TECHNOLOGIES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999

NOTE 9 -      DISCONTINUED OPERATIONS

              Effective  April 1,  2000,  Phillips  ceased all  operations.  The
              following  is a summary of the loss from  discontinued  operations
              resulting from the elimination of the operations of Phillips.  The
              financial  statements have been retroactively  restated to reflect
              this event. The Company has established a reserve for discontinued
              operations of $850,665 which consists of net liabilities in excess
              of  recoverable  assets at December 31,  2000.  No tax benefit has
              been attributed to the discontinued operations.
<TABLE>
<CAPTION>
                                                                                         December 31,
                                                                            -------------------------------------
                                                                                       2000           1999
                                                                            -----------------  ------------------
<S>                                                                         <C>                <C>
              NET SALES                                                     $         300,431  $        2,714,846
                                                                            -----------------  ------------------

              OPERATING EXPENSES

                Cost of sales                                                         267,480           2,017,321
                General and administrative                                            172,776             926,783
                Depreciation                                                           20,066              74,442
                                                                            -----------------  ------------------

                  Total Operating Expenses                                            460,322           3,018,546
                                                                            -----------------  ------------------

              LOSS FROM OPERATIONS                                                   (159,891)           (303,700)
                                                                            -----------------  ------------------

              OTHER INCOME (EXPENSES)

                Loss on write down of assets                                         (386,940)             -
                Interest expense                                                       (7,646)            (58,956)
                                                                            -----------------  ------------------

                  Total Other Income (Expense)                                       (394,586)            (58,956)
                                                                            -----------------  ------------------

              LOSS BEFORE INCOME TAXES                                               (554,477)           (362,656)

              INCOME TAXES                                                             -                   -
                                                                            -----------------  ------------------

              LOSS FROM DISCONTINUED OPERATIONS                             $        (554,477) $         (362,656)
                                                                            =================  ==================
</TABLE>

                                      41
<PAGE>

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

         This item is not applicable.

                                    PART III

Item 9.  Directors and Executive Officers of the Registrant

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

        Name                       Age             Position
Edward P. Sutherland               54      Chairman, CEO, Treasurer and Director
Kerry M. Frey                      55      President, COO and Director
William David Kiesel               56      Director
Robert L. diBenedetto, MD          71      Director
Timothy Andrus, MD                 51      Director
Charles Potter, MD                 52      Director
Richard H. Reisner                 57      Director
Bruce S. Morra, PhD                47      Director
Paul L. Ray                        54      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 officer serves at the discretion of the Board
of Directors.

MANAGEMENT

         Mr. EDWARD P. SUTHERLAND is the Chairman/CEO, Treasurer and a
co-founder  of the Company.  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.  He 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 sectors  including over eight years of experience in forming,  developing
and  managing a start-up  company in the medical R&D  industry.  His  background
includes strategic planning, financing,  administration,  policy formulation and
execution,   personnel  education,   general  office  management,   bookkeeping,
taxation,  and interface with governmental  agencies including the Food and Drug
Administration  (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.
He is currently admitted to practice in New York and in Louisiana.

         Mr. KERRY M. FREY is the President and Chief Operating  Officer and has
over 28 years of  experience  in the health  care  industry.  Mr. Frey became an
Officer  and a Director of the Company in  November  1994.  Mr. Frey  received a
Bachelor of Arts Degree from  Southeastern  Louisiana  University  in 1969.  His
background includes marketing and sales, as well as general management. Mr. Frey
was associated with Johnson and Johnson  Hospital  Services for ten years in the
development  of  multi-company  corporate  marketing  programs and services.  He
served as Vice  President  of  Marketing  as well as VP of Sales.  Mr.  Frey has
coordinated  strategic  assessment of the dynamic healthcare  market,  including
managed  care,  integrated  provider  systems and  healthcare  reform.  Previous
consulting  assignments have included integrated  healthcare systems such as the
General  Health  System and the Florida  Hospital;  futuristic  health  delivery
planning  with  Walt  Disney   Development   Company.   He  also  consulted  for
Qualitycare,  Inc., a medical distributor  company, and has served on the boards
of a medical software company and a start-up minority distributor.

                                       42
<PAGE>

DIRECTORS

         Dr.  Robert  L.  diBenedetto,  Director.  (Note:  Dr.  diBenedetto  has
informed  the  Company  of his  intention  to retire at the end of his term) 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 a past  President  and CEO of the
Louisiana Medical  Insurance  Company,  a major provider of medical  malpractice
insurance. He also serves, or has served, 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.

         Mr. WILLIAM DAVID KIESEL is a Director and 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  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  valuations  of
patents,  trademarks,  and other intellectual property. Mr. Kiesel received from
Louisiana  State  University a B.S. Degree in Mathematics in 1966, a M.S. Degree
in Nuclear  Engineering  in 1970,  and a Juris Doctor Degree in law in 1970. Mr.
Kiesel has been a registered patent attorney and engaged in the private practice
of law since 1971 specializing in patent law and related legal areas. Mr. Kiesel
has served as Adjunct  Professor at the Louisiana  State  University  Law School
teaching courses in Patent Law.

         DR. TIMOTHY  ANDRUS is a Director.  Dr. Andrus became a Director of the
Company in November  1996.  He received  his Doctor of Medicine  degree 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 in Baton Rouge,
Louisiana for over 20 years. He was Chief of Staff of Woman's  Hospital in Baton
Rouge in 1991.  He was elected to the Board of Directors of Woman's  Hospital in
1995 and became  Chairman of the Board of Directors  in 2000.  He was a founding
member and  President  of  Louisiana  Women's  Healthcare  Associates,  a single
specialty  group practice in Baton Rouge,  LA. Dr. Andrus received an MBA degree
from Louisiana State University in Baton Rouge, LA in 1996.

                                       43
<PAGE>

         DR. CHARLES POTTER is a Director.  He received his training at Michigan
State  University  in Lansing  Michigan and at Washington  University  School of
Medicine in St. Louis Missouri.  He is Board certified in Otolaryngology  and is
in private practice in Springfield, Illinois. Dr. Potter served for six years on
the Board of Directors of  Springfield  Clinic and has acted as a consultant for
several medical device companies including,  Xomed, Smith & Nephew, Storz of St.
Louis, and  Instrumentarium.  Storz and  Instrumentarium  market medical devices
which bear Dr. Potter's name.

         Mr.  RICHARD H.  REISNER was  appointed  as a Director in  September of
2000.  He comes to Medisys  with  extensive  background  in the  medical  device
industry.  In 1992 he co-founded  Exogen,  Inc. and served as its Vice President
and Chief  Financial  Officer until it was sold to Smith & Nephew,  PLC in 1999.
Mr. Reisner remained an employee of Exogen through June 30, 2000. After June 30,
2000 Mr. Reisner was a self-employed consultant.  Prior to that, Mr. Reisner has
held top-level executive management and advisory positions in several public and
private  companies  including Cirrus  Diagnostic,  Inc.,  Datascope Corp.,  Pain
Suppression Labs, and Electro-Biology, Inc., all of which manufactured, marketed
and sold medical devices and instruments.  He is a Certified  Public  Accountant
and holds a BS degree from Benjamin Franklin University.

         DR. BRUCE S. MORRA is a Director and currently serves as President, COO
and CFO of two development-stage  biomedical companies,  Biopore Corporation and
Polygenetics,  Inc. in Los Gatos,  California.  Dr. Morra is responsible for the
strategic   direction  and  financial  planning  for  the  companies,   and  for
establishing  option/licensing  agreements.  Prior to his current position,  Dr.
Morra  served  as  President  and COO of  Flamel  Technologies,  Inc.,  the U.S.
subsidiary of Flamel Technologies S.A. From the company's inception in 1993, Dr.
Morra led the  strategic  development  of the company's  advanced  polymer-based
delivery  technologies  for  medical   applications.   He  was  responsible  for
pre-market  development of Flamel's first commercial drug delivery product,  and
negotiated  partnerships with  pharmaceutical,  biotechnology and medical device
companies.  Before  joining  Flamel,  he had more than 13 years of domestic  and
international experience in general management,  product management,  marketing,
business  development  and R&D.  Dr.  Morra  earned his Ph.D.  and MS in polymer
sciences and engineering,  and his MBA from the University of Massachusetts.  He
graduated  magna cum  laude  with BSE in  chemical  engineering  from  Princeton
University.

         Mr. PAUL L. RAY is a Director and has 32 years of management experience
in the medical device industry and has provided  management  consulting services
to a broad variety of medical companies. He was most recently President, CEO and
Chairman of Image Guided  Technologies in Boulder,  Colorado from 1994 until the
company,  which  develops and  manufactures  optical  localizers for medical and
industrial  applications,  was sold last  August  to a  specialty  surgical  and
medical products company, Stryker Corporation. . Before joining IGT, Mr. Ray was
Managing Partner and Director of Paradigm  Partners,  LLC, a venture  investment
firm.  Until 1989, Mr. Ray was President,  CEO and Chairman of Allertech,  Inc.,
which he co-founded  in 1984.  He currently  serves on the Board of Directors of
Boulder Technology  Incubator,  a not-for-profit  corporation funded by Colorado
businesses,  public sources and entrepreneurs to help technology-based  start-up
companies  succeed.  He also  holds the  position  of  Co-Vice  Chairman  of the
Governor's  Commission of Science and  Technology for Colorado and serves on the
Advisory Board of the School of Mines' Division of  Engineering.  In addition to
several corporate board  memberships,  Mr. Ray was Director of the University of
Colorado  Technology  Transfer  Corporation  from 1996 to 1999 and  founded  the
Colorado  Biomedical  Venture Center.  He received his BS degree from Ball State
University in Muncie, Indiana.

                                       44
<PAGE>

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  were timely  prepared for
filing and submission by the individual directors to the Securities and Exchange
Commission.

Compensation of Directors

         Presently  and  through  May 1,  2001 the  Chairman  of the Board is to
receive  $1,000 per  non-meeting  month,  $1,800 (in person) per meeting  month;
Secretary  to receive  $600.00  per  non-meeting  month,  $1,600 (in person) per
meeting month;  Treasurer to receive $400.00 per non-meeting month or $1,400 (in
person) per meeting month. If a Director holds more than one office, then he/she
will only receive  compensation for the highest paid office. All other Directors
receive  $1,000 per meeting  attended in person or $500 attended via  telephone.
Committee  members receive $200 (in person or via phone) per committee  meeting.
Committee  Chairperson  to receive $300  additional.  All fees are paid in stock
with  prices  determined  by the  closing bid price on the last day of the month
following the meeting.  All Board members  annually receive the number of shares
of restricted  stock necessary to equal $5,000 in value based on the average bid
price for the year.  The Company has the authority to issue  warrants in lieu of
restricted  stock.  The  exercise  price of the warrants is based on the average
closing price of March 23, 2001.

         Effective  May 1, 2001  through  May 1, 2002  each  non-employee  Board
member  will  receive  $1,500 for Board  meetings  attended in person or $500 by
phone.  Committee  meetings:  1) In  conjunction  with Board meeting each member
receives $1,500 in person or $500 by phone; 2) Separate,  with Interstate Travel
$1,500 in person or $500 by phone; 3) Separate,  without  Interstate Travel $500
in person or $500 by phone.  Committee  Chairpersons  receive  an annual  fee of
$1,000 in addition to meeting fees.  Secretary  receives an annual fee of $2,000
in addition to meeting fees. All cash fees will be accrued until sufficient cash
is  available  for payment.  Payment will be approved by the Board.  The Company
reserves the right to pay all or part of the accrued fees in  restricted  stock.
All Board  members  elected on May 9, 2001 will receive  140,000  fully  vested,
cashless warrants priced at the closing bid price of Medisys common stock on May
8, 2001.  Starting in May 2002,  any current  Directors  re-elected to the Board
after  serving  for one year or more will  receive  the number of fully  vested,
cashless  warrants equal to 0.08% of the  outstanding  Medisys shares on the day
prior to their  re-election.  These will be priced at the  closing  bid price of
Medisys  common  stock on the day prior to their  election.  New  Board  members
elected  after May 9, 2001 will  receive  the number of fully  vested,  cashless
warrants  equal to 0.2% of the  outstanding  Medisys  shares on the day prior to
their  re-election.  These  will be priced at the  closing  bid price of Medisys
common  stock  on the  day  prior  to  their  election.  All  warrants  will  be
exercisable  immediately,  have a 10-year  expiration  date and a prohibition on
selling  any shares  obtained  with the  warrants  for a period of one year from
granting of the warrants.  Out of town  Directors are  reimbursed for reasonable
travel expenses.

Changes in Control

         Control of the company has not changed substantially since December 31,
1999.

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, 1998, 1999 and 2000 to the Company's Chief Executive  Officer
and Chief Operating Officer.

                                       45
<PAGE>
<TABLE>
<CAPTION>

                           Summary Compensation Table

Name and                                                                          Other
Principal                                                                        Annual       All Other
Position                            Year         Salary          Bonus        Compensation   Compensation
--------                            ----         ------          -----        ------------   ------------
<S>                                 <C>       <C>             <C>             <C>            <C>
Edward P. Sutherland                1998             -0-             -0-           -0-            (1)
C.E.O.                              1999      $  46,154(3)    $ 100,000(2)         -0-            (3)
                                    2000      $ 150,000       $  50,000(4)         -0-            -0-

Kerry M. Frey,                      1998             -0-             -0-           -0-            (1)
President and                       1999      $  46,154(3)    $ 100,000(2)         -0-            (3)
C.O.O.                              2000      $ 150,000       $  43,750(4)         -0-            -0-
</TABLE>

(1)      In 1999, Mr. Sutherland and Mr. Frey were authorized by the Board to be
         issued 300,000  shares each of restricted  common stock as a compromise
         and  deferral  of bonus  compensation  for the  year  1998.  (Frey  and
         Sutherland  abstained  from  the  vote.)  On the  date  of the  meeting
         authorizing  the shares,  the Company's  common stock had a closing bid
         price of $0.18.
(2)      In March 2000,  the Board of Directors  voted a $100,000  cash Bonus to
         Mr. Frey and Mr.  Sutherland as additional  compensation for 1999 (Frey
         and  Sutherland  abstained  from voting as to their own  compensation).
         That sum was paid in full in the year 2000.
(3)      No cash  salaries,  wages or bonuses  were paid to any of the  officers
         between April 1997 and December 1999. The officers voluntarily deferred
         their cash salaries and bonuses on a  month-to-month  basis  ultimately
         compromising  and deferring them for restricted  stock and/or  interest
         bearing  promissory  notes.  Beginning  in December  1999 and ending in
         April  2000,  all past wages  which had been  deferred  by notes,  were
         redeemed  with  cash  ($62,500  in 2000).  All  non-cash  and  non-note
         deferred  compensation  ($37,500)  had been  deferred  and  compromised
         through the issuance of restricted  stock,  the bid price for the month
         deferred, except for the month of November in which 250,000 shares each
         were  authorized  to be issued to the  officers  pursuant to  mandatory
         renegotiation  provisions  in their  contracts.  (Frey  and  Sutherland
         abstained  from the vote with  regard to their  own  compensation.  The
         Company had the limited right to repurchase  those shares for $0.10 per
         share but chose not to exercise that right).
(4)      Cash bonus  compensation  was paid as earned  pursuant to the  officers
         meeting specific contractual  requirements.  No stock or option bonuses
         have been paid to officers for the year 2000.

Employment Agreements

         The Company  entered into 3 year  employment  agreements with Edward P.
Sutherland and Kerry Frey respectively for the years 2000, 2001 and 2002 calling
for a first year salary of  $150,000  plus  insurance,  benefits,  expenses  and
performance based bonus provisions.  The $150,000 base salary was the same as it
had been for the previous  two years  without  increase.  Year 2001 called for a
base  salary  increase  to  $180,000  plus  insurance,  benefits,  expenses  and
performance  based  bonuses  and 2002 calls for a stepped  increase on an annual
basis to $210,000  plus  insurance,  benefits,  expenses and  performance  based
bonuses.

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, 2000,  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 of
Beneficial Owner                    Beneficially Owned(1)    Ownership
Robert L. diBenedetto*                   727,795(2)              1.2%
  144 Napoleon Street
  Baton Rouge, La 70802
William David Kiesel*                  2,581,932(3)              4.2%
  2355 Drusilla Lane
  Baton Rouge, LA 70809
Edward P. Sutherland*                  2,184,973(4)              3.6%
  144 Napoleon Street
  Baton Rouge, LA 70802
Kerry Frey*                            1,933,511(5)              3.2%
  144 Napoleon Street
  Baton Rouge, LA 70802
Timothy Andrus*                        1,187,598(6)              1.9%
  144 Napoleon Street
  Baton Rouge, LA 70802
Charles Potter*                        2,215,923(7)              3.5%
  1025 South 7th Street
  Springfield, IL 62703

                                       46
<PAGE>


Richard Reisner*                             -0-(8)                0%
   2644 Far View Drive
   Mountainside, NJ 07092
Dr. Bruce Morra*                             -0-(9)                0%
   51 Spring House Lane
   Basking Ridge, NJ 07920
Paul Ray*                                    -0-(10)               0%
   594 Wild Horse Circle
   Boulder, CO 80304
Dispomedic                             7,000,000(11)            11.4%
   1291 Mettler Road
   Huntingdon, PA 19006
Carl Anderson                          6,187,198(12)             9.9%
  19235 US Hwy 41 N.
  Lutz, FL 33549
Brett Phillips                         4,786,893(13)             7.6%
  8767 115th Avenue N.
  Largo, FL 33773
William & Marilyn Morris               6,493,726(14)            10.3%
  2804 Smitter Road
  Tampa, FL 33618
Medisys Reform Committee
Year 2001                             12,109,524(15)            19.8%
  c/o Carl Anderson
  19235 Lutz Highway 41 North
  Lutz, FL 33549
Directors and officers                10,831,732(16)            16.8%
  as a group (9 persons)

* 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, 2000 there was  61,154,342  shares of common  stock
         outstanding.  Individual  share  amounts  are as of  December  31, 2000
         unless otherwise indicated in the footnotes. These figures do take into
         consideration  stock  purchase  warrants  owned  by  certain  officers,
         directors  and  shareholders,  entitling  the  holders to  purchase  an
         aggregate of 8,008,750  shares of common stock and which are  currently
         exercisable. Therefore, for purposes of the table above, as of the date
         hereof,  69,163,092  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 March 19,
         2001 and assumes the exercise of stock  purchase  warrants held by such
         person (but not by anyone else) exercisable within sixty days.
2.       Includes  276,000  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 $3.18 per share.
3.       Includes 927,166 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 $1.74 per share,  of which  300,000
         warrants are held in the name of Roy, Kiesel & Tucker,  20,000 warrants
         are held in the name of Nu Vue Corp.  and shares are held by Mr. Kiesel
         for his two sons in trust.
4.       Includes shares held in the name of Diana B. Sutherland, wife of Edward
         P.  Sutherland  and as trustee for James  Sutherland,  minor son of Mr.
         Sutherland,  and 259,000 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 $1.29 per share.
5.       Includes  147,400  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 $1.29 per share.
6.       Includes 206,982 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 $ .50 per share.
7.       Includes  1,400,000  warrants  exercisable  within  sixty  days  at the
         average exercise price of $.50 per share.

                                       47
<PAGE>

8.       Mr. Reisner joined the Board in October of 2000.
9.       Dr. Morra joined the Board in March of 2001.
10.      Mr.  Ray joined the Board in March of 2001.  Mr. Ray  purchased  25,000
         share of stock in an open market transaction in February 2001.
11.      As of March 19,  2001,  Dispomedic  held  5,850,000  shares of  record,
         3,500,000 of which are held in escrow by the Company.  Dispomedic holds
         no warrants.
12.      This figure is estimated, since this shareholder has not provided other
         information.  Includes  1,471,118  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 $1.50
         per  share.  These  warrants  have been  voted to be  cancelled  by the
         Company.
13.      This figure is estimated, since this shareholder has not provided other
         information.  Includes  1,660,542  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 $1.50
         per  share.  These  warrants  have been  voted to be  cancelled  by the
         Company.
14.      This figure is estimated, since this shareholder has not provided other
         information.  Ms. Morris is the wife of Bill Morris,  a director of the
         Company.  Includes 1,660,542 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 $1.50  per  share.  The
         Company has been advised that Ms. Morris has sole voting power over the
         shares  indicated  above and control over the warrants.  These warrants
         have been voted to be cancelled by the Company.
15.      In reliance on the Schedule 13D filed with the  Securities and Exchange
         Commission on April 2, 2001,  Medisys Reform  Committee Year 2001, LLC,
         Brett J.  Phillips,  William H.  Morris,  Marilyn L. Morris and E. Carl
         Anderson reported that they beneficially own and have shared voting and
         dispositive  power over  12,109,524 of the Company's  common stock.  In
         further  reliance on the Schedule 13D, of the above  referenced  shares
         Brett J. Phillips is the record owner of 2,475,260  shares;  William H.
         and Marilyn Morris are the record owners of 4,823,184 (of which 124,969
         shares  are in  joint  name  and  4,688,215  shares  are in the name of
         Marilyn Morris);  and E. Carl Anderson is the record owner of 4,811,080
         shares.  It is believed  that these share  amounts are reflected in the
         amounts depicted next to each individual's name in the above table.
16.      Includes  3,316,548  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
         $.0375 to $4.25 per share.

Item 12. Certain Relationships and Related Transactions

         The law firm of Roy,  Kiesel &  Tucker,  PLC has been  used for  patent
work. The patent bill-ins for 2000 were $86,266.  William David Kiesel is both a
shareholder  and  director  of Roy,  Kiesel & Tucker,  PLC and is the  Corporate
Secretary and a Director of Medisys.  Other  attorneys of Roy,  Kiesel & Tucker,
PLC do bill the  Company  for their time and the  Company  does  reimburse  Roy,
Kiesel & Tucker, PLC for expenses incurred on the behalf of the Company. Richard
Reisner, (Director) also performs financial consulting work for the Company on a
limited basis.

                                     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
           3.3       Amended By-Laws
           4.1*      Specimen of Common Stock Certificate
          10.1*      Lease Agreement on Registrant's principal place of business
          21.1***    Subsidiaries

    *    Previously filed as Exhibit to Form 10-SB.
    **   Previously filed as Exhibit to Form S-8 filed October 15, 1998.
    ***  Previously filed as Exhibit to Form 10-KSB for December 31, 1999

(b)  No Form 8-K was filed for the three-month period ended December 31, 2000.

                                       48
<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 16, 2001

         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 16, 2001


                                  BY: /S/  KERRY M. FREY
                                  --------------------------------
                                           KERRY M. FREY
                                  President, Chief Operating Officer and
                                  Director
                                  DATE:  April 16, 2001


                                  BY: /S/ WILLIAM D. KIESEL
                                  --------------------------------
                                          WILLIAM David KIESEL
                                  Corporate Secretary and Director
                                  DATE:  April 16, 2001


                                  BY: /S/ DR. ROBERT DIBENNEDETTO
                                  --------------------------------
                                          DR. ROBERT DIBENNEDETTO
                                  Director
                                  DATE:  April 16, 2001


                                  BY: /S/ DR. TIMOTHY ANDRUS
                                  --------------------------------
                                          DR. TIMOTHY ANDRUS
                                  Director
                                  DATE:  April 16, 2001


                                  BY: /S/ DR. CHARLES POTTER
                                  --------------------------------
                                          DR. CHARLES POTTER
                                  Director
                                  DATE:  April 16, 2001


                                  BY: /S/ RICHARD REISNER
                                  --------------------------------
                                          RICHARD REISNE
                                  Director
                                  DATE:  April 16, 2001


                                  BY: /S/ DR. BRUCE MORRA
                                  --------------------------------
                                          DR. BRUCE MORRA
                                  Director
                                  DATE:  April 16, 2001


                                  BY: /S/ PAUL RAY
                                  -----------------
                                          PAUL RAY
                                  Director
                                  DATE:  April 16, 2001

                                       49
<PAGE>